How the US Government Shutdown Affects Your Company

The US government shutdown began on December 22, 2018 and shows no signs that it is nearing its end. With the deadlines for submitting important forms to the Internal Revenue Service (IRS) approaching, doubts about tax obligations, tax returns and the submission of forms and reports begin to emerge.

We had listed the most common ones and answered them here.

What is a shutdown?

In a nutshell, a shutdown is the freezing of government funds, resulting in the partial closure of public services, ministries, and government agencies funded by the United States Congress.

A shutdown can be called when there is no consensus on federal funding for the subsequent year.

During this period, most civil servants cannot go to work and enter an unpaid leave period.

How long does a shutdown last?

Unfortunately, there is no way to predict.

Has the deadline for submitting the US Income Tax been changed?

As of the closing date of this text, no change in the submission deadlines of these forms had been announced by the government. Therefore, taxpayers must meet deadlines for fiscal year 2018, regardless of how and when the IRS will resume its regular activities.

Individual Taxpayers

Without extension: April 15
With extension: October 15

Legal Entities

Partnerships (Form 1065)
Without extension: March 15
With extension: September 16

S-Corporations (Form 1120S)
Without extension: March 15
With extension: September 16

C-Corporations (Form 1120)
Without extension: April 15
With extension: October 15

Sole proprietor (Form 1040)
Without extension: April 15
With extension: October 15

How does the shutdown interfere with IRS operations?

On December 31, 2018, the IRS revealed contingency plans for the shutdown, which determined that 12.5 percent of the employees (about 80,000 people), considered essential, would continue to work during the shutdown.

The forecast is that with the increase in the number of forms submitted, the IRS will ask more employees to return and process these documents.

The IRS also announced that the contingency plan will be reviewed periodically for the duration of the shutdown. New information will be announced shortly.

How does the shutdown affect my business?

Although President Donald Trump has ensured that the IRS would pay restitutions on a regular basis even with the shutdown — unlike previous shutdowns, which faced changes in the payment schedule — it is not yet known how this will happen and whether it will actually happen.

In other words, there is still no certainty as to how the shutdown will affect the tax obligations of companies operating in North American territory.

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