Government Shutdown Threatens to Delay Tax Refunds -- but Taxes Still Due April 18

Shutdown would cause the furlough of many IRS workers, delaying some refunds.

April 6, 2011, 3:34 PM

April 6, 2011 — -- They say nothing is for sure except death and taxes. The same is true this year, even though the government might be shut down on tax day.

If Republicans and Democrats in Washington can't agree on a way to fund the government for the rest of this year, non-essential government personnel, including most IRS employees, wouldn't be allowed to work.

Even so, Americans still will be expected to file their taxes by this year's deadline of April 18, IRS commissioner Douglas Shulman said in Washington on Tuesday.

Whether there's a shutdown or not, he encouraged people to file on time, preferably electronically. Approximately 70 percent of Americans file electronically.

Mail service would not be interrupted by a government shutdown, so an April 18 postmark still would be key to an on-time tax filing by mail.

"However, taxpayers who file paper returns will experience some delays," Shulman said.

People who file electronically and opt to receive their returns electronically "should expect to see refunds quickly," Shulman said.

Shulman didn't want to speculate on whether the shutdown might damage the IRS's ability to carry through with audits and make sure tax filers are complying with the law.

In the event of a government shutdown, IRS processing of tax refunds will stop for paper-filed returns and tax auditing will cease if and when the Friday budget deadline passes, a senior administration official said Wednesday. Paper returns account for about 30 percent of filed returns. Electronic filing will continue and electronic refunds will go through, the official said.

The head of the National Treasury Employees Union said she expects most IRS employees would be among the 800,000 government workers to be furloughed if lawmakers can't reach an agreement to fund the government beyond midnight Friday into Saturday.

Edward Karl, the vice president of taxation for the American Institute of CPAs, said that the system is so automated with electronic filing and returns that most accountants and filers are not yet paying attention to the possibility of a government shutdown.

"It is a very busy period for tax practitioners and they're very focused on one thing," said Karl, who said that because the vast majority of taxes are filed electronically, he does not expect too many hiccups in tax filing even if many IRS employees are furloughed.

"I wouldn't get too alarmist about it just yet," said Karl.

Tax filing season is important for the government, but also for tax filers, many of whom get a refund.

"We do know that the majority of taxpayers have refunds and the average refund is significant -- around $3,000. Taxpayers plan to spend that money," said Karl.

For now, tax professionals seem optimistic there won't be a government shutdown.

Mark Steber, chief tax officer for the Jackson Hewitt tax service, said that "any impact will depend on how a long a shutdown lasts."

Liberty Tax Service said it doesn't expect that that there will be a shutdown.

Both tax services said they will encourage their clients to file electronically, when possible, so they can avoid any possible impact.

Most Americans' tax returns won't be affected by a shutdown anyway. Only about 20 to 25 percent of returns are filed in the last two weeks before tax day.

ABC News' Zunaira Zaki contributed to this report.

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