Monday brings a close to what tax advisors have dubbed the “never-ending tax season,” with the IRS scrambling to cope with repeated changes in law that offered just a foretaste of the challenges to come — with President Joe Biden pressing for a raft of higher levies and stepped-up audits.
Since the start of the pandemic, Congress authorized three rounds of stimulus checks, temporary expansions to tax credits and deductions, and repeated rule changes on the treatment of loans sent to small businesses.
Special unemployment benefits were also distributed, with lawmakers later revising their tax treatment.
The most recent changes were enacted in March, barely a month before the traditional April 15 deadline for filing individual returns. Under pressure from legislators, Internal Revenue Service Commissioner Chuck Rettig agreed to extend the due-date to May 17.
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With IRS staff also having to operate under the strictures of the pandemic over the past year, more than 8 million individual returns were awaiting manual review as of early April. Some 5.3 million 2019 and 2020 paper returns are also awaiting processing.
For tax preparers, the pace of recent months is a sampler of the intensity that will be looming if Democrats succeed in boosting income and capital-gains tax rates as Biden has proposed.
“We tried hard to eat, sleep and dream the tax laws” this season, said Steve Rossman, a certified public accountant at Drucker & Scaccetti.
The May 17 deadline only applied to individual tax returns — Form 1040 — and didn’t include other types, such as estates.
Quarterly taxes due from many small business owners and self-employed individuals were also unchanged. At the state level, there were wildly varying approaches in extending due dates.