American taxpayers deserve certainty and relief

2020 was a year like no other. The global health crisis left Americans reeling both professionally and personally, and thankfully, the government responded to bring relief to millions. From enhanced unemployment insurance to several rounds of stimulus payments to the Paycheck Protection Program (PPP), policymakers sought to mitigate the worst financial effects of the pandemic.

One by-product of those 2020 efforts was extending the long-established April 15 tax filing deadline to July 15. At that time, millions of Americans were afraid to leave their homes, thousands of tax professionals were concerned about the health risks of meeting with people to prepare taxes, and America’s comfort with video chat was in its infancy.

This year, while COVID-19 continues to be serious, the tax-filing season is proceeding relatively efficiently, with the tax preparation community serving taxpayers through do-it-yourself software, in-person with safeguards, and leveraging modern digital tools to connect virtually. Nevertheless, with so many recent tax-related changes, out of an abundance of caution the Internal Revenue Service (IRS) again extended the deadline this year, just one month to May 17. While proponents of the move were well-intentioned, data and experience have shown that it will bring unintended negative consequences and confusion to many Americans — which is why this latest extension should be the last.

At H&R Block, each year we help approximately 20 million Americans and 2.5 million small businesses in every state and congressional district file their taxes in person, online and virtually. This work gives us unique insight into the tax situations of a wide swath of the U.S. population. It also gives us a deep perspective on the impact of the 2020 season — and potential impact of the 2021 season.

When deadlines are delayed, basic human nature kicks in and most people procrastinate. When the filing season was extended last year, IRS data showed that a large number of people delayed filing their taxes, the majority of whom were due refunds.

For many Americans, the tax return is their single largest financial transaction of the year. Money that our clients get back in refunds gets re-injected into the economy when people pay down debt and buy necessities, both of which are important to their economic wellbeing and the country’s economic recovery. According to IRS data, 9.7 million more taxpayers due a refund in 2020 waited to file until after April 15 compared to 2019. Taxpayers’ average refund was $2,788, meaning close to $30 billion in refunds were delayed in getting to taxpayers and into the U.S. economy.

This year is the first tax season that taxpayers can recover undelivered or incorrect stimulus payments by filing their tax return, which means a further delay in the filing deadline will also hinder disbursement of money Congress intended to go swiftly into Americans’ pockets.

Additionally, the recently passed American Rescue Plan expanded and enhanced the Child Tax Credit and provided the option to receive an advance of the credit monthly, starting in July. IRS Commissioner Charles Rettig said recently that it will be a challenge to set up the necessary infrastructure to issue monthly advance payments because IRS employees are currently occupied with the tax filing season. More concerning for consumers, because it takes the IRS approximately two to six weeks to process the average tax return, should the deadline be extended again, millions of Americans’ eligibility and payment will be determined by their old 2019 return, not their most recent 2020. Any further extensions to the filing deadline will continue to stress this new Child Tax Credit.

At H&R Block we are committed to helping people and inspiring confidence in our clients and communities everywhere, and we stand by this purpose no matter what. While extending the tax deadline seems well-intentioned, the possible unintended consequences for taxpayers and the country are significant: taxpayer confusion, tens of billions of dollars in delayed refunds and stimulus payments, and delay and disruption to the rollout of the new Child Tax Credit.

As the nation strives to return to normalcy in all aspects of our lives, the sooner we can get back into familiar routines the better. The new deadline of May 17 gives taxpayers reasonable additional time to file. We urge policymakers to keep this deadline, providing clarity and financial relief to taxpayers as quickly as possible.

Jeff Jones is the president and Chief Executive Officer of H&R Block.