The IRS will accept returns beginning January 28, and they will be allowed to pay out refunds, which should hit the accounts of early filers as early as February.
"Although in 2011 the Office of Management and Budget (OMB) directed the IRS not to pay refunds during a lapse, OMB has reviewed the relevant law at Treasury’s request and concluded that IRS may pay tax refunds during a lapse," the IRS said in a press release.
The IRS announcement comes days after the Wall Street Journal's Richard Rubin originally reported that refunds could be delayed due to the partial government shutdown, which would have hurt those who rely on tax refunds the most.
While it can process some tax returns, keep systems running, and conduct criminal investigations, it can't run audits, answer off-season taxpayer questions, or — in years' past — allocate refunds, he reported.
"For many Americans, the tax refund is the single largest financial event of the year, and the people who tend to file early in the season are taxpayers who count on large refunds to pay down debt, catch up on bills or make major purchases," Rubin wrote. "Those are disproportionately low-income households that benefit from the earned-income tax credit and other provisions that give them no income-tax liability or a net benefit from the income-tax system."
Floyd Williams, a former IRS director of legislative affairs, told Rubin that wealthier taxpayers typically file later and wouldn't have been affected to such an extent.
Read more: Here's a look at what the new income tax brackets mean for every type of US taxpayer this year
Many taxpayers should be expecting bigger refunds than normal under the new GOP tax law which went into effect in 2018.
An analysis by UBS estimated an overall increase of $42 billion to $66 billion in tax refunds this year over 2017, Business Insider previously reported.
The bank found that most married filers with two children would see the biggest boost in their refunds compared with 2017, particularly those making $125,000 to $400,000 and those making under $40,000 a year.
However, single filers and residents of higher-tax locales like New York and California may see smaller refunds under the new tax law.
The new tax law was already projected to increase the risk of a delayed start to the 2019 filing season, according to the IRS, plus there are some new changes for taxpayers to watch out for.
- Read more:
- Here's when you can expect your employer to send the form you need to file your taxes for 2018
- Tax Day is April 15. Here's what you can expect when filing under the new tax law.
- Everything you should be doing to prepare for tax season
- You may be able to cut down your tax bill with a little-known credit if you saved for retirement this year
