The government shutdown in October 2013 also shut down 90 percent of the operations of the IRS. The IRS now says the two-week shutdown will also delay the start of the tax filing season by up to two weeks. Rep. Dave Camp, R-Michigan has already written a letter to the acting head of the IRS complaining that this delay will hurt people who depend on getting early tax refunds. Thus far, however, the only concession given by the IRS in this matter is a promise to look into options that may shorten the delay period by about a week. Still, the organization is making no promises.
Delays Mean Later Refunds for Millions
The original start of the 2014 tax filing season was supposed to be January 21. However, a one to two-week delay would mean the IRS would not begin accepting tax returns until at least January 28 and maybe not until as late as February 4, 2014. Over 18 million people file their tax returns in January, right at the beginning of the tax filing season. This delay would mean they wouldn't get their expected refunds until at least a week or two later than expected, which could be a financial burden on some filers who depend on early refunds and plan large purchases or paying off certain bills around the expected time of arrival of the early returns.
Tax Preparers May Be Burdened By the Delay as Well
Tax preparers may also be negatively affected by this delay. Seasonal tax preparers may have their season shortened this year by the delay and therefore won't make as much money as they are used to making during tax season. They could also be overwhelmed by a huge influx of customers once tax season opens, as people who would have normally filed earlier come in to get their taxes done along with people who are coming in at their usual time. This could mean long work days for tax preparers and long wait times for those who come in to get their taxes done with or without an appointment.
The IRS States its Reasons for the Delay
The IRS says the delay is necessary because the government shutdown came at the time when IRS employees would normally be preparing for the upcoming tax filing season by programming and testing more than 50 new computer systems needed to handle processing the coming year's estimated 150 million tax returns. These new systems include new programs to prevent refund fraud and identity theft as well as updates to existing programs that do the same things.The government shutdown put the IRS behind schedule in this testing and now it must make it up by delaying the start of the tax filing season.
Rules for Taxpayers and Businesses Won't Change
The IRS won't process any paper tax returns before the official start date to the tax season. While no official date has been set yet, it will be announced some time in December. This delay to the start of the tax filing season will have no effect on the deadline for filing taxes, which is April 15. This date is set by government statute and remains in place. Companies are also still required to send out W-2 and other tax documents by January 31 as usual.
The current agreement to reopen the government only lasts until January. If budget talks come to loggerheads between the two parties in Congress again as they did in October, it could shut down the government once more. This would delay the start of the tax filing season and the issuing of refunds even longer, while deadlines for filing and sending out W-2 forms would continue to remain the same. The burden of compliance appears to remain with the average taxpayer and the nation's businesses no matter what happens with the federal government.