Shutdown Delays Start of U.S. Tax Filing Season

The Internal Revenue Service announced Tuesday that it would delay the start of the tax-filing season up to two weeks because of the recent 16-day government shutdown.

Acting IRS commissioner, Danny Werfel said, “Readying our systems to handle the tax season is an intricate, detailed process, and we must take the time to get it right.”

Originally, the IRS planned to start accepting tax year 2013 returns Jan. 21. Now the agency is giving itself a window from Jan. 28 to as late as Feb. 4. A final decision will be announced in December.

Delaying the beginning of tax season is not a new concept. The IRS delayed the start of the 2012 tax season until Jan. 30 last year after Congress failed to set some tax policies on time according to Bloomberg.

Uncertainty and delay have become normal in Washington and although this most recent delay is not a major event, it has already generated rancor between Democrats and Republicans.

Related: Alan Greenspan: Fear Drives the Markets

Democratic representative, Sander Levin of Michigan said, “This is yet another unfortunate effect of a shutdown that Republicans should have never caused.”

Republicans, on the other hand, suggested the delay was more political than real. Sarah Swinehart, spokeswoman for the House Ways and Means Committee, told Bloomberg, “Considering the IRS has dealt with much larger changes on far shorter notice over the past years without delay, its reasons are suspect.”

One thing will not change. The deadline for filing 2013 taxes will remain April 15.

Most taxpayers who file early are seeking a refund. Bloomberg reported that this past year from Jan. 30 to March 1 the IRS issued $135 billion in refunds. Even though 50 percent more returns were filed from March 2 to May 10, total amount in refunds during that period was less than in the previous period.

The IRS said its preseason preparations provide protection against fraud, something that received additional emphasis Tuesday following an inspector general’s report, which said the agency paid out nearly $111 billion in bogus earned-income tax credits over the past 10 years.

The Washington Post reported that the inspector general said that the IRS “has made little improvement in reducing improper EITC payments as a whole since it has been required to report estimates of these payments to Congress.”

Meanwhile, the delay in accepting tax returns could also affect the date when the U.S. debt limit is reached. Currently the debt limit is suspended through Feb. 7. If a significant number of refunds are delayed until after that date (and Congress has not acted to extend the deadline further), the debt limit could be reached earlier than anticipated.