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How the Government Shutdown Could Impact Your 2018 Tax Return

  • Tax

Update 1/8/19: The IRS has just confirmed that, despite the current government shutdown, it will begin processing 2018 tax returns on January 28, 2019 and will provide refunds to taxpayers as scheduled.

As 2019 begins, we are wading into unknown territory with the current federal government shutdown which also impacts the IRS.

According to the FY2019 Lapse Appropriations Contingency Plan, the IRS will retain 9,946 of the nearly 80,000 employees (12% of the total IRS workforce) during the shutdown. The IRS Contingency Plan also suspends some functions including audit activities, taxpayer services (call centers for taxpayers) and issuing refunds to taxpayers.

How will this shutdown (for as long as it lasts), impact you?

If the federal government shutdown doesn’t last much longer (mid-January), you shouldn’t see a noticeable difference with IRS tax processing or getting your 2018 tax refund. Even before the shutdown was a possibility, the IRS hadn’t planned to begin working on 2018 taxes until mid-January, so hopefully the schedule will not change.

According to Kevin Kressig, CPA, Mize Houser Tax Shareholder, “If the federal government shutdown lasts longer than January 15, we could see delays. One of the bigger challenges is how quickly the Federal government can approve tax software products like Lacerte®. Tax preparers and CPAs rely on the latest approved version to prepare tax returns. If the government pushes back the software review and approval process, this could impact the tax return prep schedule.”

One taxpayer group that could be affected: those still waiting on tax refunds from before 2018. If the federal government remains closed down, don’t expect to get that money until sometime after the government reopens.

As a taxpayer, what should you do? Kressig advises taxpayers to stay calm and continue to follow tax filing procedures and deadlines. “If our clients are anxious about receiving a refund, we advise them not to wait until the last minute to provide us with their tax records. Once the shutdown is complete, tax refunds will be processed in order based on filing date.