Wyden concerned about shutdown impact on IRS

Sen. Ron Wyden, D-Ore., the top Democrat on the Senate Finance Committee, sent a letter Friday to Treasury Secretary Steven Mnuchin and Internal Revenue Service Commissioner Charles Rettig asking them to explain the impact of the partial government shutdown on the IRS and how it will affect taxpayer assistance, cybersecurity, operations and tax refunds.

The IRS announced Monday that it would still process tax refunds despite the shutdown, even bringing back thousands of now-furloughed IRS employees who would be unpaid as long as the shutdown lasts (see Tax season to start Jan. 28, IRS confirms). But Wyden is still concerned that the limited number of IRS staff could prompt tax refund delays and leave taxpayers vulnerable to identity theft.

The Treasury Department and the IRS have told the Senate Finance Committee that a shutdown contingency plan outlining IRS’s operating procedures would be released soon, Wyden noted. A bipartisan briefing for Senate Finance Committee staff with senior officials from the Treasury and the IRS is anticipated to follow shortly after the release of that plan.

Senator Ron Wyden
Senator Ron Wyden, a Democrat from Oregon

Wyden asked for answers to a number of questions in his letter to Mnuchin and Rettig:

1. Will taxpayers’ refunds be delayed as a result of the shutdown? If so, by how many days or weeks on average?

2. Will IRS be able to hire seasonal employees to help with the timely processing of tax returns? If not – or if the shutdown limits how many seasonal employees IRS can hire – what measures will be taken to ensure delays do not occur?

3. Will IRS be able to process paper returns and issue tax refunds without a delay for taxpayers, like seniors and low-income families, without access to electronic filing?

4. Will taxpayers who require IRS call assistance to complete their returns get to speak to a live person to have their questions answered in a timely way?

5. Is there increased risk of taxpayer ID theft if IRS tries to maintain normal operations during a shutdown? For example, if IRS is working with a skeleton staff as a result of the shutdown, is there an elevated risk that cyber criminals filing fraudulent returns with stolen taxpayer identities will be able to steal taxpayers’ refunds? Will IRS be able to detect, let alone thwart, these fraudulent attempts?

6. What about fraudulent tax return preparers who attempt to over-claim tax benefits on behalf of their clients? Or unscrupulous preparers who attempt to charge their clients usurious rates of interest in return for receiving their tax refunds right away? Will the shutdown hurt IRS efforts to police such practices?

7. Will the IRS continue to send automatic computer-generated collection and audit notices to taxpayers? How will the IRS alleviate the concerns of taxpayers who have responded to collection and audit notices but, due to the shutdown, not received any notification from the IRS?

8. How will the IRS adjust the deadlines imposed on taxpayers for responding to collection and audit notices, to ensure taxpayers are not penalized only because the shutdown is preventing the IRS from processing their responses?

For reprint and licensing requests for this article, click here.