IRS Commissioner Danny Werfel has warned that a failure to continue to fund the government, and the resulting shutdown of nonessential services, could adversely affect taxpayers as the 2024 tax season begins on Jan. 29, CNBC.com reported.
In a call with reporters last week, Werfel said that, while the agency can preserve certain activities for ongoing operations after a lapse in funding by law, “shutdowns are highly disruptive,” and one could “increase the risk that we don’t have as smooth a filing season as we intend to have.”
Congress has two deadlines to either reach a full budget agreement or to pass a short-term funding measure: Jan. 19 and Feb. 2, the latter of which affects the IRS.
The U.S. Department of the Treasury in September released a lapsed appropriations contingency plan for fiscal year 2024, covering critical operations for the IRS.
In response, in a November 23, 2023, letter to Treasury Secretary Janet Yellen and Werfel, the AICPA asked for plan updates with “filing season-specific activities." The letter expressed concerns about phone service, taxpayer assistance centers, possible refund delays, paper correspondence and automated notices. The letter pointed to an interpretation of the contingency plan from National Taxpayer Advocate Erin Collins, who wrote that “Taxpayers and their representatives should be aware that if there is a lapse in appropriations, the Taxpayer Advocate Service (TAS) will not be permitted to assist taxpayers until the government reopens.”
“There’s not a lot of winners if the IRS shuts down and has to go to their contingency plan,” said Kasey Pittman, tax policy director at Baker Tilly’s Washington tax council, in an interview with CNBC.com.
Lack of funding measures could threaten the agency’s progress on past issues and new initiatives, such as employee retention tax credit (ERC) backlogs and the upcoming Direct File pilot program, said former IRS Commissioner and current Alliantgroup Vice Chairman Mark Everson in an interview with CNBC.com. “It’s not just a regular filing season,” he said.
In his call with reporters, Werfel seemed prepared for the possibility.
“We experienced shutdowns before [and we] have not experienced a shutdown in the middle of filing season, so there’s some uncertainty there,” he said. “Of course, we will do everything in our power to minimize the disruptions that a shutdown would have on the filing season.”
To get the latest guidance on navigating clients’ tax issues, and to meet key IRS players and ask questions, attend the Foundation for Accounting Education’s NYSSCPA Meet The IRS Webcast on Jan. 25.