Three weeks ago, Congress voted to increase the amount of time it has to approve a $1.2 trillion federal spending bill. The new deadline is today, and Congress has until midnight tonight to pass a deal to avoid a government shutdown.
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Congress has already passed four short-term funding deals for fiscal year 2024, and if the two chambers still cannot reach a long-term spending deal, many government agencies, including the IRS, could be shut down until Congress passes them. be. invoice.
What will happen to my tax refund if I file taxes during that period? We can't look back at what happened during previous government shutdowns because funding has never been cut off. meanwhile It's tax season, and we'll explain what it means for you.
Here's what we know about what could happen to the IRS if the government shuts down in March. For more information, see What Happens to Social Security Checks and Other Government Benefits During the Shutdown?
Why are we talking about a government shutdown?
The federal government's fiscal year budget runs from the beginning of October of one year to the end of September of the following year. Congress often approves a series of spending bills to fund the government for an additional year before the fiscal year's deadline, or short-term deals while finalizing long-term deals if the deadline has passed. agree to fund the budget accordingly.
Last year, Congress failed to agree on a budget by the end of September and passed a series of short-term funding bills to keep the government running while it worked on a budget. As part of the short-term funding agreement, Congress will fund some government departments (including agriculture and transportation) through March 8, and the remaining 80%, including financial services such as the Department of Defense, Justice, and IRS. decided to provide funding to the following departments and services. If Congress does not fund the government by midnight March 22nd, by law the unfunded branches of government must be temporarily shut down.
What are the chances that the government will actually shut down?
Everything depends on whether Congress can pass a federal spending bill for long-term funding through the end of the year, or for additional short-term funding to buy time for both chambers to reach an agreement. If the latter happens, it will only delay the budgeting process and at least give the IRS time to process the bulk of your tax returns.
Congress has passed four emergency funding bills so far in this budget to avoid a government shutdown, so there's a good chance Congress will act again.
Will the IRS shut down completely during the shutdown?
Typically, the IRS does not close completely during a shutdown. Tracy Spivey, a partner at accounting firm KPMG, told CNET.
Spivey said he hopes all IRS employees will be exempt from the potential closure, as has happened in the past. That said, parts of the IRS may be unavailable to him during the shutdown.
Thanks to the Inflation Control Act, essential IRS operations will continue during the government shutdown, with about one-third of employees exempt from furloughs. Meanwhile, about 60,000 employees will be furloughed as part of the U.S. Treasury Department's emergency response plan. This could include his IRS Taxpayer Advocate Service, which acts as a taxpayer advocate within the agency.
Can the IRS send out tax refunds (paper and digital) even if the government is shut down?
Unless there is an error, electronic refunds are expected to be processed as if there was no closure, Spivey said. If there is a problem with your tax return, it is nearly impossible for him to contact the IRS by phone at this time, so it is difficult to resolve the issue during the shutdown.
Taxpayers filing hard copies should expect delays in receiving their refunds during the government shutdown.
The IRS recommends filing electronically and setting up direct deposit to receive your refund within 21 days. If possible, we recommend applying as soon as possible before a potential government shutdown to avoid delays.
How long can my tax refund be delayed due to a government shutdown?
It's hard to say until it happens. “There's some uncertainty because we've never experienced a shutdown in the middle of filing season,” IRS Commissioner Danny Wuerffel told reporters in January.
The IRS continues to catch up from the 2020 pandemic shutdown. “If something new happens that slows down the process, it's certain that the delays we've already had will be exacerbated,” Spivey said.
If the government shutdown continues beyond April 15th, will taxpayers still need to pay their taxes on time?
Yes, even if the government is shut down, the tax filing deadline still exists. Even if the closure extends beyond the tax date, you must still pay your taxes on time. Failure to do so may result in fines and late fees until paid in full.
We will update this article with further guidance from the IRS in the event of a government shutdown.
Learn more about why you should file your taxes as soon as possible and how you can get your tax refund up to 5 days earlier than usual.
