Some IRS News & Some FTB News

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Internal Revenue Service

The IRS expects the 2014 tax season to be delayed by one to two weeks.  That would mean the new tax season would begin somewhere between January 28th and February 4th.  The reason for the delay?  None other than the historic Fall 2013 government shutdown.

The IRS normally begins tuning and tweaking their complicated tax return processing systems in the fall, even before the start of the 4th quarter.  This year’s system testing period was delayed when the IRS closed its doors during the first half of October.  You should also be aware that the February 4th start date is only an estimate.  The IRS will re-evaluate and confirm the 2014 Tax Season start date in December.

California Franchise Tax Board

We often hear about federal tax scams, but the FTB recently sent out a warning to California residents to keep their eyes and ears open for phishing schemes and identity theft.  There is apparently a scheme which targets elderly taxpayers in Beverly Hills.  The caller, posing as a FTB employee, tells the victim that they were ticketed for a red light violation and their case has been forwarded to the FTB for collection purposes.  As ridiculous as this may sound, the IRS has been given so many additional responsibilities over the years that it’s hard to say what they may have a hand in.  So, why not the FTB too?

The moral of the story is the same as it always is for the IRS: they won’t contact you by email, and they will rarely call you without sending a series of notices first.  You need to be suspicious if either of these things happen to you.

IRS Asks for Patience

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The IRS issued an “Operations Resumption Statement” last week on its website after opening its doors back up on October 17th.  The IRS wants taxpayers and tax professionals to know that that they are aware of the backlog that has resulted from the 16-day shutdown:

At this point, we know we received a large amount of correspondence during the closure. We know there will be a substantial increase in demand for our phone services and many other operations

In other words, “stop reminding us about the delays and long hold times; we know we have problems right now.”

The IRS also acknowledged that it will take time for the call centers and walk-in assistance centers to ramp up to normal levels of operation.  Since they are still assessing the damage caused by the government shutdown, there is no way to estimate how long the ramping up process will take.  I would guess that things will be slow for several weeks, perhaps even a couple months.  This is based on my experience as a tax attorney over the years.  Even one day off at the call centers often has residual effects on hold times and mail processing times.  A 16-day shutdown is unprecedented and we have no way of knowing when the IRS will be back to “normal” at this point.

In light of the enormous backlog that the IRS has committed to focus on over the next several weeks, the IRS has asked that taxpayers and tax professionals delay or limit their contacts with the IRS except in urgent situations.  Of course, after 16 days many of the issues that could have been considered non-urgent have now been upgraded to higher levels of urgency.  And I think the IRS realizes that too.  They just ask for our patience right now.  Ask anyone who deals with the IRS on a regular basis — if there is anything we know, it’s patience.

IRS is Closed, but Still Accepting Your Payments

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The IRS has provided a detailed explanation regarding what services are available during the lapse in appropriations — and it’s not much.

  • no live telephone assistance
  • no walk-in availability at local IRS offices
  • no refunds to be issued
  • no correspondence will be opened/reviewed
  • no tax return processing
  • no third party transcript requests
  • no installment agreement requests will be reviewed
  • no hardship status requests will be reviewed
  • no offers in compromise will be reviewed
  • no audit, exam, or appeal conferences
  • no levy releases (presumably)

The IRS clearly stated that they will not be issuing any new levies during the lapse in appropriations.  This applies to automated levies that are generated by ACS (Automated Collection System) as well as those issued by live field agents.  However, the caveat there is that some levy notices appear to have gone out after the government shutdown because they were post-dated.  If a particular levy notice was actually issued prior to the IRS closing its doors, then it will be impossible to get it released for the time being.  Also, “intent to levy” notices (those that warn taxpayers of future levy risks) will continue to be mailed out by the automated system.

But we know that at least some IRS personnel continue to work through the shutdown.  What are they doing?

  • cashing your checks
  • conducting criminal investigations
  • issuing emergency levies & seizures

Emergency collection actions usually involve situations where collection of the tax is in jeopardy: for instance, where the CSED (Collection Statute Expiration Date) is approaching and the IRS is on the verge of forever losing an opportunity to collect a substantial tax debt.  Even during normal operations, the IRS is quite selective in what it deems a “jeopardy” situation.  So during the IRS closure, this scenario would be “extremely limited” according to the IRS.

Government Shutdown: Residual Effects on IRS

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The effects of the “government shutdown” have been far-reaching and I’m certain we will feel the effects for months to come, even if everything is switched back on soon.

In IRS world, even one day off tends to cause residual delays and bottle-necks.  For example, when the IRS observes a national holiday and shuts down on a Friday or a Monday, the work tends to pile up, making it more difficult for taxpayers to get help for the following couple business days.  This is especially true in the IRS call centers where they have little control over work flow.  A salaried employee, such as an IRS revenue officer, can put in extra time before a day off so that work doesn’t pile up too much.  But the work flow of an hourly call center employee is more dependent on the volume of inbound taxpayer phone calls.

The IRS always experiences high call volumes on Mondays and days following holidays because IRS problems don’t just go away on their own.  If you can’t get through to the IRS on one day, you’ll probably try again as soon as possible.  And I don’t feel like the IRS hold times have ever really recovered to what they once were before the IRS began furloughing employees earlier this year.  But now we are talking about an unprecedented closure of several days in a row (and how many more, we do not know).  I would not be surprised if the residual effects of the IRS shutdown are felt well into 2014.