IRS developing contingency plan as government shutdown looms

The IRS is developing a contingency plan for a probable government shutdown, the union that represents the Service’s workers said in a statement Friday.

One potential concern of a partial or full IRS shutdown is how taxpayers who received an extension in April would file their returns before the Oct. 16 deadline.

In addition to missing deadlines, other concerns include the possibility of another large backlog of returns and delays to upgrading IRS computer systems.

With a Sept. 30 date looming for Congress to approve a budget for fiscal 2024 or a continuing resolution that keeps government operating temporarily, Congress left Thursday for the weekend. It plans to return Tuesday, giving the House and Senate five days to reach a consensus. 

The National Treasury Employees Union (NTEU), which represents federal employees in 34 agencies, including the IRS, confirmed Friday that the IRS could close if the government shuts down.

“The IRS has yet to release its final plan, so we do not know the full scope of the impact of a government shutdown on IRS employees,” NTEU President Doreen Greenwald said in a statement. “NTEU became aware from our members that the IRS was developing a new contingency plan that includes furloughing some of its workforce.”

The IRS told the NTEU last week that it planned to use funding from the Inflation Reduction Act of 2022, P.L. 117-169, to avoid closing in the event of a shutdown, Federal News Network reported. But in an email to IRS employees Thursday, the union said the IRS is “severely limited” in its use of Inflation Reduction Act funds to stay open in the event of government shutdown, according to Federal News Network.

Web pages with previous IRS contingency plans show an error message now. However, an archived page shows that the IRS said in its fiscal 2023 contingency plan that the Inflation Reduction Act funding meant that normal IRS operations would continue during a government shutdown. It is not clear why that would not be the case this year.

Bloomberg News reported that IRS Commissioner Danny Werfel said last week that it was too early to say anything about the IRS plans and said he was awaiting guidance from Treasury and the Office of Management and Budget. An IRS representative said Friday that nothing had changed since that statement.

In the partial government shutdown of late 2018 and early 2019, 88% of IRS employees originally were furloughed. The IRS issued a plan for 57% of its employees to work during tax season, but the shutdown ended before that happened, with federal government employees returning to work in January 2019.

The IRS did not issue a contingency plan for a government shutdown that ended up lasting three days in January 2018. And a 16-day government shutdown in 2013 resulted in a delay to the start of the 2014 filing season.

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