IRS Will Issue Tax Refunds During Shutdown, Easing Pressure To Reach A Deal

Following panicked reports that the Internal Revenue Service won’t issue refunds during the government shutdown, acting director of the White House Office of Management and Budget, Russell Vought, told reporters “Tax refunds will go out”, effectively easing pressure on Trump to reach a deal. 

The tax agency’s previous shutdown contingency plans outlined that the IRS would accept tax returns (and payments of course) during filing season, but refunds would be delayed until government had passed a funding bill, according to Bloomberg

The decision will naturally come as a relief to many taxpayers who file their taxes as soon as the filing season begins to claim their refund checks, which averaged $2,899 last year. Within the first week of the 2018 filing season, more than 18.3 million people claimed about $12.6 billion in refunds.

The IRS hasn’t yet announced the start date to file tax returns this year, but says it’s on track to begin in late January or early February.

The policy change also removes a major political incentive for lawmakers and the White House to reach a deal in the coming weeks. If refunds won’t be held hostage, the shutdown effects will be felt much less widely, relieving the strain on Congress and Trump to resolve the current impasse about how much money to spend on a border wall with Mexico. –Bloomberg

Former IRS Commissioner Mark Everson noted that if people were unable to get their refunds, there would be “excruciating pressure” on lawmakers to reach an agreement. 

And so, without the threat of pitchfork-wielding voters demanding their refunds, it looks like the pressure on Trump to reach a government shutdown deal with the just as stubborn Democrats has just been reduced substantially, and all else equal, the shutdown – which will become the longest on record in just five days, won’t end any time soon.