Congress is required to pass budget legislation for the upcoming fiscal year (FY) each year. This legislation consists of 12 appropriations bills, one for each appropriations subcommittee. The president must sign the budget legislation before it can go into action.
A government shutdown can result when there's a disagreement regarding the budget. Only services that are deemed essential, such as Social Security and Medicare, are allowed to continue during a shutdown until new funding legislation is signed into law. But taxpayers' obligations are largely unaffected.
- During a government shutdown, you still owe taxes, and you'll be required to pay them.
- You should still file taxes according to the usual tax deadlines during a shutdown.
- Many Internal Revenue Service (IRS) employees may be furloughed during a shutdown, but a select number of employees may be required to process paper returns that have payments attached.
- Although your tax obligations remain the same, you should be prepared for a backlog at the IRS, which can delay your refund and make it more difficult to get through via phone.
The Appropriations Subcommittees
The 12 Appropriations subcommittees that rely on Congress to pass budget legislation are:
- 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, 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
Filing Taxes During a Shutdown
You don't have to wait to file your tax return during a government shutdown. You can prepare and send it in as soon as you have all the required documents, such as Form W-2 and 1099. 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.
Send a check if you owe the IRS money, but you might not want to submit a paper return if you don't owe anything and you're anticipating a refund. Federal law requires that processing paper returns must wait until after the shutdown ends, so it might be a good time to go electronic, if you haven't already.
Tax-related deadlines remain the same during a shutdown, although Congress and the IRS can extend them due to national emergencies. This includes the estimated tax payments made by self-employed individuals that are due quarterly. Taxpayers must still file and pay taxes as normal during a shutdown.
Returns must still be filed by Tax Day during a shutdown, which is normally April 15. Tax Day becomes the next business day in years when April 15 falls on a weekend or a holiday. You're still legally obligated to file and pay on time, even when Congress is squabbling.
How Shutdowns Affect Tax Returns
The IRS is part of the Treasury Department; therefore, it's affected by government shutdowns from operational and logistic standpoints.
Federal law requires the IRS to be staffed during shutdowns by exempt employees whose roles "protect human life and property." The short-staffed IRS is required to 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."
As a result, the IRS received more than five million pieces of mail to process during the government shutdown from December 2018 to January 2019. The IRS Automated Collection System line was only able to answer 38% of calls it received when the government reopened, with an average wait time of 48 minutes. Answered calls were 65% in the previous year, with an average wait time of 19 minutes.
The Bottom Line
You shouldn't delay filing your tax return or stop having taxes withheld from your paycheck when or if the government shuts down. Your duties and responsibilities as a taxpayer are largely unaffected, so you should go about tax season as you normally would.
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 tax return if you don't have enough withheld from your paychecks in the interim. It might help if you're mentally prepared for your refund to be delayed due to the IRS being backed up, however.