2014 Tax Season to Start Later Following Government Closure; IRS Sees Heavy Demand As Operations Resume

WASHINGTON–The Internal Revenue Service today announced a delay of approximately one to two weeks to the start of the 2014 filing season to allow adequate time to program and test tax processing systems following the 16-day federal government closure.

The IRS is exploring options to shorten the expected delay and will announce a final decision on the start of the 2014 filing season in December, Acting IRS Commissioner Danny Werfel said. The original start date of the 2014 filing season was Jan. 21, and with a one- to two-week delay, the IRS would start accepting and processing 2013 individual tax returns no earlier than Jan. 28 and no later than Feb. 4.

The government closure came during the peak period for preparing IRS systems for the 2014 filing season. Programming, testing and deployment of more than 50 IRS systems is needed to handle processing of nearly 150 million tax returns. Updating these core systems is a complex, year-round process with the majority of the work beginning in the fall of each year.

About 90 percent of IRS operations were closed during the shutdown, with some major work streams closed entirely during this period, putting the IRS nearly three weeks behind its tight timetable for being ready to start the 2014 filing season. There are additional training, programming and testing demands on IRS
systems this year in order to provide additional refund fraud and identity theft detection and prevention.

“Readying our systems to handle the tax season is an intricate, detailed process, and we must take the time to get it right,” Werfel said. “The adjustment to the start of the filing season provides us the necessary time to program, test and validate our systems so that we can provide a smooth filing and refund process for the nation’s taxpayers. We want the public and tax professionals to know about the delay well in advance so they can prepare for a later start of the filing season.”

The IRS will not process paper tax returns before the start date, which will be announced in December. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit. The April 15 tax deadline is set by statute and will remain in place. However, the IRS reminds taxpayers that anyone can request an automatic six-month extension to file their tax return. The request is easily done with Form 4868, which can be filed electronically or on paper.

IRS processes, applications and databases must be updated annually to reflect tax law updates, business process changes, and programming updates in time for the start of the filing season.

The IRS continues resuming and assessing operations following the 16-day closure. The IRS is seeing heavy demand on its toll-free telephone lines, walk-in sites and other services from taxpayers and tax practitioners.

During the closure, the IRS received 400,000 pieces of correspondence, on top of the 1 million items already being processed before the shutdown.

The IRS encourages taxpayers to wait to call or visit if their issue is not urgent, and to continue to use automated applications on IRS.gov whenever possible.

“In the days ahead, we will continue assessing the impact of the shutdown on IRS operations, and we will do everything we can to work through the backlog and pent-up demand,” Werfel said. “We greatly appreciate the patience of taxpayers and the tax professional community during this period.”

US Government Opens After Congress Ends Its 16-day Shutdown

WASHINGTON (AP) — The government reopened its doors Thursday after a battle-weary Congress approved a bipartisan measure to end a 16-day partial shutdown and avert the possibility of an economy-jarring default on U.S. obligations.

Early Thursday, President Barack Obama signed the measure, which the House and Senate passed late Wednesday, ending a brawl with Republicans who tried to use the must-pass legislation to mount a last-ditch effort to derail the president’s landmark health care law and demand concessions on the budget.

The White House directed all agencies to reopen promptly and in an orderly fashion. Furloughed federal employees across the country are expected to return to work Thursday.

The impasse had shuttered national parks and monuments, and mostly closed down NASA, the Environmental Protection Agency and the Interior Department. Critical functions of government went on as usual and most federal employees won’t see their paychecks delayed, but the closure and potential default weighed on the economy and spooked the financial markets.

There were signs early Thursday that the federal government was slowly coming back to life. “We’re back from the (hash)shutdown!” the Smithsonian Institution crowed on Twitter, announcing that museums would reopen Thursday and the National Zoo in Washington on Friday.

Standard & Poor’s estimated the shutdown has taken $24 billion out of the economy, and the Fitch credit
rating agency warned Tuesday that it was reviewing its AAA rating on U.S. government debt for a possible downgrade.

Obama and his Democratic allies on Capitol Hill were the decisive winners in the fight, which was sparked by tea party Republicans like Sen. Ted Cruz of Texas, who prevailed upon skeptical GOP leaders to use a normally routine short-term funding bill to “defund” the 2010 health care law known as Obamacare.

“We fought the good fight. We just didn’t win,” House Speaker John Boehner, R-Ohio, conceded in a radio interview. He was given positive reviews from Republicans for his handling of the crisis, though it again exposed the tenuous grasp he holds over the fractious House GOP conference.

The agreement was brokered by the Senate’s top Democrat, Majority Leader Harry Reid of Nevada, and its Republican leader, Mitch McConnell of Kentucky. They stepped in after the House was unable to coalesce around a Republican-only approach Tuesday.

McConnell is up for re-election next year, and his tea party primary opponent issued a statement blasting his role.

“When the stakes are highest, Mitch McConnell can always be counted on to sell out conservatives,” Matt Bevin said. In the House, conservatives praised Boehner for tenacity.

The Senate approved the legislation by an 81-18 vote; the House followed suit by a tally of 285-144, with 87 Republicans in favor and 144 against, breaking an informal rule in which a majority of the majority party is supposed to carry legislation. Democrats unanimously supported the bill, even though it locks in funding at levels required by across-the-board spending cuts known as sequestration.

The legislation would fund the government through Jan. 15 and permit it to borrow normally through Feb. 7, though Treasury Secretary Jacob Lew retains the capacity to employ accounting maneuvers to create wiggle room on the debt limit into mid-March or so.

The shutdown sent GOP approval ratings numbers reeling in public opinion polls and exasperated veteran lawmakers who saw it and the possibility of default as folly.

“After two long weeks, it is time to end this government shutdown. It’s time to take the threat of default off the table,” House Appropriations Committee Chairman Harold Rogers, R-Ky., said before the vote. “It’s time to restore some sanity to this place.”

Most House Republicans opposed the compromise bill for failing to do anything about deficits and debt.

“All this does is delay this fight four months,” Rep. Mo Brooks, R-Ala., said. “We need to get to the underlying cause of the problem, which is our out-of-control spending and deficits, and fix it before it’s too late and we go down the toilet to bankruptcy because that’s where America is headed.”

The bill’s passage was only a temporary truce that sets up another collision between Obama and Republicans over spending and borrowing early next year. It’s the second time this year that Congress has passed legislation to increase the government’s borrowing cap with few if any conditions on the president, reversing a 2011 precedent in which the threat of default was used to extract $2.1 trillion in spending cuts from a politically wounded Obama.

“With the shutdown behind us,” Obama said after the Senate vote, “we now have an opportunity to focus on a sensible budget that is responsible, that is fair and that helps hardworking people all across this country.”

At the same time, House-Senate talks will begin on a broader budget pact in hopes of curbing deficits and easing across-the-board budget cuts that have slammed the Pentagon and domestic agencies alike. Such agreements have proven elusive in the current era of divided government.

“No one thinks this will be easy” Senate Budget Committee Chairman Patty Murray, D-Wash., said of budget negotiations. Murray and House Budget Committee Chairman Paul Ryan, R-Wis., along with their ranking minority members, immediately scheduled a breakfast meeting for Thursday to break the ice.

Shutdown Doesn’t Mean You Get a Break on October 15th Tax Return Deadline

If you filed for a federal tax extension last April, you’ll still need to send in your return by Oct. 15, despite the government shutdown.

And millions of you had better get busy. According to the IRS, as of the last week of September, many of the 12 million taxpayers who sought extensions had yet to file. (Of course, you needed to pay at least 90 percent of your estimated tax back in April to avoid any penalties.)

If you have questions about federal forms, or need help with last-minute calculations, don’t look to a live IRS tax expert for advice during the shutdown. Customer service agents have been furloughed, and walk-in taxpayer assistance centers are closed. However, you may be able to find answers to your questions on the IRS automated phone system at 800-829-1040 or on its website. You can also give us a call here at NFS toll free at 800-560-4637.

The IRS says it prefers that you file your return electronically since those returns are processed automatically. If you choose to file a paper return, it won’t be processed until the government is back up and running. Still, your return must be postmarked by Oct. 15 to be considered on time, the IRS says on its site. If you miss the deadline, you’ll face fines.

If you owe money and can only pay a partial amount, you must still meet the Oct. 15 deadline to avoid the late-filing penalty — 5 percent per month —  that would otherwise apply to any unpaid balance after Oct. 15, the IRS said on its site. However, 3 percent annual interest, compounded daily, and late-payment penalties, will continue to accrue.

Taxpayers who sought extensions and were affected by the severe storms and flooding that hit parts of Colorado have more time, until Dec. 2, to file and pay. Military members serving in a combat zone have at least 180 days after they leave that zone to file returns or pay any taxes due.