Effects of the Gov. Shutdown on Tax Season

*This post was originally published on 1/5/2019 and has since been updated to reflect changes announced on 1/7/2019.

Tax season is just around the corner with the IRS announcing the official start of tax season to be January 28, 2019.  The current US government shutdown is affecting taxpayer services and should the shutdown continue once tax filing opens, your return – specifically your refund – is likely to be affected.  Below are a few frequently asked questions regarding the shutdown and tax season:

  1. The question we have been asked most frequently is, “Will I still get my refund?”  The answer is yes, but likely not until after the shut down ends.  The IRS lists issuing refunds under “non-excepted” activities, meaning that refund issuing is furloughed during a government shutdown.  Depending on how long the shutdown continues past the official start of tax season, refunds could be significantly delayed once processing commences.  On January 7, 2019, the IRS announced that it is likely to call in additional personnel to ensure that taxpayers’ refunds are issued in a timely manner, despite a government shutdown.  For more information on the laws affecting this announcement, check out this article.
  2. “What if I have questions for the IRS?” In short, you’re going to have to wait for an answer.  Representatives for the IRS employees’ union report that, as a result of minimum staffing, taxpayers with questions are unlikely to get through on the phone and those who do will experience significantly longer than normal wait times.
  3. “When can I actually file my return?” The IRS has announced the start of tax season to be 1/28/19 and that they will begin accepting electronic and paper returns that day.
  4. “What happens to my tax return if it is filed during the shutdown?” Returns filed electronically will still be processed during the shutdown (up to the point of issuing a refund).  Paper returns, however, are unlikely to be processed, and if they are, you should expect it to take much longer than normal due to a personnel shortage.  If possible, you are strongly encouraged to file electronically to avoid any processing delays.
  5. “Does the shutdown mean I can wait to make estimated payments or pay any tax due?” Unfortunately, no.  Failure to pay during the shutdown will still result in penalties and interest.

Activities that are likely occurring during the government shutdown include:

  • Processing of electronic returns
  • Processing of payments received (both estimated payments and tax due)

Activities that are likely on hold or significantly delayed during the government shutdown include:

  • Issuing tax refunds
  • Tax payer support
  • Processing amended 1040 returns
  • Processing paper returns that do not contain payments
  • Non-automated collections functions
  • All functions related to audits

 

*This information is based on the IRS’s contingency plan, announced in December 2018, for a government shutdown and has been updated to include information announced on January 7, 2019.  Greatly reduced services are the result of almost 90% of the IRS’s workforce being furloughed.  However, the IRS is expected to issue its updated Lapsed Appropriations Contingency Plan within a few days.