The Truth About the Government Shutdown and Your Tax Return
News Flash – Our wonderful politicians once again can’t come to terms on a budget. This time there is no midnight hour deal – it’s shutdown time, and the political pundits and politicians are hyperventilating…lost government wages, delayed billions in tax refunds, and the barrage of doom and gloom stories in the press.
Time to take a deep breath. The following explains how the partial government shutdown will affect the operations of the IRS and the processing of tax returns, much of which is contrary to what is currently being reported in the press.
Tax Refunds Will Be on Time – For Most
Today, most tax returns are electronically filed. In fact, most tax returns are not even viewed by IRS personnel. The entire process is completely automated. Tax returns that are not flagged for further review will be processed without delay.
Those returns that are set aside for review may be delayed substantially as the IRS is functioning on a fraction of its labor force. The length of the delay may depend on the length of the shutdown and your place in the que for review. Tax returns containing high credits, unusual items, and the Schedule C are prime targets for review during the early tax season.
The President Said So
President Trump pledged to eliminate delays in processing tax refunds. While he does have substantial power over who gets paid during a partial government shutdown (including the payment of tax refunds), this does not address the processing delays previously discussed. Tax refunds will be delayed for those tax returns held for review.
File Sooner Rather Than Later
While I can’t be certain that those returns set aside for review will be processed on a first-come-first-serve basis, it does make sense that this will be the case in most instances.
Nobody Can E-file Faster Than Another
There is a common misconception that certain ways of e-filing are faster than others. Some practitioners will even state they are the fastest at e-filing (and it’s illegal to say so). Whether you use off-the-shelf tax preparation software or a tax professional, the IRS has possession of the tax return once electronic filing is completed. Ultimately, the IRS determines how fast your tax return is processed (and refund is issued), not the method of e-filing.
IRS Collections Will Be Fully Functional
If you must make a payment with your tax return or you owe back taxes, the IRS is standing by fully staffed, willing and able to collect. Why? Because those employees are deemed to be essential.
Need to Call the IRS? Good Luck!
Unfortunately, if you need to call the IRS for assistance or to resolve a matter, you’re going to have a difficult time reaching a real person. This was true before the shutdown. Many of these employees are nonessential and will not be available. In my experience it’s best to contact the IRS first thing in the morning (7 AM local time) when call volume is low.
Correspondence and Amendment Delays
IRS staff tasked with addressing taxpayer correspondence and the processing of paper returns, such as amendments, will be substantially reduced. Most of these tasks will be shelved until the government completely opens. Expect substantial delays.
Have you experienced delays in the past? Could this have been caused by your tax preparer? If you are expecting a refund, it may be time to choose a proven tax professional, such as those holding the title of Certified Public Accountant or Enrolled Agent. Schedule an appointment with Summerfield CPA, PC today.
