What to Know About Your Taxes During a Government Shutdown
A government shutdown doesn't mean you don't still owe taxes
Each year, Congress must pass budget legislation for the upcoming fiscal year (FY) that consists of 12 appropriations bills—one for each appropriations subcommittee. The president must sign the budget legislation for it to go into action, but when there's a disagreement on the budget, there's a chance that a government shutdown may result. During this shutdown, only services deemed essential, such as Social Security and Medicare, are allowed to continue until new funding legislation is signed into law.
Filing Taxes During a Shutdown
During a government shutdown, you don't have to wait to file your tax return; you can prepare and send in your return as soon as you have all required documents, such as W-2s and 1099s. As always, the sooner your tax return is in line with other received returns awaiting processing, the sooner you'll receive your refund if you're due one. If you owe the Internal Revenue Service (IRS) money, send a check, but if you don't owe them, you might not want to submit a paper return. The law says that processing these will have to wait until after the shutdown, so it might be a good time to go electronic.
Regardless of the shutdown, the tax-related deadlines are expected to remain the same, and returns must be filed by Tax Day, which is April 15. If April 15 falls on a weekend or holiday, Tax Day becomes the next business day. You're still legally obligated to file and pay on time, even when Congress is squabbling. This includes the estimated tax payments made by self-employed individuals that are due on January 15. The IRS website instructs taxpayers to file and pay taxes as normal.
Do not adjust withholding from your paychecks to have more take-home pay to make up for your refund being potentially delayed.
Refunds are not expected to be withheld, and the shutdown doesn't affect tax law or what you owe. You'll still owe the same amount when the government is up and running again, and you could face a large bill when you file your return for the tax year if you don't have enough withheld from your paychecks in the interim.
The IRS and Tax Refunds
The IRS, which is part of the Treasury Department, is unfortunately affected by government shutdowns from an operational and logistic standpoint. Federal law requires that the IRS must be staffed during the shutdown by exempt employees whose roles "protect human life and property," and since tax revenues are federal property, the show goes on. To make matters worse, the short-staffed IRS must process all tax returns submitted on paper that include payments.
The Office of Management and Budget (OMB) took the position during the threat of a 2011 shutdown that the IRS could not pay refunds during a budgetary lapse. However, the OMB reversed that opinion in 2019, agreeing with the IRS that 31 U.S. Code Section 1324 does indeed provide for "payment of all tax refunds through a permanent, indefinite appropriation."
During the last government shutdown from December 2018 to January 2019, this caused the IRS to receive more than five million pieces of mail that needed to be processed. Once the government reopened, the IRS' Automated Collection System line was only able to answer 38% of calls they received, with an average wait time of 48 minutes. For comparison, the year prior, 65% of calls were answered, with an average wait time of 19 minutes.
The 12 Appropriations subcommittees that rely on Congress to pass budget legislation to include:
- Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
- Subcommittee on Commerce, Justice, Science, and Related Agencies
- Subcommittee on Department of Defense
- Subcommittee on Department of Homeland Security
- Subcommittee on Department of the Interior, Environment, and Related Agencies
- Subcommittee on Departments of Labor, Health and Human Services, and Education, and Related Agencies
- Subcommittee on Energy and Water Development
- Subcommittee on Financial Services and General Government
- Subcommittee on Legislative Branch
- Subcommittee on Military Construction and Veterans Affairs, and Related Agencies
- Subcommittee on State, Foreign Operations, and Related Programs
- Subcommittee on Transportation, Housing and Urban Development, and Related Agencies
The Bottom Line
When the government shuts down, you shouldn't delay filing your tax return or withhold more taxes from your paycheck. Your duties and responsibilities as a taxpayer are largely unaffected, and you should go about tax season as you normally would. However, it would help if you were mentally prepared for your refund to be delayed due to the IRS being backed up.
Committee for a Responsible Federal Budget. "Q&A: Everything You Should Know About Government Shutdowns." Accessed Feb. 15, 2020.
IRS. "IRS operations during the appropriations lapse." Accessed Feb. 15, 2020.
IRS. "IRS opens 2020 filing season for individual filers on Jan. 27." Accessed Feb. 15, 2020.
U.S. Government Publishing Office. "31 U.S.C. 1324 - Refund of internal revenue collections," Download pdf. Accessed Feb. 15, 2020.
U.S. Senate. "Committee on Appropriations." Accessed Feb. 15, 2020.