The Trump administration said Monday that it will issue tax refunds if the partial government shutdown continues, despite the fact that previous administrations have ruled that the IRS cannot issue refunds during shutdowns.
“Tax refunds will go out, they will not be non-excepted activities,” acting Office of Management and Budget Director Russ Vought said during a press briefing with reporters Monday afternoon, using the technical term for government services that are discontinued during shutdowns. Vought briefed reporters alongside Vice President Mike Pence and Homeland Security Secretary Kirstjen Nielsen.
Vought said that his office would issue guidance for issuing refunds. That would remove a potential political headache for the administration, which spent much of its political capital in its first two years passing tax cuts that may lead to larger refunds. Pence, Vought, and other administration officials said that the guidance would be made as part of an effort to make the shutdown as painless as possible.
A senior administration official justified the updated guidance in an emailed statement by citing a 2011 shutdown contingency plan published by the IRS’s chief counsel, arguing that tax return processing, including refunds, is an activity necessary to protect government property and should be considered essential. According to the official, that guidance was then overruled by the previous administration’s budget office, but has now been reversed.
“Consistent with the Administration’s intent of making this lapse as painless as possible, OMB informed Treasury today that consistent with Treasury’s 2011 position they can in fact process tax refunds during a lapse,” the official said.
Funding for operations at the IRS expired late last year, leading to the possibility that tax refunds might not be issued until the current government shutdown dispute over President Trump’s border wall is resolved. But on Monday night the agency said tax filing season would begin on Jan. 28.
“We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown,” IRS Commissioner Chuck Rettig said in a release. “I appreciate the hard work of the employees and their commitment to the taxpayers during this period.”
On Sunday, House Democrats released text of a bill to fund the IRS, among other finance-related and general government operations. The funding would be at levels agreed upon along a bipartisan basis last year in the Senate.
Rep. Richard Neal, D-Mass., the chairman of the House Ways and Means Committee, which has jurisdiction over tax policy, said in a statement that he looks forward to seeing the guidance that would allow for those refunds.
“This afternoon, I spoke with both Secretary [Steven] Mnuchin and Commissioner Rettig to reiterate the concerns I raised to them last week regarding the impact of the partial government shutdown on taxpayers and the upcoming filing season,” Neal said in his statement. “I was informed that — more than two weeks after its federal funding lapsed — the IRS will release its contingency plan for the tax return filing season and issuing taxpayer refunds.”
The government has been shut down over Trump’s $5.7 billion border wall funding request since shortly before Christmas.
Melissa Quinn contributed to this report.
