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How Government Shutdowns Amplify Tax Woes

After the longest government shutdown in U.S. history, furloughed federal workers returned to their jobs on January 25, 2019. This just three days before the official start to tax season. Many of those were Internal Revenue Service employees who had been ordered by the Trump administration to return to work, without pay, a week earlier. Not everyone complied. According to reporting from the Associated Press, fewer than half of the 26,000 recalled workers returned early to handle tax returns, answer taxpayer questions, and send out refunds. Many of them sought permission to be absent from work due to financial hardship; some simply couldn’t be reached by IRS managers. Now we’ll get to see the full effect of the government shutdown on taxes. All in all, it should make for a pretty interesting tax season.

Calling the IRS hotline

This filing season was already shaping up to be a complicated one. The 2018 tax year was the first for many provisions of the Tax Cuts and Jobs Act of 2017. And the first for filing with the new “postcard-sized” Form 1040 (and its entourage of new schedules).

During the shutdown, all walk-in taxpayer assistance centers closed. The IRS kept limited live telephone customer service open, but due to heavy call volumes, warned taxpayers to prepare for longer wait times.

With workers back on the job, taxpayers flooded IRS call centers with questions about about new laws, forms, and other issues. According to MarketWatch, Twitter users have complained about wait times of three hours or more. Others experience the IRS’s “courtesy disconnect,” a euphemism for hanging up on callers – some who’ve been on hold for hours – when IRS phone lines become overloaded.

Will tax refunds be delayed?

In an interview with the Washington Post, IRS spokesperson Eric Smith stated the agency will “continue to pay refunds within normal time frames.” According to its website, the agency issues 90% of refunds in less than 21 days. But not everyone is convinced.

According to a poll by Jackson Hewitt Tax Service, 66% of respondents believe they’ll experience a delay in receiving their refunds due to the shutdown. IRS tax season statistics seem to back that up. The LA Times reports the IRS processed 4.67 million tax refunds in the first week of the 2019 tax season, about 24% less than the 6.17 million processed in the same week in 2018.

How to speed up your refund

If you claim the Earned Income Tax Credit or the Additional Child Tax Credit, the earliest you can expect your refund is February 27, 2019.

For everyone else, there are ways to ensure your refund isn’t delayed, despite the government shutdown.

  • File electronically. Refunds for electronically filed returns are generally issued within 21 days. But you might wait four to six weeks if you file on paper.
  • Choose direct deposit. Direct deposit refunds are faster than waiting for a physical check to arrive in the mail.
  • File your return as soon as possible. IRS service generally slows down the closer we get to the April 15th deadline. File as soon as you can for the fastest turnaround.
  • File an accurate return. Any mistakes or errors on your return will delay its processing. Before you file, double check the spelling of all names and Social Security numbers. Make sure you didn’t make any data-entry errors and check your math.

The National Taxpayer Advocate, an independent organization responsible for oversight of the IRS, told House staffers it will likely take at least a year for the IRS to return to normal operations, according to a report from the Washington Post.

This tax season is bound to be a difficult one for taxpayers and tax professionals alike. The government shutdown has IRS workers dealing with a backlog of calls and customer correspondence. This comes during an already hectic time of year. So try to get answers to your questions before calling the IRS call center, file your return as soon as possible, and hope for a smoother start to tax season in 2020.


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