Internal Revenue Secretary Danny Wuerffel speaks during a swearing-in ceremony at the IRS on April 4, 2023 in Washington, DC. (Photo by Bonnie Cash/Getty Images)
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As Americans prepare for the start of tax season, lawmakers are scrambling to avoid a government shutdown. IRS Commissioner Danny Wuerffel said if the two sides cannot reach an agreement, the result could be the suspension of non-essential operations, which could impact taxpayers’ filing experience.
Werfel told reporters last week that the law allows the agency to maintain certain activities for continued operations even after funding stops. But “the closure would be extremely disruptive,” he said, adding it could “increase the risk that we will not have a smooth filing season as planned.”
Congress has two deadlines looming, Jan. 19 and Feb. 2, to hammer out a deal or pass a short-term funding measure. This is his second deadline affecting the IRS.
Lawmakers have taken steps to extend both deadlines until early March, but the new deadlines still leave them with a limited number of business days to reach an agreement.
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“We’ve been through closures before,” Werfel said. “We’ve never experienced a shutdown in the middle of filing season, so there’s some uncertainty there.”
“Of course, we will do everything in our power to minimize the disruption to the application season caused by the closure,” he added.
Some tax preparers have already begun accepting 2023 returns, but the season officially begins on January 29, when the IRS begins processing returns.
What can happen with the IRS during a shutdown?
Experts say some IRS functions will continue during the federal government shutdown, but it’s unclear exactly which employees will continue working.
In September, the U.S. Treasury released a fiscal year 2024 lapsed appropriations contingency plan targeting critical IRS operations.
However, the American Institute of Certified Public Accountants sent a letter to Treasury Secretary Janet Yellen and Secretary Werfel in November asking for an update to the plan regarding the “submission of seasonal activities.”
“If the IRS shuts down and has to follow a contingency plan, there aren’t many winners,” said Casey Pittman, director of tax policy at Baker Tilly’s Washington Tax Council.
The AICPA’s letter raised concerns about telephone service, taxpayer assistance centers, potential refund delays, paper communications, automated notifications, and pointed to the national taxpayer advocacy group’s interpretation of the contingency plan.
Shutdown could impact IRS priorities
Mark Everson, a former head of the Internal Revenue Service and current Alliant Group vice chairman, said the agency’s progress on past issues and new initiatives will be affected if lawmakers can’t reach a deal or pass short-term funding measures. may be threatened.
“This is more than just a regular filing season,” he said, adding that there are challenges such as the backlog of Employee Retention Tax Credits and the upcoming Direct File pilot program that will allow certain taxpayers to file directly with the IRS for free. I pointed out the issues.
Meanwhile, the IRS is under increasing pressure to continue improving its services following funding and reversal efforts by some Republican lawmakers.
“The list of things they’re pursuing is incredibly long,” Everson said. “They certainly don’t need that kind of disruption.”
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