IRS and Tax Court Deadlines Remain Despite Government Shutdown

Americans are bracing for yet another possible government shutdown, which will affect everything from national park access to drinking water inspections to loans for farmers, if Congress can’t reach a short-term funding agreement by Oct. 1.

One significant area that will be impacted is the IRS and, by virtue, the US taxpayer.

The government shutdown is a federal appropriations issue. While it may create disruptions and backlogs at the IRS through the temporary furlough of thousands of agents, it doesn’t change the federal tax law. This means that tax filings and tax payments (including deposits and estimated tax payments) remain due on a timely basis during a shutdown. This applies to all taxpayers—individuals, corporations, foundations, and others.

Taxpayers can apply for a waiver of penalties, but only if they can establish reasonable cause. The shutdown by itself is unlikely to be a sufficient basis for penalty relief. Furthermore, interest will continue to run on outstanding payments. During past shutdowns, the IRS continued to process payments, which will stop high interest rates from running on an outstanding balance.

According to the most recent contingency plan, the IRS will furlough two-thirds of its work force (approximately 60,000 people). All IRS examinations will stop, most refunds will be delayed, and IRS phone lines will go unanswered. IRS computer operations will continue to run to prevent the loss of data.

Therefore, timelines would move forward during the shutdown, which could land a taxpayer in collections once the shutdown ends. This makes addressing collection holds or other extensions in advance even more important. IRS.gov should continue to be available for certain online assistance.

During a shutdown, furloughed employees aren’t permitted to work. While furloughed personnel won’t respond to inquiries or submissions, this doesn’t mean submission deadlines have been extended. Communication with revenue agents, revenue officers, and appeals officers is essential once the shutdown period ends to ensure cases resume smoothly.

The 30% of retained workers will process payments, issue US residency certifications (Form 6166), provide income verifications, protect assessment statutes that are about to expire, support IRA initiatives (such as implementation of green energy credits), and continue testing for the upcoming filing season.

Some local advocates from the Taxpayer Advocate Service will be available as well. However, furloughed employees aren’t permitted to work at all. While furloughed personnel won’t respond to inquiries or submissions, this doesn’t mean that submission deadlines have been extended. Communication with revenue agents, revenue officers, and appeals officers is essential once the shutdown period ends to ensure cases resume smoothly.

The US Tax Court and other federal courts may continue to operate past Friday with some limited funding. Taxpayers who have received a statutory notice of deficiency providing 90 days to petition the Tax Court should be prepared to make a timely submission. A shutdown doesn’t extend this statutory deadline. Fortunately, Tax Court petitions can be submitted electronically (by 11:59 p.m. ET of the applicable due date) to help taxpayers meet deadlines.

While we’re hearing some concern from clients, most tax professional have “seen this movie” before. Firms should closely monitor the situation and communicate with clients on both proactive moves to make, as well as what to do once a shutdown ends. Hopefully, this will be another fire drill rather than an actual fire.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Miri Forster is a partner and national leader of EisnerAmper’s tax controversy and dispute resolution practice. She has more than 25 years of IRS practice, procedure, and tax controversy experience.

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