National Tax Day (April 15) has not been modified since 1955.
In 1955, the Tax Code was 929 pages. Today, it’s more than 6,600 pages. Why haven’t we updated our filing deadline?
Accuracy matters. The proper calculation of tax liabilities is important for both the Treasury and taxpayers. Serving an important role in between are professional tax preparers, CPAs and Enrolled Agents.
With each passing year, tax complexities increase and taxpayers receive their tax documents later in the filing season. Tax professionals struggle with a very compressed filing season to meet an outdated deadline. We live and breathe numbers. We hardly sleep. We hardly spend time with family. We skip meals, eat too many snacks and drink a ton of coffee. Just me?
Sure, we could quit the industry, but here’s the thing: Most of us like the work. It’s a bit like cake. Eating a slice of cake is good. Eating the entire cake in one sitting is bad. We like helping taxpayers comply with the Tax Code. We want our work to be accurate. How can we do our best work when we are forced to eat an entire cake in one sitting? The accounting industry is suffering and something needs to change. Older accountants are retiring. Younger accountants do not want to eat this much cake, so they quickly leave. The sandwich generation of accountants is burned out. That was a lot of food references for one paragraph.
So why not file more extensions and have some work-life balance?
When an individual taxpayer files an extension request with the IRS, it only grants additional time to file the tax return. It does not extend the time to pay. Therefore, taxpayers must pay their tax liability by April 15 or face interest and penalties on any unpaid liability. Taxpayers may or may not have all of their information available to properly calculate their tax by the April 15 date. Taxpayers and tax professionals seeking assistance from the IRS may not have their calls answered. Without almost fully preparing a tax return, it is difficult to properly calculate someone’s tax liability. Get it wrong and the taxpayer faces penalties and interest. The extension process for individual taxpayers is burdensome. It could be simplified.
The IRS is struggling to serve the taxpayers of this country. Recent testimony by the Government Accountability Office and the National Taxpayer Advocate before the Senate Finance Committee stated the IRS disconnected 53% of their phone calls while experiencing almost four times the pre-pandemic call volume. The IRS answered a mere 11% of their calls. Considering the challenges of outdated computer systems, staffing shortages and a mounting backlog, it is nothing short of remarkable that they were able to quickly roll out multiple rounds of economic stimulus payments, among other pandemic relief measures. However, the problem remains that many taxpayers have questions, concerns, unprocessed tax returns, penalty notices and an IRS that is largely unavailable.
What are possible solutions? Simplify the extension process. An easy solution is to allow extensions to not only extend the time to file but also the time to pay. Start the penalty assessment after the extended deadline rather than the original deadline. Make the penalty rate zero until the extended due date, and twice the current rate after the extended deadline. If that is not feasible, permanently move Tax Day to a later date, like May 15, June 15 or July 15. We are long overdue for an update to National Tax Day. I have posted a
Taxpayers deserve a functional and modernized IRS. Tax professionals want to have a life beyond eating cake under duress. April 15 is no longer practical. We only strain the accounting profession, the taxpayers and an already overburdened IRS by retaining this deadline.
