IRS Faces Perfect Storm With Shutdown Aftermath, Tax Law Implementation

Fort Lauderdale accountants
The IRS faces a challenging tax season.

As tax season approaches, the government shutdown, combined with implementation of Republican tax changes, the IRS faces an overwhelming challenge.

Officials have called many IRS workers back to their jobs for tax season. But many were not being paid. At the same time, the agency is trying to implement sweeping tax law changes.

According to the Washington Post:

Trainings for IRS employees on the new law have been postponed. Hundreds of centers that help taxpayers navigate the tax code will be closed for the duration of the shutdown. New regulations clarifying the more complex parts of the law are coming out at a significantly slower pace, and tax attorneys and accountants report struggling to get IRS officials on the phone for help.

The IRS has announced it will recall more than 30,000 unpaid workers for tax filing season, scheduled to begin later this month, bringing agency staffing levels close to 60 percent of its regular level. Congress also appropriated two years of funding for the implementation of the new law, creating a team at IRS whose work has been unimpeded by the lapse in appropriations.

But the longer the shutdown goes on, the more vexing the rollout of the new law becomes. Tax practitioners and experts say they are worried about what they see as a series of hurdles that could undermine what several described as a thus far surprisingly smooth rollout of the law.

Bloomberg also notes the hurdles the IRS and taxpayers face in the coming months:

For individuals, the overhaul changed the tax brackets, expanded the child tax credit and eliminated or limited several niche breaks. Pass-through businesses now can get a 20 percent deduction on some of their income, but have to follow complicated rules to figure out if they qualify. Multinationals also face complex regulations related to their offshore profits.

“The agency will try to doggedly deliver the filing season, but it’s going to be ugly in moments in ways we haven’t yet even anticipated,” said Robert Kerr, the executive vice president of the National Association of Enrolled Agents, a group that represents licensed tax preparers.

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