Tax filing season each year is always full of ups and downs dealing with the compliance of issuing financial statements and preparing tax returns. Most tax seasons have their own personality and differ in one way or another. Common changes that accountants deal with are tax law changes, accounting regulations, software changes, managing employee’s workload, and exceeding client expectations. This past year has been one for the ages due to the Covid pandemic that has hit businesses and individuals very hard, but has also created so many changes in tax law that it has created a deep burden for tax preparers in this country. As of today, we have had three major stimulus bills pass along with other pieces of legislation within the past 12 months, which have created new tax credits, rules, and regulations.
This year tax preparers have been dealing with a lack of guidance on guiding their clients with the Paycheck Protection Program (PPP) loan forgiveness, second round PPP Loan application, employee retention credits (ERC), stimulus money, and partially nontaxable unemployment compensation, states that do not conform to the federal (or who have not decided yet), not being able to call the IRS and get through to an agent, and now the moving of the April 15 filing date for individual returns to May 17. Add on top of this the struggle of remote working, office social distancing, mask wearing, video conferencing, managing personal life and family, and friends’ health, and oh yes, trying to stay calm and sane through it all.
As of early March, the IRS had yet to process approximately 6.7 million 2020 returns that have been filed since mid-February. It had processed nearly 49 million. It also has a number of tax returns unprocessed from 2019.
In addition to processing tax returns, the IRS is also in the process of sending out a third round of about $150 million stimulus payments. As of Wednesday, about $90 million had been sent out.
The AICPA (American Institute of Certified Public Accountants) has suggested and issued a request to the IRS to move the filing date for all returns to June 15. With all the challenges listed here, the compression of the tax season of this year and last, the issues at the IRS, and the constant change in legislation and guidance, it makes sense for the American taxpayer and the voluntary tax compliance system to move the filing date.
The IRS moved the April 15 date for individual tax returns to May 17, but still left first quarter estimated tax payments, trust returns and tax payments, and corporate tax returns (Form 1120) and payments still due April 15. The AICPA President CEO Barry Melancon, CPA, CGMA said “While we appreciate the IRS’ recognition that a filing deadline postponement is indeed necessary, the announcement is far too selective in who is receiving relief.” Not aligning the filing date with all tax returns and payments only creates more confusion, complexity, and more stress on the U.S. taxpayer.
What do we wish the IRS would do right now?
There are so many issues and complexities to all of what has happened, and nobody wants any blame thrown anywhere. However, the U.S. taxpayer and their tax preparers deserve to be given the best opportunity to manage the situation we are all in today. Some of the key changes on the Spring Wish List:
- Extend all April 15 tax returns and payments until June 15
- Gain control of the phone system so that taxpayers and their advocates can discuss important issues with the IRS
- Devise a plan and goal to process the backlog of returns and notices
- Respond to taxpayers on a timely basis
- Provide clear, timely guidance on all the new tax legislation so that voluntary tax compliance can be done in an efficient manner
The IRS mission is to provide the U.S.'s taxpayers top quality service by helping them understand and meet their tax responsibilities and to enforce the law with integrity and fairness to all.
With all that has happened to taxpayers and businesses over the past year and the constant struggle to keep things moving forward, the list above would only help exemplify the “fairness” part for all U.S. taxpayers. IRS Commissioner Charles Rettig and his team can help bring relief this spring and to the situation we are in again. I know tax preparers could really use some clear-cut guidance and help in navigating the tax filing system that is in front of them right now.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Mark Gallegos, CPA, MST, is a tax partner on Porte Brown’s accounting and consulting services team in the Elgin, Ill., office. He has more than 20 years of experience. Since the pandemic started, Gallegos has been entrenched in the intricacies of the Covid-related stimulus programs, such as the Paycheck Protection Program (PPP) and the CARES Act. Gallegos co-hosts a recurring webinar series on the topic and regularly speaks on the stimulus programs and other tax topics.
Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute, please contact us at TaxInsights@bloombergindustry.com.