IRS says it will process returns, issue refunds despite shutdown

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The government shutdown won’t stop the IRS from processing 2018 tax returns and issuing refunds, the agency announced Monday.

In fact, the IRS said it will recall “a significant portion” of its approximately 70,000 furloughed workers in preparation for the start of tax season, which will begin on Jan. 28, 2019. That’s the date the IRS said it will begin processing 2018 federal income tax returns.

What’s not yet clear is if or how the IRS will pay recalled workers if the shutdown continues into tax season — including those responsible for hiring temporary seasonal IRS workers — and what affect that situation might have on the service’s ability to make good on its promise to process returns and issue refunds.

Want to know more?


What’s the background?

The partial shutdown of the federal government began on Dec. 22, 2018, when Congress and the Trump administration locked horns over a spending deal for the federal government. At the heart of the dispute is funding for a border wall.

The administration is seeking more than $5 billion to build a wall along the U.S.-Mexico border. Congressional Democrats — who took control of the House of Representatives on Jan. 3, 2019 — have promised to block any budget legislation that includes funds for a wall.

As long as the administration and Congress are at odds over those funds, the lack of a spending deal leaves many parts of the government in limbo. And without a spending plan in place to fund them, certain federal departments and agencies — including the IRS — have had to furlough workers and either partially or entirely cease operations.

What are people saying?

The policy in place for past government shutdowns directed the IRS to process returns but not issue refunds. However, that policy has since been reviewed by the Office of Management and Budget, which determined the IRS may issue tax refunds during these situations.

The IRS has affirmed it will process returns and issue refunds because Congress directed it to do so “through a permanent, indefinite appropriation.”

Meanwhile, the IRS has affirmed it will process returns and issue refunds because Congress directed it to do so “through a permanent, indefinite appropriation.”

But that means calling back furloughed IRS employees to work despite the shutdown, meaning some federal employees would be working without pay. That could raise legal questions for the federal government.

The National Treasury Employees Union filed a lawsuit on Jan. 7 alleging that the federal government is violating the Fair Labor Standards Act by forcing some employees to continue working without compensation. Yet paying those employees may be problematic.

John Mahoney, a federal employment law attorney based in Washington, D.C., recently told Government Executive that recalling furloughed IRS workers to process tax refunds could violate the Antideficiency Act, which “prohibits the government from being involved in any contract for the future payment of money in excess of currently available congressional appropriations.”

And, former Commissioner of Internal Revenue Steven Miller recently told NPR that the 2019 filing season “was always going to be a stretch for a very stretched IRS. This can’t help.”

How could this affect you?

Despite the IRS’s stated intention to open tax season, process tax returns and issue refunds, it’s impossible to predict whether the agency will be able to deliver on its promise. Many factors are in play beyond the positive intentions of the IRS and any of its employees who are working without pay during the shutdown.

Congress and the administration remain at odds over the border wall and a spending plan as the third week of the shutdown draws to a close. It’s anyone’s guess how long the shutdown will continue and what its long-term effects might be.

What can you do?

The IRS has said it will begin accepting and processing returns on Jan. 28, and for most people the filing deadline will be April 15 (taxpayers in Maine and Massachusetts get two extra days due to state holidays).

Consider filing your federal income tax return as soon as you’re able. Here are some good reasons for doing so.

  • You may reduce the risk that an identity thief will file a bogus return in your name before you can file your real return and claim any refund you’re owed.
  • If you’re due a refund, you can’t get it until you file your return. And the sooner you file, the sooner you may get your refund. The IRS says it typically issues nine out of 10 refunds within 21 days of receiving a return.
  • If you procrastinate, your return could get caught up in a last-minute filing rush. In fact, more than 20 million Americans typically wait until the last week of filing season to submit their returns.
  • This is the first year that many of the major provisions of the Tax Cuts and Jobs Act have taken effect. Because many things changed significantly, you may want to give yourself as much time as possible to work through any issues arising from the new tax law.

Finally, exercise your right as an American to have a voice in how your government operates, and let the White House and your representatives in Congress know what you want them to do about the shutdown.