As Government Shutdown Approaches, IRS is Formulating a Contingency Plan

By Better Today On Sep 22, 2023

TL/DR –

The IRS is formulating a contingency plan in the event of a government shutdown, according to a statement from the union that represents the organization’s workers. The potential impact of a partial or full IRS shutdown could include taxpayers struggling to file their returns before the October deadline, significant backlogs of returns, and delays in updating IRS computer systems. The IRS has reportedly considered using funding from the Inflation Reduction Act of 2022 to remain operational during a shutdown, but it would be “severely limited” in its use of these funds.

IRS Developing Contingency Plan for Potential Government Shutdown

As the possibility of a government shutdown looms, the IRS is developing contingency plans, according to the National Treasury Employees Union (NTEU) representing IRS workers. This could impact taxpayers who got an extension in April to file their returns before the Oct. 16 deadline. It could also delay upgrading IRS computer systems and create a backlog of returns.

Congress has until Sept. 30 to approve a budget for fiscal 2024 or a temporary resolution to keep the government running. The House and Senate have five days to reach consensus after they return on Tuesday, the NTEU confirmed on Friday. The impact of a shutdown on IRS employees remains unclear.

The IRS planned to use funds from the Inflation Reduction Act of 2022 to avoid closure in case of a shutdown, as per Federal News Network. However, an email sent to IRS employees indicates that usage of these funds is “severely limited”. It’s unclear why the IRS appears to have a different approach to handling potential shutdowns compared to previous years.

The IRS’s fiscal 2023 contingency plan maintained that normal operations would continue during a shutdown, thanks to funding from the Inflation Reduction Act. The archived page shows the contingency plan, but the current pages show an error message.

IRS Commissioner Danny Werfel did not confirm any IRS plans as he was still awaiting guidance from Treasury and the Office of Management and Budget. The IRS did not provide any updates since that statement.

In the 2018-2019 partial government shutdown, 88% of IRS employees were initially furloughed. The IRS planned for 57% of its employees to work during tax season, but the shutdown ended prior to that. Furthermore, a 16-day government shutdown in 2013 resulted in a delay to the 2014 filing season.