What Tax Season Will Look Like if the Government Shuts Down Again

The federal government was partially shut down from December 22-January 25, the longest shutdown in U.S. history. There were 800,000 government employees who were not getting paid, with 420,000 of them still being required to work. Forty-three percent of IRS workers were among furloughed employees, and almost a quarter of the IRS agents called back into work in January did not show, citing financial hardship.

Because of the staffing shortage and uncertainty around the shutdown, the IRS came out with a contingency plan for tax season that may still come into play. The government will shut down again on February 15 if Congress doesn’t come to a funding agreement. In the case of a second shutdown, this is what tax season will look like.

Tax returns

Breaking from the tradition of past shutdowns, the IRS will be accepting paper and electronic tax returns as normal during the shutdown. However, the IRS encourages taxpayers to file electronically for quicker processing times and refunds.

Tax refunds

Tax refunds will still be issued, but as mentioned before, taxpayers are encouraged to use e-file or Free File with direct deposit to avoid delays. Refunds will still be subject to fraud, identity theft, and other IRS reviews as usual.

IRS tools such as the Where’s My Refund? tool and the IRS2go mobile app will still be functional during the shutdown for taxpayers to check on the status of their refunds. 

Audits and collections

The IRS will not be conducting audits during the shutdown, but automated audit selection letters will still be going out. If taxpayers are selected for an audit, they won’t be contacted by an auditor until the shutdown ends. Likewise, no collection activity will be conducted other than automated collection activity. There is great concern in the tax resolution industry about the state of 30, 60, and 90 days letters, as well as getting responses to stopping the automated collection activity.

If you have an audit scheduled, don’t expect the agent to show up during the shutdown, and with the telephone lines mostly off, you won’t be able to reschedule with the agent until the shutdown is over.

Additionally, the Tax Court shut down operations on December 28, 2018 and reopened January 28. All trial sessions scheduled through February 11 are canceled. Trial sessions will proceed as scheduled as of February 25. The Tax Court website is the best place to get information about a pending case.

If you sent documents to the Tax Court that were returned, you should resend the documents through the U.S. Postal Service or a designated private delivery service. Be sure to include a copy of the original envelope showing the postmark or other proof of mailing. Keep the original envelope.

Note: Criminal investigation work will continue during the shutdown.

IRS resources

Many IRS help resources will be limited during the shutdown, especially live assistance. There will be some telephone customer service assistance available but not as much as usual, so the IRS has said that taxpayers should be prepared for longer wait times.

There will be no in-person meetings available—all taxpayer assistance centers (TACs) will be closed, and if you already have an appointment scheduled that’s related to audits, collection, Appeals, or Taxpayer Advocate cases, you should consider your appointment canceled. Your appointment will be rescheduled once the IRS reopens.

Additionally, the CAF Unit won’t be operating, so there will be no way to file new Power of Attorney forms.

The resources that will be available are automated applications. As mentioned before, taxpayers can still use the Where’s My Refund? tool and the IRS2go mobile app, and the IRS website will still be functional. The EIN online system will also be functional for everyone except foreign taxpayers.

IRS correspondence

The IRS can still receive mail during the shutdown, but their correspondence back will be extremely limited. Some experts claim that the IRS could take at least a year to recover from the shutdown and catch up with correspondence.

How you can help

The government shutdown of the IRS was overwhelming for all involved—IRS employees, taxpayers, and tax professionals—but most of all for the IRS employees who weren’t getting paid.

“After a month with no pay, real hardship does exist for IRS employees including not having the money needed to get back and forth to work or to pay for the child care necessary to return to work right now,” Tony Reardon, president of the National Treasury Employees Union, said according to CNN.

If you’re interested in helping IRS employees, there are a few options.

Last week, Canopy worked with a local Domino’s and local IRS leadership to provide dinner to IRS employees in Ogden, Utah. You can check in your local area for similar service opportunities. There are also a few GoFundMe fundraisers that you can donate to.

This fundraiser is specifically for IRS workers in the Atlanta and Washington D.C. areas.

Here’s another fundraiser that’s helping federal employees in the Washington D.C. area as well.

Want to stay up to date with what’s happening in the tax and accounting industry? Check out the Industry News section of Canopy’s blog.