IRS building

UPDATED: How Will the 2019 IRS Shutdown Impact Taxpayers?

The government shutdown that began on December 22, 2018 is causing many concerns as the days add up without any resolution in sight.  The shutdown has now affected the IRS, which is currently operating with only 12% of its workforce. Here’s what this means for taxpayers:

Federal Tax Refunds Will Be Delayed

The largest impact, and certainly the most concerning, for the 2018 filing season is that the IRS will not be issuing any federal tax refunds during the shutdown.  While you will still be able to electronically file your return once filing season opens (usually at the end of January), you will need to wait for any expected refunds.  According to the Wall Street Journal, the shutdown could result in a delay in “billions of dollars in income-tax refunds.”

Updated 1.7.2019

The acting director of the White House Office of Management and Budget has directed the Internal Revenue Service to issue refunds to taxpayers even if the U.S. government shutdown extends farther into tax season.  In previous shutdown plans, the IRS would accept tax returns but refunds would be delayed until the government was funded. This announcement attempts to change that policy but it remains unclear how this might impact the tax filing season. Cray Kaiser will keep you informed as updates become available.

Tax Transcripts Are Not Being Processed

Another negative impact to taxpayers is that the IRS is not currently processing any non-disaster relief tax transcripts.  This is important because mortgage loan companies usually require tax transcripts to verify income before approving any new loans. As a result, new homebuyers should check with their lender to see if a tax transcript is still required in this time of uncertainty, or if another form of income verification will be allowed.

Additional Impacts

Other IRS activities that appear to be on hold include:

  • Processing of amended federal tax returns
  • Non-automated collection efforts
  • Audits or examinations (exceptions may apply)
  • Telephone assistance

Activities that appear to continue in the shutdown include:

  • Processing of tax returns with payments (including e-filing)
  • Design and printing of tax forms
  • Appeals and certain tax cases and investigations

Although the IRS may not be operating at full capacity, Cray Kaiser remains vigilant in preparing for the tax filing season.  We encourage you to gather your tax information now in order to ensure your tax returns can be filed timely, despite the IRS shutdown. Please contact us if you have any questions.