No taxes! Well, not quite. The Federal government shutdown at the time when Taxpayers and practitioners are beginning to prepare for tax season. Here are 5 ways the government shutdown will impact Taxpayers.
1. Tax Season Won't Be Delayed, But Problems Will Inevitably Arise.
IRS employees tasked with preparing for the upcoming filing season are continuing to work under a previously approved funding measure. However, this tax season was already going to be complicated by new rules, schedules, and forms. The unavailability of most IRS staffers to provide telephone assistance, make paper booklets available, or address other issues will create problems if the shutdown is not resolve soon.
2. Refunds Will Not Be Issued.
If the shutdown lasts until the opening of filing season, then those Taxpayers filing their 2018 tax return will experience a delay in receiving their refund. For comparison, the IRS began accepting 2017 tax returns on January 29, 2018. Given the reliance of so many Taxpayers on their tax refund any delays will be felt throughout the country.
3. Audits Will Not Be Initiated.
Taxpayers should not receive notices for new IRS audits. Unfortunately, Taxpayers currently under audit will find that the examiner reviewing their returns are currently furloughed. This drags out what is generally an unpleasant experience for at least few weeks longer.
4. Collection Action Will Be suspended.
Taxpayers owing money to the IRS won't receive new collection notices, but interest and penalties will continue to accrue. Unfortunately, Taxpayers who had their bank account levied or wages garnished prior to the shutdown will find it very difficult to obtain relief since IRS revenue officers and collection agents are furloughed.
5. Real Estate Transaction Will Be Delayed.
IRS involvement in the buying and selling of real property arises in a few different ways. Buyers usually need to produce tax return transcripts before their loan is funded. Sellers may have a tax lien filed against them which will require a demand to be issued by the IRS to escrow. Any real property transaction that requires IRS involvement will be delayed unless the parties can work around these issues.