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Tax Season 2019 and the Government Shutdown

Tax Season is here and many tax payers are concerned about how the current record-breaking government shutdown is going to affect their tax return and tax refund. This is the one time of year when many low income families are able to pay down debts, make major purchases and even cover bills such as healthcare etc.

According to the IRS’s Contingency Plan, the 2018 tax filing season starts on January 28th, 2019. Additionally, they say taxpayers should expect to get their returns and refunds on time despite the shutdown. At last checking, the Administration decided to bring back about 60% of IRS employees with hopes of avoiding many of the main shut-down related issues.

"We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown," said IRS Commissioner Chuck Rettig. However, many doubt that the IRS’ usual pledge to pay refunds within 21 days may be difficult.

Tax Experts are staying positive with the hope that the situation should be manageable although there will undoubtedly be some delays in processing refunds. It is reasonable to expect delays given the combination of a reduction in the number of IRS staff usually processing tax returns and refunds under non-shutdown conditions, and, the catch-up changes still remaining from the Tax Cuts and Jobs Act 2017.

The filing process should continue to be fairly routine and timely if the taxpayer:

  1. uses a paid preparer

  2. use commercial tax software

  3. does not need to contact the IRS for assistance

  4. tax return raises no red flags

On the other hand, some taxpayers may experience more delays than would normally be expected. For example, in the following cases;

  1. low income tax filers who rely on free IRS assistance

  2. households that claim earned-income tax credit and child tax credit (by law these must be held until at least Feb. 15)

  3. tax return that contains errors

  4. tax return that raises red flags

In addition to the delays listed above for specific taxpayers, other problems may develop that would affect the general populace of taxpayers if the shutdown persists. Three of these possibilities are:

  1. High percentage of “No-Show” to work

  2. Insufficient workers called back

  3. Strike by IRS employees

If the situation continues towards the end of January - and currently the indications are that it may still be going in February - dire financial consequences for Federal employees, Federal contractors and taxpayers waiting for refunds to meet basic living requirements are sure to increase. How it will all turn out is now a waiting game for everyone.

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