The Administrative Effect of The Government Shutdown On The Internal Revenue Service

Overview

On October 1, 2013 the United States Government was required to suspend all but its most needed operations as the result of the U.S. Congress’ failure to compromise upon appropriations that would have funded the government in fiscal year 2014. It should be duly noted that since March 26, 2013 numerous government operations have been funded under the Consolidated and Further Continuing Appropriations Act [Pub. L. No. 113-6].

As a reminder, the United States Government operates on a fiscal year that runs from October 1 – September 30, and Congress is required to appropriate funds for the approaching fiscal year by the beginning of that year (i.e., October 1, 2013). Historically speaking many legislators often fail to do so, but typically they can agree upon a Continuing Budget Resolution that provides temporary funding—typically at the previous fiscal year’s spending rates—for the short-term period(s) while negotiations for the full-year appropriations continue. However, as both Democrats and Republicans continue to debate many federal buildings across the country have remained closed since October 1st including access to national parks, monuments, and museums coupled with hundreds of thousands of non-essential federal employees being furloughed.

Administrative Effect on the Internal Revenue Service

On October 8, 2013 the Internal Revenue Service (hereinafter the “Service”) updated its online notice about the government shutdown and reminded taxpayers on extension that the October 15 deadline is still in effect. The Service emphasized that all statutory due dates remain unchanged— including those affecting individuals, corporations, and partnerships. The regular payroll tax deadlines remain in effect as well. The Service encouraged taxpayers to file their returns electronically during the lapse in appropriations, and warned that paper returns would not be processed during the shutdown (e.g., the Service is operating with minimal staff during the shutdown) but would be considered timely filed if appropriately postmarked. Tax refunds will not be processed nor issued until normal government operations resume. In addition, the Service’s Determination Letters; Private Letter Rulings; and Voluntary Correction Programs have been halted until further notice.

Critical Congressional Timeline

Congress must agree to raise the federal debt ceiling by mid-October in order to prevent the government from defaulting on its debts. A Treasury Department Report issued on October 3, 2013 warned of catastrophic economic consequences if the fractiousness currently miring the budget issue were to transpire with respect to the debt-ceiling increase. Senator Reid, along with Senate Finance Committee Chairman Max Baucus (D-Mont.) introduced legislation on October 8, 2013 to suspend the debt limit until December 31, 2014 (S. 1569). With an October 17, 2013 deadline to extend the debt limit fast approaching; Reid hopes to move the crisis forward in advance of that deadline and the absolute drop-dead date of October 30 as claimed by select government officials.

In accordance with Circular 230 Disclosure


About the Author

Peter J. Scalise serves as the National Partner-in-Charge and the Federal Tax Practice Leader for Engineered Tax Services. Peter is a highly distinguished BIG 4 Alumni Tax Practice Leader and has approximately twenty years of progressive public accounting experience developing, managing and leading multi-million dollar tax advisory practices on both a regional and national level.

Peter is also a renowned keynote speaker and author on specialty tax incentives, tax controversy matters, and legislative updates from Capitol Hill for NAREIT, USGBC, AICPA, ASTP, NATP, ABA, AIA, TEI and serves as a volunteer member of the iShade Tax Faculty. Peter serves on both the Board of Directors and Board of Editors for The American Society of Tax Professionals (“ASTP”) and is the Founding President and Chairman of The Northeastern Region Tax Roundtable, an operating division of ASTP.

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Engineered Tax Services

Engineered Tax Services

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