2 key House Democrats want the IRS to extend tax filing season, citing ‘titanic strain’ on taxpayers

Richard Neal
Rep. Richard Neal (D-MA).

  • Two House Democrats called on the IRS to extend the tax filing season past April 15.
  • The extension would allow taxpayers time to accurately file returns and factor in tax changes in the stimulus.
  • Accountants also support an extension to account for prior tax return processing delays from the IRS.
  • Visit the Business section of Insider for more stories.

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.”

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Biden asked for 6 months of extra unemployment benefits. Here’s why House Democrats gave him 5.

neal pelosi
Speaker of the House Nancy Pelosi (D-CA), Ways and Means Chairman Richard Neal (D-MA), and other members conduct a news conference in the Capitol.

  • House Ways and Means extended extra unemployment benefits through August, rather than September.
  • Experts and lawmakers argue that Americans need at least six months of jobless pandemic relief.
  • Pension funding diverted money from unemployment aid, an economist says. 
  • Visit the Business section of Insider for more stories.

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 pension problem

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.

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