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Treasury Notes

 Treasury's Lapse in Appropriations Contingency Plan

By: Dan Tangherlini

Ed. Note: Late Friday evening, an agreement was reached in the FY 2011 budget negotiations, avoiding the below mentioned possibility of a government shutdown. For more information, please read OMB Director Jack Lew's memo on the Anticipated Enactment of a Continuing Resolution.

As many Americans watch budget negotiations unfold in the news, they are understandably concerned about how a potential government shutdown might affect them. To help answer many of these important questions related to Treasury services, we're releasing today the contingency plans for the Department and its bureaus. We want to make sure that Americans have the most up to date and clear information about how the Treasury Department will function in the event that an agreement is not reached, forcing a government shutdown. Below is a summary of the Treasury's Department-wide Lapse in Appropriations Contingency Plan and links to plans for each bureau:

Department of the Treasury
Department-wide Lapse in Appropriations Contingency Plan Summary

This is an overview of the Treasury Department lapse in appropriations contingency plan.  Additional details are provided in the individual bureaus plans also posted on the site, including: Departmental Offices (DO), The Office of the Inspector General (OIG), the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Treasury Inspector General for Tax Administration (TIGTA), the Financial Crimes Enforcement Network (FinCEN), the Alcohol and Tobacco Tax and Trade Bureau (TTB), the Financial Management Service (FMS), the Bureau of Public Debt (BPD) Administrative Resources Center (ARC), and the Internal Revenue Service.  The DO plan includes functions of the Community Development Financial Institutions (CDFI) Fund.  

Several Treasury bureaus are funded from sources other than annual appropriations.  No plans are included for these bureaus as they are entirely excepted.  These include the Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), the United States Mint, and the Bureau of Engraving and Printing (BEP).  There are also programs within some bureaus funded from other than annual appropriations that are addressed within the individual bureau plans (e.g., the Office of Financial Stability in the DO plan).  The Consumer Financial Protection Bureau (CFPB) –which is temporarily under Treasury’s jurisdiction – is included in the DO plan.  The BPD functions, with the exception of ARC, are authorized to continue in the absence of appropriations by the Second Liberty Loan Act (31 USC 3129). 

In total, the Treasury Department has approximately 127,000 employees.  In the event of a lapse in appropriations, approximately 92,000 would be furloughed and 35,000 would remain on duty. Because the possible lapse comes at the height of the annual tax filing season, the majority of these employees would be excepted from furlough to handle essential tax filing and service functions of the IRS, with the remainder primarily working in Treasury programs that are funded from sources other than annual appropriations.  Treasury will continue to revise its plans as circumstances warrant. Each Bureau under the Treasury has discrete functions.  Each prepared their plans to meet their needs consistent with the requirements of the Antideficiency Act, 31 U.S.C. §§ 1341 and 1342 and the guidelines outlined in OMB Circular No. A-11 Section 124.

Excepted and Non-Excepted Activities

Below are examples of excepted and non-excepted activities within Treasury.  

  • Individuals should keep filing their tax returns with the IRS and are required to do so by April 18.  The IRS would be accepting all tax returns.  Once they’ve been accepted, the IRS would generally process and issue refunds for electronically filed individual returns.  Individuals are urged to file electronically, because most of these returns are processed automatically and would not be delayed.  Because of limited IRS staffing, paper returns would be accepted, but would not be processed in the event of a lapse in appropriations and taxpayers who file paper returns would experience a delay in receiving their refunds. Limited telephone customer service functions would remain available, but IRS walk-in taxpayer assistance centers would be closed. 
  • If the government is closed, people with appointments related to examinations (audits), collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled. IRS personnel would reschedule those meetings at a later date.
  • FMS would maintain payments, collections, and daily cash management and processing of essential authority/appropriation transactions. This includes resources to support disbursements of interest on the debt, disbursements to Social Security and other benefit recipients, and maintaining critical government-wide accounting activities, as well as activities related to borrowing and tax collection.
  • TTB would ensure that all tax remittances are processed and continue criminal law enforcement and undercover operations.  TTB would halt its regulatory functions, non-criminal investigative activities and audit functions.
  • FinCEN would provide some support for its domestic and foreign law enforcement customers but would halt other Bank Secrecy Act regulatory and foreign and domestic law enforcement support functions.
  • TIGTA and OIG would halt audit activities but retain some investigative only law enforcement functions necessary to protect life, property and continue felony criminal investigations. 
  • SIGTARP, in order to provide oversight of offices and agencies that are continuing their operations, plans to use available no year funds during a short lapse of appropriations. In the event of a longer-term lapse, SIGTARP would re-evaluate based upon a range of factors, including funds availability.
  • Treasury DO would continue to provide key functions in a limited capacity such as economic analysis, implementation of tax policies and programs, management of the Government's cash position, and the continuation of borrowing/debt programs, including work related to adjusting the debt limit.  It would continue to oversee operations of the Exchange Stabilization Fund (ESF). DO’s Terrorism and Financial Intelligence office would continue collection, analysis and reporting of intelligence as well as the administration of the Specially Designated Nationals (SDN) list.  Functions not funded from FY 2011 appropriations would continue, including the Office of Financial Stability, the CFPB, the Small Business Lending Fund, International Affairs Office of Technical Assistance, and the Treasury Department Executive Office of Asset Forfeiture (TEOAF). However, most policy and support functions, such as tax policy development, reviews by the Committee on Foreign Investment in the United States, and regulation would be halted.  In addition, the ability to address policy and financial market issues would be reduced and the analysis of global economic issues, macroeconomic rebalancing, and international banking reform would be discontinued. The CDFI Fund would halt its grant and other support programs.
** Ed. note: Please click here for the most up to date information. **

Dan Tangherlini is Assistant Secretary of the Treasury for Management, Chief Financial Officer and Chief Performance Officer.
Posted in:  Management
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