IRS contingency plan during government shutdown

December 22, 2018

Congress failed to pass legislation to continue funding a substantial portion of the government past December 21.  The unfunded agencies include the Department of Treasury and the IRS. 

The IRS on January 15, 2019, updated its contingency plan. Read TaxNewsFlash

In anticipation of a possible lapse in funding, the IRS produced a “Lapsed Appropriations Contingency Plan" last month. According to the plan, certain functions of the IRS will remain operating during the “shutdown,” including those personnel responsible for preparing for the upcoming filing season. Furthermore, certain activities associated with implementation of tax reform are not immediately affected by the shutdown because that funding was provided by legislation last year.  The IRS contingency plan provides in part:

 

An additional consideration this year is the Tax Cuts and Jobs Act (TCJA), Pub. L. No. 115-97 (Dec. 22, 2017). TCJA is the largest overhaul of the Tax Code since 1986 and involves all aspects of tax administration for individuals and businesses, TCJA provisions provide funding for two (2) fiscal years FY2018 - FY2019 for IRS activities covered by the provisions.

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In enacting the TCJA, Congress provided the Treasury Department with funds that will remain available until September 30, 2019. See Consolidated Appropriations Act, 2018, Pub. L. No.115-141, Div. E, Title I, § 113 (Mar. 23, 2018). Thus, some  implementation activities would not be affected by a lapse in appropriations in Fiscal Year 2019.

 

Accordingly, the IRS contingency plan shows that, for example, 56 of 286 employees in the Office of Chief Counsel are unaffected by the lapse in government funding (see p. 24).

Still, many, and perhaps most, other functions remain unfunded and suspended until Congress and the president reach an agreement on funding. These include the issuance of refunds, audit and exam functions, and those IRS personnel responsible for fielding and answering taxpayer questions. It is also important to note that the IRS’s contingency plan only applies to 2018.  If the government shutdown continues into 2019, a new plan would need to be developed.

Meanwhile, other key agencies also appear to be affected by the lapse in governmental funding. For example, OMB's Office of Information and Regulatory Affairs (OIRA)—which is responsible for reviewing tax regulations and other guidance issued by Treasury—is no longer updating its website to notify taxpayers about the status of OIRA review. 

 

 

 
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