The IRS will push back its filing and payment deadlines for 2020 tax returns to May 17, according to House Democrats briefed on the decision.
The agency had been under pressure for weeks from congressional Democrats to extend the filing and payment deadlines as it did last year as the coronavirus pandemic’s first wave swept the country.
"This extension is absolutely necessary to give Americans some needed flexibility in a time of unprecedented crisis," House Ways and Means Chair Richard E. Neal, D-Mass., said in a joint statement with Bill Pascrell Jr., D-N.J., the Ways and Means Oversight Subcommittee chair.
"We are gratified that the IRS has recognized the need and heeded our calls for additional time, and while we are pleased with this 30-day extension, we will continue to monitor developments during this hectic filing season," Neal and Pascrell added.
Word of the tax filing deadline delay comes as Pascrell's subcommittee is scheduled to hear testimony Thursday from IRS Commissioner Charles P. Rettig.
Senate Finance ranking member Michael D. Crapo, R-Idaho, on Wednesday joined the clamor of those seeking a delay.
"There is growing bipartisan support for the IRS to extend the filing deadline,” Crapo said in a statement Wednesday. “The various coronavirus relief programs created over the last year, including the bill signed into law just last week, have resulted in a large amount of extra paperwork for taxpayers this year and have required tax preparation firms to constantly update their systems.”
Democrats have been pushing for an extension for a month. A Feb. 18 Neal request to push deadlines back had by March 8 become a demand from the Massachusetts Democrat “as the pandemic continues to impose titanic strain on the agency and on taxpayers.”
In that March 8 statement, Neal noted there had been large declines in processing returns and in customer service at the agency during the current filing season compared with last year’s.
Democrats also pointed out a new wrinkle affecting 2020 tax returns for those who received unemployment benefits last year. That's a new provision in the $1.9 trillion coronavirus aid package signed into law last week making the first $10,200 in unemployment compensation tax-free.
The IRS has been praised for taking on extra duties during the pandemic; in particular, for getting out two rounds of direct payments amounting to about 307 million checks and $412 billion, according to an IRS press release.
The agency said Wednesday it had delivered the first "tranche" of the newest round of economic impact payments valued at $242 billion to 90 million people.
Instead of a typical late January start to the filing season, the IRS began accepting 2020 tax returns on Feb. 12. The delay occurred largely to reprogram computer systems for changes affecting the agency in the $902 billion aid bill enacted in late December.
But the IRS didn’t announce that it had gotten the last of the $600 direct payments from that bill out the door until Feb. 16 as it “now turns its full attention to the 2021 filing season.”
Besides that second-round requirement to send out $142 billion in checks to 147 million people, the IRS has struggled to catch up on its backlog of mailed tax returns from last year. In a Jan. 21 interview hosted by the Tax Policy Center, Rettig said that millions of tax returns were still being processed from last year, but that all of the unopened mail from the pandemic had now been opened.
As a result of this year’s late start, the IRS had processed 49 million tax returns as of the week ending March 5, down 25 percent from the 65 million returns processed as of the week ended March 6, 2020.
The average refund is about the same — $2,990 this year vs. $3,012 last year. Because of the lower number of processed returns, however, the total value of refunds is down 32 percent to $108 billion.