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Government Shutdown Would Cause Tax Filing Nightmare, CPAs Warn IRS

By Melanie Waddell

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CPAs are warning Internal Revenue Service Commissioner Danny Werfel and Treasury Secretary Janet Yellen that a government shutdown during the tax filing season will wreak havoc on IRS operations and cause headaches for tax preparers.

“Past experience has taught us that an IRS shutdown, especially between now and April 15, 2024, will have dire consequences to the IRS, taxpayers and their practitioners,” Blake Vickers, chair of the AICPA Tax Executive Committee, told Werfel and Yellen in a letter. “The longer the shutdown, the larger the backlog and other challenges become.”

H.R. 6363, the Further Continuing Appropriations and Other Extensions Act of 2024, was signed into law by President Joe Biden on Nov. 16.

However, as H.R. 6363 is a Continuing Resolution, it extends government funding for the IRS until Feb. 2, 2024 — less than two weeks after the start of the 2023 tax filing season, Vickers told Werfel and Yellen.

The New York Times reported that the 35-day Trump shutdown in 2018 “meant that a ‘shocking’ number of taxpayer calls and letters” went unanswered, even after the shutdown ended, Senate Majority Leader Steny Hoyer, D-Md., said then.

Core tax administration functions such as Taxpayer Assistance Center operations, some refund processing and responses to paper correspondence from taxpayers would abruptly halt in the event of a shutdown, Vickers said.

“An IRS operating with limited functionality during the tax filing season would harm Americans of all income levels across the country — and the longer the shutdown lasts, the more the harm will compound,” Vickers added.

The Committee for a Responsble Federal Budget stated in a recent blog post that “as a result of funds provided in the Inflation Reduction Act, essential IRS operations would continue and roughly one-third of its nearly 90,000 employees would be exempt from furlough.”

In 2013, the committee reported, “a backlog of 1.2 million income and Social Security number verification requests delayed mortgage and other loan approvals, and billions of dollars of tax refunds were also delayed. At least 26,000 furloughed IRS employees were recalled to work during the 2018-2019 shutdown in preparation for tax season, but 14,000 did not show up to work without pay.”

Vickers noted that according to AICPA members, “though there have been recent improvements to IRS services, processes are still not functioning at their normal levels, or even pre-pandemic levels.”

An IRS shutdown “will create more problematic issues, burdens and backlogs, similar to those created by the pandemic,” Vickers said. “Simply put, shutting down during the tax filing season would be disastrous to the country’s tax administration and revenue collection systems.”

Melanie Waddell

@Think_MelanieW

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