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Delayed tax deadline looms; IRS closure, communication issues have generated problems for clients

July 5, 2020 GMT

The coronavirus pandemic has affected many things in modern society, and the looming July 15 deadline to finish filing taxes illustrates that in many Americans’ minds.

Tax season had already begun when the pandemic set in, but many Americans had yet to file their returns or pay their taxes. When the Internal Revenue Service closed its doors, many were frustrated to have a lot of questions and not a lot of ways for those questions to be answered.

“There’s nobody there; nobody’s home,” said Kathy Braden, owner of Kathy’s Accounting in Lufkin. “It’s getting better because they’re coming back to work slowly, but they’ve got something like 11 million pieces of mail that haven’t been opened just sitting up there in 18-wheelers.”

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That and other communication issues have generated many problems for her clients, Braden said.

The IRS issued the People First Initiative to temporarily adjust and/or suspend key compliance programs during the pandemic.

One of the key parts of this program was to extend the due dates for income taxes to July 15. With that date looming closer, Braden encouraged taxpayers to file as soon as possible if they haven’t already.

Tammy Boyd with Karber Boyd Income Tax Service said there were many uncertainties as the pandemic set in, but people still came into the office, however cautiously.

“When the stay-at-home orders started going out, we started looking at who is essential to have in the office and how can we do things remotely,” Boyd said.

She said she wished the IRS would be more forthcoming with information to prepare tax preparers so they know what’s going on, but she said she also understands that everyone is going through a new situation, and sources like the practitioner priority line helped her get in contact with them fairly easily once they started opening back up.

“They’ve been open with the information that they had; unfortunately most of the information was ‘that department’s not open yet, and we’re not sure when it will be,’” Boyd said.

Luckily, both Boyd and Braden’s offices already had a secure online portal for individuals to submit their documents remotely. Clients could take photos or scan in confidential documents, sign via e-signature, pay fees via credit card and more.

However, Braden said many elderly or technologically challenged individuals had trouble navigating those services, and attempting to explain that over the phone was complicated.

“It’s more difficult for everybody,” Braden said.

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So they worked with their respective clients who preferred to come into the office, and Boyd said everyone was very understanding.

Boyd said the People First Initiative spread some of her office’s clients out — some who were getting refunds wanted the money as soon as possible to help during the shutdowns, and some wanted to wait.

“I’m still working with quite a few clients who normally would have been done,” Boyd said. “It’s spread things out a bit, but it hasn’t been bad. It’s given people time to do what they needed to do to take care of their family, their business, figure out their plan and not feel like they were under pressure.”

Normally, Boyd highly encourages her clients to e-file, and this year she said she is probably at 100% of her clients’ returns e-filed, and that has “gone like clockwork.”

Another casualty of the pandemic was the loss of the face-to-face aspect of the profession, Braden said. Professionals now found themselves helping customers file their income taxes from behind locked doors or six feet away.

“I miss the client contact because I used to sit down across the table from them, and as I’m opening up their stuff, it’s — how has your day been or how was your year?” Braden said. “I get caught up on family and new babies and new grandbabies. This year, it’s like — they drop it in a mail slot. The interaction, the personal touch, it’s not there anymore, it’s not anywhere.”

In the middle of the closures and confusion, many tax professionals were also tasked with an additional challenge — Payment Protection Program loans. The federal government and many kind donors provided money to help qualifying small businesses stay afloat.

Many owners who used tax professionals were contacting them in a flurry to have important documentation transferred as quickly as possible so they could submit their application before the money ran out.

Braden said PPP loans took up about a month’s worth of work that normally would have been devoted to tax season.

The offices also received many questions during the confusion caused by the stimulus payments sent out from the IRS as a part of the CARES Act. Boyd said by the time everyone files their 2020 returns, the stimulus payments should balance themselves out.

No one will have to pay anything as the payments are considered a tax credit. However, some might receive more money, Boyd said. For instance, if a family had a child that was not recognized on their 2019 tax returns, they may be entitled to a bigger stimulus payment.

In the unfortunate event that the pandemic persists and complications become more drawn out, Braden and Boyd recommended filing taxes as soon as possible in 2021.

“Those who filed in the middle of February, they’re gone, they’ve got their monies, they’ve got their taxes, it was wonderful,” Braden said. “Even though the IRS took a furlough for a while, your taxes are still due, and they’re going to hit you with penalties and interest down the road. It’s just not going to go away.”