Following a 24-hour ultimatum from Democratic lawmakers, the Social Security Administration provided information to the Internal Revenue Service on Thursday that will help more Americans get stimulus payments.
Nearly 30 million Social Security and Supplemental Security income beneficiaries were kept waiting on stimulus payments because, House Democrats said, the SSA hadn’t provided the Internal Revenue Service with necessary payment files for them.
On Wednesday, the chair of the House Ways and Means Committee, Richard Neal, and the chair of the House Oversight Subcommittee, Bill Pascrell, Jr., sent a letter to the SSA requesting that information be sent over right away. “We are giving the trump-appointed heads of the Social Security Admin **24 Hours** to get off their backsides and stop delaying sending stimulus checks to 30,000,000 Americans,” Pascrell said on Twitter on Wednesday.
On Thursday, the SSA transferred the necessary files to the IRS, making it possible for the affected Americans to get the $1,400 stimulus checks that many others have already received.
“The delays imposed by Commissioner Saul defied congressional intent and imposed needless anxiety and pain on taxpayers,” the Democrats said in a statement on Thursday. “Now the IRS needs to do its job and get these overdue payments out to suffering Americans. Further delays will not be tolerated by this committee.”
Rep. John Larson of Connecticut and Rep. Danny Davis of Illinois had joined Neal and Pascrell in calling for action from the SSA and IRS.
Since President Joe Biden’s stimulus bill was signed into law, Americans across the country have encountered delays in receiving stimulus aid. Due to December and March stimulus changes, the IRS was behind in processing nearly 7 million tax returns, and customers of major online tax preparers, such as TurboTax and H&R Block, faced delays on the $10,200 tax break on unemployment benefits received during the pandemic.
As a result of the delays, along with calls from lawmakers, the IRS extended tax filing season to May 17, which Neal and Pascrell said would lift the “titanic strain” on taxpayers.
The Treasury Department, IRS, and Bureau of Fiscal Service announced on Wednesday that 127 million of the $1,400 stimulus checks have been sent out to date.
President Joe Biden signed his $1.9 trillion stimulus package on Thursday, a win for many Americans who needed financial aid to recover from the pandemic. But that has slowed things down for the Internal Revenue Service to the extent that 7 million Americans are now waiting for tax refunds.
In December, Congress passed a $900 billion stimulus package that included $600 stimulus checks the IRS had to distribute. The more recent passage of the American Rescue Plan requires the agency to begin distributing $1,400 stimulus checks, and to field adjustments to unemployment benefits – a tax exemption on the first $10,200 of benefits – as well as a new child tax credit.
According to IRS data, 6.7 million tax returns have not yet been processed in 2021, but in 2020, only around 2 million returns faced processing delays, reflecting the effects of the stimulus changes.
IRS spokesman Robert Marvin told The Washington Post on Friday that while most refunds take 21 days to be issued after filing season starts, some refunds may take longer.
“Many factors can affect the timing of your refund after we receive your return,” Marvin said. “Some tax returns take longer to process than others. For example, returns with an error, incomplete information or those affected by theft or fraud may take longer to process.”
In addition, the Government Accountability Office found in a March 1 report that from 2010 to 2019, IRS staffing was down by almost 23% and its budget was cut by 20%, factoring into the processing delays that must be resolved manually.
“IRS’s overall 2020 performance was significantly impacted by its reliance on manual processes such as for paper returns, and its limited ability to process returns remotely while processing centers were closed,” the report said. “As a result, as of December 2020, IRS had a significant backlog of unprocessed returns and taxpayer correspondence.”
Democratic lawmakers have expressed concern with the backlog the IRS is experiencing, and the effects the backlog has on taxpayers who need their refunds to stay financially afloat. House Ways and Means Committee Chair Richard Neal and House Oversight Subcommittee Chair Bill Pascrell called for the IRS to extend tax filing season on March 8, citing the lack of help taxpayers were receiving from the agency.
More recently, 21 Democrats, led by Senate Majority Whip Dick Durbin, called on Friday for the IRS to remove the current requirement of an amended tax return for taxpayers who have already filed and want to account for tax relief in the stimulus bill.
“We recognize the challenges of implementing this change in tax law during filing season, particularly as millions of Americans have already filed their tax returns for 2020,” the letter said. “This underscores the need for Treasury and the IRS to take every action to ensure that all eligible individuals, including those who have already filed their 2020 tax return, are aware of and able to receive this critical relief.”
Biden’s stimulus plan included $1.9 billion in additional funding for the IRS, but the agency has yet to respond to lawmakers’ concerns on processing delays.
To continue providing economic relief to Americans during COVID-19, two House Democrats called on the Internal Revenue Service on Monday to extend the the 2021 tax filing season past April 15.
Ways and Means Committee Chair Richard Neal and Oversight Subcommittee Chair Bill Pascrell, Jr. said in a joint statement that at the end of February, the number of returns filed was down nearly 25% year-over-year, while only 27% of phone calls to the IRS were answered, indicating that a majority of taxpayers weren’t getting the help they needed in filing taxes.
“We want to remind the IRS that many Americans continue to face the same health and economic challenges that necessitated an extension last year,” Neal and Pascrell said. “Facing enormous strain and anxiety, taxpayers need flexibility now. We demand that the IRS announce an extension as soon as possible.”
Last year, the IRS extended the tax filing season to July 15 – three months later than the usual April filing – and extending it again this year will allow time to account for changed laws within President Joe Biden’s American Rescue Plan, according to the statement. This includes unemployment benefits, with the first $10,200 of benefits set to be eliminated from taxation in 2020.
Accountants are also worried about the quickly approaching tax season deadline. In a March 4 letter, American Institute of Certified Public Accountants Chair Christopher W. Hesse, on behalf of the organization with more than 431,000 members, requested that the IRS extend the tax filing season to June 15.
“Maintaining the April 15 filing and payment deadline does not reflect the real-world hardship and challenges imposed on taxpayers and tax professionals,” Hesse wrote. “Therefore, we urgently request that the 2020 Federal income tax, information returns, and payments (e.g., extension and estimated payments) originally due April 15, 2021 be granted additional time to file and pay until June 15, 2021.”
In defense of the extension, Hesse cited circumstances reflecting its need, including:
A delay to the start of the 2020 tax filing season;
The second round of the Paycheck Protection Program required significant assistance to small business clients, and tax professionals are still assisting clients with the PPP’s first round loan forgiveness process;
The IRS’ delayed processing of 2019 tax returns;
And effects on staffing in the IRS due to the pandemic, which has made it difficult to respond to taxpayers’ questions.
Hesse also noted that there is still confusion regarding eligibility of the $1,400 stimulus checks, and whether they are taxable.
The Ways and Means Committee said on Twitter on Monday that the April 15 tax filing deadline does not give taxpayers the time they need to file appropriately.
“Taxpayers are facing enormous economic strain and anxiety this filing season,” the Committee said. “They need more time to get their questions answered and file accurate returns.”
The Manhattan District Attorney’s office, led by Cyrus Vance Jr., first sought Trump’s tax documents since it opened an investigation into his finances in 2017.
The precise scope of the investigation is unclear, but court filings suggest that Vance’s office is looking into whether the former president’s tax filings amounted to criminal tax fraud. If Trump were to be indicted for financial crimes, the tax returns would no doubt be a centerpiece for the charges.
Vance’s office is also reportedly looking into whether Donald Trump, Jr. and Allen Weisselberg, the former chief financial officer of the Trump Organization, were involved in wrongdoing.
The investigation was first triggered after Michael Cohen, a former executive of the Trump Organization and personal lawyer to Trump, told Congress he used the company’s funds for hush-money payments to Stormy Daniels, an adult-film actress who claims she had sex with Trump in 2006. Vance is looking into whether those payments broke laws as well.
Chief among the issues is whether – as Cohen testified – Trump kept two sets of books for his finances: One for favorable loan deals and another for low tax rates.
Jeff Robbins, a former attorney for the US Senate Permanent Subcommittee on Investigations and federal prosecutor overseeing money-laundering probes, said keeping two sets of books could lead to a number of serious financial crimes.
“Inconsistency is not a crime. The intent to defraud is a crime,” Robbins told Insider. “What a prosecutor is going to be looking at is: Did Trump seek to defraud the government of the United States with respect to the valuation of assets and the paying of taxes? Was there an intent to defraud banks?”
Trump has gone to great lengths to keep his tax returns secret despite saying he wants to make them public
In January 2017, Trump held a press conference with his three eldest children and pointed to a large pile of papers that he said showed he was withdrawing from the Trump Organization and giving all control over to Eric Trump and Donald Trump, Jr. He has never permitted reporters to look at those purported documents.
A 2020 investigation from The New York Times found and analyzed nearly two decades’ worth of Trump’s returns. It cited major revelations, including:
Trump paid $0 in federal taxes for the majority of the years reviewed and $750 during his first two years as president. At the same time, he paid hundreds of thousands of dollars in taxes to foreign governments.
He received tens of millions of dollars from foreign sources.
$300 million in loans are due to be paid back over the next several years.
He vastly overstated his charitable giving.
He has been involved in a yearslong battle with the IRS over a $73 million refund, which he may owe back to the federal government.
The subpoenas will also enable Vance to obtain other documents related to Trump’s taxes, including communications between the Trump Organization and its accountants at the accounting firm Mazars USA, as well as questions, complaints, concerns, instructions, and arguments for how to value certain assets.
Robbins described these documents as “a potential treasure trove of admissions.”
“I’m sure prosecutors are looking at all sorts of contradictions in those documents,” Robbins, now the co-chair of the Congressional Investigations practice at Saul Ewing Arnstein & Lehr, told Insider.
“If the taxpayer had taken a totally different position with respect to the asset in some other place, that would be very strong evidence of an intent to defraud,” he added.
Deutsche Bank, the Trump Organization’s chief lender, and Aon, its insurance broker, have already cooperated with Vance’s investigation, according to The New York Times.
Trump is also subject to at least two other financial investigations
The House of Representatives’ Ways and Means Committee is also seeking to obtain Trump’s tax returns as part of an investigation into whether he interfered with the IRS’s audit program.
It is not clear if the US Attorney’s Office for the Southern District of New York, which oversees federal prosecutions in Manhattan, is also looking into Trump’s finances. It successfully obtained a guilty plea from Michael Cohen in 2018 for campaign-finance violations related to the Stormy Daniels hush-money payments.
And just because Vance will get Trump’s tax returns doesn’t mean everyone else will.
Under New York state law, evidence obtained for a grand jury – as Vance is doing here – must be kept under seal unless the case goes to court. Both James and the House have been mired in their own court challenges over Trump’s returns. Rep. Richard Neal, the chairman of the House committee, has cited Vance’s recent Supreme Court win as a mark of confidence that he’ll succeed in his own lawsuit.
James, the state attorney general, has been involved with several tangles with Trump, his family, and his company over financial matters.
In 2019, she secured a settlement with Trump and his children where they paid a $2 million fine and were barred from serving on charity boards in the state. The Trump Foundation, which was dissolved as part of the settlement, had used funds to bolster Trump’s political fortunes and for the then-candidate’s personal image.
A separate probe from James’ office is looking into whether the Trump Organization has misrepresented its assets, including the value and use of its properties, for tax benefits. The office interviewed Eric Trump, the current chief executive of the Trump Organization, in October.
Trump, his family members, and the Trump Organization have all denied wrongdoing.
Vance is not expected to run for reelection as Manhattan’s District Attorney this year. He recently hired Mark Pomerantz, a former mob prosecutor, to oversee the Trump team and ensure its continuity under a new administration.
The investigations into Trump’s finances aren’t the only legal perils he’s facing. He, his company, political operation, and numerous other businesses and organizations he’s affiliated with are staring down a tsunami of investigations. He also faces numerous civil lawsuits related to his business practices and sexual-assault accusations.
President Joe Biden called on Congress to extend $400 weekly unemployment benefits through the end of September. The House Ways and Means Committee heard the president’s request and included the weekly benefits – but it cut them off a month early.
Unemployment benefits are set to expire on March 14 if Congress does not pass a stimulus package before then, putting 11.4 million Americans at risk of losing needed aid.
Citing the high unemployment during the pandemic, Biden has said months of federal unemployment benefits are needed to ensure Americans won’t have to deal with a lapse in needed aid. But House Democrats added funding for multiemployer pensions in their pandemic relief bill, which left only enough funding for five months of extra unemployment benefits – through the end of August.
“Over the last two days, the Ways and Means Committee has considered aggressive, science-based solutions that will deliver the urgent relief our country so desperately needs,” Committee Chairman Richard Neal said in a statement following the advancement of the bill. “From unemployment benefits to health care affordability, the work we’ve done is substantial, and it is exactly what the American people have been calling on us to do to meet this moment.”
However, lawmakers and experts expressed concern at the benefits cutting off in August.
The committee’s bill also includes $1,400 stimulus checks, and Sen. Ron Wyden of Oregon told Bloomberg last Tuesday that he will “fight like hell” to get approval for both the stimulus checks and six months of unemployment benefits.
The Congressional Budget Office on Monday released a breakdown of the spending in the Ways and Means Committee’s bill. It reported that the legislation would increase premium rates for multiemployer pensions, which Marc Goldwein, head of policy at the nonpartisan Committee for a Responsible Federal Budget, said is taking money away from unemployment benefits.
“That multiemployer pension bailout in the bill cost about $56 billion, which would be enough to extend unemployment benefits to the end of September, and possibly a bit further,” Goldwein told Insider.
Goldwein said the inclusion of pension funding has nothing to do with COVID-19 relief, and although a solution is needed for multiemployer pensions, including them in the pandemic relief package is only diverting money from relief directly related to the pandemic.
The bill cannot include both pension aid and six months of unemployment benefits because the committee has a $940 billion cap within Biden’s $1.9 trillion pandemic package.
An ideal unemployment benefits timeline
The Center on Budget and Policy priorities said in an analysis that cutting off benefits at the end of August, rather than September, is insufficient given that Congress is typically not in session at the end of August, which would cause a lapse in benefits.
Goldwein suggested using automatic economic triggers – budget features that offset economic fluctuations – that phase down based on the level of the public health emergency. If triggers can’t be used, providing the benefits through the end of the calendar year with a taper could be an alternative, he said.
“Trying to get this to the end of the year would make sense,” Goldwein said. “Only getting to August makes very little sense as both an economic issue and a legislative issue. It’s not a good time to have a cliff.”
At the August cutoff, 13.5 million Americans on Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation would lose access to aid.