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How does the government shutdown affect the way you conduct business?

Submitted by UCS on January 11, 2019

As we all know by now, on December 22, 2018 the United States government was shut down for a lack of funding. During a shutdown, the essential parts of the government remain operational but the public loses access to a wide range of services considered non-essential. There are 806,300 non-essential government employees out of work around the country. The largest concentration of furloughed citizens is in Washington, D.C. where 98,300 people have been out of work for the past 3 weeks. Businesses that benefit from opportunist shopping near government buildings such as cafes or convenience stores may see a decline in demand for their products.

For some businesses, the closing of certain non-essential services can affect original plans. Below is a rundown of services that are and are not available to businesses for the time being:

Secretary of State Offices
It is important to note that all state Secretary of State offices are fully active, so usual business transactions (formations, document retrievals, UCC searches etc.) are not affected.

Internal Revenue Service (IRS)
The IRS is partially shut down. The IRS will still be collecting taxes for 2018 but its resources department which is usually open for answering questions will not. This means that they are not available to answer questions about tax liabilities (including small businesses).

Employee Identification Numbers (EINs) can be applied for using the online method through the IRS website but expect delays for applications sent via fax, mail, or telephone.

Small Business Administration (SBA)
The SBA is considered non-essential. This means that approvals for loans are on hold until the shutdown ends. Lenders are not able at this time to submit loans to an approval queue for SBA processing. In case of dire emergency the SBA is still offering disaster assistance loans.

Securities and Exchange Commission (SEC)
According to the SEC only 285 of the 4,436 employees are in the office. The system where companies file their IPO, EDGAR, is still open but submitting strictly through EDGAR is causing significant backlog. Businesses ready to go public should be prepared for delays and plan accordingly.

Passport Administration
Passport acquisition is likewise stalled. This could potentially affect international business personnel expecting to travel on a tight schedule.

Legalization of Documents
The U.S. Department of State remains open and documents that require legalization for use in other countries is currently being processed with 4-5 business days.

E-Verify
The federal program E-verify which compares information entered by an employer from an employee’s Form I-9, Employment Eligibility Verification is cross checked with records available from the U.S. Department of Homeland Security and the Social Security Administration to confirm employment eligibility is suspended. This may slow hiring nationwide, but will mostly affect the states that require the use of E-Verify for at least some public and/or private employers. Such states are:

  • Alabama
  • Arizona
  • Colorado
  • Florida
  • Georgia
  • Idaho
  • Indiana
  • Louisiana
  • Michigan
  • Mississippi
  • Missouri
  • Nebraska
  • North Carolina
  • Oklahoma
  • Pennsylvania
  • South Carolina
  • Tennessee
  • Utah
  • Virginia
  • West Virginia

Contributors to this article

Keith Sheppard received his Bachelor of Science degree in Paralegal Studies from St. John’s University. As a corporate paralegal and manager with over two decades of experience in the legal services field, Keith has developed an awareness for how to assist lawyers and fellow paralegals with corporate filings and due diligence. Have a question or a suggestion for a blog? Contact Keith at keith.sheppard@unitedcorporate.com

Ray Barr is an intern for United Corporate Services and currently studying leadership, writing and economics at the University of Richmond.

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