Once again there’s a government shutdown. What does it mean for taxes?
First, deadlines and responsibilities don’t change just because there’s a government shutdown. You still owe tax, and if you’re on extension your taxes are still due (generally) on October 15th. If you use the excuse, “The government shut down, so I’m not going to file or pay,” your chance of winning that argument is zero. Don’t try it.
For now, it’s business as usual at the IRS. The IRS is using Inflation Reduction Act funds to stay fully staffed. Unfortunately, there’s about five days of funding left; that means the IRS will likely run out of funds next Wednesday, October 8th. When that happens, it’s likely there will be little or no phone support, correspondence will start being accumulated, and IRS counsel (dealing with legal issues) may be furloughed. If you need to reach the IRS, call ASAP.
If this shutdown lasts any appreciable amount of time, it will add to the challenges the IRS faces. The IRS is already facing (a) massive tax law changes, (b) ancient computer systems, and (c) probable budget cuts. If you add backlogged work you have a nightmare for anyone who has to deal with the IRS on a regular basis. (And yes, that’s me.)
One thing that’s likely to continue during the shutdown are automated notices. Consider a taxpayer who gets an automated notice and timely responds. Will that response get noted so that a second notice doesn’t get generated? Who knows.
I hope that this gets resolved quickly, but the reason I wrote when that happens above rather than if it happens is that I’m convinced this will take a number of weeks to get resolved. I think the best case is two weeks, but I wouldn’t be surprised if this takes a month or longer. This is one prediction I really hope I have wrong.
