IRS Suffered Significant Harm During Government Shutdown
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What is the main topic discussed in this episode?
With your money briefing, I'm J.R. Whalen at The Wall Street Journal in New York.
How did the government shutdown initially impact the IRS's operations?
The government shutdown that ended in January did some real damage to the IRS and its ability to process correspondence and offer assistance to taxpayers. We'll fill in some details in a moment. First, these money and market stories you should know. The Labor Department says the number of job openings in the U.S. rose to 7.3 million in December. That's the highest level since 2000. The increased openings late last year were followed by robust hiring in January. That likely reflects a good labor market and modest improvement in wages. It's pulling some potential employees off the sidelines and causing the unemployment rate to rise, even while hiring remains strong. The Labor Department report also shows the rate at which Americans quit their jobs held steady for the third straight month in December.
That's a sign of confidence in the job market. That rate was down slightly from the 17-year high reached last summer. Meanwhile, Americans are borrowing more for cars and less for houses. That's the word from the Federal Reserve Bank of New York. Mortgage originations fell in the fourth quarter of 2018 to $401.5 billion, the lowest level since the first quarter of 2016. And mortgage originations for all of 2018 were at the lowest level since 2014. Auto loans, on the other hand, have been steadily moving up since 2010. Last year saw the highest volume of new auto loans on record.
What broader economic news frames the IRS discussion in this episode?
at $584 billion, but overall the loans taken out by consumers appears to be leveling off. The New York Fed also says for the 18th consecutive quarter household debt rose during the fourth quarter of 2018 to $13.5 trillion, but at the same time credit inquiries for the past six months have dropped to the lowest level in the history of the data, which stretches back to 2003.
The government shutdown that lasted until late January directly affected hundreds of thousands of federal workers by delaying their paychecks and some federal contractors who missed their paychecks altogether. But it also created ongoing headaches for the IRS and taxpayers looking for assistance. And Wall Street Journal tax reporter Richard Rubin is on the line with us with some details. So, Richard, the IRS's own internal watchdog group says the shutdown resulted in mountains of backlogged mail and audit responses.
The IRS is a large agency. On a regular day, it's got about 80,000 people working there. And yeah, people are more likely to take vacation over the Christmas holiday. But on a regular workday, people do stuff. They process correspondence.
Which IRS functions were disrupted and caused backlogs after the shutdown?
They respond to if process amended returns. They respond to letters from taxpayers about audits. So all of that stuff. Or a lot of that stopped. And so that created this backlog that IRS workers are having to deal with now, even as they're also dealing with the 2019 filing season.
And there's a lot of confusion that could come around this year because of the new 1040 form. And a lot of people, I would imagine, will be looking for some assistance from the IRS. And the wait time on the phone line to the IRS, that wait time is shot up also.
Yeah, the wait time on the accounts management line is up from four minutes in the equivalent week last year to 17 minutes this year. Some of that is the new form. Some of that is the new rules. There's this new business deduction. There's limits on other deductions. Other deductions have gone away. The forms look different. Anytime you change things, that's just going to add taxpayer service burden. And Congress knew that when they passed the law, but we're in this real adjustment period.
How did the shutdown affect taxpayers trying to get help or respond to IRS notices?
And in your Wall Street Journal story, you mentioned that during the shutdown, the IRS sent out letters dealing with, as you put it, serious consequences. And then recipients had a difficult or even an impossible time responding. I would imagine that time is of the essence in a situation like that.
Yeah. The example in this report, which comes from Nina Olson, the national taxpayer advocate, is the IRS sends out letters that are notice of intent to levy.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:05–0:09
2
How did the government shutdown initially impact the IRS's operations?
0:09–1:31
3
What broader economic news frames the IRS discussion in this episode?
1:31–2:48
4
Which IRS functions were disrupted and caused backlogs after the shutdown?
2:48–3:47
5
How did the shutdown affect taxpayers trying to get help or respond to IRS notices?
3:47–4:45
6
What specific examples of harmful IRS letters and consequences were reported?
4:45–5:46
7
What changes to the 2019 Form 1040 could increase taxpayer confusion?
5:46–7:22
8
How would a potential second shutdown during tax season further strain the IRS?
7:22–8:36
Speakers
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