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HomeLatest NewsImpact of government shutdown and its implications on individuals and sectors.

Impact of government shutdown and its implications on individuals and sectors.

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The IRS, known for its aggressive operational cutbacks during federal funding lapses, has yet to release its shutdown contingency plan. According to the IRS chief counsel, government workers can remain on the job during shutdowns only if their duties protect the government rather than individuals. This means that ordinary taxpayers may face increased financial hardship. For instance, during the 35-day shutdown in late 2018 and early 2019, the Taxpayer Advocate Service could only open mail to search for checks payable to the government, severely limiting its ability to conduct case work or resolve taxpayer disputes.

In addition, at the beginning of that particular shutdown, only 12 percent of IRS employees who remained on duty were unable to answer taxpayer phone calls, issue tax refunds, release liens and levies, or provide other taxpayer services. However, as the shutdown continued and approached the filing season, the IRS gradually exempted more employees and brought back thousands of staff members to handle tasks such as answering phones and processing refunds.

If the IRS’s shutdown contingency plan follows historical patterns, it is likely that taxpayers will face significant challenges. The limited availability of services provided by the Taxpayer Advocate Service and the delay or interruption of crucial tasks like issuing refunds and resolving taxpayer disputes could lead to financial difficulties for individuals and businesses. The impact may be particularly severe during the upcoming filing season, when taxpayers typically rely on IRS assistance and timely processes. The potential consequences of reduced IRS operations during a shutdown highlight the importance of government funding and the critical role the agency plays in supporting taxpayers.

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