The Government Shutdown Won’t Affect Tax Refunds If It Goes On Until Filing Season, The IRS Says
As it wades into its third week, it looks like the government shutdown won't affect your tax refund, according to the Internal Revenue Service. "Tax refunds will go out," said acting director of White House Office of Management and Budget Russell T. Vought, according to The New York Times. But this move by the Trump administration is new.
According to The New York Times, during previous government shutdowns, the law has been interpreted to mean that the IRS cannot distribute tax refunds before Congress has OK-ed a budget to fund the Treasury Department. (The Treasury Department is one of at least nine departments affected by partial government shutdown, which started on Dec. 22, USA Today reported.) Bloomberg reported that during previous shutdowns, the IRS would accept a tax return, but not issue a refund until after the government was funded.
A senior administration official tells Bustle that the Office of Management and Budget's move is traced to an IRS memo from 2011 that argued that the agency can pay refunds during a funding lapse.
"Consistent with the Administration’s intent of making this lapse as painless as possible, OMB informed Treasury today that consistent with Treasury’s 2011 position they can in fact process tax refunds during a lapse," a senior administration office tells Bustle.
Employers are required to give employees W-2 or 1099s by Jan. 31 — and then filing can begin. Some people like to get started early: By Feb. 2, 2018, Americans had already filed 18.3 million tax returns with the IRS, according to the agency. People have a lot of reasons for filing early, including getting access to a refund check sooner. In 2018, the average federal refund was $2,899, according to Bloomberg.
The House Ways and Means Committee — the "chief tax-writing committee" in the House — has recently come under Democratic control as the new Congress was sworn in. The New York Times reported that the committee lawyers think the administration's move to distribute refunds while the government remains shutdown could be illegal.
The committee also can't get ahold of anyone at the agency because of the shutdown. "We keep trying to call people at IRS and Treasury, and there's no one there," said committee spokesman Daniel Rubin told The New York Times.
Vought told reporters that guidance would be issued to the agency regarding refunds. "We have been trying to make this as painless as possible consistent with the law," Vought told reporters, according to The Hill.
In order to process refunds, employees will be called back, according to New York Times reporter Jim Tankersley. "More news on the tax refunds: Mnuchin told W&M Chair Neal this afternoon that IRS will recall a significant # of employees in order to process refunds," Tankersley tweeted on Monday. "They won't be paid until shutdown ends."
The Wall Street Journal reported that the IRS has been working with a "skeleton staff" since the shutdown started last year. There are one in eight employees who are focusing on computer systems or criminal investigations.
In an effort to resolve the question of if issuing refunds before the government is funded, House Speaker Nancy Pelosi said the House would be passing individual bills to open government agencies like the IRS. "Next week, @HouseDemocrats will begin passing individual appropriations bills to re-open all government agencies, starting with the Department of the Treasury & IRS," Pelosi tweeted on Saturday. "An action necessary to make sure working families receive their tax refunds on schedule. #TrumpShutdown."
However, actions by the House can only do so much if the Senate — still Republican controlled — won't also pass such bills.