What Does The Government Shutdown Mean For Taxes?

The government shut down early Saturday, January 20th after Congress failed to agree on a funding bill. That triggered automatic furloughs for government employees deemed “non-essential.” That means only a portion of each federal agency’s employees will continue to work through the shutdown.

A shutdown plan posted on the Treasury Department’s website shows that nearly 44 percent of the IRS’ 80,565 employees will be exempt from being furloughed during a shutdown. That would mean nearly 45,500 IRS employees will be sent home just as the agency is preparing for the start of the tax filing season and ingesting the sweeping changes made by the new GOP tax law.

The Treasury and IRS have the option to reassess how many people they need working and what functions may be performed.

As Outlined in the IRS Fiscal Year 2018 LAPSED APPROPRIATIONS CONTINGENCY PLAN

If the IRS is confronted by a lapse in appropriations during the 2018 Tax Filing Season (January 1 – April 30, 2018) the IRS will need to continue return processing activities to the extent necessary to protect Government property, which includes tax revenue, and maintains the integrity of the federal tax collection process, along with certain other activities authorized under the Anti-Deficiency Act.

The contingency plan gives examples of the IRS functions that will continue throughout the shutdown. They include processing electronic returns, testing upcoming filing year programs, and computer operations to prevent the loss of data.

Here is an outline what IRS services are available During a Period of Government Shutdown

You may find it useful to keep a list of IRS operations that are still in effect, modified, or unavailable during a period of a 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 taxpayer assistance centers will be closed at this time.
• Audits, Appeals, Taxpayer Advocate Cases – These appointments should be treated as canceled. 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.

Due to the current federal government shutdown, IRS operations are limited. However, “the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.”

Here are some basic questions for taxpayers about what they should do during the shutdown, along with answers from the IRS.

HOW DOES THE SHUTDOWN AFFECT ME?

• You should continue to file and pay taxes as normal.
• All other tax deadlines remain in effect, including those covering individuals, corporations, partnerships and employers. The regular payroll tax deadlines remain in effect as well.
• You can file your tax return electronically or on paper — although the processing of paper returns will be delayed until full government operations resume. Payments accompanying paper tax returns will still be accepted as the IRS receives them.
• Tax refunds will not be issued until normal government operations resume.
• Tax software companies, tax practitioners and Free File will remain available to assist with taxes.

WHAT IRS SERVICES WILL BE AVAILABLE?

• For taxpayers seeking assistance, only the automated applications on the regular 800-829-1040 telephone line will remain open.
• The IRS website (IRS.gov) will remain available, although some interactive features may not be working.
• The IRS Free File partners will continue to accept and file tax returns.
• Tax software companies will continue to accept and file tax returns.

IS THE OCTOBER 15 DUE DATE STILL IN EFFECT AND SHOULD PEOPLE STILL FILE BY THEN?

Taxpayers should continue to file and pay taxes during a lapse in appropriations as they would under normal government operations. Individuals who requested an extension of time to file should file their returns by October 15, 2018. Taxpayers can file their tax returns electronically or on paper. However, the processing of paper returns will be delayed until full government operations resume.

Payments accompanying paper tax returns will still be accepted as the IRS receives them. Tax refunds will not be issued until normal government operations resume. Tax software companies, tax practitioners and Free File will remain available to assist with taxes.

All other tax deadlines remain in effect, including those covering individuals, corporations, partnerships and employers. The regular payroll tax deadlines remain in effect as well. Penalties and interest still apply for all late filings not received by the regular deadlines.

WILL ELECTRONICALLY FILED RETURNS BE PROCESSED?

Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as they are required to do so by law. Taxpayers are urged to file electronically because most of these returns will be processed automatically. Payments accompanying electronic tax returns will be accepted as the IRS receives them, although the IRS will be unable to issue refunds during this time.

WILL PAPER TAX RETURNS BE PROCESSED?

Individuals and businesses should keep filing their tax returns and making deposits with the IRS as they are required to do so by law. However, the processing of paper returns will be delayed until full government operations resume. Payments accompanying paper tax returns will still be accepted as the IRS receives them, though the IRS will be unable to issue refunds during this time.

WILL PAPER TAX RETURNS BE CONSIDERED TO BE FILED ON TIME EVEN THOUGH THE IRS IS NOT PROCESSING PAPER RETURNS?

Yes. the U.S. Postal Service is operating during the shutdown, and it will postmark and deliver mail to the IRS. Any return postmarked by the due date will be considered timely filed by the IRS even though processing of the return may not occur until after the return due date depending on the length of the lapse in appropriations.

CAN I OBTAIN A TAX TRANSCRIPT DURING THE SHUTDOWN?

Yes. This is an automated process. Taxpayers can still use automated tools, including IRS.gov, to request that a transcript of their personal tax records be sent to their address of record; the taxpayer will typically receive transcripts in the mail within five to 10 calendar days.

CAN A THIRD PARTY OBTAIN A TAX TRANSCRIPT DURING THE SHUTDOWN?

No. Transcript requests from third parties require actions by IRS employees, who are not available due to the current lapse in government appropriations. During this period, transcript requests by third parties, such as financial institutions, cannot be processed through the IRS Return and Income Verification Services and Income Verification Express Service. These processes are not automated. However, individuals requesting their own transcripts can still use the automated process.