IRS Forming Backup Plans as Government Shutdown Nears

The IRS is forming contingency plans as the likelihood of a government shutdown approaches, the union representing Treasury and IRS employees has warned.

If the government shuts down, people who file paper returns will wait longer to get a refund. Taxpayers who file electronically, but whose files need further processing, will wait longer to resolve any issues.

And the IRS’ backlog will go back up. Per the National Taxpayer Advocate, the IRS had a backlog of 2.6 million returns at the end of the 2023 filing season, which ended April 17, 2023.

Whether the government shuts down or not, calendar-year individuals and C corporations with filing extensions must file their 2022 returns by October 16. Tax-Exempt organizations with extensions must file by November 15. Employers must make their payroll tax deposits and file their Q3 employment tax forms (Form 941) due October 31, 2023.

Congress has until October 30 to either complete and approve 2024 fiscal appropriations or pass a continuing resolution, keeping funding at current levels until a fixed date when lawmakers hope a budget is approved.

The National Treasury Employees Union (NTEU), which represents federal agency employees, including the IRS, confirmed on September 22 that the IRS could close if the government shuts down.

“The IRS has yet to release its final plan, so we do not know the full scope of the impact of a government shutdown on IRS employees,” NTEU President Doreen Greenwald said in a statement. “NTEU became aware from our members that the IRS was developing a new contingency plan that includes furloughing some of its workforce.”

The NTEU told bargaining unit members last week that the IRS expects to “partially close” if Congress triggers a government shutdown, according to a report from the Federal Government News Agency.

Senate leaders are still negotiating a deal on a 45-day continuing resolution, although it faces an uncertain future in the House.

House Speaker Kevin McCarthy, Republican of California, told reporters September 26 that he remains non-committal on putting a Senate-passed stopgap funding bill on the floor to avoid a shutdown.