The Administrative Effect of The Government Shutdown On The Internal Revenue Service

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On October 1, 2013 the United States Government was required to suspend all but its most needed operations as the result of the U.S. Congress’ failure to compromise upon appropriations that would have funded the government in fiscal year 2014. It should be duly noted that since March 26, 2013 numerous government operations have been funded under the Consolidated and Further Continuing Appropriations Act [Pub. L. No. 113-6].

As a reminder, the United States Government operates on a fiscal year that runs from October 1 – September 30, and Congress is required to appropriate funds for the approaching fiscal year by the beginning of that year (i.e., October 1, 2013). Historically speaking many legislators often fail to do so, but typically they can agree upon a Continuing Budget Resolution that provides temporary funding—typically at the previous fiscal year’s spending rates—for the short-term period(s) while negotiations for the full-year appropriations continue. However, as both Democrats and Republicans continue to debate many federal buildings across the country have remained closed since October 1st including access to national parks, monuments, and museums coupled with hundreds of thousands of non-essential federal employees being furloughed.

Administrative Effect on the Internal Revenue Service

On October 8, 2013 the Internal Revenue Service (hereinafter the “Service”) updated its online notice about the government shutdown and reminded taxpayers on extension that the October 15 deadline is still in effect. The Service emphasized that all statutory due dates remain unchanged— including those affecting individuals, corporations, and partnerships. The regular payroll tax deadlines remain in effect as well. The Service encouraged taxpayers to file their returns electronically during the lapse in appropriations, and warned that paper returns would not be processed during the shutdown (e.g., the Service is operating with minimal staff during the shutdown) but would be considered timely filed if appropriately postmarked. Tax refunds will not be processed nor issued until normal government operations resume. In addition, the Service’s Determination Letters; Private Letter Rulings; and Voluntary Correction Programs have been halted until further notice.

Critical Congressional Timeline

Congress must agree to raise the federal debt ceiling by mid-October in order to prevent the government from defaulting on its debts. A Treasury Department Report issued on October 3, 2013 warned of catastrophic economic consequences if the fractiousness currently miring the budget issue were to transpire with respect to the debt-ceiling increase. Senator Reid, along with Senate Finance Committee Chairman Max Baucus (D-Mont.) introduced legislation on October 8, 2013 to suspend the debt limit until December 31, 2014 (S. 1569). With an October 17, 2013 deadline to extend the debt limit fast approaching; Reid hopes to move the crisis forward in advance of that deadline and the absolute drop-dead date of October 30 as claimed by select government officials.

In accordance with Circular 230 Disclosure

About the Author
Peter J. Scalise serves as the National Partner-in-Charge of the Federal Tax Credits and Incentives Practice at SAX CPAs LLP. Peter is a highly distinguished member of the Accounting Today Top 100 Influencers and has approximately thirty years of progressive Big 4 and Top 100 public accounting firm experience developing, managing, and leading large scale tax advisory practices on a regional, national, and global level.
Peter also serves as a passionate philanthropist and a member of several Boards of Directors and Boards of Advisors for local, regional, and national charities in connection with poverty and hunger alleviation; economic development; environmental conservation; health and social services; supporting veteran and military service personnel along with preserving arts and cultural programs.

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1 comment on “The Administrative Effect of The Government Shutdown On The Internal Revenue Service”

  • I often wonder what impact will the shutdown have on the morale of the IRS employees. These employees have been under the gun in the past few years with funding reductions, hiring freezes and scandals (true or false) that must have an impact on morale. No one mentions how the shutdown will impact the morale and productivity of IRS employees in the period after the shutdown.

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