How the government shutdown affects tax season • Chris Hervochon CPA

5 Ways The Government Shutdown is Affecting Tax Season

The Government Shutdown

Whelp…

Here we are, January 7th, and the #GovernmentShutdown continues with no end in sight.  The government shutdown began at midnight EST on Saturday, December 22, 2018, so today will make day 17 of the shutdown.  Certainly the shutdown is affecting millions of Americans, and from a tax preparer’s point of view and a taxpayer’s point of view, it’s frustrating in some regards.  That said, it’s not yet the Apocalypse as far as Tax Season 2019 is concerned since most folks aren’t yet ready to file this early in January anyway.  Here are 5 ways the Government Shutdown is affecting Tax Season 2019 thus far…

1) The IRS is not taking phone calls

Why would you need to call the IRS?  Did you receive a notice from the IRS?  Do you have questions about tax law?  Do you have questions about a tax form?  These are all good reasons to call the IRS.  Given the tax law changes for this year, the latter two situations might be particularly applicable.  Unfortunately, if you need to call the IRS during the Shutdown, you’re out of luck.

2) The IRS will not process paper tax returns

Are you still printing out and filling in the forms by hand?  If you are, stop it.  Seriously. Stop it.  The only reason to file a paper return is if your return includes a form that can’t be e-filed.  One of those is listed below.

3) No refunds will be issued

From the USA Today article linked in the beginning of this post:

The IRS has categorized issuing tax refunds as a “non-excepted” activity — meaning those tasked with processing refunds would be furloughed during a shutdown and millions of Americans wouldn’t get their checks on time.

Per #2 above, the IRS is not processing paper returns, as they require manual effort.  They are, however, allowing e-filed returns.  Even if you are organized enough to get filed this early in the season, if you’re due a refund you’re out of luck for the foreseeable future.

*Update as of 1/7/18:  The IRS will be processing refunds starting on the early filing date of January 28th.

4) No processing of amended returns

See #2.  This is one of those times.

5) The Taxpayer Advocate is shut down

Unfortunately, the Taxpayer Advocate Service is a casualty of the shutdown.  As I mentioned in a video about my experience at the 2018 AICPA National Tax Conference, I had the privilege of sitting through a presentation by the head of the Taxpayer Advocate Service.  I was really impressed by her presentation, and I have a new found affinity for the service.  What do they do?  Basically, they are a watchdog over the IRS of sorts, as well as advocate for taxpayers who might be in precarious situations.

The bottom line

The bottom line is that it’s not an unmitigated disaster…yet.  We are still able to e-file returns, which covers the majority of tax returns.  Most years, a lot of people receive refunds, but this year withholding is an issue due to the Tax Cuts and Jobs Act (TCJA) resulting in an expectation that more people might owe the IRS than normal.  I’ll be interested to keep an eye on that.  Finally, we are still waiting for a lot of the final regulations from the IRS regarding the implementation of the TCJA, and it seems the Shutdown will slow the progress of their effort to get that out to preparers and payers.

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