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The Internal Revenue Service is definitely back in business. The phone has been ringing at our office as IRS representatives are back to work, rescheduling conferences and setting new timelines on existing matters.
The IRS has also issued updates with respect to the resumption of field exam activities and field collections activities. Here are the highlights:

  • Audits are back on. If you were scheduled for an examination which didn’t happen because of the shutdown, hang tight: your auditor will be reaching out to you. This could take a couple of days as auditors play catch up.
  • IRS is still accepting audit information and supporting documents. If, however, you have materials that had been requested by your auditor – and you were just waiting for the shutdown to end in order to send it – you can go ahead and send that now. If you have questions about what might be due – and when – you can discuss this with your auditor when they touch base with you.
  • The phones are open. If you’re super nervous about your exam, or you have questions about your audit report, you can call your auditor during business hours. But do you really want to? Again, the IRS has indicated that your auditor will reach out you after they start tackling their “to do” list. And while I generally encourage taxpayers to be proactive, the IRS has requested a little bit of patience from taxpayers.
  • Deadlines – especially statutory deadlines – still apply. If you’ve received a 30 Day Letter or a Statutory Notice of Deficiency, the deadlines and the rules are still in play unless you’ve been notified otherwise.
  • Filing and payment deadlines didn’t change. Filing and payment deadlines remained in effect during the shutdown even if there was no one available to process returns and payments. If you missed those deadlines, you will be subject to penalties and interest.
  • Installment agreements and other payment arrangements which were in progress will continue. Revenue Officers are working through case loads and will be in touch. If you were waiting to hear about a resolution of your tax account issue, keep waiting… You’ll eventually get a call. Again, if you’re nervous, you can always reach out to your Revenue Officer during normal business hours.
  • Time sensitive matters still need attention. If you have a pressing issue – like a Notice of Levy – you can call the number on the notice. Levies can cause major disruptions for taxpayers – including emptied bank accounts – so it’s important to respond to those within the mandatory time frame.
  • Lien operations are back in business. If you have general lien questions, need to request a payoff balance of a federal tax lien or need a release of a federal tax lien, you can contact Centralized Lien Operation by mail (P.O. Box 145595, Stop 8420G, Cincinnati, OH 45250-5595); phone (1-800-913-6050) or fax (859-390-3528).
  • Lien discharges are available. If you need to have a lien discharged on a tight time frame, such as for a closing, contact your local Collection Advisory Office. You can find the contact information for each office in Publication 4235 (downloads as pdf).
  • Keep in mind that Tax Court is now open, too. For information about those deadlines and extensions, check out this prior post.

As more information becomes available, I’ll be sure to update you.

Despite reports to the contrary, the Internal Revenue Service really is back up and running after the shutdown.
However, as I indicated yesterday, getting the agency back up to speed – and starting to tackle the backlog – is necessarily going to take time. The IRS has noted in particular that it expects “high telephone demand” and that many walk-in offices could open at staggered times.
If your matter is not urgent, the IRS is asking you to wait.
The IRS has begun to process paper tax returns and will begin to issue refunds. They are also finally opening the mail and tackling transcript requests and authorization forms received during the shutdown from third parties – those that were causing some taxpayers major headaches. Again, expect some delays as the IRS works through the piles of mail and requests that have been sitting for more than two weeks.
The name of the game? Patience. Some matters may require a bit more time than others – and the IRS asks that you give them some leeway.
I know, I know. You want me to make a snarky comment about how the IRS doesn’t wait for taxpayers. I’m not going to do it, though. There’s lots to be annoyed with IRS about from time to time – but the shutdown isn’t one of them. That’s all on Congress.

For a recap of what the shutdown has meant so far, check out these prior posts:
IRS To Employees: Let’s Get Back To Work!
Five Things You Need To Know About The Role Of Taxes In The Government Shutdown
Shutdown Gives Scammers New Opportunities To Steal

Shutdown Or No, IRS Filing Deadline Remains October 15
Running Man: Marathoner Fined For Violating Government Shutdown
D.C. Won’t Issue Tax Refunds, Going Broke Due To Shutdown: Are More States Far Behind?
The View From The Trenches: What The Shutdown Has Meant So Far For Taxpayers
With Shutdown, Taxes Still Due But You Can’t Ask IRS For Help
Congress Marches Towards Shutdown, Spares Military
Government Shutdown 101: What Happens When The Lights Go Off

With the shutdown officially over, the Internal Revenue Service had this to say to employees: get back to work!
As per the IRS web site:

IRS employees are expected to report to work no later than four hours after the start of their tour of duty that begins at 6 a.m. or later local time on Oct. 17.

That should mean that normal operations should resume today. But be patient, folks. Employees have been out of work for 16 days. That means that there will be a backlog. Notices have piled up. Messages have gone unanswered. Mail has gone unopened. Refunds have not been issued.
There have been rumors flying fast and furious about official extensions for notices, delayed Collection Due Process hearings and more. As soon as I confirm the details about extensions and any relief that might be available, I’ll let you know.
We’ll have a better idea about what this means for taxpayers as the day progresses. Keep checking the blog for updates.
It’s been a long couple of a weeks for the nation. For a recap of what the shutdown has meant so far, check out these prior posts:

We’re on day 16 of the shutdown. There have been serious negotiations in the past few hours that seem to indicate that we might have a work around. For now, however, the lights remain turned off.
It would be great if we could boil down the disagreements over spending into one.big.thing but there are a number of really complex issues at stake. While it’s true that the government shutdown began with a specific event (the House Republicans tried to eliminate funding for the Affordable Care Act, commonly called Obamacare, which the Senate Democrats rejected), the discussions around the budget aren’t quite that simple. Both Houses of Congress keep tossing around terms heavy on “fees” and “tax” without explaining what they are – or how they affect taxpayers. Here are five things you need to know about the role of taxes in the government shutdown:

  1. Nobody likes the reinsurance tax. The tax, also called the “transitional reinsurance fee” is assessed on insurers (which, of course, gets passed along to the insured). The cost per person: $63. The idea was to protect insurers (that’s the insurance companies) from potentially high-risk insureds (those who had been unable to obtain insurance before because of their health or age) who might disproportionately take advantage of the federal health care exchanges early on in the process. The tax was expected to begin in 2014 and last three years – long enough to shake out some of the cost concerns and hopefully balance out premiums from the not-so-healthy with the healthy. A Senate proposal put forth by Democrats would have delayed the collection of the tax until 2015 but appears to be left out of the most recent negotiations. Unions and big businesses have openly opposed the tax. From a budget perspective, the measure is revenue-neutral.
  2. Tough income verification rules for subsidies make sense but are challenging to implement. A key provision of Obamacare would allow those who are not exempt from purchasing health insurance but may not be able to pay the entire costs to apply for government subsidies to help pay those costs. The amount of subsidies will vary based on income (singles with annual income of up to about $46,000, for couples making up to about $62,000, depending on age and geography). In order to roll out the subsidies, incomes of the applicants will have to be verified – and a big part of that verification puzzle relies on previously filed income tax returns. Republicans in the House worry that the current verification process is too lax and want to see those standards tightened. Doing so will, opponents argue, drive up costs and create delays. President Obama has promised to veto any measure that would create additional restrictions but it appears that House Republicans will include language doing just that in the final bill.
  3. The medical device tax is a loser in this fight. Repealing the medical device tax has been a rallying cry since 2010. Medical device companies have been pushing hard for repeal of the 2.3% excise tax on medical devices, which run the gamut from pacemakers to artificial hips to cardiac stents, couching the tax as an “innovation killer.” So why won’t they ditch it? The tax is expected to raise nearly $29 billion in revenue. That’s not an insignificant number, causing statements like this one from Sen. Richard Durbin (D-IL): “We can work out something, I believe, on the medical device tax — that was one of the proposals from the Republicans — as long as we replace the revenue.” Exactly.
  4. Politicians still benefit from Obamacare even though they clearly don’t understand it. The healthcare exchanges were intended for those individuals who don’t have the benefit of employer-provided health care. One exception to the rule applies: the President and members of Congress were supposed to use the exchanges – you know, on account of they created them. The idea was that if it was good enough for the public, it was good enough for Congress. However, the law wasn’t clear as to whether this meant that the government would actually pay for those premiums – the snafu here is that the exchanges were meant to be available for those who were not entitled to employer-provided health care. It created a quandary. To “fix” it, the Office of Personnel Management (OPM) said that benefits would continue, causing a firestorm of controversy. If OPM had said no, the result would have been more or less a pay cut for members of Congress (which the public might have been okay with) and more than 10,000 staffers (not so much) – remember, employer-provided health care coverage is a tax-free benefit to employees. Taking that benefit away is the same as, more or less, taking thousands of dollars away from Congress (again, maybe okay) and their employees (maybe not okay). This latest round of wrangling over Obamacare raised the issue again, also questioning whether members of staff should be included in the exemption. As a result, the House introduced a bill that would have made it clear that staffers were included in the group of federal employees who would no longer receive any help from their employer to buy health insurance (in other words: a loss of tax free benefits). That vote was eventually canceled.
  5. We’re still talking about tax dollars. At the end of the day, this is really about tax dollars. If the government defaults, Treasury Secretary Jacob Lew says that the government will lose its ability to borrow and would be required to meet its obligations relying only on cash on hand and new tax receipts. Even though we just passed an income tax filing deadline (October 15), an influx of income tax dollars is typically most likely in spring, not autumn. Taxpayers who file on extension received an extension of the time to file, not the time to pay. The Treasury isn’t expecting a bunch of new tax dollars. Analysts predict that would mean that the money runs out – this time, for real – around November 1.

Clearly, these are quick and dirty summaries… It’s not meant to be a blow-by-blow account of what’s gone on to date (that would take pages) nor is it an exhaustive list of all of the related tax provisions keyed to the shutdown. It’s meant to give you a flavor of some of the major talking points surrounding the appropriations bill and the efforts to repeal/reform (depending on your take) the Affordable Care Act as part of the negotiations. As the details of what has been characterized as a “bipartisan Senate deal” get worked out, I’ll have more.

Yes, the Internal Revenue Service is (mostly) shut down right now. But that doesn’t mean that you get a break: the 12 million taxpayers who filed for extension during tax season must still file and pay any balance due on Tuesday, October 15, 2013.
That deadline applies for all taxpayers who timely requested a six month extension of the time to file in April.
There are a few exceptions to the October 15 deadline: members of the military and others serving in Afghanistan or other combat zone localities typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due.
Additionally, as reported earlier by Forbes, taxpayers with extensions in parts of Colorado affected by severe storms, flooding, landslides and mudslides have until December 2, 2013, to file and pay.
For faster processing, the IRS encourages taxpayers to file electronically. The Free File system using fillable forms is available to all taxpayers and some electronic filing options are available free of charge for taxpayers with incomes of $57,000 or less.
If you are expecting a refund, you’re out of luck for the short term: due to the shutdown, IRS is processing payments but not issuing refunds. The “Where’s My Refund?” tool will not give you a firm date for your refund until after the shutdown: the IRS advises you to check “Where’s My Refund?” TWO days after the government reopens for updated information.
Remember that the IRS is not answering the phone during the shutdown and Taxpayer Assistance Centers are not available. You can, however, get forms and publications from irs.gov and the automated phone system. You can also ask your tax professional. I usually advocate waiting and filing the best, most complete return possible. However, in this instance, I’m encouraging taxpayers who have questions not to wait until IRS is up and running but rather to file by the deadline – you can always file an amended return later if it turns out that you made an honest mistake (yes, interest and penalty might still apply but you will avoid a “failure to file” penalty).

On day 11 of the shutdown, many taxpayers have been inconvenienced and frustrated with the lack of available government services but others have a more serious problem: finding food to eat.
Last week, the federal government stopped funding the Special Supplemental Nutrition Program for Women, Infants and Children, known as WIC. WIC is technically a state administered program but is fully funded by the federal government. The program supports over 8.9 million moms and kids under five living near or below the poverty line, providing healthy food, breastfeeding support, infant formula and other necessities dispensed at clinics nationwide.
At the time of the shutdown, the USDA estimated (report downloads as a pdf) that the program would be able to support a lapse in funding through late October. However, confusion over available funds has parents worried about available benefits much earlier.
On Tuesday, the N.C. Department of Health and Human Services (DHHS) announced that it would stop issuing WIC benefits because of a lack of funding. That’s a blow to the state, where one in four children go hungry every day. WIC provides benefits to 270,000 women, infants and children in North Carolina each month.
Far from being a traditional welfare program, evidence suggests that WIC actually saves public dollars by providing cost-effective health care and nutrition to at-risk families. In North Carolina, for example, every WIC dollar spent on a pregnant woman saves $3.13 in Medicaid costs during the first 60 days of the baby’s life. WIC participation leads to lower infant mortality rates, fewer sick kids and higher rates of immunizations. Those benefits pay off long term, according to WIC proponents who cite studies showing that four and five year-olds who participate in WIC in early childhood have better vocabularies and digit memory scores than comparable children who do not participate in WIC.
Participation in the program is based on eligibility. Women and children (up to five years of age) who meet the eligibility criteria receive food and cash-value vouchers for a variety of healthy foods (you can review NC’s list of approved WIC foods here, downloads as a pdf).
Those benefits appeared to be in jeopardy Tuesday. After hearing that DHHS could not support additional benefits and would, instead, refer families to community food banks, Food Lion, a NC-based grocery chain, stepped up to help out. Food Lion LLC is a subsidiary of Brussels-based Delhaize Group (NYSE: DEG). Founded as Food Town in 1957, today Food Lion is one of the largest supermarket companies in the United States, operating approximately 1,300 supermarkets in 11 states and employing 73,000 workers.
As a nod to its North Carolina base, Food Lion made a $500,000 donation to seven regional food banks across the state to support those who need food assistance to feed their families. The donation, consisting of gift cards, was targeted to food banks stretching from the west to the east in the state – and divided based on geography and number of counties in each region.
The Food Lion gift cards will arrive at the food banks over the next two days. Food banks will distribute them to partner agencies and constituents in the next several weeks, or purchase critical food needed for the food bank. The gift cards can be used in any Food Lion store. And in keeping with the spirit of WIC, gift cards cannot be redeemed for purchases of alcohol or cigarettes.
Beth Newlands Campbell, president of Food Lion, said about the donation:

In North Carolina…parents are forced to make difficult decisions, like buying formula or paying rent, to provide their children with the nutrition they need. We’re hopeful that today’s donation helps families to make fewer of those tough choices, particularly during this time.

Food Lion spokeswoman Christy Phillips-Brown emphasized how pleased the company was to be able to reach out during this tough time. Stressing that the donation was not political, she noted that “our business is food” and said that it seemed natural for the company to “take a leading role” in feeding those that might otherwise go hungry. Phillips-Brown also noted how appreciative the food banks were for the donation which Food Lion was able to deliver in person to the heads of the major food banks this week. Kay Carter, Executive Director of Second Harvest Food Bank of Metrolina, echoed those comments, saying, “On behalf of the seven food banks in North Carolina, we are overwhelmed with the generosity of Food Lion’s donation. We are grateful for this donation which comes at a critical time as we struggle to find ways to bridge the gap of hunger and continue putting food on the table for the families we serve.”
There may be more good news on the way: the USDA has said states can now tap unspent money from the previous year and contingency funds to keep programs like WIC running. With that, North Carolina has now announced that they have enough federal money to provide food to the state’s low-income mothers and their babies – at least for a bit longer.

If there were any doubt as to how much our nation’s capital relies on the federal government, consider this: the D.C. government has just announced that it will stop issuing tax refunds for individuals and businesses due to the federal shutdown.
No, don’t read it again. You got it right the first time. No D.C. tax refunds due to the federal shutdown.
So what’s the connection, exactly? Federal funds make up a quarter of the District of Columbia’s local budget. That dependency, combined with the collective hit to the city as tourists flee and workers stay home, has lead to an economic crunch. The city spends about $18 million per day on city services and payroll but currently only has about a week’s worth of cash ($153 million) left in its coffers. There’s an additional $110 million in emergency funds but that will only stretch out for another week. If the shutdown continues, woes won’t stop at delayed refund checks: chances are, payroll for city employees will be delayed.
It’s easy to point fingers at D.C. and pretend that’s what they get for relying so heavily on federal funds. But that would be a bit hypocritical if you live in, say, Florida, Louisiana or South Carolina, which sit at the top of a government list provided by the Office of Management and Budget of states which receive federal funding. In fact, nearly 10% of all states rely just as heavily as D.C. on federal funding as a percentage of their budget.
Florida easily tops the list, spending $30,318 of federal funds per capita. But the ranking can’t be explained simply on the basis of population: for the last fiscal year, the Sunshine State received the most federal funds both in total and on a per capita basis. Those funds are used to run government agencies (Florida, in particular, saw a number of dollars directed to Health and Human Services and Homeland Security), pay contractors and fund entitlement programs.
If you focus on dollars flowing out of the federal government and into the hands of state residents, Alaska takes honors, receiving more than $15,000 per person.
And when you start peeling apart by category, Hawaii tops the list in terms of defense spending (who would have guessed?) while California leads in defense spending procurements (followed by Virginia).
When it comes to spending, there are a number of ways to interpret the numbers. You can focus on total expenditures per state for programming; spending per capita for programming; or net contributions per capita, taking into consideration revenue received and spending. The nature of expenditures can vary, too, including direct payments for programming, subsidies and contractor payments.
The bottom line is that, on some level, no matter the demographics or political leanings, states all rely on federal funding on some level: one state, two states, red state, blue states. All states are feeling the effects of the government shutdown. It’s not just about parks and museums or IRS or defense. It’s about how our government functions in our society. The shutdown is affecting more than federal employees. And the lost dollars tied to government spending inside our states – for better or worse – can’t be easily captured.
The next time you see a headline about the shutdown and think, “That doesn’t apply to me,” reach a little further. You might be surprised.

It’s official. After Congress failed to reach an agreement, the federal government has shut down.
With any luck, it will be quick and painless. But in the interim, the country is going to be doing a bit of a shuffle, trying to figure out what’s open, what’s closed and what it all means.
There’s good news and bad news for taxpayers.
The good news first: no audits! The Internal Revenue Service is suspending all audit activities while the federal government is shut down.
And that’s pretty much it for good news.
Here’s the bad news: if you’re on extension, your 2012 federal income tax return is still due on October 15, 2013. And yes, the IRS will cash your check on time.
But the door doesn’t swing both ways. If you are due a refund, it will likely be delayed (the extent of the delay is largely dependent on the length of the shutdown).
Walk-in assistance centers for taxpayers will be closed. Similarly, the IRS will not pick up the phones: all telephone hotlines would be closed.
Only 8,752 employees (just under 10% of total IRS employees) will report for work as “excepted employees” during the shutdown. Included in the list (report downloads as a pdf) are the Acting Commissioner; the Deputy Commissioner for Services & Enforcement; the Deputy Commissioner for Operations Support and the Chief of Staff.
Also on the “excepted employees” list are a number of appeals staff and a number of lawyers to ensure that statutory deadlines are met. Missing deadlines affects IRS as much as it does taxpayers and the IRS is assuming (as we all are) that Tax Court and other federal courts will remain open. If courts do close, then those affected attorney would switch over to “non-duty” status.
Seven staff will remain on duty in the Communications and Liaison Office. Those folks will coordinate information regarding the shutdown, furlough status and recall. They will also facilitate information with the taxpaying public and Congress.
Forty-five employees will stay on with the Taxpayer Advocate Service; those are personnel considered necessary for the protection of statute expirations, bankruptcy, liens and seizure cases. Specifically, Nina Olson (the National Taxpayer Advocate) will go to work, as will her executive and staff assistants and her senior advisor. Additional directors and deputies needed to provide oversight will also report during the shutdown. (Oct 5 update: The final version of the IRS shutdown plan furloughed Olson and all Taxpayer Advocate employees. Details are here.)
Of course, the Affordable Care Act (ACA) Office will remain open: that office is responsible for coordinating the implementation of ACA. October 1, 2013, is a big ACA day (the exchanges open, among other things) so these offices are bound to be busy. In fact, a number of ACA related positions are “excepted” and those personnel will report to work.
A significant number of Criminal Investigation (CI) employees – more than 3,500 – will also report to work. This makes sense: if the bad guys don’t take a break, neither should those in pursuit of them. Currently, CI is working nearly 4,600 active criminal investigations with even more in the adjudication phase. That means that right now, nearly 9,000 investigations are in process on some level: special agents are actively gathering evidence, conducting critical interviews, testifying in court proceedings, executing search warrants and conducting arrests. CI will basically continue at “normal” levels since federal courts, federal prosecutors and federal law enforcement partners are operating with business as usual.
Just over 100 employees in the Large Business and International Division (LB&I) and just over 300 employees in the Small Business/Self-Employed Division (SB/SE) are “excepted” in order to ensure statutory deadlines are met. A mere 20 employees are “excepted” in the Tax Exempt and Government Entities Division (TEGE) for the same reasons.
The Office of Professional Responsibility and the Office of Online Services (OLS) will each retain a handful of employees. OLS has to remain online for, among other things, launching the ACA pages on IRS.gov. Additionally, the Privacy, Governmental Liaisons & Disclosure Division (PGLD) – the folks that ensure the proper protection and sharing of taxpayer data – as well as the Online Fraud Detection & Prevention (OFDP) office will be staffed at some level.
Employees considered “non-excepted” will be furloughed. Those “non-excepted” folks include auditors, some lawyers (admit it, you’re trying to think of a joke about lawyers not being essential) and the entire Whistleblower Office. They also include research, analysis and statistics personnel. Employees will know to report (or not) by letter, issued via email.
When it’s time to go back to work, IRS will contact the media to “help facilitate news coverage of reopening as necessary.” That means – and I’m not kidding – that “employees are expected to listen to radio and/or television broadcasts to learn when an appropriation or continuing resolution has been signed and to confirm the agency’s operating status using either the IRS Emergency Information Hotline or IRS.gov.” Of course, it would follow that the Media and Publications Office will retain some staff during the shutdown to make sure the word gets out.
It’s a lot to process. And even with a fairly detailed explanation about who will be at work – and who might not be – it’s still fairly confusing. I’ll update you as information becomes available.

My brother – who is active military – is shipping out again shortly.
He didn’t know until today whether he would get paid.
The political theatre of the “will they or won’t they?” in Congress over the shutdown may make good headlines. But for the 1.4 million active duty personnel in the military (chart downloads as a pdf), it’s anything but drama: it’s real life.
With the shutdown looming, my brother – and those like him – had to face the possibility of going to work every day without the guarantee of a paycheck.
Of course, nobody likes the idea of going to work and not getting a check. But imagine deploying to a war zone and not knowing whether your loved ones would be able to make rent while you were gone. Or setting foot on a destroyer and not knowing when the next paycheck would hit your account to pay for food for your kids. Or jetting off to one of the more than 150 countries in the world (downloads as an .xlsx file) where the U.S. has troops without knowing whether there will be money in the bank when you return.
Fortunately, in the middle of all of the shutdown/budget/Obamacare craziness, Congress could agree on one thing: active-duty military should continue to get paid.
Today, the Senate approved a bill that would ensure that active-duty military personnel, including reservists on full-time active duty, receive a paycheck if (er, when) the government shuts down. The bill, H.R. 3210, was introduced by Rep. Mike Coffman (R-CO). The official debate on the bill began in the House on Saturday at 10:55 p.m.; the vote was held just after midnight on Sunday and passed unanimously. Today, Sen. Majority Leader Harry Reid (D-NV) passed the Senate’s version of the bill, the “Pay Our Military Act,” through a unanimous consent agreement. President Obama signed the bill into law this evening.
Under the provisions of the new law, in addition to active-duty military, civilian employees of the Department of Defense and Pentagon contractors deemed to “support to members of the Armed Forces” will also continue to be paid. It remains unclear who will fall under those definitions; that will be determined by Secretary of Defense Chuck Nagel (Nagel is currently in South Korea) and Acting Secretary of the Department of Homeland Security Rand Beers (in the case of the Coast Guard).
Rep. Coffman, a former Marine Corps and Army veteran who served in Iraq, said about the bill:

I fully understand the stresses that our men and women in uniform face on a day-to-day basis, particularly when we are still a nation at war. When things do not go well at home, the stress that our deployed men and women are already under is multiplied, particularly if their families go without an income and suffer financial hardships due to a government shutdown.

In other words, don’t make a bad situation worse. The men and women of our military have bigger things to worry about – like keeping us safe.
Thankfully, on this one point, Congress finally listened.