Prepping for a Tax Season Shutdown

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If you’re feeling like it's Groundhog Day, you’re not alone. The U.S. Government still doesn’t have a permanent budget and spending bill in place for the fiscal year that started October 1st and we are now operating under yet another temporary bill to stave off a shutdown.

I would love to say that a shutdown isn’t likely but with every temporary measure that has been passed, animosity is growing between the parties who are refusing to concede on certain issues to meet a permanent solution. As of now, the current temporary solution will expire in March, just in time to stress accountants out for tax season.

While rare, and optimal for politicians to try to avoid, a government shutdown is not historically unheard of. It’s happened in the past and it could happen again if parties can’t reach an agreement on spending in the near term. If we have learned anything from history, it’s that the IRS is not immune to this even if it is tax season.

Previous press releases that have come out since the initial shutdown talks began last fall have reiterated that certain “critical” IRS functions would continue if the government shut down, however, it is not totally clear what those functions are, and more importantly, what they are not.

Practitioners should try to prepare their practices and their clients by adjusting their tax season as much as possible in the event that a shutdown occurs. Historically, shutdowns have only lasted a few weeks, however, one in the middle of March could upend the filing season with the first major deadline falling on March 15th.

Plan to file your extensions early. If you know clients, especially the ones with March deadlines, will plan to extend, just prepare their extensions now and make sure they are done. Give clients a heads up that it benefits them even more than in previous years to get their documents in early. Our office requires documents 30 days in advance of any deadline to guarantee timely filing. Make sure your clients receive clear communications about when you need information and consider backing that up a couple of weeks from previous years.

If you can’t encourage clients to get you information sooner, make sure you reiterate the importance of good documentation. Anything mailed to the IRS needs to be sent by certified mail with a delivery receipt. Clients should pay extra attention to keeping copies of checks and ACH payments as well as the bank statements that show the days that any estimated tax payments clear the bank. A backlog will undoubtedly occur in the event that the IRS offices have to close, so making sure they have all the documents they need to support timely filing and payment will be even more critical.

Ultimately, the situation will be out of anyone’s hands, but communication to your clients can help better prepare everyone for what reasonable expectations will look like in the event that a shutdown impacts tax season.

Christine Gervais

Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker, providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and providing strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.