Tax Deadline Day And Time To Fill The Nation's Coffers With 10 Million Tax Returns Still Outstanding

The Internal Revenue Service is just one of the many institutions that has felt the strain of the coronavirus. Complicating matters for the agency was the Treasury Department's decision on March 23 to extended the federal tax filing deadline from April 15 to July 15.

"I can only say that in 40 years as a tax lawyer, I have never seen anything like this in terms of the difficulties the IRS is facing," tax attorney Robert W. Wood of Wood LLP in Sacramento, California, told International Business Times.

"I believe it will take the IRS years to get back to normal, and that many aspects of IRS functions could be impacted for quite some time.

"Some taxpayers facing collection action by the IRS might actually find that they get a little bit of a reprieve. However, the IRS’s announced policies of easing up on everyone are scheduled to end on July 15. It promises to be an uncertain time for quite a while longer, I think."

Yet, for all of the complications, roughly 116 million tax returns were filed by the traditional April 15 tax season deadline, about 75% of the 155.1 million tax returns expected to be filed for the 2019 tax year, and as of July 3 show, 145 million returns have been filed, just shy of the 95% that agency generally receives by the end of May.

Still, many returns are due Wednesday, but some tax filers are expected to seek even more time by requesting an extension to Oct. 15.

The months of delayed filing have meant the brunt of the pain will be felt not only by the federal government but by the states. In June, Treasury reported the highest budget deficit in history, $864 billion, and the Congressional Budget Office reported a $2.7 trillion federal budget deficit in the first nine months of the fiscal year 2020. A Wall Street Journal report on March 25 revealed that states have it worse since their budgets usually run from July 1 to June 30, which means they could not count on tax dollars for this fiscal year and unlike the federal government, states must balance their budgets.

"You can have unintended consequences with the best of intentions,” Verenda Smith, deputy director of the Federation of Tax Administrators, told the Journal. “The choices that it left the state officials are all so gruesome."

NBC News reported last month all 33 states that it surveyed said they face a revenue loss.

The overall shortfall in revenue has already been significant. In May 2019, the IRS had collected around $767 billion in revenue, compared to the roughly $415.8 billion it collected by May 2020.

The IRS did not respond to IBT's request for figures about how many taxpayers have requested a deadline extension.