The Federal government has been shut down for several weeks and, as we enter into tax season, there could be serious repercussions for taxpayers.
Currently, the IRS is operating with a skeleton staff although they are expected to add personnel for the impending tax filing season. Typically during a shutdown, the IRS will process returns and accept amounts due from taxpayers. However, they will neither conduct audits nor pay refunds!
This further muddles an already complex filing season due to the new tax legislation. If the shutdown is resolved, there will be little to no impact on taxpayers but, if it continues, here is how you can respond:
- Reconsider filing early in the tax season; you may want to postpone until the shutdown is resolved (remember that the April 15th deadline still applies!)
- If you own a small business and pay quarterly tax estimates, consider applying your refund to tax year 2019 rather than having cash returned to you.
- File your tax return but don’t count on having your refund any time soon.
Finally, even though the IRS may not conduct audits during a shutdown, remember that they can (and will) conduct audits once the shutdown has ended!
For more information, please refer to this article in the Wall Street Journal.