Despite Federal Lapse, Tax Season Arrives On Schedule

While the federal government largely remains on “Stop!”, the month-long shutdown apparently will not stand in the way of a normal beginning to the tax filing season.

The Internal Revenue Service has called in about two-thirds of its work force to start processing of 2018 tax returns on Monday, Jan. 28. Of course, those 46,000 workers will be working without pay, like other government employees caught in the partial shutdown.

The Minnesota Department of Revenue also kicks off its annual income tax rush on Monday.  Minnesota Revenue did note that many individual taxpayers who use tax professionals or tax prep software can have their returns prepared and ready to go automatically to both tax collecting agencies on Monday.

More important for many millions of taxpayers is the other end of the season, the income tax due date. This year, Monday, April 15, actually is the date for both federal and state tax returns in Minnesota. The federal deadline had been extended in recent years for calendar reasons, including weekends and a holiday in the nation’s capital.  (If you’re interested, only Maine and Massachusetts get extensions because of calendar conflicts this year.)  

But let’s get to the question we’re all wondering. Will the federal shutdown halt or delay taxpayer refunds? Well, they are going out. “We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown,” IRS Commissioner Chuck Rettig pledged in a news release.   

The sweeping changes made by the 2017 Tax Cuts and Jobs Act (TCJA) could become a factor, some pros in the accounting industry are saying. We’ll talk about some of those changes in future posts this tax season.

As the season begins the IRS is making a temporary change that benefits taxpayers with estimated payments.  According to its announcement last week, the taxing agency will waive normal penalties if their payments were at least 85 percent of what they owe in taxes for the year.  The relief has to do with the numbers of taxpayers who did not change their withholding rates this year, after the new law took effect.

The speed of IRS service could well be affected by the shutdown, though.  Accounting Today recently quoted a tax expert from accounting firm CBIZ MHM, who noted that a backlog of taxpayer questions is greeting IRS staff when they return from their furloughs. The TCJA, which largely takes effect for 2018 taxes, also prompts its own questions, Nate Smith noted.

With tax season upon us, now’s the time to reserve time to talk taxes with Eric Buechler, proprietor of EricJohn Ltd. and an enrolled agent certified by the IRS, or your tax preparer.