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If You Don’t Get Your Tax Refund, Thank the Trump Shutdown

The absence of 2018 tax refunds will be a gut punch to the national economy.

President Trump walks past the media as he arrives at the White House in Washington, DC, on January 6, 2019, as the government shutdown enters its third week.

The third government shutdown of the Trump Eon entered its 17th day today with little hope for a resolution at hand, and many of the most immediate effects are punishing. The looming threat of delayed tax refunds may carry the most political dynamite, despite Vice President Pence’s promises of an easy fix, but it is by no means the harshest side-effect of yet another Trumpian temper tantrum.

As this partial shutdown enters its third week, the effects are beginning to bleed significantly into the everyday affairs of the people. Some of these effects are unexpected, given the administration in question: The immigration court system, revved up by the Trump administration, has been significantly slowed, and the federal penal system is likewise operating at reduced power.

The Violence Against Women Act expired just as the shutdown got underway, cutting off funding for programs that help victims of sexual assault, domestic abuse and stalking. Domestic abuse shelters, which depend upon vital federal funding, are scrambling to stay open. Hundreds of thousands of federal workers, along with the towns they work in, are feeling the pain of Trump’s erratic intransigence.

Within the Native communities spread across the country, the effects of the shutdown may be felt most acutely. “The federal government plays a critical role for the 1.7 million American Indians and Alaska Natives in the 566 federally recognized tribes,” reports Al Jazeera America, “providing key services that include health care, schools, social programs and law enforcement protection, all supported by its long-standing treaty obligations made with Native Americans.” Those treaty obligations are being abrogated once again, this time by a shutdown crisis that simply did not need to happen.

On the political front, millions of taxpayers will soon bear the consequences if the stalemate continues for much longer. The tax season began with the new year, but tens of thousands of Internal Revenue Service (IRS) employees have been furloughed. As part of its current contingency plan, the agency is operating with about 12.5 percent of its normal staff, less than 1,000 workers in total.

For the time being, the IRS crisis is not imminent because the IRS does not fully gear up for tax season until the latter half of January. Should this shutdown continue through the month or even beyond into February, however, only tax returns with a check enclosed will be processed. Anyone owed a refund will be made to wait for an indeterminate period of time, and those expecting refunds from before 2018 will be made to wait even longer.

A mostly-furloughed IRS will also play merry hell with tax professionals who are still wrestling with the bent intricacies of Trump’s 2017 tax cut legislation. Calls to the agency for guidance or assistance on all the new rules and changes to the tax code will translate into a whole lot of unanswered phones ringing away in an empty building.

One does not need to be an economist to understand the potential severity of the situation. Millions of people file their tax returns as early as they possibly can because they badly need the money after the spending festival of the holiday season. Plainly put, many are low on funds right now. Winter is always a slower time for the national economy because of this, and the sudden absence of tax refund money would be a financial gut punch.

“The annual injection of refunds into the economy is postponed at best,” a certified public accountant, who requested his name be withheld due to fear of a backlash, told Truthout, “as may be any major purchases you have planned or perhaps a vacation.”

Additionally,” continued the accountant, “people trying to buy homes can’t close because the mortgage companies can’t pull down IRS transcripts to verify income, because the IRS is closed. This has an enormous ripple effect on the economy, which, as we all know, is heavily dependent on the housing market. Joe can’t buy from Suzy, who now can’t buy from Mary, who now can’t buy from Phil, who now can’t buy a house or a car. And of course, the brokers and real estate agents’ income just disappears, too.”

Have no fear, however: The White House is on the case. According to The Washington Post:

The Trump administration, which had not anticipated a long-term shutdown, recognized only this week the breadth of the potential impact, several senior administration officials said. The officials said they were focused now on understanding the scope of the consequences and determining whether there is anything they can do to intervene.

(Emphasis added.)

I feel better already, don’t you?

If the shutdown cuts deep into tax season, the IRS will be forced to scramble and will essentially be revising its contingency plan on a day-to-day basis as circumstances warrant. The agency is considering bringing furloughed staffers back in to handle the load, but they will have to work without pay. If the sick calls piling up at the Transportation Security Administration tell us anything, it’s that those IRS staffers may also find themselves coming down with a touch of the bug before showing up to process your tax return without a paycheck.

Fearing the inevitable political backlash if people don’t get their refunds, Vice President Pence and the White House Office of Management and Budget came out on Monday afternoon with breezy promises to take care of everything. Remember, however, these are the same people who think the still-unratified Canada-Mexico trade deal will pay for “The Wall.” I don’t trust them to find their way out of a paper sack, much less ensure people get their checks while this slow-rolling disaster continues unabated.

We are not over the cliff on this just yet, but we are rolling up to the edge at speed, and the one person in the country who really needs to understand the scope of what’s happening thinks it’s a “strike.”

Donald Trump is on the verge of kneecapping the very economy he loves to brag about, and no one on this giddy green Earth seems capable of stopping him. His administration says the problem is fixed, but they have been proven to be liars many times over. If you were expecting a check from the IRS any time soon, I’d start considering other options.