Funding for many government agencies expired at midnight on Friday, which triggered a partial shutdown of the federal government. The IRS is affected by the shutdown because it is not already funded through September 2019.

The IRS, having dealt with workforce and budget cuts since 2010, is already stretched thin with implementing the December 2017 tax reform law in time for the upcoming 2019 filing season.

In the event of a shutdown, the IRS will furlough about 88 percent of its total workforce, according to the agency’s Lapsed Appropriations Contingency Plan.  In November, the agency reported a total workforce of just under 80,000 employees.

Of the nearly 10,000 IRS employees exempt from a government shutdown, more than 3,377 come from their IT department, while an additional 2,745 essential employees work in the agency’s criminal investigations division.

The Wage and Investment office would also have 2,241 employees report to work in the event of a shutdown.

Over the past year, the IRS has endeavored to update more than 450 forms and 140 IT systems before the start of the tax filing season in January, in order to comply with the Tax Cuts and Jobs Act.

However, Tony Reardon, president of the National Treasury Employees Union, said Monday that the union was “extremely concerned about how a shutdown will impact the start of the 2019 filing season.”

“Thousands of IRS employees whose job it is to assist taxpayers — on the phone or in person — are in the process of being trained about the massive changes to the tax code,” Reardon said. “That training is likely to be interrupted by a shutdown.”

Due to the amount of Information Technology work that remains to be done, the Treasury Inspector General on Tax Administration (TIGTA) expressed concerns in September that IRS is at risk of having to delay the start of the 2019 filing season.

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In December 2013, the IRS delayed the start of the 2014 tax filing season following a 16-day government shutdown in October.

Steven Miller, a former acting IRS commissioner under the Obama administration, said in an interview Tuesday that we may see a rolling start to the 2019 tax filing season. And some taxpayers filing a particular tax credit or taking certain deductions would wait about a month after the normal filing date.

“That could very well happen here, and I don’t think that’s the end of the world. As long as things work, that could be a good outcome,” Miller said. “But I would almost expect, in any event, that there might be a staged start to the filing season because of the substantial changes to the tax code.”

A shutdown would increase the chances of a delayed or modified filing season. Miller said furloughing IRS employees this late in the game would make the “remarkably difficult” challenge of implementing the tax reform law even more difficult.

“It’s not good for the filing season,” Miller said. “Even if they’re able to keep people on, they’re not going to be able to keep everybody on that’s working on the filing season.”

The taxpayer services staff working at agency call centers for tax assistance centers would see some of the most significant furloughs as a percentage of their total workforce.

“It always depended on what time of year it was, as to who was vital and who was not,” Miller said, noting that IT staff would play a crucial role in last-minute preparations for the filing season.

The IRS has long faced challenges with legacy IT, and has some of the oldest systems still running in government.

“That always was difficult in the best of circumstances, and it’ll be even more difficult this year, with the level of effort that’s going to be necessary to get it done,” Miller said about the IRS’s IT challenges.

Even in the event of a shutdown, the IRS would resume full operations soon after lawmakers pass a spending bill.

“The IRS has been through this many times before, and sometimes for longer periods than others. “My experience has been that the service knows what it’s doing, and when it comes back from a shutdown, it just starts up. That doesn’t mean that there’s not some residual morale impact.”

But the IRS has “been working very closely” with the tax industry in recent weeks, discussing the possibility of a government shutdown, and the agency seems “very well prepared,”

You may find it useful to keep a list of IRS operations that are still in effect, modified, or unavailable during a period of government shutdown.

Still in Effect

  • Tax Deadlines  – Unfortunately, taxes are still collected as usual despite government services being limited.  Do not skip your deadlines or regular obligatory payments because you will be penalized and interest will be charged once things are up and running again.
  • Electronic Filing – The e-file tool will not only still be available, but in fact, the IRS prefers electronic filing during a time of shutdown because this system is automatic and minimizes the manual workload.
  • Automated IRS notices – You can still plan to receive notifications in the mail from the IRS during a government shutdown.  The mailings are actually automatic services.
  • Individual Transcripts – This service is automated and will still be in effect if requested through the automated tool on the IRS website.

Modified

  • Automated Telephone Service   – Most toll-free telephone applications will remain operational.  This service may be modified from its existence under normal operations.
  • Website – IRS.gov will still be up and running, although some interactive features will not be available.
  • Paper Filing – Paper filing returns will still be in effect (the USPS will deliver and postmark accordingly) but the returns will not be processed until government operations resume normally. 
  • Enforcement Actions – Non-criminal actions will be taken on a limited basis, specifically those involving time-sensitive issues, for example, those involving statute of limitations, but other non-criminal actions will not be in effect during a time of shutdown.  IRS Criminal Investigations employees will be working, and criminal action will still be in effect.

Unavailable

  • Refunds – Refunds will not be paid during a government shutdown.
  • Real Life Customer Service – Live telephone customer services assistance will not be available. Additionally, walk-in tax-payer assistance centers will be closed at this time.
  • Audits, Appeals, Taxpayer Advocate Cases  – These appointments should be treated as cancelled.  The IRS will reschedule these appointments after the shutdown has ended.
  • Third Party Transcripts – This service is performed by IRS employees and will not be available until after the government shutdown has resumed.
  • Levies or Liens – These impositions will not be issued or carried out during this time. 
  • Installment Agreements – Applications can be submitted, but approvals will not be made until after the government shutdown.

What Does The Government Shutdown Mean For Taxes?

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