Funding for many government agencies is scheduled to expire at midnight on Friday, which would trigger a partial shutdown of the federal government. The IRS is affected by the possible shutdown because it is not already funded through September 2019. Temporary funding for the IRS was enacted in the Continuing Appropriations Act, 2018, Division D of P.L. 115-56, and extended up to Dec. 22 by P.L. 115-90. Congressional negotiators are currently working on a continuing spending resolution that would fund the federal government through Feb. 8.
In anticipation of a lapse in funding, Treasury in late November issued a fiscal year 2019 “Lapsed Appropriations Contingency Plan” that governs what will happen at the IRS during a government shutdown — but only through Dec. 31. If the government shutdown continues into 2019, a new plan will have to be formulated. (The current contingency plan would also be in effect after April 30, 2019.)
The plan covers only a five-day shutdown. If a shutdown lasts longer than five business days, the IRS human capital officer will reassess ongoing activities and identify necessary adjustments of excepted positions and personnel.
The plan anticipates that preparation for the 2019 filing season will not be affected by the shutdown.
The plan identifies 9,946 IRS employees as “excepted/exempt” employees who would not be furloughed. The rest of the IRS’s 79,868 employees (as of Nov. 10) would be furloughed, meaning they will be put on leave of absence without pay, under 5 C.F.R. Section 752.402.
Certain IRS activities will continue during a shutdown, including activities already funded outside of the Continuing Appropriations Act and activities necessary for safety of human life or protection of government property. These activities include continuing to complete and test upcoming filing year programs; processing electronic returns, up to the point of refund; processing paper tax returns through “batching”; processing remittances; and maintaining criminal law enforcement operations.
However, most IRS activities will stop during a shutdown. These “non-excepted” activities under the plan include:
- Issuing refunds;
- Processing Form 1040X amended returns;
- All audit functions and examinations of returns;
- Processing paper tax returns that do include remittances; and
- Taxpayer services, such as answering taxpayer questions.
Other activities that will stop include Service Center processing after the point of “batching”; processing nondisaster relief transcripts, income verification express service/return, and income verification services; most IRS headquarters and administrative functions not related to the safety of life and protection of property; nonautomated collections; legal counsel; information systems functions (except as necessary to prevent loss of data in process and revenue collections); and planning, research, and training and development activities.
When funds are appropriated to the IRS, furloughed employees will return to work (they are expected to return within four hours after the reactivation is announced if it occurs on a scheduled work day).
— Alistair M. Nevius, J.D., (Alistair.Nevius@aicpa-cima.com) is The Tax Adviser’s editor-in-chief.