'Cliff' deadlock: 'This is painful'
Amy Finnegan would have loved a day off on New Year's Eve.
If negotiations over the “fiscal cliff” hadn't lingered into Monday, Finnegan probably would have gotten one.
The last hours of 2012 instead found Finnegan, the payroll and insurance manager for Moon Area School District, at work processing the first 600 paychecks for 2013. She hoped federal officials would set the 2013 tax rates before her bank deadline this week.
“That's not going to happen,” Finnegan said Monday from her office, where she relied on 2012 tax tables and a possible increase in Social Security collections to set withholding rates. “Each week they delay is just more inconvenience for (workers). We're either underwithholding or overwithholding.”
From payroll to private accounting offices, uncertainty over 2013 income and other federal taxes left many Western Pennsylvanians debating their own fiscal plans and frustrated with elected leaders. By Monday afternoon, President Obama said an agreement appeared “within sight” to avoid automatic tax increases and spending cuts at midnight Tuesday.
Frank Passant, 51, of Oakmont watched the developments closely. He estimated “it probably cost me a couple thousand dollars just to plan for this damned thing.”
His worries went beyond income taxes to how Congress and Obama would act on capital-gains assessments and federal levies on investments. He decided against making big financial moves for the time being.
“We just don't know what they're going to do,” Passant said. “It's awful.”
One of Passant's financial advisers, Dennis Piper, said most of his clients would be minimally affected if the country reverts to Clinton-era federal tax rates.
“Bottom line: We've got a deficit we've got to take care of,” said Piper, owner of Dennis Piper and Associates in the Fox Chapel area. “Whose ox gets gored?”
In Greensburg, tax attorney Pat A. Iezzi Jr. said people were selling stocks to avoid potentially higher tax rates in 2013.
“Several companies accelerated their dividends, even moved them into 2012, so shareholders wouldn't have to pay higher taxes. You see that a lot,” said Iezzi, a Certified Public Accountant.
A few Western Pennsylvania companies — Dick's Sporting Goods Inc., Mine Safety Appliances Co., HFF Inc., Fed First Financial Corp. and American Eagle Outfitters Inc. — accelerated cash dividends.
On the other end, complications from the federal impasse may lead some taxpayers to miss the standard April 15 deadline for income-tax returns, Iezzi said.
Some observers couldn't recall end-of-year tax uncertainty of such broad magnitude before.
“I think this wait-and-see attitude exists across the whole country, whether you're managing a business or an individual,” said J. Eric Renner, an executive vice president at Indiana-based First Commonwealth Bank.
At ATI Financial Services in Wexford, some clients could get tax increases of $8,000 to $10,000 apiece for 2012, depending on how Congress handles the alternative minimum tax, partner Ralph Duckworth Jr. said. He said ambiguity over tax policy could complicate decisions on retirement or selling stocks and bonds.
“We've been trying to help as best we can to do tax planning. But it's exceptionally difficult,” said Duckworth, a CPA.
He said hang-ups in Congress could have a domino effect on tax refunds in 2013, delaying their delivery and putting another squeeze on the economy.
“I just hope this isn't a new way of conducting the legislative process in Washington,” Duckworth said. “This is painful.”
Adam Smeltz and Amanda Dolasinski are staff writers for Trib Total Media. Smeltz can be reached at 412-380-5676 or firstname.lastname@example.org. Dolasinski can be reached at 724-836-6220 or email@example.com.