How the Government Shutdown Affects Accountants

On October 1, 2013, the federal government shut down after weeks of budget negotiations. The government shutdown occurred because legislators could not agree on spending cuts. Lawmakers also disagreed about whether it was the right time to implement many parts of the Affordable Care Act. The government shutdown affected almost every industry, but accountants faced some special challenges during the seventeen-day government closure.

Tax accountants faced some of the biggest challenges during the government shutdown. The Internal Revenue Service suspended operation of its tax court and stopped sending tax refunds. The IRS continued to process e-filed returns, but agents were not available to answer taxpayer or accountant inquiries. If you submitted a paper return without remittances for one of your clients, the agency did not process it during the shutdown. All of these delays, closures, and service suspensions put many tax accountants behind schedule during one of the busiest times of the year.

The Internal Revenue Service also stopped all nonautomated collection activities during the government shutdown. Although this might have been a welcome reprieve for some of your clients, this made it difficult for accountants to carry out their duties. No one was available to answer questions about collection errors or process paperwork manually, so accountants were unable to address some tax issues for more than two weeks. If one of your clients received notice of an audit during the summer, the government shutdown delayed the processing of audit-related forms. The IRS stopped all auditing activities and examinations during this period.

Representatives from the Office of Management and Budget are still determining the true cost of the government shutdown, so it is a little early to tell how much of a financial impact the federal closure had on the accounting industry. Although exact numbers are not yet available, it is clear the shutdown hurt some accounting firms. Accountants working on projects related to government contracts were unable to get the paperwork they needed during the shutdown. Some projects were stalled while the government was closed, so a few companies were unable to pay their accounting firms. Defense contractors took one of the biggest hits of the shutdown, so if your firm works with this type of company, you may still be seeing the effects of the government closure.

Government actions affect accounting practices whether you serve clients through a public accounting firm or work in the accounting department of a private company. The recent government shutdown affected tax accountants, auditing professionals, and other accountants in several ways. Now is a good time to review your firm's accounting practices and see if any adjustments are needed to prevent problems during a future shutdown.

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