Government Shutdown Leads to Delayed Start of Tax Season

The IRS announced on Tuesday that because of the government shutdown, they would have to delay the start of when they will accept tax returns for the 2014 tax season.

Originally, the IRS had scheduled the 2014 tax season to begin on January 21.  The IRS indicated that the 16-day long government shutdown would delay the start of the 2014 tax season by approximately one to two weeks, which means the earliest the IRS will begin accepting tax returns is sometime between January 28 and February 4.

IRS Working to Make Up Lost Time Testing Computer Changes

According to a news release on the IRS’ web site, the government shutdown in the beginning of October took place during a key period when the IRS was preparing their computer systems to handle the input of 2013 tax returns.  Although the IRS works to prepare these computer systems throughout the year, fall is when they perform the final testing of applications to ensure they perform as designed.

During the government shutdown, approximately 90 percent of IRS staff and offices were on furlough.  Therefore, the IRS is behind schedule in preparing approximately 50 separate applications to accept the expected 150 million tax returns that the IRS must process for the 2013 tax year.  Preparations include updates to reflect tax law changes and improved fraud detection methods.

“Readying our systems to handle the tax season is an intricate, detailed process, and we must take the time to get it right,” said Danny Werfel, Acting IRS Commissioner.  “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.”

In addition, during the government shutdown, the IRS received over 400,000 items in the mail.  The IRS is also dedicating resources to work through this backlog, in addition to the aforementioned preparations to begin receiving tax returns in three months.

“In the days ahead, we will continue assessing the impact of the shutdown on IRS operations, and we will do everything we can to work through the backlog and pent-up demand,” Werfel added.  “We greatly appreciate the patience of taxpayers and the tax professional community during this period.”

Given the backlog, the IRS asked that taxpayers hold their questions for the IRS for now unless the matter is urgent.

It is worth noting that although Congress and the President passed a bill to fund the government, the bill only provides funding through January.  Therefore, unless they pass an another bill to provide additional funding, another government shutdown could occur in January, which would delays the acceptance of tax returns by the IRS even further.

E-File Still Fastest Refund Option for 2014 Tax Season

The IRS noted that taxpayers who use e-file with direct deposit will still receive their refunds faster than taxpayers who use other methods.  Although taxpayers can mail paper tax returns to the IRS before the official acceptance date, the IRS will not begin processing paper returns early.

The due date for tax returns for to the 2013 tax year is still April 15, 2014.  The IRS has no plans to extend this date because of the government shutdown.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.