THE WALL STREET JOURNAL. ** Thursday, March 19, 2020 |A
THE CORONAVIRUS PANDEMIC
WASHINGTON—The Internal
Revenue Service began provid-
ing details for taxpayers to de-
fer their April 15 payments to
July 15, offering relief to people
who owe income taxes for 2019
or estimated income taxes for
the first quarter of 2020.
The official notice follows
President Trump’s national-
emergency declaration over the
coronavirus outbreak and in-
vokes powers usually used lo-
cally after natural disasters.
Treasury Secretary Steven
Mnuchin said the move would
delay about $300 billion in pay-
ments. The new IRS rules waive
interest and penalties that nor-
mally would apply.
However, the IRS isn’t
changing the requirement that
people file a tax return or seek
a six-month extension by
April 15. And the rules don’t ap-
ply to other taxes, such as es-
tate taxes, excise taxes and pay-
roll taxes that aren’t handled as
part of self-employment income
on individual tax returns.
That approach—which will
still require taxpayers to file
something by April 15—was al-
ready frustrating tax preparers,
who are preparing for a frantic
month and calling on the gov-
ernment to delay the deadline
altogether.
“That’s a tremendous waste
of time to do that,” said Bob
Caplan of Caplan & Wong CPAs
LLP in San Mateo, Calif.
The American Institute of
Certified Public Accountants
called on the Treasury Depart-
ment to go further. The group’s
president and CEO, Barry
Melancon, said he understands
the government’s interest in
making sure people get refunds
they are owed, but said it was
impossible for tax preparers to
do their job now.
IRS officials haven't ex-
plained why they didn’t move
the filing deadline too.
BYRICHARDRUBIN
IRS Gives
Details on
Deferring
Payments
and saying, ‘Wow that was
slow,’ ” said Tony Fratto, a
White House spokesman at the
time. “I’m not saying this just
to be defensive of what we did.
It was actually pretty quick.”
Then, the government paid
up to $600 to each adult and
$300 for every child based on
formulas tied to income. Many
people filed tax returns to
claim the benefit, which re-
sulted in extra work for the
IRS and millions of inquiries
to its call centers.
Since then, the IRS budget
repeatedly has been cut in real
terms. The tax agency now has
about 23% fewer people than it
did. The government has since
largely dismantled its capacity
for mass check-printing, so
most payments would be made
electronically, said Don Ham-
mond, a former senior Trea-
sury official.
This time around, Congress
and the Trump administration
are aiming to get the money
out quickly. One way to do thatwould be to divide recipients
into several groups for process-
ing. “This will end up going out
in waves,” said Mr. Smalligan,
who is now at the Urban Insti-
tute. “Is the time between
those waves weeks or months?”
Depending on how the law is
written, the easiest people to
pay quickly include those who
receive benefits from the Social
Security Administration and
the Department of Veterans Af-
fairs. The government already
sends them money routinely,
which means it has accurate
bank-account information.
Next are people who file tax
returns. More than 80% of tax-
payers who get refunds receive
them through direct deposit,
so the IRS has complete bank-
account information and ad-
dresses from 2018 tax returns
and a partial set of 2019 infor-
mation. Some of those elec-
tronic payments are set to go
to tax preparers and then be
distributed to individuals, said
Dick Gregg, former fiscal assis-tant secretary at Treasury.
There are potential hitches,
however. The older that infor-
mation gets, the less accurate it
is. Some people change bank
accounts, resulting in bounce-
backs. Others change addresses.
“The IRS right now is proba-
bly overwhelmed,” Mr. Ham-
mond said. “It’s tax filing season.
You’ve got still tax-law changes
that are being implemented. And
now you’ve got the effects of the
virus on their workforce.”
It would take the IRS time to
prepare files that include
names and bank account infor-
mation. Once that information
gets to the Bureau of the Fiscal
Service, which makes pay-
ments, it would take a few days
to get to people, said Mr. Gregg.
Targeting payments to
some income groups would
likely take more time. Another
option would be to send
checks to everyone and then
recoup some or all from top
earners when they file their
2020 tax returns. That wouldmake the program a cash
grant to middle-income house-
holds and a zero-interest loan
to those at the top.
“We are trading economic
output for health outcomes,”
Mr. Fratto said. “We have to
go big first, and that’s the only
way it’s going to work.”
The hardest group to reach
with money is perhaps the most
vulnerable: People who don’t
file tax returns because their in-
come is too low and who don’t
get other federal benefits. And
lawmakers will have to decide if
noncitizens should get money,
too. That is a challenging and
politically explosive question.
So is the danger of fraud.
“Any time there’s money in-
volved, there’s people around
who look for opportunities to
steal it,” Mr. Gregg said. “So
you just have to be aware that
the faster things get done, it
does increase the risk of er-
rors or fraud.”
—Kate Davidson
contributed to this article.WASHINGTON—Getting
lump-sum payments into the
hands of every American could
take weeks to start and
months to complete as the
government tries to turn its
tax-collection system into a
money-distribution machine.
Congress is coalescing
around the idea of sending
money to individuals to ease
the economic disruption from
the coronavirus outbreak, and
the Treasury Department
wants to distribute cash as
fast as possible, said Treasury
Secretary Steven Mnuchin.
A Treasury proposal circu-
lated Wednesday envisions
two rounds of payments, one
starting April 6 and another
starting May 18, with amounts
varying by family size and in-
come level. That is beyond the
two-week goal Mr. Mnuchin
mentioned on Tuesday.
Lawmakers have been talk-
ing about $1,000 for each per-
son or more, and Mr. Mnuchin
said the government would
use Internal Revenue Service
information for some people
and data from electronic-pay-
ment providers for others.
Policy makers face a trade-
off between speed and accuracy.
The faster the Treasury Depart-
ment shovels money out the
door, the more likely it is that
some people will get paid twice
and others won’t get paid at all.
A slower effort could reduce er-
rors, but people who lose jobs
or have hours cut would face
mounting bills in the meantime.
“A tolerance for error is kind
of necessary for this situation,”
said Jack Smalligan, a former
Office of Management and Bud-
get official who retired in 2018.
The government last sent
payments to Americans in 2008
as the economy was entering a
downturn. President George W.
Bush signed the law on Feb. 13,
but the money didn’t start go-
ing out until late April. The
payments were largely com-
plete by the summer. Then as
now, the task was complicated
because it occurred during the
IRS’s busy tax-filing season.
“People are looking at 2008BYRICHARDRUBIN
Big Push to Get Aid Out to Americans
Treasury SecretaryStevenMnuchin said the Trump administration supports a plan to sendchecks to Americans, likely withinthe next two weeks.
TOM WILLIAMS/CQ ROLL CALL/NEWSCOM/ZUMA PRESS