Tax Returns Are Still Due, Even with the Government Shutdown

Even though it is currently running with a skeleton crew, the IRS says it will begin accepting 2018 paper and electronic tax returns on January 28, 2019. Nevertheless, there’s still a lot of uncertainty about how the ongoing shutdown of the federal government will affect this year’s filings. The Trump administration has stated that the IRS will pay refunds during the closure — a shift from IRS practice in previous government shutdowns — but it’s unclear how quickly such refunds can be processed with staffing so drastically reduced.

Weaver’s tax professionals are keeping a close eye on the situation, and they will keep clients informed. If you have questions on this or other tax issues, you can contact us at any time.

Shutdown effects on the IRS so far

Approximately 800,000 federal government workers have been furloughed since December 22, 2018, due to the funding impasse between President Trump and Congress over a southern border wall. The most recent contingency plan published for the IRS, which expired on December 31, 2018, provided that only 12.5% of the tax agency’s employees would be deemed essential and continue working during a shutdown.

The furloughs are necessary because Congress has been unable to pass several of the appropriations bills that fund the federal government. Although tax refunds aren’t paid with appropriated funds, IRS employees are. During previous shutdowns, the IRS hasn’t paid tax refunds, not because it didn’t have the funds but because it couldn’t pay the employees who process those refunds. Trump administration attorneys, however, have determined that the agency can issue refunds during a shutdown.

The IRS will need far more than 12.5% of its employees on the job to process refunds when it starts accepting filings. In 2018, the IRS received 18.3 million returns and processed 6.1 million refunds in the first week of tax season. Just one week later, it had received 30.8 million returns and issued 13.5 million refunds. Even though the IRS has indicated that it intends to recall “a significant portion of its workforce” to work, those employees would have to work without pay. The IRS says it will release an updated contingency plan “in the coming days.”

IRS help line is down; questions related to TCJA pile up

Last year’s federal tax overhaul could further complicate matters for taxpayers. The 2018 tax year is the first to be subject to the Tax Cuts and Jobs Act (TCJA), which brought sweeping changes to the tax code, as well as new tax forms. Various TCJA implementation activities, such as the development of new publications and instructions, will continue because they’re funded by earlier appropriations legislation.

Be aware that taxpayers and their accountants may not be able to contact the IRS with questions. When the IRS’s main number on January 9 was called, this recorded message was received: “Live telephone assistance is not available at this time. Normal operations will resume as soon as possible.”

During the 2013 government shutdown, taxpayers couldn’t receive live telephone customer service from the IRS, and walk-in taxpayer assistance centers were shuttered. At that time, the IRS website was available, but some of its interactive features weren’t. Treasury Secretary Steve Mnuchin has stated that the IRS will call back enough employees to work to answer 60% to 70% of phone calls seeking tax assistance during this shutdown, which could lead to widespread frustration for the 30% to 40% who can’t get through..

Filing deadlines remain unchanged

Regardless of how IRS operations proceed, taxpayers still need to comply with the filing deadlines. Individual taxpayers in every state but Maine and Massachusetts must file by April 15, 2019; filers in those two states have until April 17, 2019. Individuals who obtain a filing extension have until October 15, 2019, to file their returns but should pay the taxes owed by the April deadline to avoid penalties.

If you have questions about tax filing, the TCJA, or the latest news from the IRS, Weaver is here to help. Please contact us through our website at any time, or call 800.332.7952 for assistance.

© 2019