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Audit target? You’re getting a bit of a shutdown break

October 5, 2013

Remember back in the spring when the Internal Revenue Service admitted that losing operating funds because of sequestration will hamper the agency's audit efforts?

Tax cheat sign from NTEU Capitol Hill rally via Rep Keith EllisonIt's happening again.

About a month after sequestration kicked in on March 1, then Acting IRS Commissioner Steve Miller told a House appropriations subcommittee that budget cuts will mean, among other things, fewer audits.

Last week when the IRS had to determine which jobs were essential, it decided that return examination, which is what the agency calls audits, wasn't. Tax audits are among the IRS activities that have been stopped during the federal government shutdown.

Auditing questionable tax returns will, of course, resume when the government starts back up and the IRS is fully staffed. But even a brief stoppage in tax examinations will mean the whole process will be backlogged.

And I know that when I get a lot of stuff stacked up on my desk, I tend to go through it a bit more quickly than I otherwise would. As the old saying goes, haste makes waste; it this case, it's wasted revenue that the IRS might not catch.

Former IRS Commission Mark Everson explained the audit problem when it first popped up this spring.

"If you have someone working on 20 audits, if they're not working as many days it's going to take longer to finish those and they're not starting new ones," Everson told CNN Money months ago.

Things have only changed for the worse. The sequester continues and the IRS lost three work days to it. With the full government shutdown in force, four potential audit days are gone and counting.

Now you might be thinking that no audits is not such a bad thing. But if folks are not paying their proper amount of tax, that means taxpayers who are paying our full share (that's you and me, right?) are carrying them

I don't know about you, but I have no desire to make up the money tax cheats are skimming from the U.S. Treasury.

So I want the shutdown done with soon, even if that means the IRS takes a longer, harder look at everyone's, including my, tax returns.

Taxes and severance payments: Job loss of any length of time is never an appealing prospect.

The only thing that might make termination the tiniest bit tolerable is a nice severance package. But even then, workers have to cope with payroll taxes — the Social Security and Medicare taxes known collectively as FICA — on those final payouts. Or do they?

The U.S. Supreme Court will decide the matter of severance pay and taxes during its upcoming term, which begins Monday, Oct. 7.

The case before the High Court is the Quality Stores contention that that it — and its former employees — should get refunds from the IRS for the bankrupt company's FICA payments on the severance packages made to workers it laid off.

If you got a payout upon leaving your job, don't spend a possible tax refund yet. It will be months before the justices make their decision.

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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