A Close Look at the IRS Shutdown

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As we settle in for what may be a long shutdown of the not yet funded parts of the federal government, including the IRS, frequent commenter and occasional guest blogger, Bob Kamman, brings us a post on what to expect at the IRS. I know from email traffic among tax clinics that the fax machine at the CAF unit has been turned off meaning that those trying to notify the IRS of the power of attorney must wait for the IRS to reopen before sending in form. The turning off of the CAF fax machine is just one tangible way of knowing that the IRS has shifted to shut down mode. Bob gives an employee by employee breakdown of who is working.

 

We wrote previously about a law suit brought by National Taxpayer Advocate Nina Olson after the Taxpayer Advocate Service was deemed non-essential in its entirety during one of the most recent shutdowns. The NTA lost the suit but may have won the war, or at least partially so, because the NTA and certain TAS employees are deemed essential now which could be critical from taxpayers facing a hardship. I suspect the NTA faces a significant hardship herself because of the timing of this shutdown and the issuance of her annual report to Congress. Read on for the details distilled for us by Bob straight from the contingency plan created by the IRS. For prior coverage about government shutdowns and the IRS, see our post here which gives a broader perspective on government shutdowns and which links to prior posts on the subject. Keith

After all the work that the Internal Revenue Service put into planning for a shutdown, it would have been a shame to waste it.

The IRS contingency plan, revised on November 30, 2018, provides many useful insights into what the federal tax agency considers important and which employees it considers essential. The 110-page document can be found here.

The priorities include:

1) Open the mail. There might be checks.

2) Cash the checks.

3) Protect the statutes of limitation, for collection and assessment, from expiring.

4) Keep the computers running and keep preparing for tax season.

5) Especially, keep preparing for implementation of the 2017 tax law changes, because money for that has already been appropriated.

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IRS has a total workforce of 79,868 employees. Of those, 9,946 are “excepted” to some extent from furlough. The rest will not return to work until their jobs are funded. Most likely, they will eventually be paid for their time away, but they might miss paychecks until the shutdown ends.

If the government had to close, the last couple weeks of the year were the best time. Many employees with seniority and “use or lose” leave time, were away on planned vacations anyway.

Here are some highlights from the “Lapse in Appropriations Contingency Plan,” with a focus on several areas of importance to readers of this blog.

“Excepted” employees are categorized as A, B or C.

Category A employees have jobs that “include those authorized by law and those funded by multi-year, no-year, and revolving funds or advance appropriations that would not be affected by a lapse in an annual appropriation.” There are 1,900 of them.

Category B employees perform tasks that are “necessary for the safety of human life or protection of government property.” Oddly enough, this includes “administrative, research, and other overhead activities supporting excepted activities” such as “completion and testing of the upcoming Filing Year programs,” “processing paper tax returns through batching,” and “Upcoming Tax Year forms design and printing.” There are 8,017 of them.

Category C employees are those needed “to bring about the orderly closedown of non-excepted activities. Activities of employees during this period must be wholly devoted to close-down the function. Upon completion of these activities, these employees would be released.” There are 29 of them, including the only three from the Office of Professional Responsibility with any shutdown duties.

Chief Counsel

The Chief Counsel (lucky guy) is a Presidential appointee who is not subject to furlough.   As for the rest of the office, 286 must show up now and get paid later for these purposes:

The plan excepts, on an as needed basis, those personnel assigned to litigation that is scheduled for trial or where there is a court-imposed deadline during the first five days of a lapse. Personnel are not generally excepted to perform litigation activities where a trial or other court-imposed deadline is scheduled more than five days after the start of the lapse. Personnel assigned to those cases should seek continuances as part of an orderly shutdown. If a continuance is denied, the case will be reviewed to determine if work on the case may be excepted.

Chief Counsel personnel are also excepted, on an as needed basis to provide required legal advice necessary to protect statute expiration, and the government’s interest in bankruptcy, lien, and seizure cases. Personnel excepted to perform this work are also excepted under Category B. The employees in General Legal Services are in Category A3, because they are needed to support activities that are authorized to continue during a lapse in appropriations. The employees in Criminal Tax fall into Category B because they maintain criminal law enforcement and undercover operations. Fifty-six employees are supporting the Tax Cuts and Jobs Act and fall into Category A1 because they are funded with the special two-year appropriation provided for TCJA activities.

Appeals

18 employees are “excepted” from shutdown:

Appeals requires that a minimum number of technical staff remain active to ensure statutory deadlines are met. Taxpayer compliance cases, when appealed, must be adjudicated within a statutory timeline that is not under the control of the IRS. If cases are not monitored, statutes may lapse resulting in adverse impacts to the IRS and US government tax collection functions.

During a lapse, the Chief, Appeals will hold a daily virtual meeting with excepted personnel to identify any imminent statutory deadlines or other threats to government property. As necessary, excepted personnel will be activated to take actions that address the imminent threat. All other employees will return to furlough status until the following day.

National Taxpayer Advocate

“National Taxpayer Advocate (NTA) has identified 84 employees (the NTA and one per TAS office) who are required on an on-call basis based the necessary-for-the-safety-of-human-life-and-the-protection-of-property exception (Category B).” That’s not grammatical, but that’s what the plan says. The plan’s chart (Page 96) shows 82, not 84 employees.

 

The local Taxpayer Advocates (one per TAS office) are to report intermittently to check the mail. There might be checks, and the filing of a Taxpayer Assistance Order suspends the statute on collection. Their instructions:

Check mail one or two hours a day, up to three days a week, to comply with the IRS’s requirement to open and process checks during a shutdown while also complying with the statutory requirements that TAS maintain confidential and separate communications with taxpayers and that TAS operate independently of any other IRS office, as described in IRC §§ 7803(c)(4)(A)(iii), 7803(c)(4)(A)(iv), and 7803(c)(4)(B). Screen the mail for incoming requests for Taxpayer Assistance Orders and notify the appropriate Business Unit that a request has been made tolling any statute of limitations. See IRC § 7811(d).

Criminal Investigation

Crime never stops, so CI never shuts down. The plan notes that “in recent years, the Shutdown Contingency Plan proposed that CI attempt to continue work on our 6,352 investigations with a reduced staff. During the implementation phase of the 2011 Shutdown Plan, it became clear that it was logistically impossible for CI to operate at a nearly 50% staffing level when the federal courts, federal prosecutors and our federal law enforcement partners were planning to continue their usual law enforcement operations.”

So all 2,745 Criminal Investigation employees continue to report.

The Most Important People At IRS

A third of the IRS employees who continue to work – 3,337 of them – are in “Information Technology.”

For example, 571 “IT Specialists…support application & web services operations necessary to prevent loss of data in process and revenue collections, application support for critical systems, manage code, perform builds, process transmittals, completion and testing of Filing Year programs.”

Another 62 are needed to “Support the IT filing season systems that operate the nation’s tax infrastructure are updated and in place for the processing of approximately 200 million tax returns annually.”

And 119 employees are required to “Provide 24×7 database support, including data storage, data replication and data backup and recovery for critical IT projects in Dev/Test/Prod/DR environments to continue to work deliverables and maintain all systems related to filing season preparedness, IT Security and IT support for Essential processes/employees.”

In the Mainframe Operations Branch (the “MOB”), 131 IRS workers, among other essential duties, “Provide critical 24x7x365 coverage to applications; Process tax returns, tax deposit and refunds; continue to process successfully on IBM and Unisys mainframe systems and to provide print and electronic documents support for internal and external customers; . . . The IDSE Section provides printed notices and letters to taxpayers, as well as both printed and electronic documents to internal customer.”

The Commissioner

Don’t worry about him, either. Like Chief Counsel, he is a “Political appointee who is not subject to furlough. The Commissioner’s salary is an obligation incurred by the year, without consideration of hours of duty required and is not placed in a non-duty, non-pay status.”

And he keeps his security detail, also. There are six special agents from Criminal Investigation who serve in that capacity (probably not more than two at a time).

 

Comments

  1. Kenneth H. Ryesky says:

    A few days ago I went to the IRS website to make an Estimated Tax payment for my own personal taxes. When I clicked the “Make a Payment” bar, the http://www.irs.gov/payments page had a warning sticker indicating that the payments may be inoperative during the government shutdown, but to try other methods of payment (including snail mail).

    I clicked the “Direct Payment” and found the same warning, but proceeded to make the online payment anyway.

    I got the confirmation, and my bank account has been touched accordingly.

    Faced with various fires to put out and other items of a higher priority, I delayed apprising the Taxpayer Advocate of the problem.

    When I finally had a pause in the disaster and sat down to try to apprise the TA about the situation, I found that the matter had been rectified.

    I still cannot help but wonder how many taxpayers who were not scared off by the “warning sticker” will encounter problems down the road with IRS bureaucratic dysfunction.

  2. Thanks for the great article. Although certain TAS employees are now deemed essential, it is not much help for taxpayers facing a hardship. Nina told me yesterday that she deeply apologizes, but they are not allowed to work on cases and assist taxpayers during the furlough.

  3. Norman Diamond says:

    “I know from email traffic among tax clinics that the fax machine at the CAF unit has been turned off meaning that those trying to notify the IRS of the power of attorney must wait for the IRS to reopen before sending in form.”

    Try the mailbox rule. You even live in a country where the US’s mailbox rule applies to documents mailed from your local post office.

    Now while a lawsuit is under way, what does a court do when a party declares that they can’t afford the expense of proceeding? The answer depends on which party it is, right?

  4. Thanks for a great article. I noticed that the united States Tax Court posted a notice on its website that it is shutting down at 11:59 pm later today Friday December 28, 2018 until further notice. It does appear, however, that proceedings previously scheduled in January 2019 are “proceeding as scheduled”, though it is unclear to me how this is possible if legislation is not enacted before then. Does anyone know?

    Randall KC Kau

  5. Does it pay to send P/A#2848 form by snail mail or wait hopefully a few more days to Fax?
    Thanks.

    • Norman Diamond says:

      You can do both. You can mail one now. Maybe use certified mail if you’re in the US. Print a copy of the delivery report from USPS’s web site. If you get an opportunity to fax later, fax it too.

  6. Many of the “fax machines” at the IRS are not a fax machine at all, but an e-fax. Consequently, disabling the e-fax system is nothing more than a middle finger.

    I can conceive of no logical reason for shutting these systems down. They operate automatically with no human effort. The IRS does not return your mail during shutdown, which does require manpower.

  7. Do you know if liens/levies on individual accounts will proceed? I received a letter after the shutdown started, but of course there is no way to talk to anyone by the Jan. 23 deadline.

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