Will You Be Getting Your IRS Refund If There Is a Government Shutdown?

IRS Commissioner Doug Shulman assured taxpayers Wednesday that their tax e-filings will not be affected should the government shut down on Friday, the situation is more dire than the explanation he offered. Americans can expect to encounter problems regardless of how they file their taxes because tomorrow close to 1 million government workers will be forced to take unpaid furloughs, crippling government and leaving millions of taxpayers wondering what to do.

The last time the federal government was shut down, after President Bill Clinton vetoed the Republicans' spending bill, a fraction of “non-essential” government employees came to work. One estimate states that in 1995, 96 percent of workers at the Department of Housing and Urban Development stayed home. At that time, the IRS remained open because it did not fall under the “non-essential” category. This time around, taxpayers may not be so lucky.

Of course, a government shutdown couldn’t come at a worse time when we are right at the peak time for the IRS.
Between now and Tax Day, about one-third of taxpayers will file their returns – that works out to about 29.2 million tax returns. Those returns account for tens of billions of dollars in refunds. And while the majority of Americans will e-file, tens of millions of taxpayers who still file the old fashion way will be left wondering if – or when – they will get their refund.

Just as worrisome, many IRS employees are “seasonal,” meaning they were hired specifically for tax season. My concern is that if the shutdown drags out, the IRS may find itself without enough employees to handle the backlog of tax filings once they return to work. The result could be taxpayers not getting their refunds until summer or even fall in the worst case scenario.

While Republicans and Democrats work to try to avoid a Friday shutdown and blame each other, the rest of us sit and wait.

But if you try to file your taxes and are denied service, your anger shouldn’t be directed at the IRS and its employees. According to U.S. Office of Personnel Management, federal workers can’t take leave or even volunteer at their jobs if the government partly shuts down.

What we should be concerned about is what plan the IRS has in place after the government resumes operations.

Mr. Shulman’s Wednesday press conference was merely was an attempt to reassure Americans that, “everything is all right” but taxpayers who depend on their refunds to pay bills and put food on the table need to know what the contingency plan is.

In the meantime, Americans who have been calling for cuts in federal programs, agencies and budgets won’t appreciate the irony: by shutting down the IRS, it will actually cost the agency more in the long run. Why? Because the IRS may have to hire additional seasonal employees or pay significant overtime to ensure Americans get the refunds they are due.

Patrick Cox is CEO of TaxMasters, Inc.