Tax refunds may be delayed despite deal
WASHINGTON — The IRS’ workforce will return to full strength under the short-term deal to reopen the government struck Friday by President Donald Trump and congressional leaders.
But the disruption from the partial shutdown and the recent absence of a large contingent of recalled IRS employees means the possibility of delayed tax refunds.
The official start of the tax filing season is Monday, and the Trump administration has said taxpayers who are owed refunds would receive them on time despite the shutdown.
The administration made money available to pay hundreds of billions in refunds and ordered nearly 60 percent of the Internal Revenue Service workforce back towork without pay.
But fewer than half of 26,000 furloughed IRS employees recalled to work during the shutdown to handle tax returns and taxpayers’ questions had returned as of Tuesday, according to congressional and government aides.
Of the 14,000 recalled employees who hadn’t reported to work, IRS officials told House staffers Thursday, around 5,000 sought permission under their union contract to be absent because of financial hardship. The remaining 9,000 couldn’t be reached by IRS managers.
In addition to the 35-day shutdown, the complexities of a new tax law have burdened an IRS that has been starved for funding for years. Getting refunds out in time could be a heavy lift.
“Just because you reopen the government, doesn’t mean that on Day 1 everything is normal,” said Jorge Castro, a former counselor to the IRS commissioner and senior counsel to the Senate Commerce Committee now at the law firm Miller& Chevalier.
Three-quarters of taxpayers receive annual refunds. Lower-income households depend on refunds as their biggest cash infusion of the year.
Beyond refunds, no audits of tax returns were being done during the shutdown because IRS auditors were furloughed. That’s a doubleedged problem: A lack of inspections could invite cheating, and the money normally captured by audits isn’t flowing to the national coffers.
“The decline in audits has been an ongoing problem at the IRS for many years,” says Howard Gleckman, senior fellow at the Urban Institute. “Reducing them even further will only encourage more people to game the tax system — and that’s bad for all of us who do pay the taxes we owe.”