What to Expect From The IRS Under Partial Shutdown

January 17, 2019 | Article

What to Expect From The IRS Under Partial Shutdown
First, a disclaimer—the information in this article is subject to change as the IRS continues to assess the current requirements they need in place to protect revenue inflows and service needs. It’s current at the time of publication, but be on the watch for updates on what’s discussed below.

Partial Government Shutdown Impact
As the partial U.S. government shutdown continues, certain IRS services are affected, creating the potential for time delays and, in some cases, no service being provided. Service disruptions could include no response for extensions of time or changes to the scheduling of examinations. However, automated services probably will not be affected.

If you receive an IRS tax notice with a defined response date, that response date should be observed and followed. Do not anticipate the IRS will allow an extension because of their inability to perform services during the shutdown.

The following information, found in the IRS FY2019 Lapsed Appropriations Contingency Plan,will provide some information, but until the partial shutdown is resolved, other things may be added or deleted. The plan will be modified, particularly in relation to sending out refunds, but nothing official has been announced yet.

What the IRS Is Continuing to Do:

  • 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 (tax payments)
  • Issuing refunds
  • Processing disaster relief transcripts, Income Verification Express Service/Return and Income Verification Services
  • Responding to taxpayer filing season questions (call sites)
  • 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 operation
  • Automated collections

What the IRS Won't Do During the Shutdown:

  • Service center processing after the point of return batching
  • Processing non-disaster relief transcripts
  • 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 phone lines closed during non-filing season)
  • Information systems functions, except as necessary to prevent loss of data in process and revenue collections

The U.S. House and Senate have both said they will introduce legislation to deal with the partial government shutdown. However, the things the IRS can and will do if the shutdown continues cannot wait on that legislation and still meet the requirements of the 2018 tax return filing season as well as handle ongoing tax cases, so expect some clarification and guidance to start coming very soon.

What Happens Next?
You should respond to IRS notices as usual and request extensions for IRS returns and other purposes in a timely manner, but be aware that the IRS probably will not be responding to non-automatic extension requests. Therefore, if a response is required to perfect the extension request, discuss your case with someone qualified in the tax controversy area. Additionally, we have noticed that many of the IRS fax services have not been functioning, so you may need to send your responses or extension requests by certified mail.

If you need immediate assistance, contact your Eide Bailly professional or Ben Peeler or Mike Mondelli in our National Tax Office IRS Dispute Resolution & Collections service area.

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