As the federal government faces a potential shutdown on October 1, 2025, questions are mounting over how the Internal Revenue Service will continue to operate. Under its latest contingency plan, the agency states that its entire workforce will continue to work for the first five business days using special funding from the Inflation Reduction Act. However, key taxpayer services may still experience disruptions.
The Internal Revenue Service will not close entirely in the event of a funding lapse. Under its IRS shutdown plan, all 74,299 employees are expected to continue working for the first five business days, supported by money from the Inflation Reduction Act. After that period, the agency will scale back to only essential workers, in line with the Anti-Deficiency Act.
Some operations will carry on without interruption. Electronic filing systems will remain active, automatically processing tax filings. Payment systems for payroll and estimated taxes will keep running, and the IRS Criminal Investigation will continue its work. Critical IT staff will also remain on duty to protect systems and taxpayer data.
Other government services will be suspended. Refund processing could slow or stop, audits and examinations would be paused, and taxpayer services, such as call centers and walk-in offices, would see significant reductions. Processing of amended returns, tax-exempt organization returns, and expatriate tax returns would also be delayed.
These measures echo what happened in earlier shutdowns. In 2013, the filing season was postponed. During the Trump administration’s 2018–2019 shutdown, refund delays and reduced taxpayer services frustrated millions of taxpayers and federal workers. The Treasury Inspector General has since warned that staffing levels and workload backlogs could worsen the impact of any new shutdown.
A government shutdown occurs when Congress and congressional leaders fail to pass a spending bill or continuing resolution before the start of the new fiscal year on October 1. Without approved appropriations, federal agencies cannot legally operate at normal staffing levels. The Office of Management and Budget directs each department to prepare a contingency plan to manage operations during a shutdown.
When a funding lapse begins, agencies prepare by designating essential workers who must continue reporting, often without pay until the shutdown ends. Non-essential employees are furloughed. In past shutdowns, federal workers in agencies such as the IRS, the Postal Service, and the Department of Veterans Affairs have experienced delayed paychecks. However, back pay has typically been authorized once government funding is restored.
IRS shutdown plans have followed this structure for decades. During the Trump administration’s 2018–2019 shutdown, millions of taxpayers faced refund delays, while IRS employees worked under significant strain. Earlier shutdowns, including the 2013 shutdown, also disrupted the filing season and taxpayer services. These experiences have shaped the current IRS contingency plan, which now incorporates temporary funding from the Inflation Reduction Act to maintain normal IRS operations for the first five business days.
The Internal Revenue Service has emphasized that it does not anticipate relying on its shutdown procedures, but must prepare in case Congress fails to pass funding bills. “Prudent management requires that agencies prepare for this contingency,” the IRS contingency plan states. The agency highlights that employees working under the plan will maintain essential systems and tax administration for at least the first five business days.
Industry groups caution that taxpayers could face significant delays if a shutdown continues beyond the initial period. The American Institute of CPAs noted that an October government shutdown could slow the processing of extended 2024 tax filings, including those for tax-exempt organizations and expatriate tax returns. Advisors say this could complicate planning for both individuals and businesses.
The Treasury Inspector General for Tax Administration has warned that reduced staffing levels and early retirements under the Deferred Resignation Program may leave the IRS vulnerable during a funding lapse. In recent reports, TIGTA stressed that agencies must safeguard taxpayer services and protect critical systems even as budgets tighten.
Congressional leaders remain divided over a spending bill to fund the federal government beyond September 30, 2025. The Senate has discussed a continuing resolution to prevent a lapse in funding. At the same time, the White House has urged swift action to protect federal workers and prevent disruptions to essential services, including Social Security and the Department of Veterans Affairs.
If a government shutdown extends beyond the first five business days, taxpayers can expect slower processing times and reduced access to IRS assistance. Refunds could be delayed, call centers may operate with limited staff, and audits or examinations may be suspended until normal IRS operations resume. While automated systems will continue handling electronic tax filings and payments, services requiring staff intervention are at risk.
Taxpayers are advised to file their returns early and electronically to minimize the risk of delays and ensure timely processing. Using direct deposit for refunds is the fastest method when systems are running. Keeping records of submissions and correspondence is critical, since disputes or follow-ups may take longer to resolve once the agency is fully staffed again. Families relying on refunds for household expenses should make contingency plans in case money arrives later than expected.
Tax professionals should remind clients that tax deadlines remain in place regardless of a funding lapse. Extensions, payments, and filings are still due on schedule. Advisors may need to prepare clients for reduced communication with IRS employees working during the shutdown. Filing electronically and encouraging direct deposit are the most reliable ways to avoid extended delays.
The IRS FY2026 Lapsed Appropriations Contingency Plan, published by the Treasury Department, outlines how normal IRS operations will continue during the first five business days of a funding lapse using resources from the Inflation Reduction Act. The Treasury Inspector General for Tax Administration has issued reports highlighting how earlier shutdowns affected taxpayer services and staffing.
Legislative updates on appropriations and continuing resolutions can be tracked directly through Congress.gov. The latest contingency planning documents are available at Treasury.gov, and IRS operational guidance can be found on IRS.gov.
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