The beginning of tax season almost got off to a strange
start with the brief government shutdown that began over the weekend. A
temporary measure passed Monday kept this from becoming
an extended issue, but the story is far from over.
Ahead of the shutdown, the IRS issued its “FY2018 Lapsed
Appropriations Contingency Plan.” Interestingly, this did not say that tax
returns would not be processed, but that they would happen, “to the extent
necessary to protect Government property, which includes tax revenue, and
maintain the integrity of the federal tax collection process.” What this pretty
much sounds like is that the government would accept tax returns and payments,
but there was nothing about refunds, and taxpayer services would be, at best,
extremely limited. .
The plan estimated that only about 43 percent of the IRS’s
staff would be retained in the event of having no funding. That comes on the
heels of the IRS stating that it would need increased funding just for the
implementation of the recent Tax Cuts and Jobs Act. Of course, this also
happens in the shadow of almost a decade of financial cuts for the agency that
have resulted in fewer audits and longer wait times for those who need to
contact the IRS.
Congress’s actions Monday kept all this from becoming an
immediate issue, but it only covered funding for the government for a few
weeks. Granted, things may work themselves out over that time, but that is
clearly no sure thing. So what does this mean for tax filing?
First, if you are ready to go forward, there seem to be good
reasons to not procrastinate filing your taxes The IRS is slated to begin
accepting returns on Monday, January 29, and in a time of uncertainty, there
could be some comfort in knowing that your obligations have already been taken
care of.
Second, though, this also becomes a good time to pass along
a reminder that if your return claims the Earned Income Tax Credit or
Additional Child Tax Credit, any refund could be delayed. In an effort to
combat fraud, the IRS expects to hold such refunds until the week of February
27th at the earliest. This includes the entire refund, and not just
the portion associated with the credits, and this will be the case no matter
how any potential government shutdowns play out.
Finally, do not overlook what the IRS said that it for sure
would still do, and that is protecting the government’s tax revenue. No matter
where things go, the federal government is still going to expect your tax
return and any payment it is due by the April 17th deadline. Even if
we enter a scenario where there is a huge backlog of tax returns that need to
be processed, the IRS is going to note when you filed the return, not when it
was processed, when it comes to any potential penalties.
Also, rest assured
that we remain ready to ramp up our efforts throughout tax season. We will not
be shutting down and instead will be standing by you no matter where the path
leads
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