Three Tax Implications of the Federal Government Shutdown

The federal government is in partial shutdown, but what does that mean as we begin the tax season?

First, taxpayers should keep in mind that due dates have not changed as a result of the shutdown.

But while the Internal Revenue Service (IRS) is working with a staff of excepted employees, many IRS employees are not working. While we expect the IRS to be handling some matters and investigations, many visible functions have been suspended during the closure.

Telephone service is unavailable
IRS customer service and practitioner services lines are not operating during the shutdown. Any inquiries or follow-up by telephone must wait until the IRS reopens. While taxpayers may write in to the IRS, they will likely not receive a response until after the IRS has reopened and is fully staffed.

Exam and appeals staff are furloughed
IRS exam and appeals staff appear to be furloughed during the shutdown. Taxpayers with active examinations or appeals will likely receive no communication from the IRS until after the closure.

Return and remittance processing is on hold
While taxpayers are free to send in paper returns with paper checks, it appears the IRS is not processing the mail at this time. Returns cannot be e-filed until the annual tax filing season officially opens, which is scheduled for January 28. Electronic payments, however, do appear to be operating.

What can we expect going forward?
It has been reported that the IRS will provide refunds; however, this does contradict earlier reports that suggested refunds would cease while the IRS remains closed. Finally, as is always the case this time of year, the IRS is going through one of its “dead cycles,” during which the posting of some account transactions will be delayed.