Government Reopening Bill: What Your Accountant Should Know

                                       

By: Wiss Team

Wiss Team

Key Takeaways

• Federal operations resume: IRS returns to full capacity, clearing processing backlogs and resuming taxpayer support
• Retroactive pay impacts cash flow: Federal employees receive back pay, while government contractors face payment delays and schedule modifications
• Economic data delays affect planning: Postponed jobs reports and inflation figures may shift Federal Reserve interest rate decisions
• Bottom Line: The reopening restores critical government services, but businesses and individuals should prepare for processing delays, modified deadlines, and catch-up periods across federal agencies

The government reopening bill ends the shutdown and restores federal operations, but the restart creates ripple effects affecting businesses, contractors, federal employees, and taxpayers. Your accountant needs to understand these impacts to advise you properly on cash flow, tax deadlines, and contract obligations.

What Federal Employees Should Know

Federal workers who were furloughed or worked without pay will receive retroactive pay covering all missed paychecks. This isn’t discretionary—it’s mandated by the reopening bill. Employees should expect payment processing to take several weeks as agencies work through payroll backlogs.

Any proposed layoffs or reductions in force initiated during the shutdown are reversed. Affected positions will be restored, and employees who received termination notices should expect reinstatement. Furloughed employees will return to work immediately as agencies resume normal operations.

Impact on Government Contractors

Contract performance resumes, but contractors shouldn’t expect business as usual. You’ll need to modify schedules and, if necessary, seek equitable adjustments for lost time and increased costs resulting from the shutdown. Document everything—delays, cost overruns, and schedule impacts—to support adjustment claims.

Payment delays will continue even after reopening. Invoices held up during the shutdown will take time to process as agencies work through backlogs. Your accountant should closely monitor outstanding receivables and maintain communication with contracting officers regarding payment timelines. Cash flow management becomes critical during this catch-up period.

Stay alert for contract opportunities. Solicitations delayed or suspended during the shutdown will be announced quickly after reopening. New opportunities and contract extensions will emerge as agencies rush to resume procurement activities. Monitor agency websites and SAM.gov for rapid updates.

Tax and Financial Considerations

The IRS returns to full operational status with employees resuming duties. This helps clear the backlog in tax return processing, refund payments, and taxpayer support services. However, expect processing delays to continue for weeks as the agency works through accumulated work.

Recalculate any tax deadlines that were affected by the shutdown. Legal and administrative actions paused during the closure will resume, but some agencies may extend certain deadlines to account for the disruption. Your accountant should verify specific deadline dates rather than assuming original schedules remain unchanged.

Economic data releases were delayed during the shutdown. Jobs reports, inflation figures, and other economic indicators that inform Federal Reserve decisions are being published on adjusted schedules. This delay may affect interest rate cut expectations and broader economic planning. Businesses relying on economic data for strategic decisions should account for information gaps in their forecasting.

Government Services Restoration

SNAP and other benefit programs resume payments after a short processing delay. Recipients who experienced disrupted benefits should expect catch-up payments, but your accountant should help plan for any temporary income gaps if you rely on these programs.

FAA operations return to normal, ending the flight cancellations and delays that occurred during the shutdown. Businesses with travel-dependent operations can resume normal scheduling, though some residual delays may continue as the aviation system fully restabilizes.

What Accountants Should Do Now

Your accountant should immediately review any government-related financial matters affected by the shutdown. This includes tracking federal contractor payment status, verifying tax deadline extensions, monitoring economic data releases affecting business planning, and recalculating cash flow projections based on delayed government payments.

For businesses with federal contracts, your accountant should prepare documentation supporting equitable adjustment claims. For federal employees, ensure payroll systems are ready to process retroactive payments correctly. For all taxpayers, verify IRS processing timelines for pending matters.

The government reopening restores essential services, but the restart period requires careful financial management and deadline tracking to avoid problems created by the disruption.

Connect with the team at Wiss to ensure you don’t miss a beat.

Previous"What is Auditing? Understanding Audit Standards"

Next"Inherited IRA Rules for Family Business Succession"