NOT SHUTTING DOWN YET

This week, my staff and I are pausing to celebrate that the chapter has closed on 2022’s filing. It was probably over for you back in April, but my team just wrapped that up for some of our clients who needed to file extensions.

Of course, we’ll be starting all over again in a couple months. Such is the annual tax cycle, as you well know.

In the interim, though, I want to get you thinking about end-of-year tax moves to set you up for a better 2023 financially. There are some simple things you can do related to charitable giving, retirement contributions, and capital gains that will benefit you overall.

Preparation is vitally important on all fronts, now more than ever. Even as we watch the escalating tensions in Gaza and throughout the Middle East, preparing ourselves for the possibility of oil prices climbing seems like good common sense. That might mean reorienting your family budget and repositioning your driving priorities in the coming months.

And it’s not just the things happening abroad that should put you in that frame of mind. Though President Biden signed a temporary bill to buffer a government shutdown on September 30th (just hours before things were set to go dark), things aren’t ready to return to business as usual yet.

While the possibility of a government shutdown remains, its implications, both short-term and long-term and the impact on your tax situation, warrant understanding.…

Janet Behm's
"Real World" Personal Strategy Note

Don’t Fret a Government Shutdown…Yet

"Change is the law of life. And those who look only to the past or present are certain to miss the future." — John F. Kennedy

Even though we narrowly missed a government shutdown at the end of September, there’s still not a clear indication that either side of the aisle is ready to agree on things yet.

So, what could a government shutdown in the coming months mean for America and for you? Let’s look at that.

In the short-term

Initially, a government shutdown has the most effect on federal employees. A significant number could be furloughed or continue to work without pay (though they will get retroactive pay once a budget is decided on).

Essential services will generally continue. The post office, for example, because they run off their own budget. Social security and Medicare checks will continue to be dispatched, but some aspects of those services like SS benefit verification and replacement Medicare cards would be halted.

WIC and SNAP funding should also continue, at least for a little while, but some other aspects of those programs would be halted. And VA services like health care would continue as well.

And of course air traffic controllers, TSA agents, law enforcement, and military personnel will also continue to work with the added difficulty of potentially working without pay.

However, some disruptions would be more immediate. Passport processing would be further delayed or stopped entirely (with some exceptions). National Parks would not be accessible. Immigration applications and citizenship status would be halted. The SBA would stop accepting and approving new loans.

If you’re thinking of traveling or starting a business, you might need to put those plans on hold for a little bit.

What about the IRS?

As far as the IRS goes… They’ve made a contingency plan in the event of a government shutdown which focuses on using allocated funds from the Inflation Reduction Act to avoid closing. However, there was pushback from the Treasury on this front, with access to and usage of the funds being severely restricted.

Tax refunds might slow and taxpayer dispute resolutions could be suspended. On top of that, call centers would be shut down, limiting access for taxpayers to get answers to questions. But, you can often find the answers to a lot of your tax questions on IRS.gov both general and personal. If that’s a problem, we can get those answers for you.

The main thing to know is the IRS will continue preparations for filing season in an effort to not get backlogged for this upcoming tax season. They’ll update tax forms, hire, train, and continue to modernize.

Beyond that, they’ll continue to process requests for transcripts following disasters, provide income verification to mortgage lenders, banks, and others who request it, maintain critical IT system functions that are necessary to protect taxpayer data, and implement green energy credit provisions.

So there’s that.

The long-term

Should a shutdown prolong, the domino effect becomes more pronounced. Economic tensions increase and chip away at our GDP (Gross Domestic Product). Various government controlled services will be stretched. Think TSA agents struggling, reminiscent of 2018’s airport disruptions. And concerns over the nation’s credit rating might mount, affecting overall buying power and productivity.

But, I would encourage you not to fret over these possibilities. Instead, make decisions about how you can proactively prepare your finances: re-evaluate your budget, put off major purchases, build up your emergency fund. You can even contact your financial companies and ask about payment extension programs in the event that you’re not able to pay your mortgage, your insurance, or your credit cards.

And, on the taxes front, know that I’ll be here to help bring light to what’s happening with the IRS and what you can do to roll with their decisions.

While a fleeting government shutdown might not drastically alter your daily routines, if it lasted a long time, the complications run broader and deeper. As international tensions simmer and domestic policies shift, staying informed and proactive becomes not just advisable but vital for all of us. I’ll be here for you through it.

This is the week when tax filing mess-ups hit the fan again. The tax extension deadline on Monday, October 16 will still see people not filing (even though they did file an extension request and get approved). And in preparing things, it will reveal bigger problems for a lot of other people.

Tax problems mean the IRS will start looking your way. If you haven’t been paying or filing or have been doing things incorrectly, you become extremely vulnerable to IRS scrutiny of your situation.

But even if you got everything submitted on time this year you could still end up being audited, especially if you’re in a higher tax bracket or have multiple years of negligence on your record.

When you’re in these situations, it’s good to know where you stand legally with the IRS.

And the good news on that is, you have a taxpayer bill of rights. There are ten on that list. In a previous installment, I discussed the first five and broke them down into plain English. So let’s take today to get into the rest.

#6 on the Taxpayer Bill of Rights: The Right to Finality

Tax problems aren’t something you want hanging over your head for eternity. Thus, you have a right to know how long the IRS can take action against you, how long they’re going to take to process things, and what your deadlines are for responding.

Included in this right is the right to have tax problems wrapped up and done, such that they can’t be brought up again later. Thus, there are legal restrictions on certain IRS actions, such as how often they can audit the same tax return (unless there is evidence of fraud, of course) and how many years they can take collection action against you.

#7 on the Taxpayer Bill of Rights: The Right to Privacy

Just because the IRS goes poking around your finances doesn’t mean that your Fourth Amendment rights against unreasonable search and seizure go out the window. The IRS should never pry into matters that are beyond your purview, should not delve into your private life, or demand to know how you pay for your lifestyle if there is no evidence that you’re hiding income.

#8 on the Taxpayer Bill of Rights: The Right to Confidentiality

In addition to these invasiveness provisions, the IRS must also follow all applicable laws in regard to protecting your personal information from being seen by the world. The IRS isn’t allowed to disclose your tax information to anybody without your permission, and cannot contact third parties for collection purposes without giving you advance notice.

The IRS is not immune to data breaches, and they are a juicy target for criminals. You have the right to know about such breaches, and the IRS is required to take action against their own employees, hackers, and even us tax professionals if said individuals are the cause of such data leaks.

#9 on the Taxpayer Bill of Rights: The Right to a Fair and Just Tax System

OK, OK, I know this one sounds like a joke. None of us are ever going to completely agree on precisely what constitutes a “fair” tax system, but that’s not exactly what this right is about.

Rather, this right refers to the IRS treating you fairly in all matters. They are required to consider your specific, individual circumstances when making decisions that affect you. The IRS is supposed to be respectful of personal issues that impact your ability to pay, file returns, or provide certain documentation.

Above all else, the IRS is not allowed to put you in a position where you no longer have a roof over your head or food on the table.

#10 on the Taxpayer Bill of Rights: The Right to Retain Representation

Officially, this is actually number nine on the Taxpayer Bill of Rights, but I’ve bumped it to the final slot because this is where I come in. Given how complex tax matters can be, and how much of a nightmare it can be to navigate the IRS bureaucracy, sometimes you just want help from a tried and true tax expert who does this every day.

You have a legal right to seek such help, and I’m here to provide that assistance if you need it. If you’re facing an IRS issue and you want to make sure that your rights are protected, keep reading this blog.

BE THE ROAR not the echo®

Warmly,

Janet Behm