The IRS is waiting, just like the rest of us, for Congress to act on the expiring tax rates.
As I mentioned in my post last week, the IRS can't just take Congress' word that it will do its job. The agency operates under the tax laws as they now exist.
That means the Bush tax cuts will expire and withholding tables for 2011 will reflect that.
And that means smaller paychecks as next year's withholding calculations account for higher taxes for us all.
There is, however, a slim hope that the withholding dilemma will work out for workers.
The IRS has some discretion to adjust withholding tables because they are projections of tax liabilities, not final payments, John Harrington, a former Treasury official now in private practice advising employers, told Reuters news service.
But, Harrington noted, it is always safer for the IRS to stick with the law.
"If they do anything that departs from current law, there is a risk you'll be pulled in front of some Congressional committee," he said.
So we wait.
I suggest if you get any cash as a holiday gift this year, you sock it away to cover the potential income shortfall you'll likely see when you get your first few paychecks of 2011.
Related posts:
- If your first 2011 paycheck is smaller, thank, er, blame Congress
- Tax agenda for lame duck, and future, sessions
of Congress is packed - The economic and political perils of Congressional gridlock
- OMG! What will happen to my tax bill if the
Bush tax cuts expire!?! - Expiring tax cuts might just do that
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