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Government Shutdown Delayed Tax Refunds, IRS Enforcement Activities

The 16-day shutdown of the federal government in early October delayed approximately $3.7 billion in tax refunds, according to a new report from the Office of Management and Budget (OMB) released on November 7. In the first government-wide tally of the cost from the shutdown, the OMB also said that the IRS was unable to collect about $1 billion per week from its enforcement activities.

The government shutdown was the result of a refusal by House GOP lawmakers to allow a vote on a temporary spending measure unless it also stripped out funding for the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). A compromise negotiated between Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., ended the crisis by funding the government through mid-January 2014 and providing for an increase in federal borrowing authority.

In addition to delaying the start of the 2014 tax-filing season by up to two weeks, the shutdown will cost the federal government billions of dollars in interest on late IRS refunds and late payments to federal contractors, according to the report. Approximately $2.2 billion in refunds to individuals and $1.5 billion in refunds to businesses were delayed by the shutdown, the OMB said. Also, taxpayers who filed returns and made estimated payments were unable to receive IRS assistance and taxpayer correspondence went unanswered, the report notes.

“This manufactured crisis damaged the economy, cost us jobs, and hurt middle-class families. We now have the facts to prove it,” said Sen. Barbara A. Mikulski, D-Md., who chairs the Senate Appropriations Committee. Mikulski requested that OMB Director Sylvia Mathews Burwell provide a written record documenting the consequences of the shutdown that furloughed roughly 800,000 federal employees.

“Today’s report proves what the American people already know. The government shutdown was a shameful and damaging episode that we can’t afford to repeat,” said Rep. Nita Lowey, D-N.Y., ranking member on the House Appropriations Committee. “Our economy and American taxpayers simply cannot afford another manufactured crisis when the continuing resolution expires on January 15th.”

By Stephen K. Cooper, CCH News Staff

Industry News

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January 8, 2016

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