IRS expected to push filing deadline to mid-May

Move comes as agency grapples with return backlog

WASHINGTON>> The Internal Revenue Service is expected to push the country’s tax-filing deadline to mid-May, according to two people familiar with the decision, as the agency grapples with a backlog of 24 million returns awaiting processing since the 2019 tax year.

The workload has put the agency underwater in recent months, and under political siege, as lawmakers fear that long-unresolved troubles at the IRS could undercut the Biden administration’s economic recovery efforts. Millions of Americans still have not received stimulus checks under prior coronavirus aid packages, even as the tax agency began distributing payments Wednesday under the $1.9 trillion stimulus signed into law this month.

The IRS shared the full scope of its backlog in recent days with the House Ways and Means Committee and the agency’s internal watchdogs. The situation was later reviewed by The Washington Post. The agency also communicated its plans to adjust the filing deadline to congressional offices, according to one of the people familiar with the decision but not authorized to speak about it, cautioning that it could change.

Still, the effects of the IRS backlog have been substantial: The delays have kept some Americans from receiving their tax refunds for months while preventing some cash-strapped workers and companies nationwide from taking advantage of many additional programs that Congress authorized to blunt the economic impact of the pandemic.

Ken Corbin, commissioner of the wage and investment division at the IRS, declined to discuss the potential changes to the tax-filing deadline during an interview on Wednesday. But he said the situation reflects the “many, many chal

lenges” the country and agency have faced because of the virus and other more recent obstacles, including inclement weather that slowed its operations.

“The IRS will always have returns in processing,” he said.

For Patrick O’ Conor, the IRS backlog has been costly: He estimates that the government owes him about $16,000 in tax refunds and stimulus payments as a result of significant lags in processing his 2019 and 2020 taxes. The Frederick, Md.-area resident said it has been particularly rough because he and his wife recently had a baby and bought a home in the past year, and they need the money to cover their new expenses.

“We haven’t missed any payments yet on anything,” he said, “but it’s come really, really close.”

The delays threaten to cast a shadow over the IRS at a time when the Biden administration is counting on it to administer much of the $1.9 trillion American Rescue Plan signed into law last week. That includes a third round of $1,400 stimulus payments - a major Democratic campaign promise that started reaching many Americans’ bank accounts on Wednesday.

IRS Commissioner Charles Rettig is expected to face tough questions about the backlog on Thursday, when he testifies before the House Ways and Means Committee. In recent weeks, the panel’s Democratic and Republican lawmakers have urged the IRS to push the tax-filing deadline from April to later this year, similar to what it did in 2020.

“The IRS is in a hole and needs to stop digging,” said Rep. Richard Neal, D-Mass., the chairman of the panel, in a statement pointing out the IRS backlog, its delays in processing some stimulus payments, and its logistical challenges in promptly answering taxpayer questions.

“It is time to assess what must be done now to deliver the service Americans deserve,” he said in the statement. “It is in the best (interest) of all to extend the filing season.”

For some lawmakers, the IRS’s troubles come as no surprise. Under GOP leadership, Congress slashed the agency’s budget by billions of dollars, contributing to the loss of tens of thousands of critical IRS jobs while leaving long-known deficiencies in its computer systems unaddressed for decades.

The pandemic has brought new challenges, forcing much of the IRS workforce to complete its tasks from home and saddling the agency with new responsibilities, including three rounds of stimulus payments. Most of these payments have reached hundreds of millions of Americans without too much difficulty, making them one of the government’s most popular relief programs.

But the agency has struggled in other respects, including in its work over the past few years to process tax returns from individuals and businesses alike. The details are laid bare in information the IRS provided to the House Ways and Means Committee as well as the Treasury Inspector General for Tax Administration, which Democratic aides later shared with The Post. A spokesman for the inspector general this week confirmed the figures but said they had not independently audited information it obtained from the IRS for accuracy.