Government Shut-Down and IRS Contingency Plan



The government shutdown has entered its third week and the traditional start of filing season is nearing. According to reports, IRS is working on a filing season contingency plan and expects to finalize its plan shortly.

While IRS released a contingency plan in late November 2018 outlining activities that would and would not take place during a lapse in appropriations, this plan does not cover the 2019 fiscal year filing season.

Government Shutdown and the IRS

The partial government shutdown began on Dec. 22, 2018. As a result of the shutdown, according to Reuters, approximately 800,000 federal works have been unpaid, and nearly 70,000 IRS employees have been furloughed (approximately 87.5% of its workforce).

While most IRS activities have been halted, guidance implementing the Tax Cuts and Jobs Act has continued to be released, due to a separate appropriation of funds made by Congress in association with the TCJA. These funds remain available until Sept. 30, 2019.

The Tax Court has also been closed since Dec. 28, 2018.

Letter to the Commisioner

New Ways and Means Committee Chairman Richard Neal (R-MA), in letters to IRS Commissioner Charles Rettig and Treasury Secretary Steve Mnuchin, expressed concerns with how the shutdown will affect taxpayers.

As of the date of the letter (Jan. 4, 2019), Neal noted that the IRS has indicated that it would not issue tax refunds during a shutdown, causing hardship to taxpayers who rely on those funds.

Chairman Neal sought information including, among other things, the date that filing season would open (and an explanation if after Jan. 29—i.e., the calendar date on which it opened in 2018), confirmation that IRS would not issue refunds during the shutdown, and a "description of how the lapse in funding has impacted the ability of the IRS to be prepared for what many expect to be a confusing tax filing season for Americans".