Due to the partial government shutdown that went into effect December 22, 2018, our tax attorneys in Oakland have learned that taxpayers who file early this year may have to wait for their refunds. The Wall Street Journal reports that should the shutdown continue, it is possible that income tax refunds totaling billions of dollars may be delayed.
Because of the shutdown, the IRS is operating with a mere 12 percent of its staff. Although IRS employees can conduct criminal investigations and process returns, the loss of funding means that many other operations are at a standstill. These include allocating refunds, answering off-season questions from filers, and running audits.
Standard protocol for the IRS is to accept tax returns from the end of January throughout the tax season, and January filers have typically received refunds as early as February.
If the shutdown is somehow resolved before the end of January, early filers may not be affected. However, the current situation makes it probable that refunds will be delayed. This will likely put pressure on the government to reach some type of agreement to end the shutdown and get federal employees back to work, including IRS staff members. Ironically, if a deal is not made in a timely manner, the people most likely to be affected by the refund delay are those who need their money the most.
The Wall Street Journal’s Richard Rubin stated that this is because it is taxpayers with disproportionately low incomes who usually file early to receive their refunds as soon as possible. Floyd Williams, former Director of Legislative Affairs for the Internal Revenue Service, told Rubin that wealthier taxpayers who usually do not file early will probably not be affected very much by the repercussions of the shutdown. The new tax laws that will benefit some and leave others unchanged or with a higher tax bill was already projected to cause a slow start to the 2019 filing season. The shutdown will only add to this delay.
The Internal Revenue Service will be accepting tax returns regardless of how long the government shutdown is in effect. Accountants who spoke with the Business Insider stated that this means taxpayers should still file their returns in a timely manner, rather than procrastinate. Those wondering how they will be affected by tax law, the shutdown, or other factors may wish to consult a tax attorney with their questions and concerns.
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