House Democrats Cancel Tax Refund Panel as Mnuchin Opts Out

(Bloomberg) -- House Democrats want to know how the longest government shutdown in history will affect one of the most critical tax filing seasons. But it’s unlikely they’re going to get any answers this week.

House Democrats Cancel Tax Refund Panel as Mnuchin Opts Out

Representative Richard Neal of Massachusetts, chairman of the Ways and Means committee, canceled a hearing scheduled for Thursday after Treasury Secretary Steven Mnuchin declined to testify.

Mnuchin had offered to send his deputies or other IRS officials who he said would be better equipped to answer questions. Neal has been pushing for testimony from Mnuchin on how the shutdown is affecting the Internal Revenue Service, which will begin accepting tax returns and processing refunds Jan. 28.

“One of the most sensitive areas of this happens to be the politics of it,” Neal said Wednesday evening, referring to calling back employees without pay to process refunds. He added that he was putting forth more dates to formally ask Mnuchin to appear.

Mnuchin sent a letter to Neal on Thursday saying that he’d be willing to testify in front of the committee once Trump releases his fiscal year 2020 annual budget request. By law, presidents are required to release their budget proposals by the first Monday in February, but this year’s could be delayed because many of the Office and Management and Budget staff members have been furloughed during the shutdown.

The meeting is the second one between House Democrats and top tax officials to be scrapped at the last minute. Ways and Means Democrats previously planned to meet with IRS Commissioner Chuck Rettig earlier this month, but that was called off after Neal said “they canceled.”

Committee staff members have already received a shutdown-related briefing from several IRS and Treasury officials, according to a letter from Treasury.

House Democrats Cancel Tax Refund Panel as Mnuchin Opts Out

The latest bickering between the White House and Congressional Democrats comes as the shutdown enters it second month and with the start of the tax filing season -- the first under the 2017 Republican tax law -- just days away. The lack of communication between the branches of government means the public will get even less insight about how the impasse will affect taxpayer’s ability to file and how quickly refunds will be processed.

The IRS said earlier this month it will continue to process refunds during the shutdown, a policy change that reversed the agency’s previous stance that it couldn’t issue refunds while the government is closed.

Neal has said the gravity of the situation -- federal workers relying on food banks and struggling with bills -- warranted an appearance by “top leaders” in the Trump administration. After several days of negotiating the format of the hearing and other potential attendees, no agreement could be reached.

“That’s a huge mistake,” said Mark Everson, a former IRS commissioner under President George W. Bush. “The administration needs to work with the Congress and vice versa.”

Even without a shutdown, the filing season was going to be a heavy lift for the agency as it rushes to make all the changes to forms and systems stemming from President Donald Trump’s tax overhaul.

The agency has been doing the final preparations for the filing season with a skeletal staff. In recent days, the agency has called back more workers and plans to have about 57 percent of employees on the job while the shutdown continues into the filing season, the most critical time period for the IRS.

Workers Stay Home

“They were already stressed and the system was at its limits,” said Representative Lloyd Doggett, a Texas Democrat who’s a member of the Ways and Means panel.

Doggett said he’s spoken with IRS workers living in his district who are staying home because they can’t afford to get to work. “This really does great harm to the implementation of the new tax law, collection of refunds and the maintaining of the system,” he said.

The agency is continuing to work on preparation for the filing season, calling furloughed employees back to work and assessing the situation, Matthew Leas, an IRS spokesman said in a statement.

The Treasury Department didn’t respond to a request for comment.

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