Don’t Wait on Government: 3 Steps to Take Now for Tax Relief

Ever since passage of the CARES Act last month, federal agencies have been struggling to design implementation rules and processes that will deliver relief to taxpayers as quickly as possible.

It hasn’t always gone smoothly. After reports indicating some Americans would be receiving their CARES Act income tax rebates by paper checks to be mailed several weeks from now, Sens. Doug Jones (D-AL) and Tom Cotton (R-AK) urged the Treasury to make the payments available by Direct Express debit cards – the same successful technology that provides an alternative for direct deposit and other payment methods for Social Security and veterans benefits.

Meanwhile, as the Treasury and Small Business Administration initially struggled with the rollout of emergency lending programs for small firms, fintech companies stepped up to facilitate loans (kudos to NTU Director Steve Forbes for being among the first to notice and praise the government’s decision to let them participate). At the same time, well-known leaders in providing financial services are debuting new interactive platforms – such as Intuit’s Aid Assist – to help small businesses figure out step-by-step how to access CARES Act relief.

What do all these developments have in common? They are all about the private sector providing innovations that benefit the public sector at a critical time when government simply has to work better. They are also all about helping people help themselves.

This is an especially timely topic around what would normally be federal tax filing day. NTU’s efforts helped convince federal officials to move the filing deadline forward 90 days to July 15, which will give many taxpayers the breathing room they need to gather information and personal assistance from their advisors at a time when they need it most. This is particularly true for business owners who are quite literally being locked out of their own establishments.

Yet, even though some CARES Act programs are running out of funds, and rebates are still on the way, many Americans can access different forms of relief right now.

  1. File now if you can.

Often lost amid all the talk about CARES Act rebates are the sizeable conventional tax refunds that a majority of Americans normally receive. For 2019, over 70 percent of all returns reported refunds, a figure likely to hold roughly steady for this year’s filing season. The average refund amount was nearly $2900.

The majority of Americans received W-2s, 1099s, and other reporting documents by the end of January, long before COVID-19 hit. For these tens of millions of filers with somewhat less complex tax situations, filing now instead of waiting gives them access to their regular tax overpayments, on top of to any CARES Act rebates they were slated to receive.

Once again, public-private partnerships will come to the rescue here. Tax preparation software, along with options like the Free File program, will speed returns and their associated refunds through the system to provide further liquidity to households who might need it desperately now rather than later this year. This also happens to be yet another cautionary tale against the federal government attempting to run its own tax preparation and filing business to the exclusion of the innovative private sector.

  1. Check for Missing Tax Refunds.

But this is not the end of taxpayers’ opportunities to do themselves a big financial favor. Each year, many federal income tax refunds are returned to the IRS because of bad addresses, bank account numbers, and other misdeliveries. There are other reasons too. In 2019, the tax agency reported that 1.2 million taxpayers were about to lose out on $1.4 billion of their own money, simply because they had not filed a tax return within the three-year statutory deadline when the money becomes the property of the U.S. government. Fortunately, the IRS has extended this year’s deadline for filing a back-year return with a refund claim to July 15 as well. Americans who have wondered whether they actually got their money back for a previous year’s return, or who haven’t filed a past year’s return claiming a refund, should do so right away.

Taxpayers can check online here and here to determine the status of current and past income tax refunds. Many states have similar online destinations too.

  1. Challenge Unfair Property Tax Assessments.

Still another opportunity for tax savings may be knocking directly on the door of a home or business: challenging an unfair property tax assessment.

Now is a time when many local governments post their property tax rolls and send out assessment notices. Most of those assessments are based on conditions observed in 2019, or perhaps the first quarter of 2020. Thus, depending upon the qualifications for appealing an assessment that the local appeals office has established, a business owner may or may not be able to claim a lower value due to recent government-ordered, COVID-19 related shutdowns right away. Still, for those in hard-hit areas, an appeal based on forced closure or quarantine might be workable next year, when assessments are supposed to fully reflect 2020 economic circumstances.

Whether or not a property owner has missed this year’s deadline for appeals, it pays to check out the process now. Owing to a valuation process that is often one-size-fits-all, property tax assessments could have been outdated, inaccurate, or far out of whack with similar properties long before coronavirus ever made the headlines. Home and business owners who are financially struggling right now might not realize that they have been paying too much in property tax for years.

All across the country, taxpayers suddenly find themselves with more time at home to get around to those long-deferred projects. Why not devote some of that time to projects that can put more money in the household budget? The three options above show that even as governments consider next steps for providing relief, taxpayers can take positive steps of their own.