Small businesses face tax headaches on top of pandemic woes

NEW YORK (AP) — Small businesses that have been buffeted by the pandemic, inflation and shipping woes have another challenge to add to their plate: taxes.

Tax season can be complicated for everyone, but as the April 18 filing deadline looms, small-business owners, contractors, entrepreneurs and others face a raft of ever-changing rules and regulations.

Plus, many are dealing with delayed returns and refunds from prior tax periods. The Internal Revenue Service has warned of a backlog and says more delays are to be expected.

“It’s worse this year than last year,” said Gene Marks, owner of The Marks Group, a small business consulting firm in Bala Cynwyd, Pennsylvania. “It seems to get worse every year, and this year definitely worse than it’s been in prior years.”

The IRS said earlier this month it was hiring 10,000 workers to deal with a backlog of 23 million items triggered by limiting operations during the coronavirus pandemic. But with understaffing at both the federal and state government levels, CPAs have found it difficult to reach anyone if problems or questions arise.

“I’ve never seen this in my career, they’re all understaffed and all behind,” said Scott Orn, chief operating officer for the human resources and accounting startup Kruze Consulting.

But he urged companies to be patient with the IRS and state-level tax officials. The government programs provided during the pandemic, including the Paycheck Protection Program and Economic Injury Disaster Loans, helped countless small businesses.

“So many companies were saved, but that additional administrative burden was really rough on the IRS and state tax agencies,” Orn said. “The unintended consequences of good deeds have been tough to handle.”

Orn and other tax experts recommend filing for a tax extension this...