WASHINGTON—The Internal Revenue Service will delay the April 15 tax-filing deadline until mid-May, according to two people familiar with the decision.
The move would come after lawmakers and accountants pressed the government for more time to complete 2020 tax returns and adjust to tax-law changes during the pandemic. The tax-filing season started later than usual and has been messy as taxpayers deal with the effects of last year’s economic disruptions and late changes to the tax law.
Notably, the coronavirus relief package that President Biden signed into law last week retroactively changed the tax rules for unemployment benefits received in 2020, making the first $10,200 exempt from taxation for households making under $150,000.
Bloomberg News first reported the delay. The IRS and Treasury Department didn’t immediately comment Wednesday, and the agencies haven’t released details about exactly what will change.
Last week’s late change in the tax law compounded difficulties facing tax preparers, taxpayers and the IRS, which is still working through a backlog of 2019 tax returns. The government has received 18% fewer tax returns through early March this year compared with 2020.
The IRS hasn’t yet offered guidance for people who already filed their tax returns and included unemployment benefits as taxable income, telling them only not to send in amended returns yet.
Lawmakers, including Reps.
(D., Mass.) and
(D., N.J.), and accountants have been pressing the IRS to push back the April 15 deadline. Until now, IRS Commissioner
had resisted, saying there was no need for a delay. Mr. Rettig is set to appear Thursday before the House Ways and Means subcommittee chaired by Mr. Pascrell.
More than 100 House members signed a letter this week urging the delay.
“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,”
Sen. Mike Crapo
of Idaho, the top Republican on the Senate Finance Committee, said earlier Wednesday.
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Because of the recent winter storms, taxpayers in Texas, Louisiana and Oklahoma were already granted a blanket extension. Their returns aren’t due until June 15. Last year, all taxpayers had until July 15 to file returns as the pandemic disrupted the tax-filing season.
In addition to the filing season, the new relief law gives the IRS a significant amount of work to do in the coming months. The agency has already sent out more than half the money from the latest round of stimulus checks. In addition, the IRS must set up a new system for making periodic payments of the child tax credit. And it must implement other tax changes in the new law, including expansions of the child and dependent-care tax credits.
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