Federal Government Shutdown - It’s Deja vu All Over Again

There’s an old adage that “there’s nothing new under the sun” and so it is inside the Beltway. As you are well aware, the federal government suspended most of its operations on Oct. 1 after Congress failed to pass a bill to extend funding to mid-November, the first such shutdown in 17 years. Strong political discourse is alive and well in America and it is part of the price we pay for democracy. It was that way in 1996 when a shutdown lasted three weeks. Hopefully a compromise can be reached quicker this time around.

On the tax front, with more than 85,000 Internal Revenue Service workers now furloughed until Congress reauthorizes spending, many non-essential IRS functions have shut down, including all taxpayer services, as well as examinations. The closure of taxpayer and practitioner hotlines is particularly challenging for those individuals who must file a Form 1040 by Oct. 15 and need to contact the IRS. Nevertheless, no filing deadlines are postponed and returns must be filed. We have urged the IRS to consider the substantial burden imposed on taxpayers (and practitioners) by the inability to communicate with and obtain information from the IRS.

The AICPA Tax Section created a Questions and Answers page to help practitioners with related challenges in filing returns and representing clients (e.g., collections, notices, ongoing examinations, etc.). According to the IRS’s contingency plan, the following activities will cease during the shutdown:

Refunds and the “Where’s My Refund?” service
Examinations
Operation of taxpayer services (including those related to identity theft) and Taxpayer Assistance Centers
Operation of the Practitioner Priority Service
Processing of paper returns that do not require remittance

Also, the Tax Court announced that, unlike other federal courts, it is stopping its operations during the federal government shutdown. The plan does authorize several IRS functions to continue, including electronic returns processing, e-Services, criminal law enforcement, and the protection of bankruptcy, lien and seizure cases.

Also in the “nothing new under the sun” category, Thomas Jefferson once said, “In matters of style, swim with the current; in matters of principle, stand like a rock.” The current political discourse creates challenges but is also part of the United States’ heritage.

We will be keeping a close eye on this issue and communicating with our members as more information becomes available. For 126 years, the AICPA has supported its members and the public interest and will continue to do so. That is our heritage. Here is a comprehensive list of what federal services and sites will remain open and what will be closed. Does the shutdown affect you? How long do you think the shutdown will last?

Edward S. Karl, CPA, Vice President of Taxation, American Institute of CPAs.