As the partial government shutdown enters its third week with trash piling up at national parks and delays at airports, citizens may also have to contend with reduced services at the IRS.
In the latest development, the IRS has announced it will start processing returns on January 28, under a mandate ordered by the Trump administration. Currently, the IRS plans to forge ahead with about 12.5 percent of its regular staff shouldering the entire load. As of this writing, the agency hasn’t released any additional contingency plans.
Initially, it was thought that many “early birds” who count on tax refunds to pay expenses, or bills that are already due, might have to wait to get their hands on refunds. However, on January 7, the White House said that refunds will begin going out as usual this tax return season. It remains to be seen if the process will slow down if the stalemate in D.C. continues.
Last year, the IRS kicked off tax filing season on January 29. By the end of the week it had received 18.3 million returns and authorized 6.1 million refunds, with an average payout of $2,035.
In any event, tax software preparation companies appear ready to do their part. One of the major tax prep software makers TurboTax says its product will store completed returns and transmit the information once the IRS starts accepting returns. Other companies have voiced similar assurances and outfits that provide short-term advances will likely still offer this option to interested taxpayers.
But there are other aspects to worry about. Notably, taxpayer assistance will be affected if fewer IRS staffers are on hand to answer calls. The problems are compounded by the slew of new tax law changes affecting 2018 returns.
Under the Tax Cuts and Jobs Act (TCJA), the standard deduction for filers has doubled, personal exemptions have been eliminated and numerous deductions have been scaled back, among other significant provisions. It is expected that IRS will be bombarded with questions relating to the TCJA at a time when resources are stretched even thinner than usual.
Just consider the impact of the prolonged government shutdown in 2013. At that time, almost $4 billion in tax refunds were delayed, according to the Office of Management and Budget. Both taxpayers and practitioners alike were flummoxed by a lack of response at the IRS.
On the other hand, the shutdown could present increased opportunities for knowledgeable tax preparers. If taxpayers can’t reach the IRS and have their questioned answered, they may turn to professionals for assistance.
In short, the impact of the government shutdown may provide a silver lining for your practice. Just remember that you’ll also have difficulty getting through to the IRS if you need to.
Have you already been experiencing concerns from your clients? Have any thoughts of your own on the shutdown's impact on busy season? We'd love to hear your thoughts
Ken Berry, Esq., is a nationally known writer and editor specializing in tax, financial, and legal matters. During his long career, he has served as managing editor of a publisher of content-based marketing tools and vice president of an online continuing education company. As a freelance writer, Ken has authored thousands of articles for a...