Taxpayers and tax practitioners received guidance from the IRS on what to expect in the areas of audits, collections, tax return processing, and Tax Court operations now that the government shutdown has concluded. The IRS explained on its website that IRS employees returned to work on Jan. 28 and are going through mail and voicemail messages, but that it will take several days for them to catch up. The guidance makes it clear that the IRS is not extending any deadlines due to the shutdown.
The IRS’s guidance on audits consists of 13 frequently asked questions (FAQs) about the status of audits now that the shutdown has ended. The first question addresses what action a taxpayer, who has sent documents to his or her auditor but has not heard back, should take. The guidance says auditors will begin to contact taxpayers once they have reviewed their inventory and caught up on administrative tasks.
The IRS also addressed the issue of taxpayers who received 30-day letters during the shutdown. It advises those taxpayers to contact their auditor if they were unable to respond by the deadline and that auditors would also be contacting taxpayers to assess their options. As for 90-day letters (statutory notices of deficiency) issued during the shutdown, the IRS said they were issued to taxpayers in cases where the statute of limitation was about to expire and that taxpayers still have to file a petition with the Tax Court within that period.
The IRS also issued 11 FAQs to address the resumption of collections activities. In most cases, the IRS states that taxpayers will be contacted after the IRS employee assigned to the case catches up, but it does not give any additional time to taxpayers or waive any penalties and interest. If a taxpayer could not make a payment because the Taxpayer Assistance Center was closed during the shutdown, the IRS says the taxpayer can request that any penalty be abated for reasonable cause.
The IRS also addressed installment agreement issues, lien issues, Collection Due Process hearings, passport revocation issues, and taxpayers whose cases were assigned to private collection agencies. The IRS said private collection agencies would resume contacting taxpayers no later than Feb. 1.
Tax Court petitions
The IRS also created a webpage that contains updates on the shutdown’s impact on Tax Court cases. Although the Tax Court officially reopened on Jan. 28, it has canceled several trial sessions. The IRS explains that taxpayers who have cases pending that have been canceled will be notified by the Tax Court of their new trial dates.
The IRS also noted that any taxpayer that had a petition to the Tax Court returned should resend the petition with a copy of the original envelope or the container it was mailed in to prove that the petition was filed timely. The taxpayer should also retain the original proof of mailing
In response to a question about interest continuing to accrue during the shutdown for a taxpayer’s Tax Court case, the IRS stated that a taxpayer could stop the accrual of interest by paying the tax due. It did not indicate an intention to abate interest that accrued during the shutdown.
— Sally Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a Tax Adviser senior editor.