The government shutdown impacted many areas outside of government offices, including many aspects of everyday business, including compliance for payroll and taxes. Payroll companies and employer payroll departments had to be careful to still meet their payroll compliance obligations even without the normal avenues for support from government sources that were closed. Payroll companies, including payroll companies in Southern California, also have had to contend with fallout from the impact of the government shutdown on customers.
Payroll Tax Payments
All tax deadlines, including those for payroll taxes, remained in effect even through the shutdown. Payroll companies and employer payroll departments were required to continue to submit payroll taxes as normal. Those experiencing problems with payroll taxes or who had questions about processing found limited assistance and closures during the shutdown, which ended minutes before the midnight deadline October 16. Correspondence, refunds, and live telephone customer service were severely delayed or completely closed.
Services that were closed during the shutdown, although reopened, may still be limited or delayed while offices and returning workers get caught up on work that was put on hold.
Services Related to Payroll that were Closed
Payroll processors didn’t have normal support available from government resources during the shutdown and will experience service delays even after the shutdown due to backlogs at first.
The IRS Practitioner Services phone line was closed. Those with questions about tax laws, procedural guidance and timeframes, IRS communications, and accounts assigned to collection services or revenue agents could not get assistance.
IRS toll free hotlines such as the business and specialty tax line, refund hotline, and information return reporting hotline were closed. Limited information was available on IRS websites but was not being updated during the shutdown.
Employer identification numbers services were closed during the shutdown, so verifying an EIN, applying for a new EIN, and following up on EIN applications were delayed until after the shutdown.
E-Verify, the federal online program used to check employee names and social security numbers, was unavailable during the shutdown. Employers with tentative non-confirmation messages on employees, the “mismatch” letters informing employers that an employee’s social security number doesn’t match the name given, weren’t able to process them during the shutdown.
Loans to Meet Payroll
Small businesses in need of working capital to meet payroll had to look for sources other than the Small Business Administration during the shutdown. Other SBA loans, including loans for startup and expansion, weren’t available either, as well as other services and resources offered by the agency.
Other Ways Payroll Companies were Affected
Payroll companies, like other businesses, were at risk of loss of revenues during the government shutdown due to clients in financial distress or loss of clients who had to close or lay off employees because of problems caused by the shutdown. Banks may or may not have been willing or able to offer financing previously provided by the SBA, affecting business ability to continue operations and grow and expand.
What’s Open after the Shutdown?
Almost all of the government services and facilities that were closed for the shutdown opened right away Thursday morning, October 17, but many are overwhelmed with backlogs of work. They may be operating on limited hours or services. For example, many IRS offices are turning away visitors and only accepting those who’ve come to make payments.
The government shutdown has affected large and small companies across the U.S., not just those whose business is dependent on government contracts. Businesses will experience slower than normal services while government workers struggle with backlogs.