Procrastinators cheer: IRS pushes off tax deadline to May 17

For the second year in a row, April 15 will not be the nation’s most dreaded day. Thanks to the ongoing issues in the COVID-19 pandemic, mainly the work needed to get two rounds of stimulus checks out ASAP, the IRS has agreed with congressional Democrats to push the tax filing deadline off another month. Taxpayers will have until May 15, but the IRS warns people not to push it off that long:

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The Internal Revenue Service is planning to push back the deadline for the tax filing season about one month to May 15 from April 15, CNBC’s Ylan Mui confirmed.

This will give taxpayers additional time to file their 2020 tax returns and pay any amounts owed to the IRS.

The move from the IRS and Treasury Department comes after calls to extend the tax season increased following the passage of the $1.9 trillion American Rescue Plan, which meant the agency was tasked with sending another round of stimulus payments while processing tax returns and refunds.

Later, the deadline date was clarified to May 17, as May 15 lands on a Saturday. This change does not impact an extension already made in disaster areas relating to the winter storm last month. The IRS had already extended deadlines in Texas and other places to June 15, which will remain in place for those impacted by the weather disaster.

The IRS had earlier insisted that they would be ready for the traditional April 15 deadline for all other filers, but signs of problems had already begun. The delays at the IRS began not with the March COVID-19 relief bill, but with the December relief bill. It took the IRS and Treasury several weeks to process those payments, which meant that they couldn’t fully focus on tax filings until five weeks ago. The passage of the new relief bill once again pre-empted tax processing; the new checks just started going out today after brief delay over the weekend.

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According to NBC, the IRS has processed 25% fewer returns this year than at the same point as last year, and that had already been impacted by the early days of the pandemic. The problems at the IRS prompted two House Democratic committee chairs to press the IRS for a broad extension, not just for the sake of taxpayers still dealing with COVID-19 restrictions but for the agency’s sake as well. The letter from House Ways and Means Committee Chairman Richard E. Neal (D-MA) and Oversight Subcommittee Chairman Bill Pascrell, Jr. (D-NJ) cited “unprecedented conditions,” but these are unfortunately all too precedented:

As of the end of February, the number of returns filed was down by nearly 25 percent from last year at the same time, and the number of returns processed by the IRS was down by 31 percent. Further, only 27 percent of telephone calls to the IRS are being answered, indicating that approximately 3 out of every 4 taxpayers trying to reach the IRS are unable to get help.

“We stand in the midst of the most important tax filing season in recent memory, and taxpayers cannot get the help they need from the IRS,” said Chairmen Neal and Pascrell. “Returns received by the IRS have fallen significantly behind last year’s numbers. On top of all that, once it is signed into law, the American Rescue Plan will change the tax laws applicable to unemployment benefits received in 2020 and reported on returns filed during this filing season. Taxpayers need more time to file accurate returns and get their questions answered by the IRS.

The Chairmen continued: “Last year, the tax filing season was extended by three months to July 15, 2020. We want to remind the IRS that many Americans continue to face the same health and economic challenges that necessitated an extension last year. Facing enormous strain and anxiety, taxpayers need flexibility now. We demand that the IRS announce an extension as soon as possible.”

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When Democrats pushed through the latest COVID relief/stimulus bill, a number of members of both parties noted the difficulties these tax changes might create. Given all of that, plus the metrics cited in the letter, one might wonder whether a single month will be enough. Don’t be surprised if this gets revisited in early May, and everyone ends up on the June 15 deadline along with Texas.

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