Here is how a authorities shutdown may have an effect on the IRS this tax season

Here is how a authorities shutdown may have an effect on the IRS this tax season

Inside Income Commissioner Danny Werfel speaks throughout his swearing in ceremony on the IRS on April 4, 2023 in Washington, DC. (Picture by Bonnie Money/Getty Photographs)

Bonnie Money | Getty Photographs Information | Getty Photographs

As Individuals put together for the opening of tax season, lawmakers are racing to avert a authorities shutdown. In the event that they fail to come back to an settlement, the ensuing pause in nonessential operations may have an effect on taxpayers’ submitting expertise, based on IRS Commissioner Danny Werfel. 

By legislation, the company can protect sure actions for ongoing operations after a lapse in funding, Werfel instructed reporters final week. However “shutdowns are extremely disruptive,” he mentioned, noting it may “improve the chance that we do not have as easy a submitting season as we intend to have.”

Congress faces two looming deadlines, Jan. 19 and Feb. 2, to finalize a deal or cross a short-term funding measure. It is the second deadline that impacts the IRS.

Whereas lawmakers have taken steps to increase each deadlines to early March, the brand new dates would nonetheless go away restricted working days to succeed in a deal.

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“We skilled shutdowns earlier than,” Werfel mentioned. “We’ve not skilled a shutdown in the course of submitting season, so there’s some uncertainty there.” 

“In fact, we’ll do all the pieces in our energy to attenuate the disruptions {that a} shutdown would have on the submitting season,” he added. 

Some tax preparers have already begun accepting 2023 returns, however the season formally kicks off on Jan. 29 when the IRS begins processing filings.

What could occur on the IRS throughout a shutdown

Whereas sure IRS features would proceed beneath a federal authorities shutdown, it is unclear precisely which workers would maintain working, consultants say.

The U.S. Division of the Treasury in September launched a lapsed appropriations contingency plan for fiscal 2024, protecting vital operations for the IRS.

Nonetheless, the American Institute of CPAs in November despatched a letter to Treasury Secretary Janet Yellen and Commissioner Werfel, asking for plan updates with “submitting season-specific actions.”

“There’s not numerous winners if the IRS shuts down and has to go to their contingency plan,” mentioned Kasey Pittman, tax coverage director with Baker Tilly’s Washington tax council. 

The AICPA’s letter expressed considerations about telephone service, taxpayer help facilities, doable refund delays, paper correspondence and automatic notices, pointing to an interpretation of the contingency plan from the Nationwide Taxpayer Advocate.

Shutdown may have an effect on IRS priorities

If lawmakers do not finalize a deal, or cross a short-term funding measure, it may threaten the company’s progress on previous points and new initiatives, based on Mark Everson, a former IRS commissioner and present vice chairman at Alliantgroup.

“It isn’t only a common submitting season,” he mentioned, pointing to challenges like the worker retention tax credit score backlogs and the upcoming Direct File pilot program, which is able to enable sure taxpayers to file immediately with the IRS at no cost. 

In the meantime, the IRS faces mounting strain to proceed enhancing service after an infusion of funding and efforts from some Republican lawmakers to rescind it.

There’s an “extremely lengthy record of issues that they are after,” Everson mentioned. “They definitely do not want that sort of disruption.” 

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