From taxpayer perspective, there’s little to like about shutdown

A column by Fran Coet, CPA
Posted 1/16/19

We are just beginning to realize the level of disruption that the partial government shutdown has caused to federal employees and to people who rely on services provided by the federal government. We …

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From taxpayer perspective, there’s little to like about shutdown

Posted

We are just beginning to realize the level of disruption that the partial government shutdown has caused to federal employees and to people who rely on services provided by the federal government.

We have learned terms like “essential” and “non-essential” — relating to which government employees are required at a minimum to maintain certain systems and keep us all safe.

For instance, my son is a federal employee of Homeland Security, and he must continue to work, helping to protect us. And the timing of the shutdown is certainly impactful to me, as an accountant, entering the well-known “tax-filing period” and relying on the IRS to accept and validate the returns that we prepare.

We just passed the Jan. 15 deadline in which certain citizens must pay their quarterly estimated taxes - and if that group includes you, we hope you made your payment. Even though the partial government shutdown has affected staffing of the Internal Revenue Service (about 70,000 IRS employees out on furlough), we suspect that tax-collecting agency will find a way to “catch up” with its work and track down any delinquent tax-payers.

Our clients are busily assembling and organizing their tax records in hopes of filing their 2018 individual tax returns as promptly as possible. Under normal circumstances, the sooner they address this chore, the sooner they receive their tax refunds.

But now we have a couple of issues in relation to the shutdown. First, the schedule in which the IRS will accept and process some individual tax returns has been placed in question. The situation has been fluid, but as of this writing, the IRS won’t accept individual returns until Jan. 28, and then only in electronic (e-file) format.

The IRS is now accepting most business tax returns, but could that change? Who knows? And even though IRS will accept the paper returns of those who choose to file that way, there is no way to anticipate when those paper returns will be processed. We suspect you could actually end up in the “slow lane” at the IRS. In other words, you might receive your refund even later than you would have if you had just waited for the partial government shutdown to end, when processes would theoretically return to predictable timeframes.

Speaking of refunds, that’s another aspect of this government shutdown to keep in mind. In previous shutdowns, the IRS simply quit issuing refunds, pending the resolution of the shutdown. Early in this shutdown, we received news that the same policy would apply - but then the White House announced that the IRS would indeed continue issuing refunds. In order to make this happen, the IRS will have to reclassify some “non-essential” personnel to “essential,” and those essential personnel will be asked to work without pay.

There may be one minor aspect of this shutdown that some taxpayers are celebrating: While the IRS is so short-handed, they have essentially suspended their audit activities. But think about it - this is a double-edged sword, because the government needs to collect taxes to pay for the services like the ones we are currently missing. We would rather just see the entire government get back to work.

Fran Coet is founder and owner of Coet2 CPAs in Westminster, www.Coet2.com. Call 303-426-6444.

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