Wednesday, January 9, 2019
The 21st federal government shutdown since the modern federal budgeting process was implemented is now in its third week as the Trump Administration desires $5 billion for a wall along the southern border. But with the shutdown comes thousands of IRS employees furloughed, and may have clients questioning what will happen to their tax returns and refunds.
Jeff Fosselman, a CPA/CFP and J.D. and senior wealth advisor for Relative Value Partners, says that though the IRS is not completely shut "it is significantly scaled back." Though it was originally reported that taxpayers would not receive any tax refunds, that has been withdrawn and reversed. The agency will still be processing electronic and paper returns and all those that are required to pay in are expected to pay at the appropriate time.
High-net worth taxpayers usually file extensions and "file as late as possible,” comments Mary Kay Foss, a CPA in Walnut Creek, California. Amended returns, however, will not be processed, and these are usually also filed by high-net worth individuals. “Any individual involved in lending that requires tax return transcripts for underwriting will be impacted as well, as the issuance of transcripts is limited during the shutdown to requests related to disaster relief.”
Audits have also been shuttered - unless those that are hindered by the statute of limitations. This will not increase the time a taxpayer has to come to an agreement with the agency. Many clients are also unaware that state tax returns and refunds are also affected.
See Jeff Stimpson, How The Government Shutdown Affects Clients' Taxes, Financial Advisor, January 7, 2019.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.