The Tax Navigator – Government Shutdown and Tax Impacts

Join Sean Muller, the Tax Navigator, as he covers the potential impacts of the government shutdown on tax services, IRS operations and financial planning.

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Detailed Description of The Tax Navigator – Government Shutdown and Tax Impacts

00:00:00
Sean: It looks like Congress is watching our videos, because they were all out this weekend buying cars, because not much happened on the shutdown. Looks like we are heading to a government shutdown at midnight, as the new fiscal year begins October 1.

00:00:11
Sean: The Senate is calling a vote this morning to sort of force the hand, but President Donald Trump had let the leadership at his White House yesterday to talk about different things.

00:00:23
Sean: The Democrats want ACA [Affordable Care Act] subsidies extended. They were wiped out of The One Big Beautiful Bill Act. The claim is that 24 million Americans who rely on the ACA are going to have their premiums increased on January 1, so they’re fighting to have some permanent funding taken on that, and the Republicans are coming back and saying, no, we’ve provided other benefits for that, but it’s been a long time fight over health care.

00:00:48
Sean: So, what does that mean? Well, the last time we had a long shutdown was 2018 and 2019. It was a shutdown for 35 days. We furloughed a lot of federal workers, and so we had limited services. Parks were shut down. The IRS was shut down.

00:01:03
Sean: And then at the end of the 35 days, the workers returned to work. They were paid all their back pay for the 35 days, and then it was business as usual, but we did have an impact on the federal workers and obviously on the taxpayers with services being down.

00:01:17
Sean: In this situation, the IRS does have some reserve funding back from a 2022 spending bill they haven’t spent yet, so they’ve already come out with a contingency plan to keep them open for another five business days, so they’ll be open for another week if this is a short-term shutdown, but then at the end of next week, the IRS will shut down as well.

00:01:38
Sean: So, what does that mean? Well, we’re at the height of filing season, and so refunds could be delayed, call centers could be delayed and IRS audits would be shut down in the near term. And the more important thing for all of us tax practitioners, all the regulations and rules that we’re looking at from The One Big Beautiful Bill Act will just come to a halt.

00:01:59
Sean: As I talked about in these videos, the tip rules have come out, everything around there, the forms have come out. They’ve released regulations, a variety of different topics and all that will come to a stop. So hopefully, you know, they come to some resolution, if not tonight [September 30, as the fiscal year ends], by the end of this week, and we get back to business as usual.

00:02:19
Sean: The IRS did release a notice last week for farmers that have been affected by drought. It affects 49 different states, and so if these farmers are required to sell livestock to make ends meet, they can defer the tax. There’s these involuntary conversion rules that say if you’re forced to sell something, you don’t have to pay tax if you replace the property, and so they’ve applied that to farmers in most of the country, and that notice was released last week.

00:02:47
Sean: But fingers crossed that we get that spending bill passed and we can move forward, at least temporarily. Thanks.

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