"I'm holding some individual returns and just waiting a while," said Neil Lonergan, a tax partner in the Madison, Wis., office of accounting firm Grant Thornton LLP. "We don't need any more work this time of year."
Eric Cohen, a Gaithersburg accountant, said he typically prepares about 400 individual tax returns in a year. So far he has seen only a couple of amended 1099 forms. "But there is probably going to be a flood, middle to the end of the month," he said.
In many cases, the corrections will reduce the amount of tax owed, Cohen said, which may not merit an amendment or may not be worth the hassle of refiling. He said only taxpayers with "substantial" dividends should be affected.
"I am not advising people to wait," he said. "Otherwise, I wouldn't make it through 400 tax returns."
Under the law, to be eligible for the lower, qualified-dividend rate, an investor has to hold the stock on which the dividend is paid for more than 60 days during a 120-day stretch. But -- and this is the glitch that is being corrected -- if you buy the stock the day before it no longer carries the right to receive the dividend payout, which is known as the ex-dividend date, you are not eligible for the reduced rate.
Congress proposed legislation in December that attempts to fix that, but hasn't yet passed it.
So in February, the IRS issued a ruling that applied the reduced tax rate to a dividend on stock held for at least 61 days of a 121-day period that begins 60 days before the ex-dividend date.
It's all very complicated, as tax law tends to be, but the benefit for taxpayers is significant, McClanahan said.
"The big-picture story here is that it's a very favorable tax cut and everyone should be happy about that," she said.