The Government Shutdown May Delay Your Tax Return

If you recall, last year the infamous D.C. beltway traffic was far less congested as Congressional leaders were at a standstill for 16 days, shutting down of the U.S. Government for the first time since 1996. October 1 marks the beginning of the U.S. Federal Government fiscal year and each year, elected officials in Washington D.C. must pass a budget to continue its operations. But they failed to do so at that time and most federal workers were sent home starting October 1, including about 90% of the Internal Revenue Service workforce. Why do you care? Well, with over 2 work weeks off the job, a serious backlog of work accumulated for IRS employees.  And this may have a snowball effect into delaying your tax refund.

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The beginning of tax season was originally slated to begin on January 21, 2014.  That’s the date the IRS was planning to accept its first tax returns from tax preparers across the country. However, because of the Government shutdown, the IRS announced up to a 2-week delay several weeks back.  The IRS recently settled on January 31st as opening day for accepting and processing your 2013 individual tax returns. Earlier reports from the IRS suggested the delay would extend into February, but thankfully for you early filers, this wasn’t the case. They found middle ground with a late January date.  Even CPAs and national tax preparation chains won’t be able to submit your return until then.

So, why the delay? Turns out, April isn’t the only busy time of the year at the IRS.  The Fall, in fact, represents a key preparation season for the IRS and the shutdown seriously disrupted their flow. During the Fall, the IRS finalizes the individual and business tax forms to include recent changes to the tax law. There’s also the electronic systems they use to process all those returns – there’s a major IT infrastructure to update and ready for the upcoming tax season. Also, the IRS is also busy this time of year processing returns for extended returns (October 15th is a key deadline for those who apply for a 6-month filing extension). Needless to say, having 90% of your workforce sent home during such a key period of time has a great impact. A 2-week delay to tax season sounds pretty reasonable actually, all things considered.

“Readying our systems to handle the tax season is an intricate, detailed process, and we must take the time to get it right,”Acting IRS Commissioner Danny Werfel said in a statement. “The adjustment to the start of the filing season provides us the necessary time to program, test and validate our systems so that we can provide a smooth filing and refund process for the nation’s taxpayers. We want the public and tax professionals to know about the delay well in advance so they can prepare for a later start of the filing season.”

So, if you’re one of the millions of Americans who file in late January and early February, brace yourself for this brief delay. The tax refund you’re relying on for the holiday season credit card bill may not come in time. Don’t stress too much though – the IRS has announced similar delays in the past and I’ve personally experienced reasonable turnaround times on getting refunds despite the announced delays. A quick tip to getting the refund faster is stay away from filing your IRS return on paper. If you’re not doing so already, turn to e-filing your return this year, either through a  tax preparer or using a tax prep software package. They are always processed several weeks faster.