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Individual Tax

IRS to release shutdown contingency plan covering filing season

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

Letter from Richard Neal to Charles Rettig

IRS FY2019 Lapsed Appropriations Contingency Plan (Non-Filing Season – December 8-31, 2018)

The government shutdown has entered its third week and the traditional start of filing season is nearing. According to reports, IRS is working on a filing season contingency plan and expects to finalize its plan shortly. While IRS released a contingency plan in late November 2018 outlining activities that would and would not take place during a lapse in appropriations, this plan does not cover the 2019 fiscal year filing season (defined as Jan. 1, 2019 through Apr. 30, 2019).

Background. The partial government shutdown began on Dec. 22, 2018. As a result of the shutdown, according to Reuters, approximately 800,000 federal works have been unpaid, and nearly 70,000 IRS employees have been furloughed (approximately 87.5% of its workforce).

While most IRS activities have been halted, guidance implementing the Tax Cuts and Jobs Act (TCJA; P.L. 115-97, 12/22/2017) has continued to be released, due to a separate appropriation of funds made by Congress in association with the TCJA. These funds remain available until Sept. 30, 2019.

The Tax Court has also been closed since Dec. 28, 2018.

Letter to Commissioner. New Ways and Means Committee Chairman Richard Neal (R-MA), in letters to IRS Commissioner Charles Rettig and Treasury Secretary Steve Mnuchin, expressed concerns with how the shutdown will affect taxpayers. As of the date of the letter (Jan. 4, 2019), Chariman Neal noted that IRS has indicated that it would not issue tax refunds during a shutdown, causing hardship to taxpayers who rely on those funds.

Chairman Neal sought information including, among other things, the date that filing season would open (and an explanation if after Jan. 29—i.e., the calendar date on which it opened in 2018), confirmation that IRS would not issue refunds during the shutdown, and a “description of how the lapse in funding has impacted the ability of the IRS to be prepared for what many expect to be a confusing tax filing season for Americans.”

Provisions in 2018 contingency plan. On Nov. 29, 2018, IRS issued a “Lapsed Appropriations Contingency Plan” for non-filing season (Dec. 8-31, 2018). While not applicable in 2019, the contingency plan contains some hints as to how filing season could be affected.

Many of the activities that were listed as continuing through a lapse in appropriations were those considered necessary to protect government property. These include:

  • . . . completion and testing of the upcoming filing year programs;
  • . . . systematically processing electronic returns up to the point of refunds;
  • . . . processing paper tax returns through “batching”;
  • . . . processing remittances;
  • . . . processing disaster relief transcripts;
  • . . . continuing IRS’s computer operations to prevent the loss of data; and
  • . . . protecting statute expiration, bankruptcy, lien, and seizure cases.

Provisions in prior shutdown plan. While IRS has not yet issued its filing season contingency plan, the following policies were in effect during a 2013 government shutdown and may provide guidance on how IRS operations would be affected by a shutdown that continues into the 2019 filing season.

In 2013, the government shut down for approximately two weeks during October. IRS instructed individual and business taxpayers to keep filing their returns and making deposits with IRS, as required by law. No live telephone customer service was available, walk-in taxpayer assistance centers were closed, and while IRS’s website remained available, some of its interactive features were not.

The opening of the 2014 filing season was delayed until Jan. 31, 2014, past the original Jan. 21, 2014 start date, due to the shutdown.

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