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Accounting

Will the tax filing deadline be extended?

Keith Nichols  

Keith Nichols  

It is the question at the back of every tax practitioner’s mind this tax season – will tax season be extended? So far, we’ve only seen one instance of local filing deadline extensions in Texas, where the deadline was pushed to June 15th due to complications resulting from severe winter storms. While the IRS has issued statements that April 15th will be the deadline, it’s become clear in the last year that legislation can change on a whim, and so the question lingers. While nobody has a crystal ball into the future, there are several key points we can look to as indicators of where we are headed as April 15th approaches.

Could the filing deadline be extended again?

The effects of COVID-19 were truly coming to light in the heat of accountants’ busy season in 2020, turning a normally stressful time into a downright chaotic period. To allow for more opportunity to get filings together, the IRS extended the tax deadline to July – an almost unheard-of move, but certainly a welcomed one for practitioners. Last week, the American Institute of CPAs (AICPA) called on the IRS to extend the 2020 filing deadline to June, citing the ongoing effects of the pandemic as reason to give taxpayers more time to file. Adding to this call is mounting political pressure from legislators in congress who say an April 15th deadline is an undue burden on taxpayers across the country.

Unlike 2020, however, we’ve had time to adapt to a new pandemic way of life. We’ve gotten more used to working from home, the mail system is getting back on track, and with vaccine distribution providing a positive outlook, we are not facing the extreme and unforeseen circumstances we were in 2020. Taking all of this into consideration, this IRS has issued statements explicitly saying there will not be an extension, so you shouldn’t be anticipating one.

What about Texas?

Some are pointing to Texas’ deadline extension as a possible indicator of a broader trend. While there’s no question Texas’ circumstances warranted an extension, it’s important to keep in mind the storms were called “a once in a lifetime event”, and the extension should be viewed the same way. The power grid for an entire state was impacted. People couldn’t work, people couldn’t get their forms, and both the accounting firms as well as the taxpayers lost multiple weeks because of this – not just the week of the freeze but the weeks after, rebuilding and catching up on lost time. Like what we saw in 2020 with COVID-19, Texas had a specific event that prompted their extension, but that doesn’t apply to every part of the country. While this could set a precedent for future extensions due to extreme weather, it is not expected that most other states will follow Texas’ lead.

What should accountants be doing to prepare?

Given the statements we’ve heard from the IRS, I advise practitioners to continue working toward the April 15th deadline. Though we are certainly not through the pandemic and are subject to Mother Nature’s springtime unpredictability, working with as much of a “business as usual” mentality will help accountants stay on track to meet the deadline.

Though you’ve got a full plate, you’ve still got clients to serve beyond just the tax return. Chances they’re seeing the same news you are and they, too, may be asking, “do I have extra time to file my taxes this year?”, and some may already be acting as if the answer is yes. Additionally, the new COVID-19 relief bill passed by congress earlier this month, has implications for 2020 tax returns, meaning client questions are sure to come sooner rather than later. Do yourself a favor get ahead of the chaos by overcommunicating with clients. Sending out weekly or bi-weekly newsletters updating clients on broad changes that affect many of your clients will help you avoid dozens of one-of phone calls and emails asking the same questions. Proactive and automated communication is not only a quick way to get in touch with several clients but also a great way to showcase your own expertise and that, despite the busy season, you’re still plugged into their ongoing needs.

For the latest news this tax season, stay tuned into the Thomson Reuters Tax Professionals Insights page, featuring blogs and legislative summaries from Thomson Reuters editors and experts.

For resources to keep your firm ahead during busy season, visit the Tax Season Resource Center from Thomson Reuters.