Tax Notes logo

Some Tax Pros Wary of Another Return Filing Extension

Posted on May. 14, 2020

The idea of delaying the individual tax return filing and payment deadlines again, from July 15 to October 15, got a cool reception from some longtime tax professionals.

“I would not” postpone the major Form 1040 and other filing and payment deadlines until October 15, former IRS Commissioner John Koskinen told Tax Notes on May 13. “The reason is the IRS needs in the next few weeks to start preparing for next filing season.”

The National Taxpayers Union Foundation (NTUF) and the U.S. Chamber of Commerce have both advocated for another filing season deadline extension. The NTUF said April 29 that it supports a payment extension until October 15, arguing that any drop in tax payments would be “relatively modest” compared with the cost of some of the coronavirus relief proposals moving through Congress. The chamber asked the IRS for filing and payment relief until October 15, but perhaps until April 15, 2021.

The National Treasury Employees Union on March 16 proposed the October 15 deadline, as well as closing all IRS buildings with 50 or more workers. IRS Commissioner Charles Rettig on March 27 announced the evacuation of tens of thousands of IRS employees. NTEU President Tony Reardon told Tax Notes May 12 that considering the ongoing COVID-19 pandemic, the union believes the later deadline is still appropriate.

Reardon said moving the deadline to October 15 “would give American taxpayers, many of whom are facing record unemployment and financial hardship, extra needed time to comply.” It would also give the IRS time to reopen while keeping employees a safe distance apart, to secure adequate personal protective equipment, and to establish workplace cleaning and disinfecting routines, he said.

Prep for Next Season

IRS executives understand that performance will be reduced by social distancing and other workplace health measures, but that employee safety comes first, said Chad Hooper, president of the Professional Managers Association.

“Even prior to the commissioner’s evacuation order, the business unit responsible for processing paper tax returns had implemented a 50 percent reduction in staffing, so that literally every other desk was vacant to promote social distancing,” Hooper said.

But extending the filing deadline to October 15 wouldn’t have a meaningful impact on IRS managers’ work, Hooper said. Taxpayers still expect expeditious tax refunds, he said, noting that the IRS still must pay interest on overpayments starting 45 days after the due date.

Koskinen said the next few weeks at the IRS should see management reviewing lessons of the filing season, and employees programming and testing systems for next year. Postponing the deadline to October 15 would create unnecessary strain on IRS systems, he said.

“While the 1040 deadline has high visibility and widespread understanding, it is a misconception that this is our only work,” Hooper said. “There are tax filing deadlines every single month of the year — many of which have not been extended.”

Second Wave?

Robert Kerr of the National Association of Enrolled Agents had this to say: “If members of my organization had the choice between an October 15 deadline extension and a root canal without anesthesia, I suspect most of them would opt for the latter.”

Tax professionals don’t get paid until they file a return, Kerr said, noting that the July 15 extension has already caused cash flow problems for some of them.

Another filing and payment extension would exacerbate practitioners’ perennial problem of client procrastination, Kerr said. Decades of training clients to expect consistent tax system deadlines could be eroded by another extension, including that some deadlines are being moved while others persist on a different timeline, he said.

Edward S. Karl, vice president of taxation for the American Institute of CPAs, said his organization hasn’t taken an official position on an October 15 deadline, partly because the current “bizarre filing season” has CPAs busy with other matters.

Tax professionals are not only grappling with an unprecedented three-month filing deadline extension to July 15, but they also must deal with a flood of work from their business clients to qualify for loan forgiveness under the Paycheck Protection Program, Karl said.

More helpful than an October 15 deadline extension would be an IRS contingency plan that would map out the agency’s response to the crisis on a timeline, Karl said. “The IRS’s ability [to function] is important, because it affects our ability to function,” he said.

Karl expressed some skepticism about an October 15 filing deadline.

“It’s not hard for me to look ahead at what’s going on,” Karl said. By “July 15, maybe the  [coronavirus] curve is flattening . . . in most of the country,” he said, yet public health experts worry about a second wave of the pandemic in the fall.

“October 15, I don’t know,” Karl said. “It’s a long way off.”

Copy RID