Tax Refunds May Be Delayed Due To Government Shutdown

Joe RaedleGetty Images

As the government ends its 13th day of being shutdown, the effects of its current state are becoming even more apparent. Hundreds of thousands of workers are going without pay for weeks, and national parks and museums across the country are unable to open, and that’s just a short list of the issues Americans have faced for the last two weeks.

Now, with the beginning of a new year, the looming thought of a continued government shutdown that has no end in sight poses yet another threat. As noted by Business Insider, the IRS may not be able to issue tax refunds in a timely manner.

While tax day isn’t officially until April 15 — a date everyone hopes doesn’t bring the government shutdown along with it — there are still millions of taxpayers that file early in the season. The IRS typically begins accepting tax returns at the end of January, and those prompt in filing can see refunds hit their account as early as February.

If the current state of the government continues, however, early filers may face delays in their tax refunds, which the Wall Street Journal‘s Richard Rubin said could total “billions of dollars.”

During the shutdown, which began on December 22, the IRS has not only lost funding, but is operating with only 12 percent of its total employees. And while the agency is still able to process some tax returns, conduct criminal investigations, and keep systems running, it is unable to run audits, answer off-season questions or, arguably the most important thing, allocate refunds.

Loading...

If the shutdown is resolved within the next few weeks, the chance of it affecting taxpayers goes down, but as the tense battle over border security remains strong, even President Trump himself has announced it could go on for weeks, meaning the threat of delayed refunds is even more likely, posing a huge problem to those who need the refund the most.

“For many Americans, the tax refund is the single largest financial event of the year, and the people who tend to file early in the season are taxpayers who count on large refunds to pay down debt, catch up on bills or make major purchases,” Rubin explained. “Those are disproportionately low-income households that benefit from the earned-income tax credit and other provisions that give them no income-tax liability or a net benefit from the income-tax system.”

Meanwhile, Floyd Williams, the former IRS director of legislative affairs, pointed out that wealthier taxpayers that typically pay closer to tax day won’t be affected to the same extent as those that need to file early from a financial standpoint.

The potential delay also comes during a year when refunds are expected to be larger than usual thanks to the new GOP tax law that went into effect in 2018.