Business Not as Usual at IRS During Shutdown

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The IRS has cautioned the 12 million taxpayers who requested an automatic six-month extension this year that, for most of them, their filing extension runs out on October 15.

As the government shutdown extends through October, taxpayers are likely to be affected by the limited services currently being provided by the IRS. The agency has posted several questions and answers to its website outlining the effect of the government shutdown on its operations.

Two of the most relevant issues for businesses:

Timeliness of paper returns: TheIRS clarified that, while it is not processing paper returns during the shutdown, paper returns will still be considered timely filed if the return is postmarked by the due date. It cautioned that in certain cases, the processing of the return may not occur until after the return due date, depending on how long the shutdown continues.

Third parties can't obtain tax transcripts: A third party, such as a financial institution, cannot obtain a tax transcript during the shutdown. Transcript requests from third parties are not automated and require actions by IRS employees, most of whom are currently furloughed.

The IRS also cautioned the 12 million taxpayers who requested an automatic six-month extension this year that, for most of them, their filing extension runs out on October 15. Taxpayers should continue to meet their tax obligations as normal. Businesses should keep filing their tax returns and making deposits with the IRS, as required by law.

The IRS contingency plan provides that “regular, ongoing functions whose suspension would not pose an imminent threat to life and property” would be suspended, including:

·        All audit functions, examination of returns and processing of non-electronic tax returns that do not include remittances.

·        Non-automated collections.

·        Legal counsel.

·        Taxpayer services.

·        Information systems functions.

·        All planning, research, and training and development activities.

·        Most headquarters and administrative functions not related to the safety of life and protection of property.

Nevertheless, certain IRS operations will continue during the government shutdown, including:

·        The processing of tax returns that include remittances.

·        The processing of electronic tax returns. Computer operations to prevent the loss of data.

·        The protection of statute expiration, bankruptcy, liens and seizure cases.

·        The maintenance of minimum staff necessary to handle budget matters related to the lapse in appropriation.

·        The maintenance of minimum staff necessary to perform accounting functions and to prevent the loss of accounting data.

·        The maintenance of criminal law enforcement and undercover operations.

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