The U.S. government shutdown has entered its third week, creating uncertainty for taxpayers and homebuyers alike. For those navigating mortgage applications or tax-related financial decisions, the IRS’s limited operations demand strategic adjustments. Homebuyers relying on tax transcripts for income verification, lenders processing applications, and homeowners awaiting refunds or dealing with tax payments must understand which IRS services remain operational and which are suspended. This disruption could ripple through real estate transactions, particularly as tax season approaches with new policies like the elimination of taxes on tips.
Despite the shutdown, tax filing deadlines remain unchanged. Homeowners and real estate professionals must prioritize timely submissions, as delays could jeopardize mortgage approvals or trigger penalties. Electronic filing remains an option, though paper returns will face processing delays once operations resume. Borrowers awaiting refunds to fund down payments or close loans should note that only e-filed, error-free returns with direct deposit requests will likely receive timely refunds. Others may face extended wait times, impacting their ability to secure financing.
Payment processing remains active, but late penalties loom. Homeowners with outstanding tax liabilities must ensure payments are made by deadlines, as the IRS will accept electronic and mailed payments. However, non-payment could lead to accrued penalties, complicating mortgage eligibility or home equity loans. Real estate professionals advising clients should emphasize the importance of budgeting for tax obligations, even during administrative shutdowns, to avoid cascading financial strain.
Nonetheless, taxpayer assistance centers (TACs) and the Taxpayer Advocate Service are closed, leaving borrowers without in-person support. Homebuyers unable to resolve tax transcript discrepancies or appeal audits must rely on automated tools like IVES to authorize lenders to access their records. Delays in transcript updates during the shutdown could stall mortgage approvals, underscoring the need for proactive communication between borrowers and lenders regarding income verification.
Phone services are unreliable, with long waits and limited live assistance. Tax professionals should prioritize early calls to the Practitioner Priority Service line, while homebuyers may need to use IRS portals like Where’s My Refund? to monitor refunds critical for closing costs. The lack of real-time support amplifies the risk of overlooked issues, such as errors in tax filings affecting loan applications.
Historical context offers caution. The 2018 shutdown delayed tax processing for over a year, with backlogs exceeding five million pieces of mail. If a similar scenario unfolds, mortgage applications delayed due to unprocessed tax documents could face months-long hold times post-shutdown, disrupting home sales and refinancing timelines. Borrowers should prepare for extended timelines and maintain backup documentation to mitigate delays.
Mortgage lenders must adapt to the IRS’s partial operations by prioritizing clients with e-filed returns and leveraging automated tools for transcript requests. For homebuyers, initiating tax filings early and choosing electronic submission can accelerate processing. Those expecting refunds for down payments should confirm direct deposit eligibility and consider alternative funding sources if delays arise.
Disaster relief transcript requests remain a priority for the IRS, which may expedite these applications even during shutdowns. Homeowners affected by natural disasters should seek guidance from lenders familiar with tax exemption processes, though non-disaster-related exemptions or pension plan determinations will likely stall.
Criminal investigation units continue operating, ensuring compliance with tax laws governing real estate transactions. Professionals must remain vigilant about reporting fraud or discrepancies, as IRS enforcement remains active. This underscores the importance of accurate tax filings to avoid scrutiny that could derail home financing or investment plans.
The IRS’s contingency plan allocates resources to critical functions, including training new customer service representatives for the upcoming tax season. This suggests preparedness for post-shutdown surges, but homebuyers should anticipate delays in resolving tax-related issues until full operations resume. Proactive communication with lenders and tax advisors can mitigate risks, such as delayed approvals or funding gaps.
As the shutdown persists, borrowers should diversify income verification strategies. If IVES or automated tools fail, lenders may accept alternative documents like pay stubs or W-2s temporarily. Homeowners with closed TAS offices should escalate urgent issues through tax professional channels, ensuring critical disputes do not compound during the interruption.
Ultimately, the IRS shutdown highlights the fragility of tax-dependent processes in real estate. Homebuyers must act swiftly to file returns, secure payments, and leverage technology to navigate limitations. Professionals should educate clients on risks, maintain contingency plans, and monitor IRS updates for reopening timelines. By anticipating disruptions and adapting strategies, stakeholders can safeguard transactions amid administrative uncertainty.
