On Monday, January 7, the White House has vowed that the Internal Revenue Service (IRS) will issue tax refunds, despite the ongoing partial shutdown of the federal government. The shutdown is a major source of apprehension for taxpayers and accountants, who are entering the busiest time of the year with tax filing season looming. Only 12 percent of IRS employees are working through the shutdown, while most of the customer service and tax processing employees are not included in that number. Currently, there are no IRS representatives available to answer questions or concerns, a situation that is exacerbated by the uncertainties surrounding filing the first returns under the new Tax Cuts and Jobs Act.
However, the greatest concern this time of year for most taxpayers is “When am I going to get my refund?” While the statement by the White House seems to alleviate some of this anxiety, the more important question this year should be, “How am I going to get my refund?”
There are huge hurdles to overcome if the administration expects refunds to be issued during the shutdown. For example, according to the IRS filing statistics, in the first week of the 2017 tax filing season alone (January 29-February 2), the IRS received over 18 million returns, of which one third requested a refund. The average refund was $2,035, creating over 12.5 billion dollars in refunds to be paid. Assuming a similar number of returns are filed early in the 2018 tax filing season, how can a skeleton crew at the IRS process that kind of volume? So far, the White House has not answered the question of “How.”
Top Democrats have stated their belief that it would be illegal for the IRS to issue refunds during the shutdown. This aligns with the way the IRS has operated in the past, based on the Antideficiency Act, which governs the types of work permissible during a government shutdown. While the administration seems confident in its ability to issue refunds if the shutdown drags on, we will find out in the coming weeks if this promise is just political posturing or a legitimate policy change to ensure that taxpayers receive their money.
If you need assistance dealing with the IRS or filing your income taxes, Aronson’s tax controversy team can help. Please contact Patrick Deane or Larry Rubin at 301.231.6200.