The federal government has shut down (again), which means there’s no federal budget in place. That means that funding for many government agencies has run out, including the IRS. So, what happens to the 2019 tax filing season?
First, don’t panic. While the government officially ran out of money for the fiscal year, the result is a partial shutdown: not every facet of the government will shut down. During a shutdown, agencies are allowed to perform activities that are supported by funding that doesn't expire at the end of the fiscal year, as well as other activities that are either expressly permitted under the law or are deemed necessary. For example, Social Security payments are funded outside of an annual appropriation, so those employees will continue to work, as well as those IRS employees who support them even though IRS funding is typically not outside of annual appropriation. The law also allows for "activities necessary to safeguard human life or protect government property."
(If you’re interested, the Anti-Deficiency Act provides the guidance on what activities are permissible and not during a shutdown. The penalties for violating the Act are pretty severe, which is why federal agencies write contingency plans.)
But, back to the IRS...
You might not think of your tax return as a matter necessary to safeguard life or protect property, and likely it isn’t, but the government still wants its money. So, the IRS may process tax returns to ensure the protection of those returns that contain remittances. In addition, it will typically continue to:
- Processing disaster relief transcripts
- Accept E-filing up to the point of refunds
- Design and print of tax forms
- Conduct appeals (statutory deadlines will not be changed)
- Hear certain civil and criminal tax cases (statute expiration, bankruptcy, liens and seizures cases)
- Conduct active criminal investigations
- Operate IRS.gov
Here’s what the IRS typically won’t do during a shutdown:
- Issue tax refunds
- Process non-disaster relief transcripts
- Process forms 1040X (amended returns)
- Operate non-automated collections (call center)
- Conduct audits or examinations (some exceptions apply)
- Provide legal counsel
- Operate a call center during Non-Filing Season
Who stays on the job? Just about 12.5% of the IRS workforce. This includes the IRS Commissioner (currently Charles Rettig) who is a presidential appointee not subject to furlough,a handful of Deputy Commissioners and Chiefs of Staff, "excepted employees" like some appeals staff and lawyers to ensure that statutory deadlines are met, some in the Taxpayer Advocate Service, a significant number of Criminal Investigation employees, and more than 3,000 IT-related workers who will ensure that taxpayer data is protected and that computer systems function appropriately.
One final note: As part of the TCJA, Congress provided the Treasury Department with some funding through September 30, 2019. As a result, certain TCJA-related activities will not be affected by the shutdown. That includes creating or revising hundreds of tax products including worksheets and tax forms, instructions and publications, among other tasks.
The 2019 filing season is expected to open on January 29th. Let’s operate on the assumption it will for now. There’s really never a time to break from tax planning and preparation, and this is no exception. Of course, if the shutdown persists, the IRS will have to reassess which functions will be necessary moving ahead; we’ll update you if that happens.