The Effect of the U.S. Government Shutdown on This Year’s Tax Season
As you may have seen in the news, the U.S. government is currently in a state of “shutdown,” which over the last several weeks has significantly affected the functioning of the IRS, among a number of other governmental departments and services (including the U.S. Tax Court).
The shutdown began on December 22, and with little progress since then, many are beginning to wonder how this will affect this year’s tax season. In this blog, we update you on the latest news on the shutdown and how the IRS plans to prepare itself for the tax season despite the massive depletion of its workforce.
It seems an unfortunate coincidence that December 22 marks exactly one year to the date that President Trump signed the Tax Cuts and Jobs Act (TCJA), representing the largest overhaul to the U.S. tax code in decades.
With new tax rules to implement and the tax season start of January 28 only weeks ago, the IRS is under pressure on several fronts. As a result of the shutdown, nearly 70,000 IRS employees are reported to have been furloughed, which represents approximately 87.5% of its entire working staff.
While most IRS activities have been frozen during the shutdown, the IRS has made a concerted effort to continue publishing guidance implementing the new provisions of the TCJA. This has been aided mainly by a separate appropriation of funds made by Congress in association with the TCJA.
IRS Contingency Plan
Just yesterday, the (Democrat-controlled) House of Representatives approved a bill that would fund the IRS and other agencies for the next year, but to most it seems unlikely such bill will survive the (Republican-controlled) Senate.
In order to make sure the tax season starts on time, the IRS is devising a contingency plan to be implemented in case the shutdown continues into the filing season. The IRS has stated that despite the shutdown, it will begin accepting and processing individual tax returns once the filing season begins on January 28.
What This Means For U.S. Expats
For all intents and purposes, taxpayers should prepare for this season like any other season, and should turn in information to their tax professional in time to make sure this year’s tax return is timely prepared.
Expat Tax Professionals has been hard at work preparing for this year’s season to ensure that your return is timely and accurately filed. Our thorough preparation and review process is designed to ensure the accuracy and completeness of your return.
If you’re an expat who is behind on your taxes and is looking to catch up with the IRS, we are also here to help. We’ve have helped hundreds of non-compliant expats come clean through the IRS Streamlined amnesty program, as well as other IRS programs. In many cases, we’ve helped minimize or even eliminate potential penalties altogether.
When it comes to filing tax returns in the U.S., your best bet is to enlist the help of an Expat Tax Professional. You are welcome to contact us for more information.
By Joshua Ashman, CPA & Nathan Mintz, Esq.