Government Shutdown Bad News for IRS As It Implements New Tax Law

Republicans love to bash the IRS, but giving it massive new tasks and then starving it of resources is a bad idea. Photo: Andrew Harrer/Bloomberg via Getty Images

For many federal government agencies, a shutdown is an annoying development but not one likely to produce long-term damage (as long as the shutdown is relatively brief). “Essential employees” are exempt, along with many functions deemed politically important (including, this time around, national parks). Most “furloughed” employees will very likely get back pay whenever the funding impasse is resolved. For a lot of them, aside from cashflow issues, the shutdown will essentially become a paid vacation.

But there is at least one agency where any lost productivity may be less tolerable at this particular moment: the Internal Revenue Service, whose usual crunch of pre–April 15 duties is being enormously complicated this year by the passage of a huge tax bill in December, loaded with provisions that became effective on New Year’s Day. The Washington Post sounds the alarm:

IRS attorneys have to issue new guidelines to resolve legal questions unresolved by the legislation. Computer programmers have to update IRS software for processing tax forms. Call centers have to answer questions from confused taxpayers.

But now the IRS, like the rest of Washington, faces the threat of a government shutdown — one that would deprive the federal agency about 56 percent of its workforce, according to the U.S. Treasury, just as that workforce is needed for one of its biggest jobs in decades.

It’s not just confused individual taxpayers who could suffer from the agency’s inability to answer questions about items that may require major changes in their personal budgets and lifestyles right away; state and local governments trying to protect their own citizens from adverse effects of the GOP bill (notably California, New Jersey, and New York) are waiting on agency rulings to determine their options for “workarounds.”

On top of all of that, the IRS has preexisting budget issues which a shutdown will simply exacerbate:

Beset by budget cuts over the last several years, the IRS already faced a last-minute scramble to give taxpayers guidance on dozens of new policies in the GOP tax law that in some cases are already in effect. The agency has shed about 18,000 full-time employees amid a more than $900 million budget cut since 2010, leading even conservative Republicans who have traditionally sought to cut the IRS budget to say earlier this month that they want to increase it to ensure a successful implementation of the tax law.

But amid stalled talks over government spending levels, that additional funding is nowhere in sight.

Republicans love to bash the IRS, and some have vowed to eliminate it altogether. But starving the agency of resources after handing it enormous new responsibilities isn’t going to get them any closer to a conservative utopia.

Shutdown Bad News for IRS As It Implements New Tax Bill