By: Staff
on March 17, 2021

2020 Tax Season-CPA-Tax Advisor-Tax Preparation Jupiter FL

(UPDATE:  The IRS just announced that the tax deadline will be delayed until May 15th.  More on this to come.)

 

The passage of the American Rescue Plan Act of 2021 on March 13th made what was already an unusual and challenging tax season all the more chaotic. The IRS is reporting a significant decline in total returns processed versus this time last year, including a 24% decline in e-filed returns submitted by tax professionals. How did this happen?

  • On December 27, 2020, the Consolidated Appropriations Act of 2021 was signed into law. This Act included changes to the 2020 tax law, as well extensions to various Covid relief legislation originally enacted in the CARES Act of 2020.
  • The IRS delayed tax season by two weeks, making February 12th the first day that tax returns could be submitted to the IRS. The reason for the delay was “to allow the IRS time to do additional programming and testing of IRS systems following the December 27 tax law changes”.
  • The IRS has been issuing and continues to issue guidance on a number of issues related to the CARES Act and the Consolidated Appropriations Act.
  • Even after February 12th, many tax forms remained in draft format, preventing many completed tax returns from being filed until recently.
  • The American Rescue Plan Act of 2021 was enacted on March 13th, which included retroactive changes to the 2020 tax law. These changes included the third round of EIP payments, the taxation of unemployment compensation, and the repayment of the Advanced Premium Tax Credit.
  • In the midst of all these changes, the IRS is still processing 2019 paper filings, and tax professionals are busy providing clients with guidance related to various Covid relief programs.

Thus, we have a tax season unlike any other. Three major pieces of tax legislation in less than 12 months, all with provisions that impact 2020 tax filings, including a bill enacted just five weeks prior to the filing due date.

Like the rest of the industry, our office is approximately 25% behind where we were at this point last year. We will continue working through the returns as we receive them, but we anticipate that we will be utilizing extensions more than we have in the past. We will take care of filing any extensions with the IRS. Once filed, they are automatically granted.

Please note that payments due cannot be extended. We will do our best to identify those returns where there is a balance due so that any necessary payments can be made.

That being said, there is a reasonable chance that the filing and/or payment due date will be moved from April 15th to June 15th or July 15th. But as of this moment, that has not happened, despite pleas from Congress and industry groups like the AICPA. If the filing and/or payment deadline is changed, we will notify you immediately.

 


Schanel & Associates is a CPA firm specializing in accounting, tax, business valuation and litigation support serving Palm Beach, Martin and St. Lucie Counties and beyond since 1993. Our CPAs and accounting professionals work with individuals, businesses, estates and trusts to provide everything you need under one roof. For more information, contact us today at 561-624-2118.
Todd Schanel has been a principal at Schanel & Associates since 2004, where he specializes in financial planning, tax planning and consulting services. He also serves as Founding Principal and Director of Investment Advisory Services at Core Wealth Management, our sister company, where he leads an accomplished professional team offering independent and objective financial advice to help clients achieve their financial goals. Todd has been a CFA Charterholder since 2005, and in 2007 he earned his Certified Financial Planner® designation and became a licensed CPA. In 2015, he earned the Certified Valuation Analyst (CVA) designation.