Tax Audits Affected in IRS Partial Shutdown Plan

The partial shutdown of the federal government is now in its second day. The shutdown is “partial” in that some services remain operative while others do not. In Texas and across the nation, people are therefore asking themselves what is open and what is not.

National parks are easily the most high-profile places that aren’t open. The National Park Service has already had to console a number of very disappointed visitors from abroad.

But what about the IRS? What effect will the partial shutdown have on tax return processing, tax audits and other basic IRS functions?

The IRS has said that, under its contingency plan, the processing of electronically filed tax returns will continue. Criminal investigations are expected to continue as well.

Overall, however, IRS operations will be very substantially scaled back. Fewer than 10 percent of the agency’s employees will be permitted to keep working. Put another way, about 86,000 IRS employees will be put on furlough.

This means that the IRS will not only close its offices for in-person assistance. It will also stop offering phone assistance.

The IRS will also have to momentarily stop performing tax audits. There will simply not be enough agents available to keep doing them.

Of course, the situation is very fluid and could change at any time. Most commentators believe that the shutdown will be short in duration. The IRS has said, however, that it will reassess its contingency plan if there is no resolution after five days.

In an upcoming post, we will write about how the IRS’s role in implementing the Affordable Act (ACA) is or is not affected by the partial shutdown.

Source: Forbes, “Shutdown Will Stop IRS Audits, But Not Obamacare Exchanges,” Jeremy Scott, September 30, 2013