Nevada lawmaker introduces bill to protect taxpayers from penalties caused by IRS delays

Nevada US Sen. Catherine Cortez Masto’s Tax Administration Simplification Act seeks to streamline certain tax processes and eliminate late fees assessed by the IRS due to processing delays on the government’s end. 

A new federal proposal seeks to implement a slew of new reforms for individuals and small businesses filing their taxes that lawmakers say will streamline the filing process and eliminate burdensome penalties for taxpayers. 

The Tax Administration Simplification Act, introduced Thursday by US Sens. Catherine Cortez Masto (D-Nevada) and Marsha Blackburn (R-Tennessee), seeks to streamline certain tax processes and eliminate late fees assessed by the IRS due to processing delays on the government’s end, the Senators said in a press release. 

Under current law, even if taxpayers submit a document on its due date, it may be considered late unless submitted physically. The bill would extend the existing so-called “mailbox rule” to electronically-submitted documents, ensuring documents filed digitally be considered on-time regardless of IRS processing delays. The change would also hopefully protect taxpayers from penalties and potential audits stemming from government lags that are beyond that filer’s control. 

Another provision of the bill would create a standardized quarterly deadline for estimated tax payments, which currently requires payments at inconsistent intervals throughout the year, and lawmakers said the hope is moving it to a more regular interval will help taxpayers more easily manage and project their income for tax reporting. 

The bill also seeks to allow new business owners to make an “S-Corp” status designation, which provides greater tax flexibility on their first timely-filed tax return, a change from the current status quo in which the deadline to elect a tax status precedes the deadline for a new business’ first income tax return. 

“I’ve heard from Nevada small business and workers about the challenges they face when filing their taxes, so I’m fighting to cut burdensome paperwork and streamline this process,” Cortez Masto said in a statement. “This bipartisan legislation makes it easier for Nevadans to file taxes and avoid unnecessary penalties.”