A bunch of Republicans on Congress’ primary tax committees despatched a letter to the Inside Income Service and the Treasury Division asking them to increase the deadline for aid from COVID-19-related tax penalties from Sept. 30 till mid- to late November, agreeing with a request from the American Institute of CPAs.
Home Methods and Means Committee rating member Kevin Brady, R-Texas, and Senate Finance Committee rating member Mike Crapo, R-Idaho, led their fellow Republicans on the 2 committees in a letter Monday addressed to IRS Commissioner Charles Rettig and assistant Treasury secretary for tax coverage Lily Batchelder.
The letter is available in response to tax penalty aid introduced by Rettig final month (see story). In Discover 2022-36, the IRS supplied penalty aid to most particular person and enterprise taxpayers who filed their 2019 or 2020 returns late because of the COVID pandemic, whereas refunding $1.2 billion in penalties to just about 1.6 million taxpayers who filed late. The aid utilized to the penalty imposed for failing to file, which is often assessed at a fee of 5% monthly and as much as 25% of the unpaid tax when a federal revenue tax return is filed late. It applies to types in each the Kind 1040 and 1120 collection. To qualify for the aid, any eligible revenue tax return needed to be filed on or earlier than Sept. 30, 2022.
Nevertheless, the GOP lawmakers imagine that is not giving taxpayers sufficient time to file their returns to qualify for the aid. “We have now heard from each constituents and in addition giant segments of the tax skilled neighborhood that the deadline is just too quickly for some taxpayers,” Brady and Crapo wrote. “The discover solely supplied 36 days (5 weeks) for self-filers and practitioners to verify their information and file any excellent 2019 and 2020 tax returns.”
IRS headquarters in Washington, D.C.
Andrew Harrer/Bloomberg
They famous that for taxpayers who now understand they should file their overdue returns, it would take time to collect data and different supporting paperwork and full and file the relevant return, notably if a number of years are concerned.Â
“As well as, we have now heard from various taxpayers who proceed to attend for numerous predicate returns (e.g., an amended particular person revenue tax return) to be processed by the IRS, and who merely can’t file but,” they added.
They identified that taxpayers and tax practitioners are already busy throughout this condensed time interval with present return submitting deadlines (such because the Sept. 15 deadline for pass-through entities, Sept. 30 for trusts and Oct. 15 for people and firms). Inserting a Sept. 30 deadline into this time interval would add to the burden for taxpayers and tax practitioners and restrict the power of taxpayers to qualify for the aid, the lawmakers argued, whereas rising the compliance and paper-filing burden on the IRS, reducing the variety of taxpayers who come into full compliance, and harming taxpayers who’re at the moment prevented from submitting their tax returns.Â
“Extending the aid deadline by means of mid-to-late November 2022, with no matter acceptable procedural guardrails are decided to be obligatory, would offer wanted time for extra taxpayers to come back into voluntary tax compliance with out unduly burdening the IRS,” they wrote. “Provided that IRS IT e-filing programs are nonetheless out there throughout this era earlier than they’re shut down for reprogramming for the subsequent submitting season, it must also not impair the IRS’s efforts to organize for and execute the upcoming 2023 tax submitting season. We subsequently urge [the] IRS to increase the Discover 2022-36 aid deadline to offer taxpayers, practitioners, and IRS extra time to learn from the aid, enhance voluntary compliance, additional cut back the IRS correspondence and paper return processing backlog, and assist taxpayers who proceed to really feel the results of the IRS’s customer support challenges.”
The AICPA welcomed the assist from the lawmakers, stating that it had identified related difficulties in a letter in late August outlining its considerations concerning the tight deadline of Sept. 30 supplied in Discover 2022-36.
“We’re grateful that the IRS acknowledged the necessity for penalty aid for taxpayers at a time when taxpayers, tax practitioners and the IRS try to get well and catch up following three years of a pandemic,” stated AICPA director for tax coverage and advocacy Eileen Sherr in an announcement Wednesday. “At a time when practitioners are working to satisfy the Sept. 30 deadline for trusts and the Oct. 15 deadline for people and firms, it is simply not affordable to impose one other deadline on them. We thank rating members Crapo and Brady, in addition to their colleagues, for his or her fast motion in assist of extending the deadline.”
The AICPA has continuously advocated for tax penalty aid this yr and in years previous. On Jan. 10, the institute launched an announcement calling on the IRS to do extra to offer penalty aid to taxpayers. That very same month, the AICPA joined a coalition of 13 stakeholder teams urging the IRS to offer significant penalty aid to taxpayers.