How does a government shutdown affect the Internal Revenue Service and you?

Here’s a hyperlink to the IRS’s FY2025 Lapsed Appropriations Contingency Plan:
https://home.treasury.gov/system/files/266/IRS-FY24LapsePlan.pdf

BenefitsLink neighbors, what do you think:

Would stopping IRS examinations be welcome or unwelcome?

Would stopping rulemaking and other interpretive guidance be welcome or unwelcome?
 

Without having read the report, just on general principles I'd say:

Stopping examinations is a bad idea. There has to be some level of enforcement threat to attempt to keep the bad players from running amok, with the rest of us picking up the tab.

And, rulemaking/interpretive guidance is also a necessary (if sometimes unwelcome) function. Look at all the SECURE/2.0 etc. confusion that requires guidance, just as one example.

1 hour ago, Belgarath said:

And, rulemaking/interpretive guidance is also a necessary (if sometimes unwelcome) function. Look at all the SECURE/2.0 etc. confusion that requires guidance, just as one example.

Even without a shutdown, I dont expect much in the form of rulemaking in the next 12-18 months.  The 10-1 rule in a recent executive order means that agencies must repeal 10 existing rules for every new rule.  Im not entirely sure what the impact is on sub-regulatory guidance, but Bondi reinstated the prohibition on "improper guidance" from the first Trump administration (which was withdrawn by Garland during the Biden administration).  

Under the memo, guidance is improper when issued without undergoing the rulemaking process but has a direct effect on the rights and obligations of private parties governed by the agency, or otherwise acts as a substitute for rulemaking.

The FY2025 Lapsed Appropriations Contingency Plan was released in July 2024 to have an orderly plan for coping with the ploy of letting government funding lapse in an effort to further a political agenda.  The plan anticipated that this ploy will become very much commonplace and the plan codifies steps to take for an orderly shutdown and then an orderly restoration of activities.  Effectively, the plan anticipates that funding ultimately will be restored, paychecks will be issued covering lost pay, staff will return and pick up where they left off.  Oversimplifying things, the plan basically puts the agency into hibernation.

We are now in 2025 and are in the midst of an aggressive Reduction in Force initiative to permanently eliminate certain staff, to permanently stop funding certain initiatives, and to impose permanent limitations on staff and budgets for those who choose to continue working.  In complete contrast to the Contingency Plan, a goal of the current actions are not to restore staff and budgets.

Aspects of our business that will be impacted the most by these reductions is unknown.  Our industry works with our professional counterparts in the IRS who have in depth knowledge of our shared interests and concerns.  The RIF is being conducted almost solely based on headcount without regard to each individual's role or knowledge base, and without regard to funding of certain initiatives.

Depending of what we may need as feedback from the IRS or what we may wish to provide as input to the IRS, the interaction could range from business as usual where our contacts remain in place and in their roles, to a complete shut down as our contacts are no longer employed and as the IRS stops funding certain initiatives.

All of this makes the Contingency Plan seem like marvelous fantasy.

Attorney General Bondi’s February 5, 2025 memo rescinds Attorney General Garland’s July 1, 2021 memo, which rescinded a memo of a predecessor.

Attorney General Sessions’ November 16, 2017 memo set standards for the Justice department’s nonrule guidance. Although the memo addressed only the Justice department, other agencies, including the Labor and Treasury departments, sometimes followed the memo’s principles.

Attorney General Bondi directs a report on “strategies and measures that can be utilized to eliminate the illegal or improper use of guidance documents[.]” Although that report is due this week—March 7, it would be an internal report from the Associate Attorney General to the Attorney General. Recognizing deliberative-process and executive privileges, that report won’t be available under the Freedom of Information Act. It might be a while before a public release.

Beyond whatever the Justice department might do or not do regarding an executive agency’s decision, we might interpret the February 5, 2025 memo as a general sense against an executive agency using nonrule guidance as a substitute for proper rulemaking, to set a right or duty beyond those already provided by a statute, or to state an interpretation of a statute beyond an interpretation already stated by a proper rulemaking.

https://www.justice.gov/ag/media/1388511/dl?inline

Prohibition on Improper Guidance Documents 2017-11-16.pdf

12 minutes ago, Peter Gulia said:

Attorney General Bondi’s February 5, 2025 memo rescinds Attorney General Garland’s July 1, 2021 memo, which rescinded a memo of a predecessor.

Attorney General Sessions’ November 16, 2017 memo set standards for the Justice department’s nonrule guidance. Although the memo addressed only the Justice department, other agencies, including the Labor and Treasury departments, sometimes followed the memo’s principles.
 

Thanks Peter!

Reality has arrived -  we are seeing plan audits reassigned due to personnel changes at Treasury, audit appointments pushed out, and even unofficially an audit scaled back. I'm sure there will be more changes coming. 

How about the Labor department’s Employee Benefits Security Administration: Has anyone seen EBSA people slow-play an investigation or inquiry, or either’s documents request?