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IRS employee Donna Orton (C) holds a sign protesting the government shutdown at the James V. Hansen … [+]
It looks as if a government shutdown is imminent—and federal agencies are taking steps to get ready, including the IRS.
According to the Washington Post, the government started notifying federal workers on Thursday, Sept. 28, that a shutdown was likely. The Department of Treasury followed suit. I previously reported that Treasury’s Contingency Plan was noticeably absent from agency contingency plans. However, the plans for Treasury are now available, with a fresh date stamp (Sept. 28, 2023).
The new plans for IRS contingency differ dramatically from those that appear on an archived web page for the last fiscal year. Here’s what you need to know.
IRS Employees
According to the plan, most core tax administration functions will stop. This will result in furloughs for approximately two-thirds of IRS employees—59,981 of the total 89,944 staff.
Approximately one-third of IRS employees, or 30,063, will continue to perform services. About half of those—14,742 are paid for outside of appropriations. That number includes 2,800 employees who are supporting Inflation Reduction Act initiatives. The remaining 15,321 non-furloughed employees are those who will be performing shutdown duties, as well as those necessary to perform activities necessarily implied by law and to protect life and property. You may recall from my previous reporting that the law allows the IRS to process tax returns with taxpayer payments to protect those dollars.
Who else stays on the job? IRS Commissioner Daniel Werfel. The Commissioner is a presidential appointee who is not subject to furlough. The Commissioner’s salary is paid no matter how many hours he works, so he cannot be placed in a non-duty, non-pay status. A handful of Deputy Commissioners and Chiefs of Staff would also remain on staff or on call as needed.
The Taxpayer Experience Office would also remain open, as would the newly created Transformation and Strategy Office. Both would retain some staff.
Also on the “excepted employees” list are some Appeals staff and lawyers to ensure that statutory deadlines are met. Missing deadlines affects IRS as much as it does taxpayers, and the IRS is assuming that federal and district courts will remain open. If courts do close, or if Appeals determines that staff and attorneys aren’t needed, then they would be furloughed. The same general rules apply to the Office of Chief Counsel.
Dozens of employees would stay on with the Taxpayer Advocate Service in some capacity. Erin Collins (the National Taxpayer Advocate) will go to work, as well as 78 local advocates (one for each TAS office) and various support.
Over 3,000 Criminal Investigation (CI) employees are slated to report to work. This makes sense—the bad guys aren’t taking a break during the shutdown, so neither will law enforcement. There are approximately 2,621 active criminal investigations and 3,727 investigations in the adjudication phase (pre-indictment, indictment, trial and post–trial) in 93 judicial districts. As part of these 5,874 investigations, special agents are actively gathering evidence, conducting critical interviews, testifying in court proceedings, executing search warrants and conducting arrests. CI maintains that all these activities require that investigative support staff be available to acquire, analyze and preserve existing and emerging evidence and failure to timely act could jeopardize an investigation. CI will operate at close to “normal” levels since federal courts, federal prosecutors and federal law enforcement partners are operating with business as usual.
Nearly 5,000 IT-related workers will stay in place to ensure that taxpayer data is protected and that computer systems function appropriately.Additionally, about 15 employees will be needed to keep the IRS.gov website up and running. During the shutdown, taxpayers should still be able to access a number of online services, including filing tax returns and paying tax online.
Finally, more than 10,000 Customer Service Representatives will remain in place to handle phones and paper service issues. It’s important to note that this is slated to happen only if a shutdown happens during filing season (during the 2013 government shutdown, customer service operations, including the call centers, stopped).
Continuing Activities
Here’s a look at some of the activities affecting taxpayers that would, according to the contingency plan, continue during the shutdown:
- Completion and testing of the upcoming Filing Year (2024) programs
- Processing of checks and other payments
- Processing of disaster relief transcripts
- Mail processing (in particular, those with payments—the government wants to get paid)
- Responding to taxpayer filing season questions (call sites)
- Protection of statute expiration, bankruptcy, liens, and seizure cases
- Upcoming Tax Year forms design and printing
- Maintaining criminal law enforcement and undercover operations
Activities That Will Stop
Here’s a look at some of the activities affecting taxpayers that would, according to the contingency plan, not continue during the shutdown:
- Processing of non-disaster relief transcripts
- All audit functions and examination of returns
- Non-automated collections
- Legal counsel focused on non-excepted activities
- Taxpayer services such as responding to taxpayer questions (call sites) not during the filing season
More Specifics
As noted above, the immediate result of the shutdown is that most taxpayer phone calls to the IRS will go unanswered. There will be no phone calls answered 0utside of filing season. For context, in the month of October, the IRS answers approximately 46,000 phone calls per day.
The 363 Taxpayer Assistance Centers (TACs) across the country will close. During the month of October, TACs provide face to face service to approximately 5,000 taxpayers per day.
Refunds will not be processed except in cases where e-filed, error free refunds can be direct deposited automatically. There are 10.5 million individual 1040 filers on extension through the Oct. 16 deadline.
The IRS will not respond to paper correspondence—expect a longer delay than usual.
IRS Filing Deadline
The IRS did not suggest that the filing deadline would be moved. Those taxpayers who are filing with a valid extension for the 2022 tax year still face an Oct. 16, 2023, deadline.
What’s Next
As noted earlier, this situation remains very fluid. Even with the plan in place (you can find the full text of the plan here), there could be changes. In 2013, changes were made at the last minute, including shuttering the TAS offices.
Check back with the Forbes tax team for updates as they become available.
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