Tax Insights

Your Guide to State, Local, Federal, Estate + International Taxation

The government shutdown and your taxes

government shutdown, tax, IRS, tax seasonA partial government shutdown began on December 22, 2018. The IRS created a contingency plan in late November in anticipation of the shutdown. The contingency plan identified 9,946 IRS employees who were “excepted/exempt” employees. The excepted employees are not impacted and continue to work during the government shutdown. The functions that continue during the shutdown include:

  • Completion and testing of the 2018 filing year programs
  • Computer processing of returns filed electronically (i.e. those where no human intervention or assistance is required)
  • Processing taxpayer checks and remittances
  • Processing disaster relief transcripts
  • Preserving time sensitive matters (e.g. ensuring the statute of limitations doesn’t run in cases of liens, seizures, etc.)
  • Designing and printing 2018 forms
  • Maintaining criminal law enforcement and undercover operations

The remaining 69,922 IRS are classified as “non-excepted” employees, whose activities cease during the government shutdown. The functions that do not continue under the contingency plan include:

2019 tax season off to delayed start

  • Issuing refunds
  • Processing non-disaster relief transcripts and providing income verification services (e.g. verifying income for a borrower getting a mortgage)
  • Processing 1040X amended individual tax returns
  • Performing all audit functions, examination of returns and processing of non-electronic tax returns that do not include taxpayer checks
  • Performing non-automated collections (e.g. attempting to collect on an outstanding balance due, other than through computer-generated letters and notices)
  • Legal counsel services
  • Taxpayer telephone services and assistance

The IRS’s contingency plan anticipated a short government shutdown and only governed what happened through December 31. Currently a new plan is being formulated, which will likely include additional employees being reclassified as excepted in an effort to gear up for the 2018 tax filing season. On January 7, the IRS confirmed that it will begin processing tax returns starting on January 28 and that refunds to taxpayers will be issued as scheduled.

Jennifer A. Maas