Smaller tax refunds 2019: Average tax refund down 8.4 percent.

The average tax refund from the IRS dropped 8.4 percent in the first week of the 2019 filing season compared to the same period last year, according to agency statistics.

The dip, to $1,865 from $2,035, is an early barometer of the season, which is being watched more closely than usual because it reflects the first full year under the 2017 tax overhaul and comes on the heels of a protracted government shutdown that hit the IRS just as it was gearing up for the annual exercise.

The number of individual tax returns received and processed by the IRS also fell sharply year over year, by 12.4 percent and 25.8 percent, respectively. The data for this year cover Jan. 28 to Feb. 1, matched against Jan. 29 to Feb. 2, 2018.

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The data reflect only one week of filing in a process that will last until April 15 for most taxpayers, and refund predictions by tax experts have been all over the map. Morgan Stanley has estimated they will rise by 26 percent, but others are less optimistic.

“There are going to be a lot of unhappy people over the next month,” said Edward Karl, vice president of taxation for the American Institute of CPAs. “Taxpayers want a large refund.”

Some 71 percent of taxpayers received refunds last year worth about $3,000 on average, Karl said, which represents the single largest financial transaction for the bulk of those people in a given year.

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The size and number of refunds will be politically sensitive this year in particular. Democrats, who uniformly opposed the GOP-drafted Tax Cuts and Jobs Act, say more people will owe the IRS this year because of confusion about withholding. But House Ways and Means Committee ranking member Kevin Brady (R-Texas), an architect of the plan, has predicted that the number of taxpayers getting refunds will be around the same as in previous years.

A statement from the IRS stressed the early nature of this year’s statistics.

“IRS systems are operating smoothly to start the filing season, and refunds are being issued,” the statement added. “The IRS encourages taxpayers to e-file as the quickest way to receive their refunds.”

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Various factors could have played a part in the filing decrease so far, including the federal government shutdown that ended just three days before filing season opened Jan. 28. The IRS had recalled previously furloughed workers during the closure to prepare, but thousands didn’t return when summoned and a backlog was expected to greet them when they did.

In addition, continued taxpayer uncertainty about the tax law changes that took effect last year was expected to prompt many to take longer than usual to file this year and maybe even prompt more filing extension requests than normal.

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