IRS Recalls 46,000 Workers for Tax Season

The exterior of the Internal Revenue Service building in Washington. The Trump administration is lifting requirements for some tax-exempt groups to disclose the identities of their donors to federal tax authorities, announced late Monday, July 16, 2018. The change benefits groups that spend millions of dollars on political ads, such as the U.S. Chamber of Commerce and an organization tied to the billionaire Koch brothers. (AP Photo/Susan Walsh, File)

WASHINGTON (AP) — The Internal Revenue Service is recalling about 46,000 of its employees furloughed by the government shutdown — nearly 60 percent of its workforce — to handle tax returns and pay out refunds. The employees won’t be paid during the shutdown.

With the official start of the tax filing season coming Jan. 28, the Trump administration has promised that taxpayers owed refunds will be paid on time, despite the disruption in government services caused by the partial shutdown now in its fourth week.

There had been growing concern that the shutdown would delay refunds worth hundreds of billions of dollars because the money wouldn’t be available for them from Congress. But last week, the administration said customary shutdown policies will be reversed to make the money available to pay refunds on time.

An IRS document detailing its new shutdown plan shows that 46,052 agency employees will be called back to work, of the total workforce of 80,265. It says the plan will take effect as soon as the Treasury Department issues an official notice.

Only about 10,000 employees are deemed essential and have been working.

Some 800,000 federal employees have been furloughed or are working without pay. President Donald Trump didn’t budge Tuesday from his demand to have Congress provide $5.7 billion to build his promised border wall with Mexico. Democrats say they will discuss border security once the government has reopened, but House Speaker Nancy Pelosi is refusing money for the wall Democrats view as ineffective and immoral.

About three-quarters of U.S. taxpayers receive annual refunds, giving them an incentive to file their returns early. Many lower-income people count on refunds as their biggest cash infusion of the year. Overall, refunds average $2,800.

The issue is politically sensitive. The massive tax law enacted by Republicans in Congress in late 2017, which is President Donald Trump’s signature legislative achievement, gave generous tax cuts to corporations and the wealthiest Americans and more modest reductions to middle- and low-income households. The law is expected to bring lower taxes for 2018 for the great majority of Americans, and the refunds are a big tangible part of that.

Trump told supporters on a conference call Tuesday that his administration has been working to minimize the painful impacts of the shutdown. “People are actually amazed that, with this many people, that government is really working so well. So we’re very proud of that,” he said.

Angered over employees having to work without pay, the union representing IRS staff sued in federal court last week to challenge any such agency action on constitutional grounds. The Constitution doesn’t allow the government to obligate funds that haven’t been provided by Congress, and the executive branch “can’t continue to force more and more employees to show up in exchange only for an IOU,” the National Treasury Employees Union said.

On Tuesday, a federal judge rejected the union’s challenge, declining to force the government to pay the recalled employees.

Some experts question whether the administration has the legal authority to reverse earlier policies to allow the government to issue tax refunds during a shutdown.

In 2011, the chief counsel at the IRS concluded that such payments were legally allowed during a shutdown. At the time, the White House Office of Management and Budget, under President Barack Obama, rejected that position and directed the IRS not to pay refunds during a shutdown. But the IRS said last week that OMB had reviewed the issue at the Treasury’s Department’s request and now agrees with the IRS counsel’s position that refunds can legally be paid.

Also on Tuesday the House and Senate announced they would stay in session, canceling a planned recess week at home if the shutdown continues, which seems likely.

The U.S. Capitol. (AP file photo/J. Scott Applewhite)

The White House tried to bypass House Speaker Nancy Pelosi in shutdown negotiations, but rank-and-file House Democrats declined an invitation to lunch Tuesday with President Trump.

The partial government shutdown is slowing plans by some companies to issue stock to the public and potentially cutting off a key source of capital for the financial markets.

Behind the scenes, though, the administration and its allies on Capitol Hill are warily eyeing the next payday, hoping to reach a resolution before next week’s Tuesday deadline, when they’ll need to prepare the next round of paychecks for workers who have been seeing zeros on their pay slips.

“There is definitely a sense that there is a deadline approaching, which would be next Tuesday, to make sure that we’re able to solve this problem,” said Mercedes Schlapp, a White House spokeswoman.

Tuesday brought another day of high theatrics but low substance as the shutdown dragged into its fourth week. The shutdown, already the longest ever, entered its 26th day Wednesday. The previous longest was 21 days in 1995-96, when Bill Clinton was president.

Trump, who a week ago seemed intent on declaring a national emergency to build the wall, has turned his attention back to Congress as polling shows he is taking much of the blame for the standoff.

The White House invited rank-and-file lawmakers to lunch with Trump at the White House as part of a strategy to build support from centrist Democrats and newly elected freshmen, including those from areas where the president is popular with voters.

But the White House quickly learned the limits of that approach. None of the House Democrats took Trump up on the offer.

One, Rep. Lou Correa, D-Calif., “welcomes the opportunity to talk with the president about border security,” his spokesman said, “as soon as the government is reopened.”

Trump ended up lunching with a handful of lesser-known House Republicans. The White House will try again later this week, inviting a bipartisan group of lawmakers known as the Problem Solvers caucus to talks.

Trump urged his supporters to call the offices of Democratic lawmakers to press them to support the wall to reopen the government

A short time later, a group of House Democrats made its way to Senate Majority Leader Mitch McConnell’s office demanding that he consider House-passed bills to fund the government. McConnell was not in his office at the time, so the Democrats left a note.

McConnell says he doesn’t want to waste the Senate’s time and will bring up only measures that Trump will sign into law. Democrats, he said, have turned Trump’s wall into “something evil” and it’s time to get the country off the “political carousel” of the shutdown fight.

Republicans complain that Democrats are the ones who are refusing to budge, and they say it’s up to Pelosi to bring Trump a new offer.

“The president — who is not well-known for flexibility — has been more flexible than the other side,” said Sen. Roy Blunt of Missouri, a member of GOP leadership.

Meanwhile, the effects of the partial government closure intensified around the country, with workers facing deepening anxieties about mortgage payments and unpaid bills.

Some lawmakers were reluctant to return home for next week’s planned recess — some were planning their first town halls of the new year — as the standoff deepens. JPMorgan’s Jamie Dimon told reporters Tuesday that he expects U.S. economic growth to slow to nothing this quarter if the government shutdown continues.

“I hope it doesn’t go to the end of the week,” said Sen. John Thune of South Dakota, the No. 2 Senate Republican. “I’d like to see us have a breakthrough here.”

But hopes of side deals being cut by the White House seemed unlikely, as did the prospect of groups of senators meeting privately to forge a compromise.

Said Sen. Chris Coons, D-Del.: “The shutdown will eventually take us to a place where the average American is angry at and sick of all of us.”

Even though Trump is focused on pushing Democrats to return to the negotiating table, it was the president who walked out of the most recent talks last week after Pelosi told him she would not yield to his demands.

As the White House invited lawmakers to lunch Tuesday, Pelosi gave her blessing for lawmakers to attend. She told her team that the group can see what she and others have been dealing with in trying to negotiate with Trump.

Pelosi predicted that after meeting with Trump, the lawmakers would want to make a “citizen’s arrest,” according to an aide, who wasn’t authorized to publicly discuss the meeting and spoke on condition of anonymity.

Rep. Jim Himes of Connecticut, another centrist Democrat, said the White House is “grasping at straws.”

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