IRS Sends Out Alert to Millions of Americans Over Deadline

Tax forms from previous years are displayed at Latino Taxes in Oakland, Calif., on April 10, 2007. Justin Sullivan/Getty Images

The Internal Revenue Service (IRS) on Friday issued an alert to millions of taxpayers who filed for a an extension earlier this year that their filing deadline is in mid-October.

“To avoid a possible late filing penalty, those who requested an extension to file their 2022 tax return should file their Form 1040 on or before Monday, Oct. 16,” the agency wrote on Sept. 29. “IRS Free File is available through Oct. 16 and lets qualified taxpayers prepare and file federal income tax returns online using guided tax preparation software,” it added.

Individuals who were impacted by flooding in Vermont have until Nov. 15 to file, the release also said. Those impacted by the Maui fires in Hawaii several weeks ago or Hurricane Idalia in Florida, Georgia, and South Carolina have until Feb. 24, 2024, to file their 2022 tax returns, according to the release.

The Oct. 16 deadline also applies to taxpayers in most of California as well as areas in Alabama and Georgia who fall under a disaster exemption, it said.

Residents of 55 California counties were given an extension for their state and federal taxes due to severe weather and flooding that occurred throughout the state last winter, the IRS announced in January.  Notably, the IRS earlier this year sent out payment notices to some Californians in June before the tax agency released a statement saying that they don’t have to pay until the October deadline.

Some extensions also include taxpayers in Alaska and Illinois impacted by recent flooding. They have until Oct. 31 to file their returns, the IRS said Friday.

Government Shutdown?

A day before the IRS issued its release about the Oct. 16 deadline, the U.S. Treasury Department, which oversees the agency, released a contingency plan (pdf) that includes furloughs to about 60,000 IRS employees—or about two-thirds of its workforce.

A spokesperson for the Treasury Department told the Federal News Network this week the potential furloughs will have “significant impacts” on taxpayers. Most of the agency’s tax functions would also halt during the event of a shutdown, the spokesperson added.

A former commissioner of the IRS, Charles Rettig, told the Washington Post on Friday that a possible shutdown would create headaches for some taxpayers.

“Taxpayers would be completely unable to contact most IRS employees during the shutdown,” he said. During the 2018–2019 shutdown, “it took the better part of a year for the IRS to get back,” he said.

“Don’t overlook the impact on the employees or future recruitment effort[s],” Mr. Rettig said. “Current and prospective IRS employees have numerous options for employment in other organizations not similarly impacted by a dysfunctional Congress.”

The plan for IRS furloughs did not make mention of the Oct. 16 deadline for extensions and individuals in disaster-impacted areas. It’s not clear what will happen on Oct. 16 or whether the date would be pushed back if the government shutdown persists past that date.

In a statement on Thursday, the National Treasury Employees Union said that with the shutdown, taxpayers will have an “incredibly difficult” time doing business with the IRS. It called on Congress to avert the shutdown.

“According to the agency’s shutdown plan released today, 60,000 employees will be locked out of doing their jobs. These frontline employees—including those who open the mail and process tax returns—are now preparing for the financial hardship that comes with missed paychecks, which is possible if the shutdown extends well into October,” the statement said.

Crackdowns?

The flurry of activity comes just weeks after the IRS announced that it would use artificial intelligence, or AI, to launch “sweeping, historic” enforcement measures to go after tax evaders.

Internal Revenue Service (IRS) commissioner nominee Daniel Werfel testifies before the Senate Finance Committee during his nomination hearing in Washington on Feb. 15, 2023. Kevin Dietsch/Getty Images

“There is a sea change taking place at the IRS in every aspect of our operations,” IRS Commissioner Danny Werfel said in a Sept. 8 statement, saying those new tools will allow the agency to catch people “abusing the nation’s tax laws.”

“The changes will be driven with the help of improved technology as well as Artificial Intelligence that will help IRS compliance teams better detect tax cheating, identify emerging compliance threats, and improve case selection tools to avoid burdening taxpayers with needless ‘no-change’ audits.”

There have been reports suggesting the newly announced crackdown will target higher-earning taxpayers and large corporations. The IRS has said that it will not increase audit rates above the historical level for people earning less than $400,000 annually.