The Federal Government Shut-Down: What Is Next?

Somewhere Chicken Little is probably running in circles screaming, “The sky is falling, the sky is falling!”  No, the sky is perfectly sound.  Mick Mulvaney and Marc Short have compared this to a “temper tantrum” of a two-year old child. We did wake up January 20, 2018 to find that the Federal Government had shut down.  Should we worry?  No, it has happened before.  So what should we expect as a result of that action?  We can expect just more rhetoric and filibuster in Congress and business as usual for most of us.  The question on most peoples’ minds may be, “How will the shut down affect income tax filing?”  The tax season is expected to begin on January 29, 2018.  Will it be delayed?  Not likely.

“…the IRS will need to continue return processing activities to the extent necessary to protect Government property, which includes tax revenue, and maintain the integrity of the federal tax collection process, along with certain other activities authorized under the Anti-Deficiency Act.”

We should expect the opening of tax season on Monday, Jan. 29, to continue as planned.

The Anti-Deficiency Act indicates a list of activities that will continue to operate.  Of course, there may be some limited access for a limited time. You may not notice any change, since a call to most Federal Governmental offices is likely to avail nothing or require additional efforts to get the help you need. The Federal Government has shut down before.  I remember being in a seminar in 2013 when a shut-down occurred under the Obama administration, and some of the presenters said that they were officially furloughed due to the shut down.  They presented their part of the seminar and then left the meeting.  It is no big deal, but the government has prepared a strategy for shut-downs. You can read the document that was prepared by the government to apply in such cases.

www.natptax.com/TaxKnowledgeCenter/FederalTaxInformation/Documents/FY2018-IRS-Lapse-in-Appropriations-Contingency-Plan_Filing-1-17-18_Single-File.pdf. Specifically the Document Provides:

• Completion and testing of the upcoming Filing Year programs
• Electronic returns that are processed systemically (requiring no intervention by service center functions) up to the point of refunds
• Processing paper tax returns through batching
• Processing remittances including payment perfection
• Processing disaster relief transcripts
The following activities will be furloughed and will NOT be conducted:
• Service center processing after the point of batching (i.e. processing paper tax returns)
• Issuing refunds
• Processing non-disaster relief transcripts, income verification express service/return and income verification services
• Processing 1040X amended returns
• All audit functions, examination of returns and processing of non-electronic tax returns that do not include remittances
•  Non-automated collections
•  Legal counsel
• Taxpayer services such as responding to taxpayer questions (call sites)

If the shutdown extends beyond five business days, these activities will be reassessed and possibly reinstated.  There is no reason to panic and in fact, the situation will most likely be short-lived.  Both parties of Congress are equally at fault for any disruption in our Government.  Call your Congressional representatives and tell them to do their jobs so we can continue to do our jobs which, of course, are how they get paid. The prevailing tax law remains in effect and all taxpayers should continue to meet their tax obligations as normal.  But then there is the question of “normalcy.”  I am not sure what the total concept of normal would be.  Just do not worry, life goes on no matter what the circumstances.  Praise God, love your family and work as usual. The shut-down will pass.
Source: National Association of Tax Professionals.

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