The Government Shut Down but Where's My Refund?
A quick look at the effect of government shutdowns and tax filing seasons.
By now, you might have heard that we're in the middle of a government shutdown due to differing views between our branches of government. At this time, there is no date of when our government will continue to operate as normal without having thousands of furloughed employees. While these employees could be facing a squeeze between not receiving their current paychecks and having to pay ongoing bills, another group of Americans can also begin to see a squeeze if the government shutdown continues.
So what is the status of the IRS right now?
As of December 21st, 2017, funding to the IRS has expired and since then about 7 in 8 IRS employees have been furloughed. This means that the IRS is operating with only 12.5% of its workforce. As you can imagine, any workforce that has been cut that deep has limited a lot of its normal functions and refocused on core administrative tasks. One activity that the IRS has cut is issuing refunds to taxpayers.
Every year, millions of taxpayers rush to file their income tax returns in hopes of collecting their tax refund. These refunds can be used for many different purposes from paying bills to repaying Christmas gifts bought on credit. I've even heard of refunds going towards paying for Spring semester tuitions. By Feb. 16th, 2017, the IRS had already paid out $101.2 billion to nearly 32 million households. As a practitioner, I have witnessed that there is definitely a population out there of early filers who see this time of the year as a windfall to help with ongoing costs.
So what is next?
On January 4th, 2019, Richard E. Neal of the Committee on Ways and Means, sent a letter to Secretary of the Treasury, Steve Mnuchin, expressing concerns on the impact of the Department of the Treasury and the lapse in government funding. As stated earlier, though there is no new information on when the IRS will begin accepting tax returns, it is still very early in January and it is worth mentioning that filing season did not officially begin until Jan. 29th of last year.
As news begins to trickle out of Washington, Pacific Pier Tax Management stands ready to service clients this tax season. For any tax questions, please feel free to reach Milton via email or instagram.
If you found this information to be helpful, please take a moment to subscribe to the blog to receive the latest insights from our firm.
Milton Rodriguez, EA