Internal Revenue Service employees who have been called back to work without pay during the partial government shutdown are increasingly taking advantage of a benefit known as a “hardship exemption,” which could delay tax refunds during tax season despite actions by the Trump administration.
Last week, the Treasury Department released a revised contingency plan for the government shutdown under which more than 46,000 of the approximately 70,000 IRS employees would be required to return to work to process tax refunds and get ready for tax filing season, but the majority of them would be unpaid (see Over half of IRS employees called back for tax season, mostly without pay). The IRS plans to start tax season on Jan. 28 even if the shutdown continues (see Tax season to start Jan. 28, IRS confirms). The shutdown is now in its 33rd day, and hundreds of thousands of federal government employees are expected to miss their second biweekly paychecks this Friday.
The National Treasury Employees Union issued a statement Tuesday about how many IRS employees are able to use a provision in their union contract known as a “hardship exemption” that allows them to stay at home when they don’t have money to pay for transportation to work or for child care. “After a month with no pay, real hardship does exist for IRS employees including not having the money needed to get back and forth to work or to pay for the child care necessary to return to work right now,” said NTEU National President Tony Reardon. “Emergencies can occur at any time so the hardship exemption can be requested during a lapse in appropriations when an employee is suddenly unable to return to work. That is why the exemption exists. The longer employees go without pay, more face financial hardships.”
According to the Washington Post, many of the IRS employees who have been called back to work earn between $25,800 and $51,000 per year and cannot afford to commute to work without any salary. Congress has passed a bill guaranteeing back pay to federal employees affected by the partial government shutdown, but only after the shutdown ends. The payroll processing deadline has already passed for this week. The IRS is paying some employees, including approximately 400 who process income verification forms for mortgage applications, out of the user fees for the applications, but most of the employees are still not being paid (see IRS reopens income verification service despite shutdown). IRS managers so far have been allowing unpaid employees to take the hardship exemptions, even if they’ve been called back to work, as long as they have a legitimate reason.
“I believe that IRS management understands the stress that employees are under and is doing its best to accommodate the very real hardships employees are experiencing,” said Reardon. “NTEU does not support employees using it as a form of protest but we do support people using it for true financial hardship. I want to reiterate that even as IRS employees continue to struggle with a lack of pay, they are dedicated to their jobs and returning to work, as directed, if at all possible.”
The union said it has been encouraging IRS employees to return to work if they have been called back. “When the IRS announced the new filing season shutdown plan, NTEU shared that information with our members and advised them to answer the call and return to work,” said Reardon. “Tens of thousands of them have done that. The IRS has an incredibly dedicated workforce that continues to find ways to get their jobs done even as the agency has shed thousands of employees over the past several years due to deep budget cuts. The pain of the government shutdown is deep for IRS employees, and all of the federal employees who are going without pay in the fifth week of the shutdown. NTEU calls on Congress and the administration to pay federal workers and bring this shutdown to an end.”
Nate Smith, director of the National Tax Office at CBIZ MHM, has seen the impact of the shutdown on responsiveness at the IRS ahead of tax season. “One thing that is being experienced is slowness or unresponsiveness in customer service,” Smith told Accounting Today last week. “You call somebody and ask a question. Because you were unable to do that until just recently, there’s this backlog of questions that hasn’t been answered so the personnel, who by the way are working without pay, that are answering these questions first of all have to deal with this influx of people who haven’t been able to reach them for a while. Secondly, in addition to that influx, there are simply more questions this year than there have been in years past because of the new tax law. So you’ve got more questions and you’ve got a backlog of questions. You’re simply going to have a tough time getting through to them and getting a timely response to your questions.”