Tax Filing Season Delay

by Linda Beale

Tax Filing Season Delay

The IRS announced that the 16-day federal shutdown will cause a delay in the start of tax filing season by a week to two weeks.  The exact date when returns will first be accepted, to be announced in December, was to have been January 21, but may now be January 28 or later.  See Annie Lowrey, Citing Shutdown, I.R.S. Says Tax Season Will Start Late, New York Times (Oct. 22, 2013). The delay is necessary to ensure that the IRS systems are functioning appropriately to handle the filings.  The shutdown delayed that process as 90% of IRS employees were on furlough starting October first, and the IRS has a backlog of items requiring attention now that employees are back.  Id.

The delayed date will tend to be most detrimental for taxpayers who file early because they tend to be the ones who expect a refund and want to get their money as soon as possible: the US issued more refunds between 1/30 and 3/1 this year than in the period from 3/2 to 5/10, even though it received 50% more returns in the latter period.  See Rubin, IRS Delays Start of 2014 U.S. Tax-Filing Season Citing Shutdown, Bloomberg (Oct 22, 2013).

An even more troubling impact of the shutdown and the resulting delay may be on the US debt.  According to Loren Adler at Committee for a Responsible Federal Budget, the delay–and the likelihood of more refunds than payments for early-filed returns–could mean that the government would reach the debt ceiling earlier than had been anticipated.  So that can that just got kicked a few weeks down the road may open up to more worms sooner rather than later.

cross posted with ataxingmatter