Lawmakers are pressing the Treasury Department and the Internal Revenue Service to extend the deadline for COVID-19-related taxpayer penalty relief from Sept. 30 to mid- to late November.
In late August, the IRS announced it would automatically wipe away late fees for taxpayers who failed to file returns and certain other documents for taxable years 2019 and 2020 if they filed the missing returns and documents by Sept. 30, 2022.
The agency expects to give refunds and credits to 1.6 million taxpayers for a total of $1.2 billion.
The bipartisan letter, sent Tuesday by eight members of the Senate Finance Committee and 16 members of the House Committee on Ways and Means states that extending the relief “with whatever appropriate procedural guardrails are determined to be necessary, would provide needed time for more taxpayers to come into voluntary tax compliance without unduly burdening the IRS.”
The lawmakers said that they’ve heard from both constituents and also large segments of the tax professional community “that the deadline is simply too soon for some taxpayers.”
While the IRS provided some COVID-19 related penalty relief in Notice 2022-36, it “only provided 36 days (5 weeks) for self-filers and practitioners to check their records and file any outstanding 2019 and 2020 tax returns,” the lawmakers wrote. “For those taxpayers who now realize they must file overdue returns, it will take time to gather information and other supporting documents and complete and file the applicable return, particularly if multiple years are involved.”
Taxpayer and tax practitioners, the lawmakers said, “are already busy during this condensed time period with existing return filing deadlines (such as the Sept. 15 deadline for pass-throughs, Sept. 30 for trusts, and Oct. 15 for individuals and corporations).”
Inserting a Sept. 30 deadline into this time period “creates a significant burden for taxpayers and practitioners that will limit the ability of taxpayers to qualify for relief, increase the compliance and paper-filing burden on the IRS, decrease the number of taxpayers who come into full compliance, and harm taxpayers who are currently prevented from filing their tax returns,” the lawmakers said.