What Taxpayers Need to Know: Navigating Tax Season Uncertainties During Government Shutdowns
A government shutdown occurs when Congress fails to pass a budget or continuing resolution to fund the government. When this happens, many government agencies are forced to close or operate with a limited staff.
The IRS is one of the agencies that is affected by a government shutdown. During a shutdown, the IRS is required to furlough most of its employees. This means that the IRS is unable to provide many of the services that it normally does, such as processing tax returns, issuing refunds, and answering taxpayer questions.
The impact of a government shutdown on the IRS can be significant. During the 2018-2019 government shutdown, the IRS was unable to process millions of tax returns and issue refunds. This caused a backlog of tax returns that took the IRS months to clear.
The Impact on Tax Filing and Refunds:
Delayed Tax Refunds:
A government shutdown can have a significant impact on taxpayers. Taxpayers who file their tax returns during a shutdown will have to wait longer for their refunds. Taxpayers who are expecting a refund will also have to wait longer to receive it. Taxpayers who have questions about their taxes will also have to wait until the government reopens to get answers.
Limited Customer Support:
A government shutdown can also harm the morale of IRS employees. Many IRS employees are furloughed during a shutdown, which means that they are not paid. This can cause financial hardship for IRS employees and their families.
Impact on upcoming tax filing deadlines:
As an Oct. 1 deadline approaches for Congress to broker a deal and keep the government from shutting down, taxpayers may be wondering how a shutdown will affect upcoming tax filing deadlines. Here is a summary of the key tax filing deadlines that are approaching:
Individual taxpayers who filed for a six-month extension:
Must still file their 2022 income tax returns (Forms 1040 or Forms 1040-SR) and pay any tax, interest, and penalties due by Oct. 16.
Calendar-year C corporations that filed for a six-month extension:
Must also file their 2022 tax returns (Forms 1120) and pay any tax, interest, and penalties due by Oct. 16.
Employers:
Must report and pay income tax withholding and FICA taxes for the third quarter of 2023 by Oct. 31.
What taxpayers can do:
If there is a government shutdown, taxpayers can take steps to minimize the impact on their taxes. Taxpayers who file their tax returns electronically should continue to do so, even if there is a shutdown. The IRS will process electronic tax returns as soon as possible after the government reopens.
Taxpayers who are expecting a refund should consider filing their tax returns early. This will help them to get their refund as soon as possible after the government reopens.
Taxpayers who have questions about their taxes should contact a tax advisor. Tax advisors can help taxpayers to understand their tax obligations and to prepare their tax returns.
A government shutdown can have a significant impact on the IRS and taxpayers. Taxpayers can take steps to minimize the impact of a government shutdown by filing their tax returns electronically early and by contacting a tax advisor if they have any questions about their taxes.
It is important to note that the information above is based on the current understanding of the law and may be subject to change if the government shuts down. Taxpayers should consult with a tax advisor to get the most up-to-date information on how a government shutdown may affect them. So, utilize marketplaces like IfindTaxPro where you can post your project and find the right tax specialist for you.
