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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.

 

 

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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

Modified

Unavailable

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?

WHAT IRS SERVICES WILL BE AVAILABLE?

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.

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