The tax filing season each year is always full of ups and downs dealing with financial compliance and tax filing. Most tax seasons have their own personality and differ in one way or another. Common changes that accountants deal with include changes in tax law, accounting rules, software changes, managing employee workload, and exceeding customer expectations. The past year was an age for the ages due to the Covid pandemic, which hit companies and individuals very hard, but also caused so many changes in tax law that it put a deep burden on tax advisors in this country. To date, in the past 12 months, we have passed three major stimulus packages along with other laws that have created new tax credits, rules and regulations.
This year, tax advisors have addressed a lack of guidelines on how to assist their clients in granting Paycheck Protection Program (PPP) credits, applying for a second-round PPP loan, ERC (Employee Retention Credits), Can support economic stimulus funds and partially non-taxable unemployment benefits that are inconsistent with federal compliance (or have not yet made a decision), are unable to call the IRS and get through to an agent, and now the postponement of the filing date for individual returns to the May 17th to May 17th postpone the struggle of remote working, social distancing in the office, wearing masks, videoconferencing, managing personal life and family, and the health of friends, and oh yes, trying staying calm and healthy through all of this.
As of early March, the IRS had approximately 6.7 million 2020 returns filed since mid-February. It had processed nearly 49 million. There are also a number of tax returns that were no longer processed as of 2019.
In addition to processing tax returns, the IRS is currently sending a third round of approximately $ 150 million in stimulus payments. Around $ 90 million had been shipped by Wednesday.
The AICPA (American Institute of Certified Public Accountants) has proposed to the IRS and requested that the filing date for all returns be postponed to June 15th. With all of the challenges listed here, compressing the tax season this year and last is, given the problems with the IRS and the constant change in legislation and guidelines, it makes sense for the American taxpayer and voluntary tax compliance system to postpone the filing date.
The IRS postponed April 15 for individual tax returns to May 17, but left the estimated tax payments, escrow, tax returns, and corporate tax returns (Form 1120) and April 15 payments open for the first quarter. AICPA President’s CEO Barry Melancon, CPA, CGMA said, “While we appreciate the IRS’s recognition that it is indeed necessary to postpone the filing deadline, the announcement is far too selective on who will receive relief.” Failure to adjust the filing date for all tax returns and payments only adds to confusion, complexity, and stress for the U.S. taxpayer.
What do we wish the IRS would do now?
There are so many problems and complexities in everything that has happened and nobody wants a blame to be thrown anywhere. However, the U.S. taxpayer and his or her tax advisor deserve to be given the best opportunity to face the situation we all find ourselves in today. Some of the key changes on the spring wish list:
- Extend all tax returns and payments from April 15th to June 15th
- Take control of the telephone system so taxpayers and their attorneys can discuss key issues with the IRS
- Develop a plan and goal to handle the backlog of returns and notices
- Respond to taxpayers in a timely manner
- Provide clear and timely guidance on any new tax laws so voluntary tax compliance can be done efficiently
The IRS mission is to provide world class service to United States taxpayers by helping them understand and meet their tax obligations and enforcing the law with integrity and fairness to everyone.
Given all that has happened to taxpayers and businesses over the past year, and the constant struggle to keep things moving, the above list would only help illustrate the part of “fairness” for all US taxpayers. IRS Commissioner Charles Rettig and his team can help ease this spring and the situation we find ourselves in again. I know tax accountants really need clear guidelines and could help navigate the tax return system that is right in front of them.
This column does not necessarily reflect the opinion of the Bureau of National Affairs, Inc. or its owners.
Information about the author
Mark Gallegos, CPA, MST, is a tax partner in the accounting and advisory team at Porte Brown’s Elgin, Illinois office. He has more than 20 years of experience. Since the beginning of the pandemic, Gallegos has been anchored in the intricacies of Covid-related economic programs such as the Paycheck Protection Program (PPP) and the CARES Act. Gallegos is co-hosting a recurring series of webinars on the subject and speaks regularly about stimulus programs and other tax issues.
Bloomberg Tax Insights articles are written by seasoned practitioners, scholars and policy experts to discuss developments and current tax issues. To make a contribution, please contact us at TaxInsights@bloombergindustry.com.