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 can shut down, disrupting many federal agencies, leading to furloughs, reduced services, and uncertainty for taxpayers. In FY 2026, a lapse in appropriations took effect on October 1, 2025. The Internal Revenue Service confirmed it would continue IRS operations during this lapse through midnight on Tuesday, October 7, 2025, using funding from 2022 legislation.

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 for a government shutdown through continuing resolutions, demonstrating how the 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. During the FY 2026 appropriations lapse, the IRS confirmed that operations would continue through midnight on October 7, 2025, drawing on funding from 2022 legislation. Prudent management requires focusing on taxpayer services and tax administration, and the agency prepared accordingly to protect continuity during the lapse.

What Is in the IRS Shutdown Plan for Taxpayer Services?

According to the IRS's official statement on the FY 2026 appropriations lapse, IRS offices maintained regular hours throughout the period. Online self-service help tools remained available, and other services continued as usual. The IRS directed taxpayers to continue meeting any federal tax filing or payment obligations as normal. For more details on what continued operating during this period, refer to the official IRS.gov statement.

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 appropriations lapse highlights the stress placed on federal employees and government services. Prudent management requires agencies to prepare, even as 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 during an appropriations lapse. The IRS confirmed during the FY 2026 lapse that taxpayers should continue to meet federal tax filing and payment obligations as normal. Business filings, including payroll and corporate taxes, must also be submitted on schedule. Penalties can apply if taxpayers fail to file or pay on time, regardless of any lapse in government funding.

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. During the FY 2026 lapse, the IRS confirmed that offices maintained regular hours and essential services continued, ensuring taxpayers could access assistance throughout the period.

Federal employees in non-essential roles are furloughed without pay, though they receive back pay once the shutdown ends. Many workers face strain and early retirements. These preparations for the IRS shutdown illustrate how agencies work to protect taxpayer services until appropriations are restored.

Sources

Details on IRS operations during the FY 2026 appropriations lapse are available directly from the IRS.gov statement. Legislative updates on appropriations bills, funding levels, and the role of congressional leaders can be found at Congress.gov.

By William Mc Lee, Editor-in-Chief & Tax Expert—Get Tax Relief Now