Reversing course, the Trump Administration announced today that the government shutdown will not prevent the IRS from sending income tax refunds to taxpayers. The first posting of this item mentioned that a question had been raised as to whether it is legal to do so. In a subsequent information release, the IRS says Congress directed the payment of all tax refunds through a permanent, indefinite appropriation, and that the Office of Management and Budget, which had previously directed the IRS not to pay refunds during a budget impasse has reviewed the law and concluded that it may so so.
The release also sets January 28 as the date it will begin processing returns.
In their words: irs information release
Have you heard that the Tax Cuts and Jobs Act repealed the alternative minimum tax (AMT)? Probably not, because the AMT survived. Yet it’s been whittled down to a shadow of its former self. For nearly all taxpayers, AMT repeal is a practical reality.
featured article: AMT Repeal, for Most
Note: This article kicks off a series on the profound changes made by the Tax Cuts and Jobs Act.
Update: as explained here, the IRS now says it will be able to pay refunds during the shutdown.
The 2019 tax season was already bound to be challenging. We can expect plenty of confusion in the first filing season under a law that made sweeping changes affecting taxpayers in all categories. Add to that a complete redesign of Form 1040, taking a modular, block-building approach and eliminating the 1040-EZ and 1040-A versions. The IRS is still scrambling to get its form instructions and information publications in final form, and has yet to announce a date for the start of the filing season.
Now the IRS faces these challenges under the handicap of a partial government shutdown. Essential functions at the agency continue, including — when they’re ready — accepting tax returns and payments. According to the Wall Street Journal, however, the IRS generally doesn’t pay refunds during a shutdown.
Any substantial delay in paying refunds would produce hardship for millions of Americans who depend on receiving a substantial check as early as possible in the year. Tax refunds, which total hundreds of billions of dollars, also boost retail sales and the general economy. A shutdown that delays those refunds would have consequences for all of us.
The IRS has completely redesigned Form 1040, using what they call a building block approach, where the form itself is much shorter but is supplemented as needed by up to six new schedules. As a result, the same form can be used by all taxpayers, from those with the simplest to the most complicated returns. The new form, its 117-page instructions, and the new schedules are available now: About Form 1040
Articles on year-end tax planning for investors inevitably mention the opportunity to harvest losses from stocks and other securities that may have declined in value. Recent stock market declines have increased the potential value of this opportunity, along with the importance of understanding the wash sale rule, which can stand in the way of efforts to harvest losses while maintaining a consistent investment strategy. No doubt you’ve seen brief summaries of this provision, but there’s a lot more to the wash sale rule than meets the eye. Get the full details here:
details: Wash Sale Rule