Many taxpayers are wondering how the recent government shutdown might affect their ongoing matters with the IRS. The most immediate question seems to be whether and how it will affect the upcoming income tax filing deadlines for all taxpayers. For now, the filing deadlines have not been extended. But there are also taxpayers with ongoing tax controversies with the IRS, including but not limited to: audits, appeals, Tax Court cases, Federal Tax Liens, levies, and other collection issues.
The IRS was already understaffed and underfunded prior to the shutdown. Because it lost employees during the shutdown, the IRS is now dealing with an even bigger staffing issue than before. Combine that with a 35-day backlog of work that could not be completed during that time and you have more work that needs to be completed by even fewer people.
Although nobody really knows what the long-term affects will be, our office has been told that it will take the IRS six months to a year to catch-up. Clearly, if the government is not funded beyond February 15, 2019 and another shutdown occurs, this catch-up period will be further extended.
Here are a few things we learned from the IRS:
- Priority in tax return processing will be placed on processing 2018 returns
- Priority will also be given to protecting the IRS’s statute of limitations on assessment and the collection statute of limitations, as well as resolving the IRS’s current caseload
If you are a taxpayer who filed a Petition in the United States Tax Court during this time, you may have an issue. We understand the IRS was not notified of some Petitions filed during the shutdown. The result is that the IRS’s automated system treated adjustments proposed in a Statutory Notice of Deficiency as undisputed—it assessed the tax (and applicable penalties and interest) and is now wrongfully attempting to collect funds from taxpayers, without giving them the opportunity to dispute it in Tax Court. IRS Counsel is aware of this issue and is actively searching for such cases to correct them administratively before enforced collection starts. But if you think you may fall within this category, you may want to call local IRS Counsel to ensure they are aware.
If you have questions, contact Anderson & Jahde, PC.