Tax Day 2020 was pushed to July to provide pandemic relief. The latest Tax Day was bumped a month to give the Internal Revenue Service time to implement tax laws that changed as late as March.
Now that the breather for the latest season (much as any season has a breather anymore) is over, perspective is possible: How was this year’s extended deadline — and should Tax Day be extended every year?
“The day went fine. Ended up with 52 on extension,” said Terri Ryman, an Enrolled Agent at Southwest Tax & Accounting, in Elkhart, Kansas. “But extending the tax season doesn’t help me. The folks that always drag their feet getting info to me by April 15 now waited until May 17 to come in. Automatic extension either way, but at least I’d have most of the documents one month earlier and could get started on those returns.”
“Tax season this year went about as expected,” said Bruce Primeau, a CPA and president at Summit Wealth Advocates, in Prior Lake, Minnesota. “We reviewed drafts of a lot of client returns and had the usual number of adjustments to recommend as things were either missed or forgotten or were entered incorrectly.”
“There were many mixed feelings about the extended deadline this year,” said James McGrory, a CPA and shareholder at Drucker & Scaccetti in Philadelphia. “Given the very late receipt of … 1099 information from banks and brokerage firms we’ve been seeing in recent years, including clients often receiving revised or amended forms, having some additional time to complete client returns for 2020 was much appreciated,” McGrory said. But “extending the deadline also resulted in extending the pressure on firm staff to get tax season tasks accomplished — so they had to put their lives on hold yet for another month.”
May 17 didn’t seem calm to everyone. Brian Stoner, a CPA in Burbank, California, called last Tax Day “a madhouse because of Paycheck Protection Program loans, getting stimulus information to calculate the recovery tax credit, and general tax questions on everything including Biden’s tax plans.”
“Oh yes,” Stoner added, “and actually preparing returns.”
‘Worse than 2020’
The IRS was busy this year distributing the $600 Economic Impact Payments from last December’s Consolidated Appropriations Act and the $1,400 stimulus payments from the American Rescue Plan Act, and so delayed the start of tax season by about three weeks.
But not all federal deadlines moved. “This year was worse than 2020 because IRS didn’t extend the April 15 estimates and only gave us an extra month to handle all the tax changes like the unemployment exclusion and the recovery tax credit,” Stoner said. “You would be amazed with direct deposit how many people don’t know how much stimulus they got.”
“The May 17 deadline itself wasn’t as intense as the April 15 deadline usually is,” said David Levi, a CPA and Minneapolis-based senior managing director at Top 100 Firm CBIZ MHM, adding that the extended deadline wasn’t worthwhile. “We still had significant due-date work to do on April 15, as 2021 first-quarter estimates were due. Many 2021 first-quarter estimates are based on 2020 projected tax, so we had to try and project that information anyway.”
“Moving the due date to July 15 would’ve been extremely beneficial to tax preparers and the IRS alike,” Stoner added.
“Whether the extension was necessary or not is hard to say,” Primeau said. “Whenever you give people more time to do something, a large percentage will undoubtedly procrastinate.”
“Any time a deadline is changed it creates additional questions, and the IRS was slow to provide clarity,” said Jonathan Curry-Edwards, a CPA and principal of leader of the Private Client Tax Services Team at top 100 Firm Friedman LLP in New York. “Tax information from clients came in later than usual, so we still saw a significant amount of work being done during the weeks leading up to the deadline. Certain clients were able to take advantage of delaying tax payments by one month, which was beneficial.”
‘Very difficult already’
Considering that the filing season deadline was extended to July last year, the most recent delay – combined with advising clients with PPP loan applications, the October 15 extended filing deadline, year-end 2020 tax planning for clients, the April 15 deadline for first quarter 2021 estimated tax payments and now discussions with clients regarding possible tax law changes, “the past two years have really seemed like a never-ending tax season,” McGrory said.
Any positives of the latest extended season seemed tempered by what’s becoming a new huge problem for the profession at large. One upside, Levi added, was that “for some of our extended clients we included their second-quarter estimates with their extension payments, there was less activity for June 15. From a staffing standpoint, the fact that people still had to put in significant time after April 15 creates more burnout and negativity at a time when retaining staff is very difficult already.”
“Given the severe shortage of talent the accounting industry is facing and the decline in the number of college students who want to become accountants, increasing work compression caused by the many tax law changes … and the myriad of regulations and procedures issued by the IRS doesn’t help the cause,” McGrory said.
Could years of regularly extended seasons and the resulting predictability ease the difficulty?
“If they extended tax season permanently, I might could get behind that,” Ryman said. “I’ve always wished we could do tax returns like we do car tags: a few alphabet letters each month. Then I wouldn’t have to kill myself for three to five months each year. I could take more time to work on each return.”
