January 07, 2019

Warner, Kaine Press Trump Administration on How Government Shutdown Will Impact Tax Refunds for Virginians

~ Letter requests answers from the Department of Treasury on how the short-staffed IRS will process tax returns for Virginia families ~

WASHINGTON – Today Sens. Mark R. Warner and Tim Kaine (both D-VA) sent a letter to Treasury Secretary Steven Mnuchin asking how Virginia taxpayers will be affected by the government shutdown, which has left the Internal Revenue Service (IRS) short-staffed and potentially underprepared for the beginning of the 2019 tax-filing season.

Funding for the IRS lapsed on December 22, 2018, leaving the agency to function on a contingency plan that provides some flexibility on operations during the first five days of a government shutdown. Now in the 17th day and nearing the 2019 tax-filing season that begins on January 29th, Sens. Warner and Kaine are asking for answers on how the IRS would accept and process tax returns, issue refunds, and address taxpayer correspondence.

“According to the Internal Revenue Service’s (IRS) Lapse Appropriations Contingency Plan, only 12.5 percent of the IRS’s workforce is authorized to work during a shutdown during a non-filing season and as a result, we understand the Treasury Department has furloughed roughly 70,000 IRS civil servants. While the contingency plan includes some flexibility in determining how the Department can respond to a lapse in government funding that continues beyond five business days, the issue of tax refunds is considered a ‘non-excepted activity,’ meaning that the funding lapse has led the IRS to stop issuing tax refunds in addition to other needed taxpayer services,” wrote the Senators.

Many hardworking families are counting on their tax refunds to catch up on bills or pay down their debt. However, with the IRS short-staffed during the government shutdown, many Virginia families are at risk of receiving a delayed return that could impact their personal finances.

“The lapse in government funding has and will continue to pose other problems for taxpayers. Reports indicate many Americans are experiencing delays in financing or refinancing mortgages and other loans because of lenders inability to obtain tax transcripts to verify incomes for loans,” continued the Senators. “The American people deserve clarity during these uncertain times, particularly as it relates to their ability to afford their basic needs.”

Sens. Warner and Kaine have been outspoken against President Trump’s use of a government shutdown as a negotiating tactic. Sens. Warner and Kaine have called on Senate Majority Leader Mitch McConnell to hold a vote on a House-passed spending bill that would reopen the government and allow hundreds of thousands of federal employees and contractors to go back to work.

The full text of the letter is available here and below.

The Honorable Steven T. Mnuchin

Secretary

U.S. Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220

Dear Secretary Mnuchin:

We write to raise concerns with the impact the government shutdown will have on the Department of the Treasury, its employees, and American taxpayers. According to the Internal Revenue Service’s (IRS) Lapse Appropriations Contingency Plan, only 12.5 percent of the IRS’s workforce is authorized to work during a shutdown during a non-filing season and as a result, we understand the Treasury Department has furloughed roughly 70,000 IRS civil servants. While the contingency plan includes some flexibility in determining how the Department can respond to a lapse in government funding that continues beyond five business days, the issue of tax refunds is considered a “non-excepted activity,” meaning that the funding lapse has led the IRS to stop issuing tax refunds in addition to other needed taxpayer services. 

According to IRS data through April 2018, the IRS processed over 130 million individual tax returns and issued close to 100 million refunds that totaled $275 billion. The average refund during that period was close to $2,800. This money is vitally important for American families and their ability to pay for their basic needs. A delay in refunds would cause hardship, particularly to those American workers and families who live paycheck to paycheck. By this time last year, the IRS had announced the beginning of the 2018 Tax Filing Season, informing taxpayers it would begin accepting tax returns on January 29, 2018. A delay in the announcement or opening of the tax filing season could adversely affect taxpayers and their ability to receive their tax refund on time.

The lapse in government funding has and will continue to pose other problems for taxpayers. Reports indicate many Americans are experiencing delays in financing or refinancing mortgages and other loans because of lenders’ inability to obtain tax transcripts to verify incomes for loans. To understand how the Department and the IRS will serve American taxpayers now that we have passed the first five business days laid out by the IRS’s contingency plan, please provide us with the following information by January 11, 2019:

1. The date when the IRS will begin accepting tax returns for 2019. If the tax filing season opens later than last year—on January 29, 2019—please explain the delay and whether the lapse in government funding played a role.

2. Please confirm whether the IRS will reevaluate its contingency plan and issue federal tax refunds at any time during the government shutdown. If so, please provide the anticipated date when the IRS will begin issuing refunds.

3. Please confirm if the IRS has a filing season contingency plan for Fiscal Year 2019. If not, please provide a date when the IRS expects to have finalized such a plan.

4. A list of all IRS functions that have stopped or been reduced during the lapse in funding. Please indicate the percentage of the reduction if IRS functions have been reduced.

The American people deserve clarity during these uncertain times, particularly as it relates to their ability to afford their basic needs. Thank you for your attention to this matter.

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