The partial shutdown of the US government is now entering its third week after US President Donald Trump said he was prepared to continue the shutdown indefinitely, in a bid to secure funding for a wall to be built on the Mexican border.
About 800,000 federal workers have been affected by the December 22 closure, with about 380,000 workers placed on unpaid leave and the remainder required to work without pay.
The US Internal Revenue Service (IRS) is understood to be staffed at 12 per cent to 20 per cent, leading to concerns of possible delays ahead of the US tax filing season.
Speaking to Accountants Daily, the Tax Institute’s senior tax counsel, Professor Robert Deutsch said the shutdown’s impact on Australia would likely be minimal if it is resolved within the next two weeks.
“A resolution in the next two weeks should enable the IRS to return to normal functioning without disruption to the interests of Australians who file US tax returns,” said Professor Deutsch.
“However a delay beyond that time frame is likely to see a considerable backlog in IRS functions including in particular the processing of tax returns and perhaps more relevantly tax refunds.
“This could start to cause some stress here in Australia but without more information, it is difficult to gauge the amount of any refunds that might be involved. Delays in processing of 2018 tax returns will also begin to bite as we move further into 2019.”
A Trump administration official has announced that the IRS will process income tax refunds during the shutdown but the agency has yet to issue a statement.
Accountants Daily has reached out to the IRS and professional associations in the US but have not been able to receive comments due to resource issues.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.