IRS Hit Hard by Government Shutdown

Now that two bills in the Senate that would have ended the government shutdown have failed, it’s back to the drawing board for lawmakers. That raises the question: What will happen at the IRS?

The two competing bills, one offered by the Democrats and the other by the Republicans, included trade-offs concerning border security. With neither side wiling to compromise yet on this powder keg issue, the shutdown has entered into its second month, as the scheduled kick-off of tax filing season on January 28 rapidly approaches.

The IRS continues to publicly insist that it will process and deliver tax refunds without any delays. To help meet this goal, it has recalled more staffers to work without pay, putting its workforce at more than half the usual capacity. But some commentators have expressed doubts that the agency will be able to deliver the goods as promised.

On January 22, the Washington Post reported that some of the IRS workers who were recalled were claiming “financial hardship” and had failed to report. Furthermore, there are suspicions about the motivation of those who have decided to show up. The longer the shutdown drags on, the harder it will be to maintain “business as usual.”

The situation is further complicated by the massive changes under the Tax Cuts and Jobs Act (TCJA) affecting 2018 returns. The TCJA eliminates personal exemptions and certain deductions while lowering tax rates and providing various other benefits. With its reduced staff, the IRS concedes that any taxpayer assistance it will be able to offer on telephone lines will be limited, if it is available at all.

But there is at least one ray of light in the darkness. Because most IRS systems are automated, returns that are filed electronically may be processed without delay, as long as there are no glitches. Thus, there is hope that the majority of your clients will receive their refunds on time this year, even if the shutdown continues.