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How the Government Shutdown Will Affect You and Your Taxes

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Well, it's official, the federal government has temporarily suspended select activities due to the collective failure of government to come to a resolution on spending activities. What does this mean to your taxes right now and for those who filed an extension due by October 15th?

The good news is that the IRS, as with much of the federal government, is able to function effectively, albeit at reduced levels, for the short term, even in the face of government shutdown that reduced staff by almost 90 percent. Of the 94,516 active IRS employees, 87,764 will be furloughed during the shutdown with a little more than 8,752 "essential" employees left to manage the critical operations.

You can still file your tax return and you can still expect a refund if you are due one. You can still mail a paper return, although that may take a little longer as real people will need to help process that tax return and that will be slowed down during the government shutdown. You still must pay your taxes on time if you owe them. If you owed and paid with a check, have no fear, it will be cashed as soon as they get it. Interest is still accruing on your unpaid balance during a government shutdown since the collection and processing of payments is not shutdown.

If you need help from the IRS, however, many support services will be curtailed or totally suspended. The automated electronic telephone support topics will still work as will Internet services on IRS.gov. However walk-in assistance centers and live telephone support hotlines will be suspended during the shutdown.

Good news -- if you are currently being audited by the IRS, due to the government shutdown, all audit activities will be suspended until the funding bill is passed and workers are back to work. Do not plan for much more than a short-term suspension of activities by the IRS auditor, as they will keep your file open and be back in touch soon.

Overall for most taxpayers, the government shutdown should not impact your day-to-day tax return issues. If you are unsure whether you are impacted, if you have questions or need to get tax help, be sure to reach out to a trained and experienced tax professional. They will continue working during the government shutdown and can help you with any tax needs you have during or after the shutdown. Also this spending shutdown could be a preview of a larger shutdown in a few weeks, and you may need additional tax help then or at some other time, so it is a best practice to at least know of a tax resource you can call upon if needed. Start the search now and secure the relationship now in the event you need help some time in the future with a tax return issue or tax situation.

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