IRS Will Send Out Tax Refunds Despite Government Shutdown, White House Says

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As the partial government shutdown heads towards the 17th day, the White House announced that the IRS will process tax returns despite approximately 90 percent of the agency's workforce now on furlough.

The decision could prove extremely consequential for US households and the USA economy. "The IRS usually pays around $125 [billion] in tax refunds in February and a further $75 billion in March", Ashworth wrote.

The decision has yet to face any challenge from the Office of Management and Budget.

Herron says despite the shutdown, automated payments will continue and taxpayers can also mail payments. The calls congressional offices are receiving about the wall would morph into inquiries about why families haven't received their refunds, he said.

The shift from the White House comes as officials prepare for an extended shutdown. Some others have worked to contain the fallout by reversing policies multiple times in recent days.

During a shutdown, the IRS typically doesn't perform audits, pay refunds or offer assistance to taxpayers if they have questions, especially outside of the filing seasons.

Democrats in the House of Representatives, meanwhile, have pushed for legislation without wall funding to re-open the government as the debate continues.

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"What we're seeing now is an effort by the administration to ignore legal views, to basically put aside the law and limit the political impact of what's going on", said Sam Berger, a lawyer in the OMB's general counsel under Obama.

Flashback: As I wrote previously, the current shutdown contingency plans limited the IRS from sending tax refunds out.

The partial shutdown has cut off new funding to the Treasury Department and the USDA, putting a vast majority of employees on furlough, and bringing necessary work to a halt.

Herron explained, "The budget tells the IRS how to configure training for the employees, it tells them how to configure the tax returns, the actual forms, it also tells them how to configure their computers to process the tax returns".

"There is a pot of money to pay refunds, but there is not a pot of money to do the work to actually pay the refunds", Berger said.

As the Federal government shutdown enters its third week, if it's not resolved soon, there's a risk that it could stop tens of billions of dollars worth of income tax refunds.

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