NJ tax refunds likely to be on time, but feds warning of slowdowns

JOHN REITMEYER, BUDGET/FINANCE WRITER | FEBRUARY 7, 2022

NJ Spotlight News

Exterior of the Internal Revenue Service building in Washington, D.C.

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The start of a new tax-filing season has renewed concerns — including among members of New Jersey’s congressional delegation — about the potential for processing delays as the Internal Revenue Service continues to be tested by the coronavirus pandemic.

Late last month, top IRS officials urged taxpayers to file electronically in the run-up to the April 15 tax deadline to help the agency manage what the officials called “enormous challenges related to the pandemic.”

Recent published reports have also indicated more than 1,000 agency staffers are being reassigned within the IRS to help bolster a workforce that has been strained both by the ongoing health crisis and by federal funding gaps.

Those moves come after both of New Jersey’s U.S. senators and six other members of the state’s congressional delegation signed onto a letter urging top U.S. Treasury officials to get ahead of issues that led many taxpayers to experience delays in receiving their refunds last year. That effort drew praise from a leading state accountants group that has also raised alarms about the potential for delays at the onset of a new tax season.

NJ refunds should arrive on time

Meanwhile, New Jersey’s Department of Treasury said the concerns about federal tax-return processing will not have a direct impact on the distribution of any state refunds this year.

New Jersey officials have also launched another big push to raise awareness about the state’s expanded Earned Income Tax Credit, which is a tax break for low-wage workers who may need relief the most.

“Given the ongoing financial struggles created by (COVID-19), we want to make sure, now more than ever, that every eligible taxpayer receives the credit they’ve earned,” state Treasurer Elizabeth Maher Muoio said.

Last year, the IRS delayed the traditional April 15 income-tax filing deadline by one month to help taxpayers who were still contending with challenges caused by the pandemic. It marked the second straight year that taxpayers were given more flexibility due to the health crisis.

This year, no such filing delay appears to be in the works for taxpayers. Instead, IRS officials have urged taxpayers to file on time — and electronically and with direct deposit prearranged.

Doing so, assuming there are no other issues with a tax return, is likely to result in refunds being received within 21 days, the officials said. But they made no such promises for those filing paper returns.

IRS says paper returns are in slow lane

“We urge people to carefully review their taxes for accuracy before filing. And they should file electronically with direct deposit if at all possible; filing a paper tax return this year means an extended refund delay,” IRS Commissioner Chuck Rettig said in a news release.

Last week, the American Institute of Certified Public Accountants praised the IRS for taking other recent action to address the concerns about the potential for there to be processing delays this year. They include the reassigning of staff and suspending the issuance of some notices to taxpayers to focus on addressing backlogs.

“We are glad that the IRS seems to be listening and responding to the collective frustrations of all taxpayers,” AICPA president Barry Melancon said in a statement.

Some of the same concerns about the potential for processing delays had been echoed by New Jersey’s Society of Certified Public Accountants. And they were also the subject of the recent letter that was endorsed by U.S. Sens. Cory Booker and Bob Menendez, both D-NJ; as well as U.S. Reps. Bonnie Watson Coleman (D-12); Josh Gottheimer, (D-5); Frank Pallone, (D-6); Bill Pascrell, (D-9); Mikie Sherrill, (D-11); and Chris Smith, (R-4).

Meanwhile, at the state level this year, the Department of Treasury is returning to a normal tax-filing schedule after also offering taxpayers the option of delaying their filings the last two years due to the pandemic, which has hit the state particularly hard.

This year’s processing of state tax returns has already begun, and refunds will start being distributed in early March, as is customary, said Treasury spokeswoman Danielle Currie.

“We always encourage New Jersey filers to submit their tax returns as early as possible,” Currie said.

Treasury officials have also been pushing this tax season to raise awareness about several state tax-policy changes that were enacted within the last year that may provide new relief to New Jersey taxpayers. Among them is the state Earned Income Tax Credit, or EITC, thanks to recent changes that increased eligibility for the tax break and also made it more generous for recipients.

For tax year 2021, eligible New Jersey taxpayers could receive a credit of up to $2,691 with qualifying dependents or $601 without dependents, Treasury officials said. The credit is also “refundable,” meaning taxpayers can receive the full credit they are eligible for, even if the size of their credit is worth more than their total tax liability.

Still, not everyone who is eligible for the EITC applies for the credits they are entitled to, officials said.

“Despite the growth in value of the tax credit over the last few years, we estimate that nearly a quarter of eligible taxpayers do not apply for the credit, leaving this hard-earned money on the table,” Muoio said.

More information about EITC eligibility requirements and the application process is available on the state’s Division of Taxation website.

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published this page in News and Politics 2022-02-07 02:41:57 -0800