Many Americans were losing their minds after it was reported that the government will not be issuing tax refunds due to the government shutdown.
The acting director of the White House budget office, Russell Vought, said customary rules will be changed to make the payments possible. He told reporters that an “indefinite appropriation” was available for the refunds, which would go out as normal.
As it dragged through a third week, the partial government shutdown could not have come at a worse time for the Internal Revenue Service. Tax-filing season officially begins Jan. 28, and while those who owe Uncle Sam will still have to pay up by April 15, people who are due to receive money back have worried about whether the closure could postpone their payments.
About three-quarters of taxpayers receive annual refunds, giving them an incentive to file their returns early. Many lower-income people count on refunds as their biggest cash infusion of the year.
The IRS said late Monday that it will recall a large number of furloughed employees to process returns. They will probably work without pay. Under the previous rules, hundreds of billions of dollars in refunds could be delayed because funding would not be available.
Some experts question whether the Trump administration has the legal authority to reverse those earlier policies to allow the government to issue refunds during a shutdown. Vought framed the move as part of President Donald Trump’s goal to make the shutdown “as painless as possible.”
The administration’s announcement came as House Speaker Nancy Pelosi signaled her intention to begin passing individual bills to reopen federal agencies in the coming days, starting with the Treasury Department, which includes the IRS, to ensure Americans receive their refunds.
Some Senate Republicans have been growing increasingly anxious about the extended shutdown and could support such legislation from the Democratic-led House.
With the White House announcement on refunds, “They’re reversing a long-standing legal position,” said Howard Gleckman, senior fellow and tax expert at the Urban Institute. But, he added, “Who’s going to sue? It would be hard to show damages. … So they might be able to get away with it.”
In 2011, the chief counsel at the IRS concluded that such payments were legally allowed during a shutdown. At the time, the White House Office of Management and Budget, under President Barack Obama, rejected that position and directed the IRS not to pay refunds during a shutdown. But the IRS said Monday in a news release that the OMB had reviewed the issue at the Treasury’s request and now agrees with the IRS counsel’s position.
The IRS has not yet announced a start date to the filing season. Last year, the IRS opened the filing season on January 29, 2018.