Tax Refunds During Government Shutdowns: Lessons from 2018-2019

When the federal government shutdown lasted 35 days from December 2018 into January 2019, millions of taxpayers wondered: Would they still receive their tax refunds on time?

The IRS Continued Processing Refunds

In a significant policy shift, the IRS confirmed on January 7, 2019 that it would process tax returns beginning January 28, 2019 and provide refunds to taxpayers as scheduled, despite the ongoing shutdown. The agency recalled over half of its workforce specifically to handle tax return processing and refund issuance.

For electronic filers using direct deposit, refunds were issued within the normal 21-day timeframe, ensuring taxpayers received their money when expected.

Refund Advance Products Remained Available

Tax preparation companies and their banking partners continued to offer refund advance products throughout the shutdown. These advances ranged from a few hundred dollars up to several thousand dollars, with refund transfer banks maintaining their operations throughout the shutdown. This meant taxpayers had options to either receive their IRS refund via direct deposit in the normal timeframe or obtain a refund advance loan for even faster access to funds.

The 2018-2019 government shutdown showed that the tax system has mechanisms to continue serving taxpayers even during extended funding gaps, with both the IRS and tax preparation industry committed to ensuring refunds and financial products remain accessible when people need them most. We would hope the same would be true if another government shutdown were to take place during any future tax refund season.

Written by:
Christopher Neylan COO
Tax Max