Q&A: Tax Season & Tax Scams

Q: When is Tax Day 2021?
 A: The IRS announced a one month delay for individuals to file their federal 2020 tax returns, shifting Tax Day from April 15 to May 17 this year. The federal tax-collecting agency postponed Tax Day for the second year in a row as Americans continue coping with COVID-19 and the IRS faces a mounting backlog in processing returns. What’s more, the IRS is managing the third round of Economic Impact Payments and has been tasked with implementing additional responsibilities enacted on March 11. The new filing deadline doesn’t apply to corporations, partnerships or nonprofits; only individual filers will have an extra month to pay their federal taxes. The extension kicks in automatically, taxpayers do not need to file a form to qualify. However, for taxpayers who need an extension for the later Oct. 15 deadline, form 4868 needs to be filed by May 17. Remember any penalties, interest and payments will start to accrue after May 17. The IRS’ postponed deadline only applies to individual federal income returns and tax payments (including tax on self-employment income) otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax. Note the new filing deadline doesn’t apply to first-quarter estimated tax payments that are due April 15, 2021. Importantly, if individuals already filed their tax returns and authorized an electronic funds withdrawal, the IRS advises taxpayers may reschedule the automatic payment by contacting the U.S. Treasury Finance Agent at (888) 353-4537. Taxpayers with income $72,000 or less may use online tax-preparation software free-of-charge. Individuals may browse the IRS Free File tool kit here and check on their Economic Impact Payment here.  
 
Q: What is the Taxpayer Advocate Service?
A: As a taxpayer watchdog, I’ve championed taxpayer rights laws for decades. In the Taxpayer Bill of Rights II that I helped write in 1996, Congress established the first-of-its-kind Office of the Taxpayer Advocate. It’s an independent entity within the IRS that creates a bright line between the Taxpayer Advocate—who serves as the “voice of the taxpayer”—and the IRS Commissioner. The primary function of the Taxpayer Advocate Service (TAS) is to serve and assist taxpayers in resolving problems with the federal tax-collecting agency. In addition, the office is required to report to Congress twice yearly on its mission to improve taxpayer services, as well as make recommendations for improvements. Moreover, its reports to Congress must identify the most serious problems taxpayers encounter in dealing with the IRS. This information is important for congressional tax-writers to simplify the tax code and improve tax fairness. In 1998, I worked to beef up the TAS by providing for at least one local taxpayer advocate in each state.
In our system of voluntary tax compliance, it’s vital to strengthen taxpayer confidence and that comes from policies that improve taxpayer service and ensure the nation’s tax laws are enforced fairly and effectively. Passage of the $1.9 trillion tax and spending package on March 11 heaped additional responsibilities on the IRS’ already full plate with new requirements to administer social benefit programs. A decade ago, the Taxpayer Advocate’s report to Congress warned against using the IRS for this purpose saying “it could impair the IRS’ ability to deliver on its core tax-collection mission” and force the IRS to “divert resources from its core functions.” The pandemic has caused major disruptions to IRS operations in the last year, creating significant backlogs and delays in taxpayer services. In March, I sent a letter with the Iowa congressional delegation to flag recent departures from the local TAS office in Iowa. These departures negatively impact the ability of our offices to help Iowans resolve problems they’re having with the IRS. We’ve asked the National Taxpayer Advocate to proactively address the disruption, such as transferring experienced staff from other locations or enabling our offices to work with other TAS offices to help resolve issues for our constituents.
Lastly, I’m alerting Iowans to help spread the word to their neighbors about the risk of tax-related scams where people impersonate the IRS. Generally speaking, the IRS contacts people by U.S. mail, not by phone about any unpaid taxes. The IRS will not demand immediate payment using a specific payment method such as an iTunes card, gift card, money order or wire transfer. It will never ask for personal financial information by e-mail, text or social media. If you get a call from someone claiming to be from the IRS without prior written notice, hang up. Call the IRS directly at (800) 829-1040. The Treasury Inspector General for Tax Administration says nearly 16,000 Americans have reported paying criminal impersonators more than $80 million since 2013.  Report suspected IRS impersonation scams to www.tigta.gov or call 800-366-4484.