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The IRS and federal budget cuts: furloughs to be delayed until after April 15

In our February 11 post, we discussed the prospect that federal budget cuts could affect the ability of the IRS to assistance taxpayers and to enforce tax law through audits and investigations. These cuts, known by the shorthand term "sequester," began taking effect on March 1.

The IRS has announced, however, that furlough days for IRS employees will not begin until after the tax filing season is done. Acting IRS Commissioner Steven Miller notified employees of this in a memo last week.

IRS employees will still need to take between 5 and 7 furlough days this year. But they will not begin doing so until after April 15.

In this context, a furlough is essentially an unpaid vacation day. All federal agencies are experiencing these furloughs as automatic spending cuts kick in.

For now, then, the delays in processing tax returns that the IRS warned of a few weeks ago do not seem likely to come to pass. Yet the IRS still faces numerous budgetary problems. The agency already has a hiring freeze in place. So there are no new employees on the horizon to take on work whose completion may be delayed due to the furlough days for current employees that will begin later this year.

To be sure, it's not as if the federal government has shut down. The IRS is still very much open for business. Clearly, though, the time lost to furlough days, combined with the hiring freeze, will an impact on impact on the ability of the IRS to respond to tax questions and review tax compliance.

Source: "IRS holds off furloughs to spare tax season," CNN Money, Jennifer Liberto, 2-28-13

Our firm handles situations similar to those discussed in this post in California. To learn more about our practice, please visit our tax litigation page.

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