Tax Implications of the Federal Shutdown

For you over-achievers out there who are chomping at the bit to file 2018 tax returns, you may have to cool your jets for a while. While the Federal shutdown has not changed anticipated filing dates, there may still be some impact on you. IRS has furloughed 87% of their employees and many areas are impacted. As of today here are a few areas where the IRS is still functioning (and not) and what you can expect:

IRS has stated that the tax filing season will begin on January 28. They will not process tax returns until then. Even if the government shutdown continues through April, you are still obligated to file or extend personal returns by April 15. No change there. They have stated publicly that they will process refunds and tax payments as well. However they have not said WHEN. Be prepared for delays.

Examinations and disputes are not being worked except for those facing imminent statute expirations. Any other representation issues and taxpayer service issues are not being worked, which includes transcript requests. Power of Attorney forms are not being processed.

Payment plans remain in effect, so don’t stop sending in those checks, but you will not be able to renegotiate an existing payment schedule or create a new one.

Amended returns and claims for refunds from prior years are not being processed. Make sure you get proof of mailing so you can prove you filed them in a timely manner. They may sit for awhile.

If you receive a “90 day” letter the 90 days will not be stayed and you must still respond.

Some areas are unclear – when will IRS forms be finalized so that software companies can get blessings on their programs? Regardless of what IRS says the official start date is, tax software will be unable to process returns without final versions of forms. Also once the IRS does go back to work, how long will the backlog take to clear for things like Power of Attorney forms and transcript requests to be processed?

By |2019-01-15T13:42:42+00:00January 15th, 2019|Pauls's Tax Blog|0 Comments

About the Author:

Paul Scholz, CPA, MST is the Managing Partner of Onisko & Scholz, CPA Firm in Long Beach, CA. He is in charge of the Firm's Tax Practice, and has a specialty in estates and trusts.

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