Implications of a Potential Shutdown on IRS Operations
Congressional Action and Uncertainty Surrounding Federal Funding
According to CNet, the possibility of a government shutdown looms due to deadlines for a proposed federal spending deal on March 1 and March 8 which could affect agencies like the IRS. If a shutdown occurs during tax season, it may disrupt IRS operations and potentially delay tax refunds. Last year, certain departments including the IRS were funded until March 8 and failure to fund them by the specified dates would result in temporary shutdowns.
The fate of federal spending relies on Congress passing a bill for either long-term funding or short-term measures to extend negotiations. Despite reluctance from some lawmakers to approve further short-term funding, Congress has previously passed three stopgap bills indicating a potential path to prevent a shutdown. However, uncertainty persists as the deadline nears leaving taxpayers and agencies like the IRS in limbo until Congress reaches a resolution.
During a government shutdown, the IRS maintains essential operations with a reduced workforce but certain services like the IRS Taxpayer Advocacy Service may be impacted. Electronic refunds are expected to proceed normally but resolving issues with returns during a government shutdown could be difficult. Taxpayers filing paper returns should anticipate delays so filing electronically and opting for direct deposit is recommended to expedite refunds. It’s advised to file early to mitigate potential disruptions in case of a government shutdown.
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IRS Commissioner Acknowledges Uncertainty Amid Potential Shutdown
IRS Commissioner Danny Werfel admits things are uncertain because of a possible government shutdown during tax season which hasn’t happened before. Also, the IRS is still catching up from the shutdown during the pandemic in 2020. Tax deadlines stay the same even if there’s a shutdown like Tax Day. If you don’t pay taxes on time, you could face penalties and late fees no matter how long the shutdown lasts.