A Trump administration official said Monday that federal income tax refunds would indeed go out despite a large part of the government being shut down.
Donald Trump and Congress are mired in a standoff over funding for a southern border wall.
Only about 12 percent of IRS staff is expected to continue working through a shutdown, according to the agency’s plan, which means certain functions such as answering taxpayer questions would be curtailed. The IRS is still working on contingencies if the shutdown continues.
“The processing of returns and customer service — most of those employees have been furloughed,” said Nicole Kaeding, director of federal projects at the Tax Foundation.
“How will they bring those employees back, and will they be compensated while they’re working?” she asked. “Those are some large questions that haven’t been answered, even though they said refunds would be processed.”
That makes this a stressful time for accountants — and their clients. “The October 2013 shutdown caused a lot of angst for practitioners,” said Edward Karl, vice president of taxation at the American Institute of CPAs.
“If there were some issue and you needed to contact the IRS, you couldn’t get them,” Karl said. “There were many folks concerned about that.”
Meanwhile, House Ways and Means Committee staff told The New York Times on Monday that they were struggling to get clarity from administration officials, many of whom are out on furlough.
“We keep trying to call people at IRS and Treasury,” said Daniel Rubin, a spokesman for the Ways and Means Committee, “and there’s no one there.”
Though the IRS hasn’t yet kicked off the filing season, millions of taxpayers tend to submit their returns as soon as possible. These households may need the tax refunds to either eliminate their remaining holiday debt or to boost their savings.
In 2018, the IRS started the filing season on Jan. 29.
By Feb. 2 — the end of that week — the agency received 18.3 million returns and processed 6.1 million refunds, with an average refund check of $2,035.
In all, the IRS received 154.4 million returns by Nov. 23 of last year, the most recent date available, and issued an average refund of $2,899.
“People shouldn’t have to wait to get money back that’s theirs,” said Jeffrey Levine, CPA and director of financial planning at BluePrint Wealth Alliance in Garden City, New York.
“It’s not their fault that the government is dysfunctional and shut down,” he said.
A busy time
The shutdown is taking place at a busy time for the IRS, accountants and filers.
This filing season marks the first under the Tax Cuts and Jobs Act — an overhaul of the tax code that went into effect at the beginning of 2018.
Last year, the new tax code roughly doubled the standard deduction to $12,000 for singles and $24,000 for married couples filing jointly. The law also limited a number of itemized deductions, including placing a $10,000 limit on the amount of state and local taxes filers can deduct.
You will also be dealing with new tax forms, as the Form 1040 has been shrunken to the size of a postcard. You will still need to work through pages of schedules to calculate other tax breaks.