US government shutdown freezes IRS services

Taxpayers face delays and the Internal Revenue Service (IRS) has suspended all non-essential work as the US government shutdown over a political funding dispute overlaps with the beginning of the tax filing season

During the shutdown, a suspension of funding means that US government departments are only able to carry out actions ‘necessary for the safety of human life or protection of government property’.

In the case of the IRS this means that 12.5% of its usual workforce is employed, carrying out essential tasks such as processing electronic returns, appeals, criminal law enforcement and investigations.

However, many non-essential tasks are suspended indefinitely, including issuing refunds, conducting audits, return examinations, and non-automated collections. US citizens seeking refunds for years prior to 2018 are particularly at risk, as are those expecting outcomes of investigations.

It also means that telephone customer service assistance for handling taxpayer queries is suspended and walk-in assistance centres are shut. All current tax deadlines, including those for payroll tax, remain in effect.

The IRS’ contingency plans cover just five business days, which lapsed on 31 December 2018. As the shutdown continues, the agency will either demand that workers return from the enforced furlough or enact further, unplanned emergency measures.

The Democrat-led House of Representatives passed two measures on 3 January 2019 in a bid to reopen government agencies whose funding had lapsed, but provided no money for the disputed $5.6bn ($4.2bn) border wall demanded by the president. The Senate, which is controlled by the Republican party, has vowed not to bring them up for a vote because they do not pass muster with the president.

In 2013, a dispute over a healthcare bill led to a suspension of government activity for 16 days. As a result the IRS moved its filing season for accepting and processing 2013 individual tax returns to start on 28 January 2014.

The IRS Lapsed Appropriations Contingency Plan - Fiscal Year 2019 is here

Report by James Bunney

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