IRS Confirms Tax Filing Season Begins January 28; Plans to Pay Refunds During Government Shutdown

(Parker Tax Publishing January 2019)

Despite the partial government shutdown, the IRS confirmed that it will begin processing tax returns on January 28, 2019, and providing refunds to taxpayers as scheduled. In addition, the IRS announced that it began processing requests on January 7 for transcript information made through the Income Verification Express Service program. IR-2019-1.

"We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown. I appreciate the hard work of the employees and their commitment to the taxpayers during this period," said IRS Commissioner Chuck Rettig.

According to an IRS news release, Congress directed the payment of all tax refunds through a permanent, indefinite appropriation, and the IRS has consistently been of the view that it has authority to pay refunds despite a lapse in annual appropriations. Although in 2011 the Office of Management and Budget (OMB) directed the IRS not to pay refunds during a government shutdown, the IRS said that OMB reviewed the relevant law at the Treasury Department's request and concluded that IRS may pay tax refunds during a lapse.

As a result, the IRS said that it will be recalling a significant portion of its workforce, currently furloughed as part of the government shutdown, to work. Additional details for the IRS filing season will be included in an updated FY2019 Lapsed Appropriations Contingency Plan that the IRS says it will publicly release.

Observation: The Trump administration's plan to have the IRS issue tax refunds during the partial government shutdown is predicated on requiring certain IRS employees to work without pay during the shutdown. Some experts have questioned whether the administration has the legal authority to do so. On January 9, 2019, the National Treasury Employees Union (which represents IRS employees), sued the Trump administration alleging that the action violates the Fair Labor Standards Act.

As in past years, Commissioner Rettig said, the IRS will begin accepting and processing individual tax returns once the filing season begins. For taxpayers who usually file early in the year and have all of the needed documentation, there is no need to wait to file, he said. They should file when they are ready to submit a complete and accurate tax return.

The filing deadline to submit 2018 tax returns is Monday, April 15, 2019, for most taxpayers. Because of the Patriots' Day holiday on April 15 in Maine and Massachusetts, taxpayers who live in Maine or Massachusetts have until April 17, 2019 to file their returns. The Emancipation Day holiday on April 16 in the District of Columbia will not affect the filing of tax returns in 2019, as it has in past years.

Software companies and tax professionals will be accepting and preparing tax returns before January 28 and then will submit the returns when the IRS systems open later this month. The IRS is encouraging people to file their tax returns electronically to minimize errors and for faster refunds.

In a separate statement posted on its website, the IRS said that, while it remains closed during the partial government shutdown, the agency recognizes the immediate hardship incurred if information is not available through the Income Verification Express Service (IVES) program. IVES is a user fee-based program used primarily by mortgage lenders and others within the financial community to confirm the income of a borrower during the processing of a loan application. Following an extensive review, the IRS began processing requests on January 7 for transcript information made through IVES. The IRS noted that it will take time to bring this service up to normal operating status and advised IVES participants that it may initially take longer than the standard 72-hour turnaround time for the IRS to process these requests.

The IRS also said it will start other user fee-based services such as providing a letter needed by some taxpayers to certify their residency in the United States for certain tax treaty benefits and responding to requests for photocopies of tax returns. The IRS noted that tax transcripts - which show most of the information from a tax return - are easily obtained online more quickly, are free and sufficient for most purposes. Taxpayers who still need a paper copy of their actual tax return may submit a Form 4506 along with a $50 fee for a copy of each return. It may take 75 calendar days to process a request for a copy of a return.

Federal law limits what the IRS can do on behalf of taxpayers during a funding lapse; however, some programs funded by user fees present an opportunity for the IRS to help taxpayers receive critical services. These services can assist taxpayers trying to obtain mortgages or taxpayers affected by disasters who need copies of their tax returns as part of the recovery effort.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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