That means there’s less uncertainty about how much money will come in: There aren’t a huge number of tax payments yet to be accounted for, like last year, when many weren’t deposited until May or later. Most of the tax payments the Treasury will receive have already been collected, says the Congressional Budget Office.
«As a result, we anticipate that the IRS will process relatively few additional payments in May,» the nonpartisan agency says.
«That, in combination with the lower-than-expected receipts through April, means Treasury’s extraordinary measures will run out sooner than we previously projected.»
The CBO and Treasury said Monday they expect lawmakers to have to act in early June. In a letter to lawmakers, Treasury Secretary Janet Yellen said the deadline could come as early as June 1, though she said it’s also possible the deadline could end up being «a few weeks later than these estimates.»
That caught lawmakers off guard, with many expecting the deadline to come at the end of July.
President Joe Biden is scheduled to meet with congressional leaders next week. House Republicans approved an increase tied to a series of budget cuts, not a start for Democrats. Lawmakers will likely have to pass an extension at short notice to buy more time to negotiate.
The timeframe for action is highly dependent on tax revenues, which are volatile. And a big reason for the new «X date» is capital gains income, which has plunged in the wake of last year’s downdraft on Wall Street.
But the timing of how quickly the IRS can change people’s returns also matters, and this was the first tax season since Democrats pushed through a one-time cash injection for the agency that was six times its annual budget. As part of an agency review, management is emphasizing improving customer service, in part by hiring thousands of new workers.
People hoping to receive tax refunds tend to file early because they want their money. There’s typically a lull in the middle of tax season before a race at the end that’s disproportionately made up of people who owe (some tax veterans refer to tax season as having «Batman ears») .
It’s not uncommon for wealthy people who owe to not only file their return very late in tax season, but also file on paper, rather than electronically, because the IRS takes longer to process it, which means the money from taxpayers can stay in an account longer. charging interest.
At this time last year, when the agency was facing a queue of 5.2 million returns, the tax payments that came with them were often not deposited in federal coffers for some time after Tax Day.
This year, through April 21, the IRS says it has processed 98.1 percent of the 134,649,000 returns it has received. That leaves 2.45 million awaiting action.
The total number of returns the IRS has received so far this year is down 1.3 percent, or about 1.8 million filings, compared to last year.
That could be in part because the department gave people in California and other states affected by natural disasters until October to apply. It is unknown how many are taking advantage of that extension.
But there are plenty of wealthy people in California, in particular, and there’s a financial incentive for those to delay paying as long as possible, which could be another reason the debt deadline is coming sooner than the moneymakers anticipated. legislators.