Don't Mess With Taxes

We're now into the third shutdown of federal offices this year. The other two were brief closures back in January and February.

Will this latest federal government shutdown, which began at midnight today (Saturday, Dec. 22) be similarly short-lived? Maybe, but closure #3 of 2018 already is the longest of the year, with the January shutdown lasting three days and the one in early February technically shutting federal doors for just a few hours.

Nothing is expected to happen until after Christmas. Some are predicting the impasse will continue into the new year.

And Donald J. Trump has vowed that the nine federal departments and multiple agencies that are now without funding could find themselves sidelined for a "very long" time.

Duration discussions aside, we do know that unless there's a breakthrough by Congress and the White House this weekend, more than 420,000 federal employees will go to work next week knowing that they're doing their jobs without any pay.

Another 380,000 will be sitting home, again without pay.

And all of these 800,000 or so federal workers will be worrying how they're going to pay for their holiday gifts, either this coming Christmas week or, more likely, next month when the bills for the credit cards they used to purchase them arrive.

IRS alerts employees: The reality of that situation became clear when the Internal Revenue Service posted the following message on its website:

This message applies to all IRS employees.

Due to the lapse in appropriations, most IRS operations are closed. An IRS-wide furlough began on December 22, 2018, for everyone except already-identified excepted employees. Non-excepted employees are furloughed and placed in a non-pay and non-duty status until further notice; however, all employees should plan to report to work for their next tour of duty. Employees will be given up to four hours to close out work requirements and receive formal furlough notification. Employees may report via remote access if they have telework capabilities.

For continuing information on the furlough, IRS employees are encouraged to monitor this page, news outlets, OPM.gov and the 24/7 Emergency Hotline — 866-743-5748. For TTY access (Federal Relay Service), call 800-877-8339.

We'll update this page as new information becomes available.

As a reminder, the Employee Assistance Program is available for all IRS employees and their immediate family members at any time, day or night, by calling 800-977-7631 (TDD: 800-697-0353). This no-cost counseling service could help address stress and other issues you and your family may face.

Other Treasury Department employees have received a similar announcement. So have workers in the similarly unfunded Departments of Agriculture, Commerce, Justice, Homeland Security, Interior, State, Transportation and Housing and Urban Development, as well as those in several smaller agencies.

Job parameters under shutdown: The unpaid workers who will report to their IRS offices — or as the message notes, can do their unpaid jobs remotely — will be operating under the guidance of the agency's closure contingency plan.

This weekend's Saturday Shout Out goes to that IRS document, Fiscal Year 2019 LAPSED APPROPRIATIONS CONTINGENCY PLAN (Non-Filing Season - December 8-31, 2018), which was updated in late November.

As noted in my prior posts as the shutdown loomed, it's possible that if the closure of IRS and the other affected federal agencies drags on, the 2019 tax filing season could be delayed. And that means millions of taxpayers will be waiting longer for their expected tax refunds.

It also means that the IRS won't have enough staff on hand to examine returns, meaning folks who fudge their filings could get away with their tax evasion efforts.

Both refund and audit activities are on the list of what is known as non-excepted activities. That means they are at the bottom of the list of what the IRS plans to do in worker furlough situations.

What the IRS will do during shutdown: In government shutdown situations, the IRS focuses on what are termed excepted actions.

These are, in the IRS' case per the contingency plan, actions that are "Necessary for the Safety of Human Life or Protection of Government Property The Budget Enforcement Act of 1990 amended the Anti-Deficiency Act."

We can spend days and innumerable blog posts parsing this phrasing, but basically these are IRS activities that help the agency collect money, as best it can in shutdown situations, to keep the rest of the federal government going.

The excepted jobs that more directly apply to taxpayers and which will be done during shutdown include:

• Completion and testing of the upcoming tax-filing year programs
• Electronic returns that are processed systemically (requiring no intervention by service center functions) up to the point of refunds
• Processing paper tax returns through batching
• Processing remittances
• Processing disaster relief transcripts
• Continuing the IRS' computer operations to prevent the loss of data
• Protection of statute expiration, bankruptcy, liens and seizure cases
• Upcoming tax year forms design and printing
• Maintaining minimum staff necessary to perform accounting functions and to prevent the loss of accounting data
• Maintaining criminal law enforcement and undercover operations

What the IRS won't do during shutdown: On the other side of the shutdown coin are the non-excepted actions, or those "regular, ongoing functions whose suspension would not pose an imminent threat to life and property."

Again, these are things that the IRS has determined aren't key to the agency's job of collecting taxes. So the non-exempt list of jobs the agency won't focus on when the government is closed includes:

• Service center processing after the point of return batching
• Issuing refunds
• Processing non-disaster relief transcripts, Income Verification Express Service/Return and Income Verification Services
• Processing 1040X amended returns
• All audit functions, examination of returns, and processing of non-electronic tax returns that do not include remittances
• Non-automated collections
• Taxpayer services such as responding to taxpayer questions (call sites, during non-filing season)
• Information systems functions (except as necessary to prevent loss of data in process and revenue collections)

Plan timing, possible amendments: This contingency plan likely will be updated if the shutdown goes into 2019.

The plan itself says as much:

This plan will become effective anytime outside of filing season (January 1 - April 30, 2019), after official notification is received from the Department of the Treasury. Such notification may include additional guidance from the Office of Personnel Management and the Office of Management and Budget that a lapse in appropriations is possible or in effect.

If the IRS is operating under furlough guidelines in 2019, expect some changes as to the excepted and non-excepted activities that workers, still unpaid, would perform during filing season.

Note, too, that while a government shutdown will hamper how the IRS does its job, that doesn't mean we taxpayers are off the hook.

Whenever the IRS does start accepting tax returns in 2019, all of us will be expected to file as usual and meet the April deadline.

You also might find these items of interest:

• Government shutdown effects trickle down to real people
• Trump threat of 'good' government shutdown nothing new
• Been there, done that: Government shutdown (2018) shouldn't affect IRS handling of tax returns as long as closure isn't too long

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