Impact of partial government shutdown on Federal income tax refunds

Just as a point of information, the ongoing partial government shutdown creates a situation where NO tax refunds will be sent out by our friends at the United States Treasury. So if you already have a refund coming, or if you anticipate a refund in future, it will not be forthcoming until after the partial shutdown is resolved and the government re-opens 100%.

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I don’t think that is correct. The Office of Management and Budget announced January 7th that tax refunds can and will be paid out during a shutdown. This was an issue decided during a shutdown in 2011.

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Appreciate the post. Obviously I looked this up prior to posting. Source I consulted stated unequivocally “no refunds until it’s over”. However:

I take your point seriously regardless. All news and information sources in USA today are horribly slanted to favor one political viewpoint or the other. Hence sources opposed to the shutdown will report “no refunds”, while other sources more concerned with illegals entering the country will report the opposite. Today you really do not know whom to believe.

I probably should have mentioned in the OP I have no independent knowledge of the right answer to this matter.

Would the IRS itself be a good source?

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If they didn’t issue refunds, people just might stop paying taxes. Which might be a good idea at this point anyway.

:rofl::rofl:

LMAO Yes, I think that is a GREAT source!!

Looks like I got snookered by a couple of websites opposed to the shutdown. I should have known better!!

Refunds will be paid, BUT there are a lot of people at the IRS not at work right now. Do not expect your phone call to be answered or anything done via paper to be completed in a timely manner.

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I wonder if shutdown will impact audit frequency especially for paper returns.

I fully expected the IRS to pay refunds. After all, they got your money already. If they withheld returning it to you, it’d be VERY unpopular. Much more so than the shutdown itself since many people are relatively unaffected by the shutdown, at least not directly and not as directly as to impact their wallets.

Academic question: if IRS withheld your refund because they could not process it due to a shutdown, would you be entitled to interest on the refund (maybe to the tune of what the IRS charges you when you don’t pay them on time?) My gut feeling is not a chance (at least not without suing the IRS) but who knows.

Same amount of interest they pay you on the tax withholding you pay throughout the year :wink:

Actually they normally pay interest if it takes too long.

“typically 45 days”

Of course, as it says “typically”, it seems like they could probably issue a decision setting the administrative time longer due to the trump shutdown. Plus the 45 days is only after the regular due date or when the return is filed. So it wouldn’t apply until June at the earliest.

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Classic “Chicken Little” post from the ol’ FWF days. /breathes in the nostalgia/

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One can dream… :slight_smile:

I did not realize they started that clock on April 15th regardless of when you filed prior to that. So that means, if you filed at the end of January, they could not send you a dime until end of May and still not owe you any interest for delaying giving you back your money for 4 months. But I guess it makes some sense since they also do not charge interest on underpayment until after April 15th either.

Anyway, let’s just hope we’re not still in a shutdown by end of May or even April 15th.

You didn’t specify the year. We will be out of shutdown sometime before April 15th 2025, at the worst. Hopefully much, much sooner. But I make no predictions.

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And just to add …

IRS recalls workers to process refunds

With all of the people they’re recalling, they may not even be late in paying refunds, especially if the democrat shutdown ends by April 15th. :grin:

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I don’t believe the IRS employees recalled are being paid and will have to wait for retropay like others.

Originally, they were not going to do refunds, but they changed that plan. It might have been better to not do refunds as it probably would hasten a deal of some sort.

At least they’re going to get retro pay for actually doing work. Others get their retro pay for sitting at home on vacation the whole time. And then I’m sure some pull overtime once back to work, to get caught back up. The whole concept of a “shutdown” is a farce when it comes to saving money.

I should say, generally they do. With Trump, retro pay for people who were sent home may be more of a sticking point.

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Any government considering not offering retro pay for furloughed employees would end up causing more long term damage to the attractiveness of work for government agencies (beyond the already shameful mess it is currently). Considering how frequently the threat of government shutdowns happens, who would want to work long-term for an employer with such built-in job insecurity? Might as well sign up for seasonal jobs. At least you know when they end.

From a personal finance standpoint, I’ve never seen emergency planning advice asking whether you worked for government or not. But in the light of this deadlock, maybe working for government should automatically increase the size of your recommended emergency fund by a few months.