Navigating IRS Shutdowns: What You Need to Know

As a tax consulting firm committed to providing valuable insights into the ever-evolving world of taxation, we believe in keeping you informed about the latest developments that could impact your financial well-being. Let’s discuss the recent revelation regarding the Internal Revenue Service (IRS) and its preparations for a government shutdown.

IRS Faces Unexpected Challenges

The IRS, an agency with around 90,000 employees, had initially anticipated weathering any government shutdown with the help of an $80 billion boost provided by the Inflation Reduction Act. This funding was expected to allow them to stay open for business, ensuring minimal disruptions to vital services during tax season.

However, a sudden turn of events has reshaped the IRS’s plans. Recent guidance from federal officials has thrown a wrench into their preparations. It has been clarified that the IRS cannot use funds from the Inflation Reduction Act to cover most salaries during a shutdown.

Impact on Taxpayers and Services

If a government shutdown occurs, the IRS is now expected to furlough up to two-thirds of its workforce, affecting approximately 60,000 employees. This move will have significant implications for taxpayers, especially as the late-filing season closes in.

The consequences of this shift include:

  1. Delays in Tax Refunds: Millions of tax refunds may not be issued to late filers unless they file electronically.
  2. Payment Processing: Payments owed to the government by millions of individuals and businesses may go unprocessed.
  3. Limited Phone Support: Thousands of employees responsible for answering taxpayer questions may be sent home, making it difficult for taxpayers to contact the IRS.
  4. Closure of Taxpayer Assistance Centers: These centers, which offer face-to-face assistance, may be shuttered, impacting 5,000 taxpayers a day.

Lessons from Past Shutdowns

To put this situation into context, it’s worth recalling the 34-day government shutdown in late 2018 and early 2019. Even after the IRS made the unconventional decision to bring back some employees during that time, it took nearly a year for the IRS to fully recover.

Moreover, it’s essential to consider the impact on IRS employees and future recruitment efforts. Current and prospective IRS employees have alternatives in organizations not affected by government dysfunction.

Looking Ahead

As a tax consulting firm dedicated to your financial well-being, we closely monitor developments like these. While the situation is fluid, we encourage our clients to stay informed about potential disruptions during tax season.

In the event of a government shutdown, it’s crucial to plan accordingly. Consider filing electronically to avoid refund delays, and stay updated on IRS announcements for any changes to their services.

We believe that taxpayers and tax practitioners should have the opportunity to provide feedback on the IRS’s plan during such times of uncertainty. Your voice matters, and we’re here to support you throughout this process.

At Boxelder, we remain committed to helping you navigate the complexities of taxation, regardless of external challenges. We’re here to provide guidance, answer your questions, and ensure that your financial interests are protected.

For more information or assistance with any tax-related concerns, please feel free to contact us.

Remember, your financial well-being is our top priority. 

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About the Author

A company founder standing by Colorado's Front Range

Tom Conradt

Co-Founder, IRS Collections Defense Attorney

Tom Conradt is the co-founder of Boxelder Consulting & Tax Relief, and has been practicing IRS Collections defense law for the past ten years. Graduating from the University of North Carolina at Chapel Hill, Tom is the lead IRS Collections Defense Attorney and heads the tax resolution department. Tom’s favorite part about working at Boxelder Consulting is hearing about the relief that clients experience after they sign up and start seeing immediate results on their case. Tom enjoys all the outdoor activities Colorado has to offer, including skiing, hiking and climbing. He is also looking forward to the return of indoor pickup basketball.

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