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January 15, 2019

Government Impasse Won’t Stop Tax Season (article)

Government Shutdown

Federal agencies may be in the midst of a partial shutdown over southern border security concerns, but tax season hasn’t hit a wall. The IRS is affected significantly by the government stalemate over funding for a border wall that shuttered most federal agencies on December 22. But it will draw on its furloughed employees to come in and work so that tax season can begin as scheduled on Jan. 28, 2019.

The IRS announcement means that no delays are expected to the start of filing season, and it also means that quarterly estimated tax payments are due Jan. 15, 2019, and individual tax filings will be due Monday, April 15, 2019, as scheduled.

Ramifications from the Shutdown

Initially there was widespread concern that the government shutdown would delay tax refunds. The partial government shutdown in 2011 led to a delay for refund checks, consistent with IRS policy regarding its authority to take certain actions during shutdown situations. But this time, the Office of Management and Budget (OMB) insisted that 2018 tax year refunds will be issued even if federal workers’ paychecks are not. Whether the IRS will be able to deliver on this promise remains another story.

It’s also unclear how many furloughed employees the IRS will require for its tax season. At the end of the year, the IRS had dropped its workforce down to about 12 percent capacity. The press release from the IRS indicates a “significant portion of its workforce” would be coming back to help with filing season. But there’s a question about whether the imposition on many federal employees to work without pay is legal. Some of the returning workforce also will resume the processing of requests for income verification that are typically made by mortgage lenders.

Making matters more complicated are the changes under the 2017 tax reform law, commonly known as the Tax Cuts and Jobs Act (TCJA). Tax returns prepared for this first year post-TCJA were already expected to be difficult, and with fewer IRS resources, individuals filing their returns may need to turn elsewhere for their tax filing questions or concerns. Some of the biggest changes individuals face include the nearly doubled standard deduction, the elimination of several popular tax breaks commonly used when “itemizing” tax deductions, and new tax rate brackets.

It is recommended that taxpayers try to file as early in the season as possible in case there is a delay with tax refunds. Filing early also cuts down on the risk of phishing schemes and other types of fraud used by cybercriminals to file fraudulent tax returns with your personally identifiable information.  

Taxpayers should watch for additional information from the IRS regarding the shutdown. As some of the lingering questions over the shutdown and tax season get resolved, there could be more changes coming down the pipe that affect this tax season.

For more information about the potential ramifications of the government shutdown on tax season, please contact us.

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Copyright © 2019, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).

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