A group of Senate Democrats is urging the Internal Revenue Service to extend the filing deadline for people with individual taxpayer identification numbers who have been affected by the massive processing delays at the IRS.
Sen. Bob Menendez, D-New Jersey, a senior member of the Senate Finance Committee that oversees the IRS, led the group in a
Current law requires that an ITIN has to be issued on or before the due date of the tax return in order to file for the CTC, but many families did not receive their ITIN prior to April 15, 2022 despite applying on time, putting them at a disadvantage for accessing the tax credit. ITIN application processing times now average three to four months and renewal times have doubled to 41 days compared to before the pandemic, according to the Treasury Inspector General for Tax Administration and the IRS’s own website.
“We are concerned to learn that there may be numerous families that had hoped to file for and receive the enhanced child tax credit, but were unable to do so because of Individual Taxpayer Identification Number processing backlogs,” the senators wrote. “In order to remedy this situation, we ask that you allow families who applied for an ITIN or ITIN renewal prior to April 15, 2022 to file for and receive the advanced CTC, if they file a return before or on Oct. 15, 2022.”
The American Institute of CPAs has also been urging the IRS to address its backlog of millions of unprocessed tax returns this year and grant tax penalty relief. On Monday, the IRS followed up with a new
AICPA Tax Executive Committee chair Jan Lewis said more needs to be done to ensure that taxpayers and practitioners are not faced in 2023 with yet another tax filing season with “unprecedented” levels of unprocessed returns, leading to delays in processing and incorrect notices and penalties.
“The recent revelation that the IRS destroyed over 30 million unprocessed paper returns has greatly eroded the trust taxpayers and practitioners have in the IRS,” said Lewis. “To alleviate the ongoing issues with the backlog of returns, prevent the repetition of another frustrating tax season for taxpayers and practitioners, and rebuild trust with the American public, the AICPA recommends that the IRS clearly communicate to the public, in a timely manner, the status of all IRS operations. This includes current processing times for both paper and electronically filed returns, amount of unopened mail, number of unprocessed returns by return type, number of error resolution cases, dates through which mail, including original and amended returns, has been processed, and projected dates for a return to normal (i.e., pre-pandemic) inventory levels.”
Lawmakers want the IRS to focus on helping taxpayers with claiming the enhanced child tax credit.
“As you know, the expanded CTC was a historic provision passed in the American Rescue Plan,” the senators wrote. “Researchers estimate that the first enhanced CTC payment — made last July — kept approximately 3 million children out of poverty and reduced the monthly child poverty rate from 15.8% to 11.9%. After such a historic investment in families, limiting the access of certain families due to unprecedented processing delays would be an unfortunate oversight.”
Advocates have been asking Congress to extend the expanded child tax credit this year, but the Senate failed to pass the Biden administration’s Build Back Better Act, which included such a provision after it passed in the House last year amid opposition from Senate Republicans and some moderate Democrats such as Sen. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona. Manchin has been negotiating with Senate Majority Leader Chuck Schumer, D-New York, on a scaled back package, but it does not seem to include an extension of the enhanced child tax credit.
Last month, Sen. Mitt Romney, R-Utah, proposed an extension of the expanded child tax credit in his Family Security 2.0 plan, co-sponsored by two other Senate Republicans, Richard Burr of North Carolina and Steve Daines of Montana, but their proposal is more limited, disqualifying grandparents from claiming it, as well as immigrant parents like those who typically receive ITINs from the IRS. Under the plan, families would receive $350 a month for each young child, and $250 a month for each school-aged child. Families would need to earn at least $10,000 to receive the full benefit of the tax credit, but families earning less would still receive a benefit proportional to their earnings. Unlike earlier versions of the child tax credit, pregnant women would receive up to four $700 payments during the last four months before their due date under the Romney plan.
