Partial Government Shutdown as it Affects IRS

US tax forms The recent partial government shutdown has affected 800,000 government employees. As we enter the tax filing season, many wonder if the IRS is affected and if so, how?

The short answer is: The IRS & taxpayers are both affected. The most obvious impact on the IRS is the fact that most of the employees have been furloughed and have gone 35+ days without a paycheck.

Even though the government has reopened until February 15th and employees are now being paid, the following impacts will continue for the foreseeable future:

  1. This is the busiest time of the year for the IRS and having employees furloughed for as long as they have been will put a strain on their ability to process mail. This may cause a delay in taxpayers receiving refunds. How long this delay may be, we will have to see.
  2. There will be delays in audits of tax returns, not only new audits but also
    ongoing audits.
  3. Collection activity will be delayed. This delay should be a plus for taxpayers as it will allow them more time to gather information the IRS is asking for and to prepare their strategy for trying to resolve their tax controversy.
  4. Even though IRS employees were furloughed during the partial government shut-down, IRS computers that generate notices were not shutdown. As a result, there could be incorrect notices being sent to taxpayers.
  5. For example, if you responded to an earlier notice and submitted the information requested without an employee to enter that information into the computer, the computer will not know you responded and thus continue sending incorrect notices.

  6. One thing that is very important to remember is that the temporary government shutdown DID NOT change or delay the requirement for timely filing of all required federal tax returns. Therefore, be sure that you timely file and pay all taxes due by their normal due dates.
  7. Don’t be surprised if employees’ tempers are a little on edge. Remember, they have gone 35+ days without a paycheck and are uncertain of their future after February 15th, which would put a strain on most people.

If you have any questions, please contact Bailey & Galyen.