IRS Won't Issue Refunds During Shutdown: That Could Be A Problem

By Feb. 2, 2018, the IRS had paid $12.6 billion in refunds to more than six million households. By Feb. 16, the IRS had paid $101.2 billion to nearly 32 million households. And by March 30, the IRS had paid $212 billion to 73 million households.

For many Americans, the tax refund is the single largest financial event of the year, and the people who tend to file early in the season are taxpayers who count on large refunds to pay down debt, catch up on bills or make major purchases. Those are disproportionately low-income households that benefit from the earned-income tax credit and other provisions that give them no income-tax liability or a net benefit from the income-tax system. -WSJ

Retailers, meanwhile, count on people to spend their tax refunds beginning in February - as people who will be getting money back typically file their taxes as soon as possible. 

"Wealthier filers generally have more sophisticated returns and file later so they should not be affected as much," said former IRS director of legislative affairs, Floyd Williams. 

Nobody's home

Taxpayers with questions about their returns, meanwhile, will have difficulty reaching the IRS - as the agency typically doesn't respond to questions outside the filing system. 

"The commissioner’s going to have to make a call: What does this mean for the beginning of the filing season?," said Obama administration Treasury tax-policy official Mark Mazur. 

During this first part of the shutdown, just 12.5% of the IRS’s nearly 80,000 employees were considered exempt from furloughs. In early 2018, in preparation for potential shutdowns during the filing season, the IRS contingency plan made 43.5% of the agency’s workforce exempt, suggesting many more staffers will return to work as filing season begins.

In addition, the agency received some two-year appropriations to implement the new tax law, so some activities related to the new law have been continuing, including updating technology and publications. -WSJ

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