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How the Government Shut Down Affects Tax Season For You

Jan 9, 2019 10:28:32 AM / by CSI Accounting Staff posted in small business taxes, small business accounting, small business operations

The current government shutdown is affecting all kinds of nationally funded programs, but nowhere is it more evident than how it has shaped tax season this year. Already different because of the passage of the Tax Cut and Jobs Act, the real monkey wrench comes from the fact that 800,000 federal workers in nine different departments aren’t able to work. These departments include Agriculture, Commerce, Justice, Homeland Security, Housing and Urban Development, Interior, State, Transportation, and Treasury.

The Treasury Department is where we’re most concerned, as it contains a little bureau called the Internal Revenue Service. Turns out the IRS is pretty crucial in filing taxes. Even if you’re not an accounting expert, you can figure that out. So what does it mean for you? How does the government shut down affect your tax situation? We’re so glad you asked.

Early filing starts on January 28th -- no matter what.

An announcement late Monday from the acting director of the White House Office of Management and Budget said that early filing will begin on January 28th. To facilitate this deadline, the government plans to recall a “significant portion” of their staff who have been furloughed during the shutdown. These recalled staffers will focus on processing tax returns. The White House Office of Management and Budget also said that more details will be forthcoming on their shutdown contingency plan.

So how else does the shutdown complicate an already atypical filing year? Here are a couple other burning tax questions that you’ll want to know the answers to.

Tax refunds will go out even if the shutdown continues.

The Internal Revenue Service also stated that refunds would still be sent out during a shutdown -- even if it continues into filing season. This is good news for individual returns, and it also lets us know that many of the staff of the IRS will be coming back to work in some capacity over the coming weeks.

There are still several important tax dates in January.

If you’re self-employed, the fourth-quarter estimated tax payment is still due on January 15th. If you’re an employer, your deadline for mailing out W-2 forms and 1099 statements is January 31st. These are important as they report non-employee compensation, bank interest, dividends, and distributions to retirement plans. They help calculate total taxable income.

Forms 1095-C and 1095-B have a hard deadline of March 4th.

If you’re an employer, you must send 1095 forms to your employees by March 4th. This is per the IRS extension on November 29th. The 1095-C form shows that employers with 50 or more full-time or equivalent staff offered eligible employees health coverage compliant with the Affordable Care Act. If you’re a smaller organization, you must fill out the 1095-B. There has been no change to this date, even with a shutdown, so plan to have those ready either way well before early March.

E-Verify is down… still.

E-Verify, the web-based system that allows enrolled employers to confirm the eligibility of their employees to work in the US is down. Run by Homeland Security, its website simply states that, “E-Verify and E-Verify services are currently unavailable due to a lapse in government appropriations.”

E-Verify has taken steps to minimize those burdens on employers and employees. They’ve suspended the “three-day rule” for creating E-Verify cases until they’re back online. They’ve also created a list of their resources that are still available on their website, though at this point its mostly just an FAQ and a few manuals.

Be proactive with your tax preparation.

While it’s always good to be up-to-date on your tax situation, this year it’s especially valuable. Be proactive with your tax planning by staying in contact with your accounting, bookkeeping, and payroll services so that you aren’t met with a time crunch when the government shut-down stops. You need someone who is well-versed in the shifting tax structures and deadlines that define this tax season. Don’t wait until the last minute to plan this out; a government shutdown means that it’s more important than ever to make sure that your own house is in order, so you’re not left in a bad place come April.

CSI Accounting Staff

Written by CSI Accounting Staff

Client Development Manager