National Taxpayer Advocate’s NTA Blog: 2021 Filing Season Bumps in the Road: Part II

National Taxpayer Advocate’s NTA Blog: 2021 Filing Season Bumps in the Road: Part II

The National Taxpayer Advocate Erin M. Collins follows up with Part II of her recently published NTA Blog on filing season challenges and refund delays. In her newest blog, Collins talks about the latest legislation, the new American Rescue Plan Act (ARPA), enacted in the middle of the tax filing season, its benefits to taxpayers and the challenges the IRS faces in executing the provisions of.

The National Taxpayer Advocate draws attention to two specific legislative changes:

  1. Partial Exclusion of Unemployment Compensation Benefits from Income

In most cases, the IRS will automatically recompute any deficiencies or refunds for taxpayers who qualify for the partial exclusion of taxation of unemployment benefits up to $10,200 for each taxpayer if the modified adjusted gross income (AGI) is less than $150,000 and will make the necessary adjustments, eliminating the need for millions of taxpayers to file amended returns. There are certain caveats which apply for taxpayers with qualifying children who might now be eligible for other tax credits not claimed on the original tax return.

  1. Excess Advance Premium Tax Credit (APTC) RepaymentUnder certain circumstances, some taxpayers must reconcile the advance premium tax credit (APTC) to ensure that the amount received in advance equals the Premium Tax Credit to which the taxpayer is entitled. Ms. Collins indicates, “…. taxpayers who filed their returns prior to the passage of the ARPA and included the excess APTC in their 2020 tax liability do not need to file amended returns. The IRS will reduce the taxpayers’ excess APTC amount to zero, thereby adjusting their liability, and automatically reimburse those taxpayers who have already repaid any excess APTC amount.”

 

Collin emphasizes, “…. given these last-minute tax changes, it is critical those taxpayers who have not yet filed – particularly low-income, the elderly, and taxpayers with disabilities – have easy access to filing services such as Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) throughout the filing season, including throughout the postponed filing date of May 17, 2021. TAS has recommended in the past that VITA and TCE increase the number of sites that remain open beyond the filing season, to October 15.”

Read the full NTA Blog from the National Taxpayer Advocate for details on what taxpayers can expect in regard to the latest tax law changes and any actions that must be completed.

National Taxpayer Advocate

The Office of the Taxpayer Advocate, also called the Taxpayer Advocate Service, is an office that is independent of the Internal Revenue Service, the United States Government’s tax collection agency, although the two bodies often work closely together.

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