June 25, 2019

June 24, 2019

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Impact of Government Shutdown on IRS Collections

The government shutdown has impacted many government offices, including the Internal Revenue Service. After the longest government shutdown in history, IRS employees returned to work on January 28, 2019, in most offices across the country. Unfortunately, due to extreme weather conditions in parts of the US, including Michigan, local offices were closed most days during this first week of the IRS reopening. If a taxpayer has outstanding balances with the IRS, the lingering question is what impact did the shutdown have on IRS collections.

While it will take some time for the IRS to resume normal operations, on January 29, 2019 the IRS issued a number of FAQs to assist taxpayers and tax professionals with collection issues that were affected by the shutdown.

Things to Keep in Mind

IRS revenue officers were furloughed during the shutdown. Meaning that they were put on a leave of absence that prohibited them from performing their duties. If you were working with a revenue officer to resolve your balance due account, the officer will be reviewing inventory and should be reaching out to taxpayers within the next week or so. If an appointment was missed, it should be rescheduled. If a payment or information was due during the shutdown, you should have that payment and/or information ready and available when contacted so that you can move your case toward resolution.

Government shutdown stamp over Form 1040 documentThe government shutdown did not affect federal tax law as it relates to the filing of returns and the making of payments to the IRS. Thus, penalties for failure to file, failure to pay, federal tax deposit penalties and estimated tax payment penalties may still apply. Further, since compliance is critical for all collection alternatives, including installment agreements, offers-in-compromise, and currently not collectible status, your collection alternative can be subject to default procedures. 

The government shutdown did not affect statutory deadlines for filing timely appeals from enforced collection actions, including the time frame within which to request a Collection Due Process Hearing from the issuance of a Final Notice of Intent to Levy or from a Notice of Federal Tax Lien Filing. Thus, you may find yourself in jeopardy of levy action on income and financial assets.

© 2019 Varnum LLP


About this Author

Angelique Neal Tax Attorney

Angelique is a member of Varnum’s Tax Team. Her practice includes all aspects of federal and state tax controversy and tax planning, including: tax audits, appeals, and litigation; tax collections – liens, levies, offers in compromise, and other collection alternatives; employment tax issues; and civil and criminal tax litigation. In addition, she handles tax and reporting compliance issues with offshore financial accounts and other assets. She represents individuals and business clients from small businesses to multimillion dollar corporations, including clients with overseas interests....