Government Shutdown and Tax Filing
What To Know About The Government Shutdown and Your Tax Filing
As you probably know, the longest government shutdown in the history of the United States recently ended.1 During the shutdown, many government employees were furloughed or required to work without pay, with some government services temporarily halted or scaled back.
The question many people have asked me lately is, “How might this affect my tax filing?”
To answer that, here are a few things to know:
- The IRS was always open – but only partially.
While much of the government was shut down, the Internal Revenue Service remained open, with staffers set to begin processing tax returns on January 28, 2019.2 However, only 12% of its staff actually worked during the shutdown, with the rest on furlough – including staffers tasked with answering questions.3&4 And while the IRS has recently recalled thousands of staffers back to work, less than half actually returned right away.5
As a result, the IRS is likely to be significantly behind. In fact, many tax preparers have reported significant problems with using basic services the IRS provides.5 For this reason:
- Filing could be trickier this year.
This is the first year the Tax Cuts and Jobs Act - the massive tax reform bill that went into law last year - will affect individual federal returns. There are significant changes to many deductions and tax credits, so you will want to scrutinize your returns carefully! And because the IRS was only partially open for so long, there may be a significant backlog in resolving issues, requesting forms, or even accessing information online.5
- You should still get your refund.
Despite rumors you may have heard, the government shutdown should NOT affect your refund. According to a statement by the IRS Commissioner, "We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown."4
- Taxpayers with amended returns may have to wait longer.
Taxpayers with amended returns may need to wait longer to receive their refunds, as the IRS staffers charged with processing amended returns were among those furloughed and could be especially behind.5
- It's important to start preparing for the upcoming tax season now.
Hopefully, the shutdown won't impact you personally. However, the best way to ensure a smooth tax season and a timely refund is to start preparing now. Gather documents, study tax changes and consult with a qualified professional. And keep in mind that while the shutdown has officially ended:
- It could start back up again.
The agreement between congressional leaders and President Trump to re-open the government only lasts until February 15.1 During that time, Congress must figure out a way to resolve controversial issues like border security and the federal budget, which is no sure thing. Should negotiations over a long-term spending bill fail, the government could shut down again. Stay tuned.
Hopefully, the government will remain open. But in the meantime, the best thing you can do is to be diligent, thorough, and proactive when it comes to filing your taxes.
Prepared by Bill Good Marketing.
1 “Shutdown ends as Trump signs short-term deal,” NBC, January 25, 2019. https://www.nbcnews.com/politics/donald-trump/trump-shutdown-announcement-n962836
2 “Tax refunds will go out despite government shutdown, with early filing date on January 28,” USA Today, January 8, 2019. https://www.usatoday.com/story/money/2019/01/08/government-shutdown-tax-refunds-filing-starts-jan-29/2511995002/
3 “Worried the Government Shutdown Will Delay Your Tax Refund?” Inc.com, January 14, 2019. https://www.inc.com/carrie-mckeegan/3-myths-about-government-shutdown-your-business-taxes.html
4 “These shutdown hurdles could mess up your tax refund,” CNBC, January 14, 2019. https://www.cnbc.com/2019/01/14/these-shutdown-hurdles-could-mess-up-your-tax-refund.html
5 “Tax preparers report serious disruptions at IRS,” Politico, January 25, 2019. https://www.politico.com/story/2019/01/25/tax-preparers-disruptions-irs-1117556
6 “IRS Confirms tax filing season to begin January 28,” Internal Revenue Service, January 7, 2019. https://www.irs.gov/newsroom/irs-confirms-tax-filing-season-to-begin-january-28