This blog was last updated on June 27, 2021
IRS Commissioner John Koskinen has made another announcement about how the agency’s budget cuts, which Congress included in the The Tax Increase Prevention Act, will present noticeable consequences. Following his announcement that the funding reduction has led to a hiring freeze, he has now said the agency could experience a two-day shutdown.
This isn’t the first time the IRS has needed to shut its doors to save money. In 2013, the IRS instituted a three-day furlough due to sequestration issues, Government Executive reported.
Koskinen noted that while the plan is not set in stone, a shutdown is likely to happen, as the IRS doesn’t have any other areas where it can cut funding. According to Politico, the agency believes it can save $29 million each day it is closed.
Before any final decision is made, the commissioner must negotiate with the National Treasury Employees Union (NTEU), as three-quarters of the IRS budget is for staff compensation. Additionally, the agency must comply with a mandated 1 percent pay raise while contending with limit funding.
What could come of the shutdown?
Considering Koskinen and the NTEU are still working out the details for when and how a shutdown can occur, there is no telling if the action will affect the 2015 tax information reporting season. Some analysts who have been watching the situation unfold have said this will not be the ideal time, Politico reported.
One reason that a shutdown during tax season could be detrimental is that it could cost the government more money in the long run. One analyst said an off-season furlough wouldn’t be as bad. However, the source noted the IRS still has essential duties to attend to throughout the year. Businesses, for example, have quarterly tax information filing responsibilities.
Getting the right help
Even if a shutdown was to occur, Koskinen stated that deadlines would remain in place. This means filers must get the information they need, and if IRS services are closed, they’ll have to look to the agency’s online instructions, frequently asked questions and other resources as well as tax compliance assistance in the private sector.
The latter option may be best for more complex reporting questions, as the IRS expects to answer only 50 percent of the calls it receives this tax season, with wait times reaching up to 1.5 hours.
