UPDATE: Normal operations are restored at federal agencies until Feb. 15, 2019, after the House and the Senate passed a stopgap spending bill. President Trump signed the bill on Friday, Jan. 25, 2019. The IRS reopened on Jan. 28, 2019 and kicked off the 2019 tax-filing season.
Since Dec. 22, 2018, the majority of IRS employees have been temporarily called off of work due to the government shutdown. In addition, this is the first tax season where the Tax Cuts and Jobs Act is in effect.
The IRS is responsible for issuing regulations and guidance on new tax laws. As the 2019 filing season approaches, many want to know how these factors will affect their ability to file, receive refunds, and comply with the new tax law. Here’s what we know.
IRS customer service
The IRS has a shortage of workers. In the agency’s contingency plan, it states they will have 46,000 employees working during tax season if the shutdown continues. This is about 57% of their full staff. This shortage will have the largest impact on taxpayers and tax professionals.
Why? It affects many IRS operations and activities.
Currently, no telephone customer service is available. The IRS plans to add staffing to answer phones, but you can expect long wait times. Walk-in centers or in-person service areas are closed.
If you send mail to the IRS, expect a delayed response as the IRS is responding but to a limited degree. In addition, the IRS isn’t processing applications or making determinations on tax-exempt statuses or payment plans.
Refunds, deadlines & payments
The IRS will begin accepting paper and electronic tax returns on Jan. 28, 2018. This is the start of the individual taxpayer’s filing season. They will also process and distribute tax refunds, but again, it may take more time due to staff availability.
To help speed up the process, the IRS recommends you e-file and/or sign up for direct deposit. If you have all your information, go ahead and file. There’s no need to wait.
The IRS began accepting business tax returns in early January. Tax preparers can begin submitting returns when IRS systems open later this month.
The filing deadlines haven’t changed. Partnerships and S corporations must file by March 15, 2019. Individuals and corporations must file by April 15, 2019.
As always, you can choose to file by the appropriate deadline or file an extension by that date. Contact your tax professional to determine the best course of action for you and/or your business.
Don’t be caught off guard! If you have an unpaid tax bill and are trying to contact the IRS about it, penalties and interest will continue to accrue.
Tax Cuts and Jobs Act
The IRS is responsible for writing and releasing final regulations for the new tax law. These activities continue regardless of the government shutdown because the Act included IRS funding for two fiscal years.
Implementation activities include creating or revising tax products, worksheets and forms, form instructions and publications, and changes to current IRS policies and procedures.
However, we’re still waiting for final regulations. The IRS hasn’t provided guidance on all of the new laws yet.
This is the biggest tax overhaul since 1986, so it’s understandable to assume there’s a great deal of work involved in interpreting and implementing the new laws, making revisions, etc.
Due to the shortage of IRS workers, tax professionals may also face longer wait times attempting to get clarification on your behalf.
It’s safe to assume this will be an abnormal tax season for all. If your tax return is simple, you may see little disruption in the filing experience.
If you’re involved in a business or pass-through entity, you may experience a significantly different tax season compared to years past. It’s unknown when the government shutdown will end. But, you can reasonably expect all IRS activities will be delayed this year, even if IRS staffing returns to normal rates.
Connect with your tax professional to determine the best course of action for filing this year and for any additional tax assistance.