IRS Will Pay Tax Refunds 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. We've got the story behind the IRS opening up its coffers to pay out tax refunds during the government shutdown. That's coming up.
What quick money and market headlines set the scene for this episode?
First, these money and market stories you should know. The Federal Reserve says that total consumer credit increased $22.1 billion in November.
How did consumer credit and loan trends change in November?
to a seasonally adjusted $3.98 trillion. That's down only slightly from a $25 billion gain in October, which was the fastest pace in 11 months. Specifically, the use of credit cards dialed back in November, rising by 5.5% after a 10.9% gain in October, whereas auto and student loans rose 7.1% in November after a 6.5% gain in the prior month. So far in 2019, trading action in cryptocurrencies has been subdued as investors await an upgrade to Ethereum. That's the blockchain that most crypto ventures launch their cryptocurrency on.
Why is Ethereum's January upgrade and crypto trading mentioned here?
It's scheduled to receive an upgrade on January 16th. And billionaire Henry Kravis, the co-founder of private equity giant KKR, is putting his Colorado ranch on the market for $46 million. The Wall Street Journal Real Estate Bureau says the roughly 4,600-acre property, known as Westlands, is about an hour's drive from the resort communities of Aspen and Vail. The 19,000-square-foot main lodge has five bedrooms, including the master's suite, as well as a library, a great room, and a dining room. The lower level includes a wine cellar, a game room, a theater, a hot tub, a sauna, steam rooms, and a wet bar. There's also a swimming pool and two large guest cabins, a carriage house, and a helipad, plus a four-hole golf course designed by golfer Greg Norman.
Mark your calendars for January 28th.
What are the notable details about Henry Kravis's Colorado ranch sale?
That's the start of tax filing season. It doesn't always come with good news, but the good news this year is the IRS will pay tax refunds even if the government shutdown extends throughout the tax season. And Wall Street Journal tax reporter Richard Rubin is with us on the line to explain how all this came together. So Richard, the shutdown has kept a substantial number of IRS workers at home. This is a pretty significant workaround for the agency.
Yeah, let's break this down for a second.
How will the IRS handle tax refunds if the government shutdown continues?
until now, the IRS has had about one in eight of its employees working. They're working without pay, but they're working. And that's mostly been people who investigate crimes in the tax code and people who kind of keep the computers running because they kind of need to do that, otherwise they start breaking. And the IRS was always planning to bring more people back for the tax filing season. A plan that they released last year had about 43.5 percent of IRS workers working during a shutdown during a filing season. So they were going to come back at some point. The big unknown was what was going to happen to refunds. The IRS had had this policy in the past, this view in the past that it couldn't pay refunds during a government shutdown.
And the administration reversed that legal conclusion yesterday, this week.
And for President Trump, there's a lot of political capital here on the line because these refunds are the first to be issued under the guidelines of the Republicans' tax law.
Yeah, there's a couple of political pieces to this.
What political and legal reasons explain the decision to pay refunds during a shutdown?
One is what you just mentioned, which is that to the extent that refunds under this first time of this new law are delayed, that could affect how people view the law. That really is the Republicans' most significant legislative achievement while they had control of Congress and the White House. And then secondly, it affected the shutdown itself. This was a real potential pain point for the administration going forward. If we'd gotten into late January, early February, and people were expecting refunds and not getting them, that could have really turned up the pressure. And the administration basically, by turning off this pressure... found a way to keep the dispute going without it being quite so painful on ordinary Americans.
So it obviously is painful in a bunch of other ways for federal workers and for others.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:17
2
What quick money and market headlines set the scene for this episode?
0:17–0:26
3
How did consumer credit and loan trends change in November?
0:26–1:04
4
Why is Ethereum's January upgrade and crypto trading mentioned here?
1:04–2:04
5
What are the notable details about Henry Kravis's Colorado ranch sale?
2:04–2:32
6
How will the IRS handle tax refunds if the government shutdown continues?
2:32–3:31
7
What political and legal reasons explain the decision to pay refunds during a shutdown?
3:31–5:43
Speakers
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