Episode 69: In this episode, Timalyn deviates from the discussion begun in Episode 64 about the One Big Beautiful Bill Act. Timalyn addresses the government shutdown and how it affects the IRS and, in turn, all taxpayers.
Today, she's explaining what a government shutdown is, how a government shutdown doesn't give taxpayers in tax debt a get out of jail free card, what to expect from the IRS right now, and how this will likely affect the 2026 filing season.
What is a government shutdown?
The government shuts down when Congress cannot agree on a budget. It is not that the country does not have money. The money can't be spent to fund government jobs or programs because, for this time period, Congress has not agreed on the amount to allocate to different expenses that the country has.
Some government agencies continue to work but without pay. Essential workers can stay, but others are sent home on furlough.
How does the government shutdown affect the IRS?
Keep in mind that the IRS has already lost a significant number of people, taking the number of employees from ~101,000 to ~71,000 since January. This government shutdown has called for another 30,000 - 35,000 employees to be furloughed at the end of the individual and corporate tax extension season.
With fewer employees, the services offered have become very limited. Taxpayers can expect delays in processing returns, payments, refunds, and payment arrangements. Certain audits and exams have come to a halt until after the shutdown.
Although things have come to a halt, the automated systems within the IRS are still working. This means that returns can still be filed. It also means that the automated collection system is still working. Taxpayers who have debts that they cannot pay in full are at risk of being levied if a bank account match is made by the system.
If you are in that position, take care of your situation as soon as possible. Removing a levy right now will be more difficult than it typically is due to fewer staff being available.
How will this affect the next tax season?
The IRS typically shuts down the e-file system in November to prepare for the next season. It typically does not open again until the end of January, in a normal year. This year, the One Big Beautiful Act was passed as law in July.
There are things in the law that went into effect this tax year, which means they will affect the return that you file in the Spring. The IRS has yet to translate some of the things that Congress has written into law under the One Big Beautiful Bill Act. But who can do that if the government is shut down?
A government shutdown doesn't equal a complete IRS shutdown. But with the restrictions they are facing right now, it will feel that way. The IRS also has to update forms and publications so that taxpayers and professionals will know how certain things should be reported on the tax return. With them being out of the office now, that will put them behind on making these updates for next season.
What should you do?
If you have tax debt, get it off the back burner. Take care of it as soon as possible. There are different options for you if you need more time or can't afford the proposed monthly payments.
Consider hiring a tax professional whose expertise is in handling back tax situations. If you have to make a call to the IRS, be sure to document the agent's name, badge number, as well as the time and date that you are calling.
When mailing something, be sure to send certified and keep the green receipt.
Plan for delayed processing and service times as well.
Need Tax Help Now?
If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website. Click this link to book a call.
Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it.
As we conclude Episode 68, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms.
Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.
For more information about tax relief options or filing your taxes, visit https://www.Bowenstaxsolutions.com/ .
If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.
Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.
