Posts

2018 Government Shutdown is the IRS Nightmare | IRS Lawyer & Attorney

/0 Comments/in , /by

A government shutdown is always bad for the normal functioning of federal agencies, but the 2018 government shutdown spells disaster for the IRS, especially if it lasts for a significant amount of time.

2018 Government Shutdown Comes at the Worst Time for the IRS

What makes the current 2018 government shutdown so bad is the timing. The shutdown comes just nine days before the tax season begins. For the IRS, the tax season is always the busiest time of the year.

Moreover, this year, the shutdown also comes right after a huge tax reform passed. Many of the provisions of the Tax Cuts and Jobs Act of 2017 still need to be implemented, the IRS software needs to be adjusted and the employees at the Call Centers need to be prepared to answer the questions of millions of Americans about the new tax laws.

2018 Government Shutdown Comes After Years of Budget Cuts

The 2018 government shutdown also comes after many years of the IRS budget cuts. Since 2010, the IRS lost more than $900 million in funding, eliminated 18,000 full-time positions and had to implement hiring freezes. Moreover, many IRS veterans are now retiring without being able to train proper replacement. This means that the IRS is gradually losing its best, highly-knowledgeable and experienced cadres – professionals who know how to enforce tax laws in an equitable manner. This unfortunate circumstance will inevitably have a profound impact on IRS ability to properly implement US tax laws in the future.

It is not only the professionals that the IRS is losing. The long years of budget cuts dramatically reduced the IRS ability to staff its call centers. Even before the shutdown, the IRS projected that, with its current budget, it will only be able to answer at best four calls out of every ten – i.e. the IRS said that it could answer only 40% of the calls, leaving 60% of Americans without any assistance.

Furthermore, the budget cuts came at a time when there was an unprecedented explosion of new tax laws, domestic and international, which have created an enormous demand for more IRS employees. The Tax Cuts and Jobs Act of 2017 is just the latest example of these new laws.

So far, the IRS has been able to more or less survive by cutting everything it could in the non-essential areas and relying on new technology to save costs. However, it does not appear that this is a sustainable situation in the future.

2018 Government Shutdown: Immediate Impact

The most immediate impact of the 2018 government shutdown will be the fact that only 43.5% of IRS employees will be coming to work on next week. 56.5% of the IRS workforce will be forced to stay at home.

While the IRS will continue to do “excepted activities” such as processing 2017 tax returns (this is a matter of life and death for the federal government), a number of its functions will be suspended.

Here is the list of the most common examples of the suspended activities: issuing refunds, processing of amended tax returns (Forms 1040X), conducting any audits or examinations, processing of non-electronic tax returns that do not include remittances, non-automated collections, legal counsel, planning, research, training, all development activities, most information systems functions, headquarters and administrative functions not related to the safety of life and protection of property, service center processing after the point of batching (i.e. Code & Edit, data transcription, error resolution, un-postables) and other activities. With respect to offshore voluntary disclosures, they are not likely to be processed while the government shutdown continues.

At this point, we can only wish that the government shutdown be over as soon as possible to minimize the negative impact it may have on the IRS, our nation and our fellow citizens.

Sherayzen Law Office will continue to monitor the situation.

IRS Will Be Closed Five Extra Days in 2013; Filing and Payment Deadlines

/in , /by

On May 15, 2013, the Internal Revenue Service announced additional details about the closures planned for May 24, June 14, July 5, July 22 and August 30, 2013.

Due to the current budget situation, including the sequester, all IRS operations will be closed on those days. This means that all IRS offices, including all toll-free hotlines, the Taxpayer Advocate Service and the agency’s nearly 400 taxpayer assistance centers nationwide, will be closed on those days. IRS employees will be furloughed without pay. No tax returns will be processed and no compliance-related activities will take place.

Taxpayers needing to contact the IRS about their returns or payments should be sure to take these furlough dates into account. In some instances, this may include taxpayers with returns or payments due soon after a furlough day, such as the June 17 deadline for taxpayers abroad and those making a second-quarter estimated tax payment as well as the September 3 deadline for truckers filing a highway use tax return.

No Impact on Tax-Filing and Tax-Payment Deadlines, but No Confirmation of Receipt

Because none of the furlough days are considered federal holidays, the shutdown will have no impact on any tax-filing deadlines. The IRS will be unable to accept or acknowledge receipt of electronically-filed returns on any day the agency is shut down.

Similarly, tax-payment deadlines are also unaffected. The only tax payment deadlines coinciding with any of the furlough days relate to employment and excise tax deposits made by business taxpayers. These deposits must be made through the Treasury Department’s Electronic Federal Tax Payment System (EFTPS), which will operate as usual.

Impact on Providing Documents to the IRS

IRS states that it will give taxpayers extra time to comply with a request to provide documents to the IRS. This includes administrative summonses, requests for records in connection with a return examination, review or compliance check, or document requests related to a collection matter. No additional time is given to respond to other agencies or the courts.

Where the last day for responding to an IRS request falls on a furlough day, the taxpayer will have until the next business day. If the last day to respond is Friday, May 24, for example, the taxpayer will have until Tuesday, May 28 to comply (Monday, May 27 is Memorial Day).

Some Services Will Continue to Function

Some web-based online tools and phone-based automated services will continue to function on furlough days, while others will be shut down. Available services include Withholding Calculator, Order A Transcript, EITC Assistant, Interactive Tax Assistant, the PTIN system for tax professionals, Tele-Tax and the Online Look-up Tool for those needing to repay the first-time homebuyer credit. Services not available on those days include Where’s My Refund? and the Online Payment Agreement.

Additional Furlough Days Possible

At a later date, the IRS may possibly announce one or two additional furlough days if necessary.

IRS Statute of Limitations: Tax Collections

/in , , , /by

The statute of limitations limits the time for the IRS tax collection activities. Generally, there is a ten-year statute of limitations for the IRS collection of owed taxes. Thus, for assessments of tax or levy made after November 5, 1990, the IRS cannot collect or levy any tax ten years after the date of assessment of tax or levy. See 26 U.S.C. §6502(a)(1). Court proceedings must also be started by the IRS within the 10 year statute of limitations. Treas. Reg. Section 301.6502-1(a)(1).

For assessments of tax or levy made on or before November 5, 1990, the IRS cannot either collect or levy any tax six years after the date of assessment of tax or levy. See 26 U.S.C. §6501(e). However, if the six-year period ends after November 5, 1990, the statute of limitations is extended to ten years. Hence, in order to come under the six-year statute of limitations, the six-year period must end prior to November 5, 1990.

The ten-year statute of limitations can be extended by agreement between the taxpayer and the IRS, provided that the agreement is made prior to the expiration of the ten-year period. See 26 U.S.C. §6501(c)(4).

Thus, in figuring out the applicable statute of limitations, you must understand: the starting date for the running of the statute of limitations, any exceptions to the tolling of the statute of limitations, the last day that the IRS can audit a tax return, and the last day that the IRS can collect overdue tax on a tax return.

Sherayzen Law Office can help you understand all of these issues and represent your interests in your negotiations with the IRS.

Call NOW to discuss your case with a tax lawyer!