Examining How the Government Shutdown Impacts IRS Operations

When Congress and the White House fail to pass appropriations bills or a continuing resolution by October 1, the federal government risks a shutdown. During past shutdowns under the Trump administration, many federal agencies reduced services, furloughed federal employees without pay, and disrupted government services. The Internal Revenue Service has contingency and shutdown plans in place to maintain normal IRS operations and essential taxpayer services, supported by the Inflation Reduction Act.

What Happens During a Government Shutdown and How Does It Affect the Federal Government?

A government shutdown occurs when Congress fails to pass funding bills for the fiscal year. Without appropriations, the Office of Management and Budget directs shutdown plans. Federal employees face furloughs without pay, while essential workers continue to operate. Social Security, Medicare, Medicaid, and Veterans Affairs continue as mandatory spending.

When shutdowns end, furloughed workers receive back pay, although staffing levels may decline and early retirements may follow. Prudent management requires agencies to prepare through continuing resolutions, demonstrating how the government shutdown affects IRS operations, tax administration, and federal agencies until appropriations are restored.

What Does the IRS Contingency Plan Require?

The IRS contingency plan outlines how normal IRS operations will continue in the event of a funding lapse. Prudent management requires focusing on taxpayer services and tax administration. For the first five business days, the entire workforce of 74,000 employees stays on duty, with oversight from the Treasury Inspector General. Under the IRS shutdown plan, refunds, tax return processing, and accounts remain open.

Supplemental appropriations from the Inflation Reduction Act keep the IRS government funded through fiscal year 2031. This reduces the risks associated with a potential government shutdown. Agencies prepare to protect taxpayer services, and federal employees return once the shutdown ends, showing prudent management ensures stability.

What Is in the IRS Shutdown Plan for Taxpayer Services?

The IRS shutdown plan details which taxpayer services continue and which may shut down. Expatriate tax returns, tax-exempt organization returns, and electronic tax filings are processed, while online services like e-filing, refund tracking, and IRS.gov remain available. Paper filings are slow due to staffing levels, and mailed correspondence faces delays.

Audits, examinations, and appeals pause until the shutdown ends. The hotline is operational, but with fewer employees on staff, taxpayers can expect longer wait times. Agencies prepare to maintain normal IRS operations, proving prudent management requires prioritizing tax administration. This illustrates the impact of the government shutdown on IRS operations and taxpayer services.

How Are Government Services and Federal Workers Affected?

Federal agencies follow shutdown plans during a funding lapse, with management and budget officials prioritizing the protection of essential workers. Human services, such as SNAP and the Special Supplemental Nutrition Program for Women, Infants, and Children, may be disrupted. Education programs such as Pell Grants and the deferred resignation program are delayed. The Postal Service remains open, while public safety personnel continue their roles.

Each potential government shutdown highlights stress on federal employees and government services. Some expect artificial intelligence may one day assist, but staffing levels remain decisive. Prudent management requires agencies to prepare while federal workers face furloughs without pay until the shutdown ends.

Do Tax Filings Change During a Funding Lapse?

Tax filings remain required by law even in a government shutdown. The October 15 filing season deadline for extended returns stays unchanged, as do quarterly estimated payments. Business filings, including payroll and corporate taxes, must also be submitted. Penalties apply if taxpayers fail to file or pay, even after the shutdown ends.

The IRS contingency plan and IRS shutdown plan ensure tax administration continues for expatriate tax returns and tax-exempt organization returns. Prudent management requires agencies to prepare for maintaining normal IRS operations, demonstrating how the government shutdown affects IRS operations despite reduced staffing levels.

What Happens to Social Security and Employees Working at the IRS?

Some programs remain open because they are mandatory spending. Social Security payments for retirees and disabled workers continue, and Veterans Affairs operates normally. Essential IRS staff working in tax administration and taxpayer services remain active, ensuring normal IRS operations continue during a funding lapse.

Federal employees in non-essential roles are furloughed without pay, though back pay is granted once the shutdown ends. Many workers face strain and early retirements. These shutdown plans illustrate the impact of a government shutdown on IRS operations and government services. The IRS contingency plan ensures that agencies are prepared to protect taxpayer services until appropriations are restored.

Sources

Details on IRS contingency planning, the IRS shutdown plan, and taxpayer services are available at IRS.gov. Legislative updates on appropriations bills, funding levels, and the role of congressional leaders in preventing a government shutdown can be found at Congress.gov.