As the shutdown continues, all IRS offices are closed and 91% of Internal Revenue Service employees remain furloughed. Tax deadlines remain in place, but what exactly is happening at the IRS?
What is Happening
The IRS will continue to process electronic returns. This process is automatic and does not require significant human effort.
Similarly, all automated systems will continue. This includes the automated issuance of letters warning taxpayers of potential levies and liens. These are warnings only, not actual liens or levies, but should not be ignored or disregarded. Now is a good time for taxpayers who receive these letters to seek help from a tax professional, who can begin work preparing their case before the IRS reopens and takes further action.
Criminal investigations will continue as normal. Most of the IRS’s criminal enforcement employees are not furloughed.
Enforcement actions will continue, but in a limited capacity. The IRS states, “the only enforcement actions the IRS is taking during the appropriations lapse involve isolated instances where we need to take immediate action to protect the government’s interest.” The IRS will only take action in cases in which it feels it must take action or risk losing assets. For example, the IRS will seize property or assets if the statute of limitations is about to run out on the debt.
What is not Happening
Paper returns will not be processed, but tax returns submitted after the October 15th deadline will be penalized. The IRS will take note of the Postal Service’s postmark on returns and charge penalties and interest on any late filers. Even when the shutdown ends, there is likely to be a delay in processing returns due to the backlog created by the lapse in operations.
Unfortunately, refunds will not be issued until normal IRS functions resume. Even those who file returns electronically will not receive a refund. However, the IRS will continue to accept payments from taxpayers.
The good news is that levies and liens will not be issued. While taxpayers may receive notice of a levy or lien, they will not be enforced until after the shutdown. These notices were printed before the shutdown. Just keep in mind, these levies and liens will be enforced once the government reopens. Again, now is a good time for these taxpayers to take advantage of the lapse in IRS operations and prepare their case to be ready when the IRS resumes normal functions.
Finally, the IRS is working with limited fax machines. Taxpayers attempting to submit documents to the IRS may receive a busy signal or may not be able to confirm that the fax went through. The IRS advises those who do not receive confirmation to resubmit their documents after the government shutdown ends.
Who to Turn to for Help
The IRS’s ability to assist taxpayers is limited while the government shutdown lasts. IRS customer service employees are furloughed and the interactive features of the IRS website are down. While the IRS website and the IRS’s automated assistance phone line remain available, taxpayers in need of personalized assistance should look for help outside the IRS. Tax software companies and tax practitioners continue to be available to answer any taxpayer’s questions. Tax Defense Network is continuing to help clients get through the government shutdown and is available to assist taxpayers who have yet to tackle their tax situation and are looking to take advantage of the government shutdown and start preparing their case before the IRS reopens.