Two top House Democrats on Monday urged the IRS to extend the tax-filing season, as President Biden is expected to enact a $1.9 trillion coronavirus relief package that has implications for the 2020 tax returns of people who received unemployment benefits last year.
The relief package, which the House is expected to pass Tuesday and Biden is expected to sign soon thereafter, would waive taxes on up to $10,200 in unemployment compensation for people with income under $150,000. Unemployment recipients who already filed their 2020 tax returns will need to file amended returns to get the tax break, and recipients who haven’t filed their returns may have questions about how to ensure they receive the relief.
“Once it is signed into law, the American Rescue Plan will change the tax laws applicable to unemployment benefits received in 2020 and reported on returns filed during this filing season,” Reps. Richard Neal (D-Mass.) and Bill Pascrell (D-N.J.) said in a statement. “Taxpayers need more time to file accurate returns and get their questions answered by the IRS.”
Neal is chairman of the tax-writing House Ways and Means Committee, and Pascrell is chairman of the panel’s oversight subcommittee.
The IRS started this year’s filing season later than usual, but the deadline to file returns remains the traditional April 15 due date.
A news release from the Ways and Means Committee said that as of the end of February, the number of tax returns received was down by almost 25 percent compared to the same period last year, and that the IRS is only answering about 27 percent of telephone calls.
“We stand in the midst of the most important tax filing season in recent memory, and taxpayers cannot get the help they need from the IRS,” Neal and Pascrell said.
The IRS extended last year’s filing deadline from April 15 to July 15 because of the pandemic. Neal and Pascrell said “many Americans continue to face the same health and economic challenges that necessitated an extension last year.”
“Facing enormous strain and anxiety, taxpayers need flexibility now,” the lawmakers said. “We demand that the IRS announce an extension as soon as possible.”
Pascrell and several other Democrats on the House Ways and Means Committee previously urged the IRS to extend the filing season in a letter last month. But IRS Commissioner Charles Rettig said during a recent congressional hearing that the agency had no current plans to extend the filing season, arguing that an extension would create confusion for taxpayers.
The IRS has extended the filing due date to June 15 for individuals and businesses in Texas and Oklahoma as a result of winter storms. Taxpayers in other areas can request extensions to Oct. 15.