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Business of Tax: Some Tax Pros Want a Longer Season

Posted on May 13, 2022

Frazzled tax return preparers are hoping to gain traction in their efforts to move tax day from April 15 to later in the year as both the IRS and the industry struggle to keep up with their work.

It would be a solution to the increasingly intense time compression that comes with each tax season, supporters say. Detractors raise concerns that moving tax day wouldn’t curb the time crunch caused by last-minute filers and would increase the IRS’s mounting workload.

A Change.org petition to “Change National Tax Day” had over 1,000 signatures as of May 12. The petition is addressed to Treasury, House Ways and Means Committee Chair Richard E. Neal, D-Mass., Senate Finance Committee Chair Ron Wyden, D-Ore., Finance Committee ranking member Mike Crapo, R-Idaho, and other lawmakers.

The petition urges Congress to move tax day from April 15 to one, two, or three months later to allow taxpayers more time to gather documentation and allow CPAs more time to navigate exponential changes to the tax code.

“As tax complexity increases, more taxpayers seek the assistance of a professional tax preparer,” the petition description says. “April 15th is no longer practical. We only strain the profession and the taxpayers by retaining this deadline.”

The petition creator, Denise C. Yelvington, is with Sheffield Advisors and has been a CPA for more than 20 years.

“Each year it’s getting harder and harder,” Yelvington told Tax Notes.

April 15 was set as tax day in 1955 by the Internal Revenue Code of 1954. Before that, tax day was March 15. The move — according to tax historian and Tax Notes contributing editor Joseph J. Thorndike, quoting the Ways and Means Committee chair at the time, Daniel A. Reed — was meant to give accountants and taxpayers more time to work through the code.

In a letter to the editor Yelvington submitted to Tax Notes, she said the increasingly chaotic filing season has much to do with the expansion of the IRC since the April 15 tax date was set.

“In 1955 the IRC was 929 pages. Today it’s more than 6,600,” Yelvington said in the letter.

The strain of the deadline, on top of new tax code and COVID-19 relief provisions, is taking its toll on tax professionals. Yelvington noted a decline of incoming CPAs.

“It’s dwindling because the horror stories are increasing. People don’t want to work like this,” Yelvington said.

Joe Kristan of Eide Bailly LLP, who signed the petition and has advocated to move tax day, agreed.

“There’s increased work difficulty, increased time compression, increased client difficulty,” Kristan said. “And that’s just for easier returns.”

One common point in opposition to the change that Yelvington hears is that extending the deadline won’t discourage taxpayers from waiting until the last minute on their returns. They will procrastinate anyway, and a time crunch will exist regardless.

“I don’t know what the right answer is,” Yelvington said. “But April doesn’t seem to work in our current climate.”

CPA Hot Takes

Vimal Bava of vbCPA said he’s noticed the increased pressure placed on tax professionals, particularly in recent years.

Bava said his firm handles tax returns for numerous S corporations and businesses that have a March 15 due date. That leaves only 30 days for Bava to prepare personal tax returns.

And even personal returns have added complications from the COVID-19 pandemic, the inclusion of tax credits, and reporting health insurance Forms 1095-A and cryptocurrency gains.

“The complexity has increased and the IRS is behind. Clients can’t get answers,” Bava said.

Bava said the IRS is often slow to provide guidance to tax professionals while the agency itself is in a time crunch. Then preparers wait for tax software updates for new regulations and tax code changes. Then clients wait for the preparers. “It’s like a chain reaction,” Bava said.

Amie Kuntz of RubinBrown LLP said the blistering pace of new tax provisions creates issues for clients and tax professionals.

“To have such a short window to gather information and analyze these tax laws — it’s too short,” Kuntz said.

Kuntz and Bava said they can understand the argument that last-minute filings will remain an issue.

“The nature of a general person is to procrastinate,” Kuntz said. “You have to incentivize clients to get theirs done early.”

“We have to look at the big picture,” Bava said about the long-term goals of moving tax day. “We can’t just look at a few taxpayers.”

Bava added that the industry is already struggling. More experienced CPAs are leaving the field, and incoming CPAs need time to be trained.

Bob Donica of RE Donica & Associates Tax Professionals said that while he understands why accountants would support the change, he’s unsure of how taxpayers would respond.

“I think it would help the tax professionals, but I’m not sure how the public will perceive this,” Donica said.

“I felt it to be a little daunting,” Donica said about the tax day change concept, adding that it would lengthen already stressful filing seasons.

Donica also said the change would require a lot of legwork from the IRS, which already is overburdened.

IRS would have to change some of their systems around,” Donica said. “They’re way behind. I don’t think that would help the IRS, to be honest.”

Craig Hausz of CMH Advisors said moving tax day would create its own setbacks.

“You would still have to calculate the tax that is due by April 15 regardless of [when] the filing deadline is, unless you move the date the tax is due from April 15, which then creates a revenue problem for the government,” Hausz said.

“It would be a big task but wouldn’t solve the problem with tax season compression,” Hausz said.

Tax Extension Test Runs

Tax day was moved to later dates in 2020 and 2021 because of the coronavirus pandemic. The tax deadline for tax year 2019 was extended to July 15, 2020. For tax year 2020, the deadline was extended for individual taxpayers to May 17, 2021.

Kristan said moving tax day for those years was necessary for clients and tax professionals to adjust to the changes brought on by the pandemic.

“Like everyone else, tax pros were struggling to get used to remote operation, and the extra time made it possible to get the work done,” Kristan said.

Having the date moved only to May for tax year 2020 meant that estimated tax payments and C corporation returns weren’t extended, Kristan said.

“It helped, but not as much as an earlier and broader due date delay would have,” Kristan said.

“The extension did help relieve some pressure,” Bava said. “2020 was an uncertain and stressful year for everyone.”

Bava added that many of the items that were introduced a few years ago, such as COVID-19 relief measures, are still in play for 2021 returns.

“We're still dealing with issues that have carried over from the past two seasons,” Bava said.

Other Solutions

Yelvington said one way to simplify the process would be to make the extension for individual returns automatic, like for foreign bank account reporting. Individual taxpayers wouldn’t be penalized until the end of the extension period and filing extension forms wouldn’t be necessary, she said.

Calculating the tax liability for an extension often requires preparers to fill out the entire return, Yelvington said. Eliminating that requirement, or allowing for a rough estimate, would save time for return preparers and offer relief to taxpayers, she said.

Yelvington took a poll on social media April 14 asking CPAs the rate of extensions for their clients. Out of 55 respondents, 67 percent said more of their clients are taking extensions than they had in recent years, 26 percent said clients are taking extensions at the same rate, and 7 percent said they are seeing fewer clients take extensions. Yelvington said she’s seen a rise in extension requests among her own clients.

“That’s a good approach,” Donica said on the idea to simplify extensions. He said that would ease confusion for taxpayers who don’t understand why their returns have an extended filing date but what they owe in taxes is still due April 15.

However, Donica said implementing that solution would require some adjustments at the top. “We would probably have to do less work than the IRS on that,” he said.

Tax firms and accountants taking a second look at their operations and pricing accordingly could be another solution, Hausz said.

“Firms take in clients at a lower price and have to do twice the work,” Hausz said. “Too many accountants underprice their services and end up feeling burned out.”

There’s also a call not to pass tax laws during the filing season. Kuntz said members of Congress need to understand that doing so has repercussions.

“They’ve put a lot of burden on the IRS, tax professionals, and taxpayers,” Kuntz said.

Hausz has similar concerns. “It creates a huge mess when things are changed on the fly,” he said about the uncertainty created by midseason tax law changes. “It doesn’t help preparers advise their clients accordingly.”

It also leaves software developers little time to provide the most up-to-date information, Hausz added. “It’s not beneficial to taxpayers and tax professionals.”

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