How Does the Government Shutdown Affect US Taxpayers’ Involvement with the 2012 OVDP?
The United States Government, the IRS, and the Tax Court have been shut down for over 2 weeks now and taxpayers have a growing amount of questions.
Because the IRS shutdown happened just before the final tax deadline of October 15, 2013, the firs series of questions taxpayers had was whether or not to file a tax return. There are numerous taxpayers who are still struggling with delinquency and trying to get required information from the IRS.
For those who have not yet filed a US expat tax return: Remember that there are very few IRS locations accepting paper returns, so your best bet for having your return accepted and processed as efficiently as possible is to file electronically. If an electronic tax return is not a viable option for you, be sure to send your US income tax return with a courier that will provide you with proof of delivery in case there are any questions about your having submitted a return by the time the IRS is back in full swing and processing of paper returns begins.
The requirement to file a timely tax return during the government shutdown is not limited to individual taxpayers. Business owners still need to file regular payroll taxes with the same frequency as before the IRS shutdown, and those responsible for sending quarterly estimated tax payments will still be required to remit quarterly stubs and payments regularly.
OVDP participation is still an option for US Taxpayers in the future, although the government shutdown has prevented any new applications from being processed and made an ‘already slow’ process even slower.
There are basic procedures for applying for and being accepted into the 2012 OVDP. Generally speaking, a taxpayers submit an admission request to the IRS…Then, wait. Once the IRS replies with a letter of preliminary acceptance (which is never guaranteed), the taxpayer must, then, must submit all required information to the IRS and – once again – wait.
Until the government shutdown, the IRS barely had enough personnel to keep up with the influx of OVDP admission applications, so the process was already extremely slow. Now that the IRS is barely operational, there are currently no new applications being processed. As a matter of fact, even cases which had recieved a letter of preliminary acceptance have been placed on hold.
According to the IRS, once it has resumed normal operations the OVDP will still be available to delinquent US Taxpayers who are interested in catching up on their tax obligations. This being the case, any taxpayer who has unfiled tax returns from previous years or undisclosed assets and is interested in entering into the OVDP should still submit a submission request to the IRS.
There is no way of knowing how long it will take for the IRS to return to normal operations or respond to your request. Then again, as far as the OVDP is concerned, there never has been any way of anticipating when you would receive an acceptance letter or if you even would.
Unanswered questions remain for many US Taxpayers, but it’s important to stay current on your obligations and do what you can to take advantage of the OVDP if it’s the right option for you.
As for any questions about the functionality of the IRS or the US Government such as, “How long will the shutdown last?” the answers are anybody’s best guess. What isn’t a guess, however, is that you should continue to meet your tax and reporting obligations to the best of your ability. If you were considering entering into the OVDP, do not postpone sending your request to the IRS. If you wait until it is back up and running, your request will be at the bottom of the pile.