IRS Shutdown Contingency Plan

January 24, 2019

According to a detailed shutdown contingency plan for fiscal year 2019 released on January 15, the Internal Revenue Service (IRS) will have 46,052 employees on hand – 57.4 percent of its total workforce of 80,265 – to carry out the IRS’s tax filing season responsibilities during the partial shutdown of the federal government. The IRS and Treasury Department are among the federal agencies and departments that were forced to limit their operations to essential functions after the shutdown took effect at midnight last December 21, 2018.

The contingency plan explains that the IRS’s essential functions include, among other things, “those authorized by law and those funded by multi-year, no-year, and revolving funds or advance appropriations” as well as operations deemed “necessary for the safety of human life or protection of government property.”

The contingency plan confirms that the IRS will process income tax returns and issue refunds during the shutdown, and will maintain the operations that support those functions. Previous administrations have held that issuing refunds is not an essential IRS function and therefore not a permissible activity while the government is shut down. But the contingency plan, confirming the position that the IRS announced last week, states that “tax refunds are paid from the permanent, indefinite refund appropriation and activities necessary to issue the refunds may continue during a shutdown.”

Additionally, the IRS also will continue to carry out activities necessary to implement the tax cut legislation enacted in 2017, known as the Tax Cuts and Jobs Act (TCJA). The contingency plan notes that Congress allocated funds for TCJA implementation for fiscal years 2018 and 2019 under the Consolidated Appropriations Act of 2018, which was signed into law in March of last year. As a result, “some implementation activities would not be affected by a lapse in appropriations in fiscal year 2019.”

Further, the IRS will staff some of its telephone lines to handle taxpayer questions during the filing season, although it cautions that a heavier call volume likely will mean longer wait times. Most automated toll-free phone services will remain available. Yet, many other IRS operations will be suspended or limited while the shutdown remains in effort. Those include: audit, collection and enforcement activities; taxpayer appointments; taxpayer correspondence and the IRS will not be processing applications or determinations for tax-exempt status or pension plans.