Bowing to pressure from congressional Democrats, the U.S. Internal Revenue Service said on Wednesday it was extending the federal income tax filing and payment deadline by about a month until May 17 due to the coronavirus pandemic.
In a statement, the IRS said the extension would be automatic, with no need to file any forms and no penalties or interest on taxes due that are paid between April 15 and May 17.
The move marked a reversal of the IRS’ earlier stance, which was to maintain as normal a tax-filing season as possible in order to speed refunds to households. A year ago, as coronavirus lockdowns began, the IRS delayed the filing and tax payment deadline by three months, to July 15.
IRS Commissioner Charles Rettig said the delay was because of the “tough time for many people” caused by the pandemic.
“Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds,” he said in a statement, adding that filing electronically with direct deposit also could help taxpayers quickly get any coronavirus stimulus payments they are owed.
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There is good reason for the IRS to want people expecting a return to file early. The IRS generally pays interest on refunds paid later than 45 days after filing deadlines. In the 2020 tax year, the IRS paid $3.03 billion in interest, compared with $2.06 billion the prior year.
House of Representatives Ways and Means Committee Chairman Richard Neal and Oversight Subcommittee Chairman Bill Pascrell, was originally pressuring the IRS to delay the deadline to July 15 as in 2020. While Neal did not get his wish, he did praise the decision for a small delay.
“Under titanic stress and strain, American taxpayers and tax preparers must have more time to file tax returns,” the two Democrats said in a statement.
House Democrats had been demanding that the IRS issue an extension, in part because this year’s tax filing season started about two weeks later than last year, giving households struggling with the pandemic less time to file. They also raised concerns about a backlog of unprocessed returns even as the agency is responsible for distributing a new round of aid payments.
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Rettig is due to testify on Thursday at a hearing before the Ways and Means oversight panel.
“He would be on the defensive if the IRS didn’t announce an extension,” said Nina Olson, executive director of the Center for Taxpayer Rights.
“The filing season was delayed at the beginning, so pushing it back to May 17 reflects that delayed start but doesn’t push it so far into the summer that the IRS just gets further and further behind in processing,” Olson said.
It is understandable that people are still struggling this year but the Treasury said earlier on Wednesday it had sent out some 90 million direct payments to Americans worth $242 billion since Friday and taxes are never pleasant. Accountants have been back at work since last spring and it takes almost no time to file an extension.
It would seem if the IRS did not want the extension, who is Congress to pressure them into it. The extension really only benefits the wealthy by postponing payment of what they owe and costs the government billions in interest on refunds.
Then again, at the rate the Biden administration and Dem lawmakers are spending money, a couple of billion is really just a rounding error.
Reuters contributed to this report.
Article Source : thefederalistpapers.org