Frequent contributor Bob Kamman discusses the IRS’s updated lapsed appropriations contingency plan for the filing season. Les
The first thing to realize about the IRS Filing Season Contingency Plan is that it is already outdated. As the Overview states,
“The IRS Lapse in Appropriations Contingency Plan describes actions and activities for the first five (5) business days following a lapse in appropriations. The plan is updated annually in accordance with guidance from the Office of Management and Budget (OMB) and the Department of Treasury. While we do not anticipate using the plan, prudent management requires that agencies prepare for this contingency.”
Although the cover sheet is dated January 15, 2019, that excerpt from Page 5 is dated January 11, 2019. Filing season, it states, runs from January 1 through April 30, 2019. What happens after the first five days?
“In the event the lapse extends beyond five (5) business days, the Deputy Commissioner for Operations Support will direct the IRS Human Capital Officer to reassess ongoing activities and identify necessary adjustments of excepted positions and personnel.”
In lay terms, this is known as “flying by the seat of your pants.”
The general rule is that all IRS employees must stay home because they are not essential and there is no money to pay them. (Of course, history tells us that they will be paid when the shutdown ends.) The exception to the rule is that they must work, without pay, if they fall into one of several “excepted” categories.
Category “A” includes activities that (A1) are already funded, like those related to TCJA implementation and disaster relief; activities (A2) “authorized by statutes that expressly permit obligations in advance of appropriations; and the catch-all (A3) “authorized by necessary implication from the specific terms of duties that have been imposed on, or of authorities that have been invested in, the agency.” Until anyone objects, this A3 means what any given lawyer says it means on any given day.
Then there are “excepted” employees (remember, these are the ones who must show up to work) in Category B. Their jobs are necessary to safeguard human life (see Police Officers, below) and, more often, to protect government property.
To understand this category, note that “tax revenues constitute Government property which the Service must safeguard.” But not just money is involved:
“…the Service may continue processing tax returns to ensure the protection of those returns that contain remittances. Activities necessary to protect other types of Government property, including computer data and Federal lands and buildings, may continue during a shutdown as well.”
In fact, not just money, buildings, and computers are at stake. It is the IRS reputation itself. The agency must “maintain the integrity of the federal tax collection process.” (This mostly seems to come under A3, not B, for those keeping score at home.)
Finally, there is the “turn out the lights” Category C, for activities that “provided for the orderly termination of those functions that may not continue” during a shutdown.
Those are the rules. Here are some examples of how they are being applied.
Category A1: This includes “Income Verification Express Service (IVES) and Revenue & Income Verification Service (RAIVS) Photocopy Programs.” These allow mortgage lenders to verify taxpayer incomes. It was recently determined that this was “excepted” work, perhaps because it is funded by user fees.
Category A2: This one is easy. IRS does not have any. It just shows up in the report because Treasury needs it for other reports.
Category A3: “Maintaining minimum staff necessary to handle budget matters related to the lapse in appropriations.” Presumably these employees will have other work to do, when the lapse ends.
Category A3 also includes “Activities necessary for the payment of refunds, including processing electronic returns through issuance of refunds; processing “Paper Refund Tax Returns” through issuance of refunds; and processing “1040X Amended Refund Returns Adjustments including Carrybacks, Amended Returns, Duplicate Filed Returns (DUPF), Correspondence, Injured Spouse Claims, Disaster Claims, F843 Claim for Refund and Request for Abatement in support of issuing refunds.”
Issuing those refunds is necessary, not because they are government property, but because they are part of a system that maintains IRS integrity.
For Category B, there is a long list of activities necessary for the protection of human life or government property. “The risk to life or property must be near at hand and demand an immediate response. To ensure that employees only perform functions that meet this requirement, each business unit will conduct regular meetings throughout a lapse in appropriations to identify actual imminent threats and activate excepted personnel only as required to perform related excepted activities.” Here are just some of these examples:
- Completion and testing of the upcoming Filing Year programs
- Processing Remittances including Payment Perfection
- Responding to taxpayer filing season questions (call sites)
- Continuing the IRS’ computer operations to prevent the loss of data
- Protection of statute expiration, bankruptcy, liens and seizure cases
- Protecting Federal lands, buildings, and other property owned by the United States
- Upcoming Tax Year forms design and printing
- Maintaining criminal law enforcement and undercover operations
(You might find it odd that designing next year’s forms has at least the same priority as criminal law enforcement. You will agree, however, once you see this year’s forms.)
Those are the activities that are necessary. Here are some examples of work that is not:
- Non-automated collections
- Legal counsel
- Taxpayer services such as responding to taxpayer questions (call sites) (But only during Non-Filing Season. During Tax Season, they hope to operate.)
- All audit functions, examination of returns, and processing of non-electronic tax returns that do not include remittances
So let’s not call it a shutdown. When audit and collection work is suspended, let’s call it a holiday. Were it not for the staff trying to prevent statute expirations, we could almost call it amnesty.
Here are some details from the latest plan:
“Chief Counsel’s primary responsibility during a lapse is to manage pending litigation, the time-sensitive filing of motions, briefs, answers and other pleadings related to the protection of the government’s material interests. Due to Counsel’s separate litigation function, the number of excepted Counsel positions will not align with excepted activities authorized in other IRS business units. Counsel’s plan assumes that the Federal and District Courts will be open, and that litigation will continue uninterrupted. The plan excepts, on an as needed basis, those personnel assigned to litigation that is scheduled for trial or where there is a court-imposed deadline during the first five days of a lapse. Personnel are not generally excepted to perform litigation activities where a trial or other court-imposed deadline is scheduled more than five days after the start of the lapse. Personnel assigned to those cases should seek continuances as part of an orderly shutdown. If a continuance is denied, the case will be reviewed to determine if work on the case may be excepted. . . .
“Chief Counsel personnel are also excepted, on an as needed basis to provide required legal advice necessary to protect statute expiration, and the government’s interest in bankruptcy, lien, and seizure cases.”
Taxpayer Advocate Service
There are now two “excepted” Category B employees allowed in each local office: The local TA, and either a group manager or a “lead case advocate.” Their jobs are to “Check mail to comply with the IRS’s requirement to open and process checks during a shutdown while also complying with the statutory requirements that TAS maintain confidential and separate communications with taxpayers and that TAS operate independently of any other IRS office . . .Screen the mail for incoming requests for Taxpayer Assistance Orders and notify the appropriate Business Unit that a request has been made tolling any statute of limitations.”
It doesn’t sound like they are allowed to answer the phone or work cases. Protecting IRS integrity doesn’t extend this far?
Small Business / Self Employed
In this operating division, 2,614 of the 2,938 Category B employees are in Collection and another 264 are in Examination. But wait – what happened to that holiday?
Most of them are Collection Representatives who “carry out revenue protection activities that include responding to taxpayers who have received a collection notice through the Automated Collection System and clarifying the payment process; assisting taxpayers with setting up installment agreements for tax payments; assist taxpayers with general collection processes; serve as the gateway for transferring taxpayers to Accounts Management for appropriate filing season inquiries; and provide assistance with releasing levies and liens as required by law.” In other words, you can contact them but they won’t contact you.
Those in Examination “protect statute expiration/assessment activities, bankruptcy or other revenue generating issues. Open incoming mail to identify documents required to be processed to protect the government’s interest during shutdown. Complete computer operations required to determine necessary actions, prevent data loss and route documents associated with imminent statutes.”
Wage And Investment
These are the workers at 10 Service Centers and 15 call sites, most of whom are in Category A3. IRS hopes that 12,961 show up for Submission Processing, and 17,520 show up for Accounts Management, which includes call sites.
From other sources, I find that at least 6,600 of these employees are seasonal. Would you take a temporary job with IRS in January, with the hope of being paid by April? It might make a difference if you needed to pay for daycare.
How many in W&I “Refundable Credits Policy & Program Management” will work on “Pre-refund case selection to protect improper payments from being released to ineligible taxpayers and perfect refunds to verify the refund is appropriate”? An army of 51.
Compare that with the 469 needed for the IVES and RAIVS programs. IVES “provides express return transcript, W-2 transcript, and 1099 transcript delivery services to mortgage lenders and others within the financial community to confirm the income of a borrower during the processing of a loan application. RAIVS services taxpayer request for copy of tax return.”
In Category B, 25 employees are needed because “Online Services (OLS) is responsible for the development and continuity of operations for IRS.gov, which is the agency’s exclusive external facing website servicing the public. IRS.gov is the means in which taxpayers may continue to file returns and submit remittances online. OLS anticipates that 9 employees will be needed for the duration of the shutdown to maintain the IRS.gov website.”
Did you know IRS has Police Officers? There are nine of them kept on duty who along with 13 Security Specialists and five Safety Officers “support general security services that increase as the IRS population escalates in excepted employees during the Filing Season. Additionally, security and emergency response actions are influenced by other external activities such as bomb threats, suspicious packages and threats to employees. Situational Awareness Management Center/Threat Incident Reporting is operational 24/7 during a shutdown.”
Leave (Not Brexit) Policy
Finally, current and former IRS employees should find this interesting. I am not sure it is how the situation was handled in previous shutdowns, but maybe I am thinking of snow days.
“Managers should advise employees who are scheduled to be on annual, sick, court, or military leave that, if a lapse in appropriations occurs while they are on leave, their leave will be canceled, and they will be placed in a furlough status. According to 5 CFR § 752.402, a furlough means ‘the placing of an employee in a temporary status without duties and pay because of lack of work or funds or other non-disciplinary reasons.’”