Government Shutdown Will Not Move IRS 1099 Reporting Deadlines

Gerry Nelligan
January 7, 2019

UPDATE (Jan. 8):

Reporting season is moving forward according to plan. The IRS has announced that it will process tax returns on schedule and without delays.

While the agency will clarify its contingency plan in the coming days, organizations should proceed as planned with 1099 reporting and other seasonal filings. The IRS will recall a “significant portion” of its workforce to handle reporting season. 

Following is a post from Jan. 7 for further context:

The government shutdown hasn’t led to delays in deadlines for 1099 reporting and other seasonal filings, and organizations should act as though it ultimately won’t.

While the shutdown has arguably led to more questions than answers for the IRS, reporting season isn’t yet in the crosshairs for delay. Currently, the IRS is operating under a contingency plan it adopted in November, but the plan only covers a five-day shutdown, and it does not have provisions for reporting season, Tax Notes reported. The current shutdown has lasted more than two weeks.

House Ways and Means Looks at Tax Reporting

At present, the IRS has furloughed—temporarily laid off, without pay—87.5 percent of its workforce. Generally, only employees in IT and law enforcement remain working and on the payroll. But tax reporting and, more succinctly, processing tax returns and issuing refunds, remains a priority for members of congress who oversee the agency.

This week, new House Ways and Means Committee Chair Richard E. Neal wrote a letter to IRS Commissioner Charles Rettig asking for details on a contingency plan for reporting season by Jan. 11, Tax Notes reported. Neal also asked Rettig for a date when the IRS will begin processing individual tax returns, noting that if the date is after Jan. 29, Rettig should explain how much of the delay is due to  a lack of government funding.

Continue with 1099 Reporting as Usual

As the government shutdown continues, the IRS is likely to accept tax returns during the furlough but will probably not issue refunds. Processing tax returns could become a “critical government activity,” meaning it would take place during the shutdown. The same would apply for the IRS processing 1099 forms and other files due during reporting season. The agency would process the forms with the current filing deadline of Jan. 31 intact.

There is, of course, no way to know how long the shutdown will last, and with the IRS still developing a contingency plan, there is no absolute guarantee that reporting season will survive a prolonged shutdown. For now, however, the safe bet for 1099 payers is to file on time as usual in order to eliminate the risk of incurring financial penalties.

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Author

Gerry Nelligan

Gerry Nelligan is a Regulatory Analysis Supervisor at Sovos, leading a team of counsels covering information reporting, including 10-Series IRS reporting, Affordable Care Act (ACA) reporting and Automatic Exchange of Information (AEOI). Gerry received his J.D. from Suffolk University Law School and his B.A. from Providence College. He is a licensed attorney in the state of Massachusetts.
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