The IRS has finally indicated what operations will look like during the government shutdown. Despite the need to prepare for the upcoming tax filing season—with new tax laws like no tax on tips in place—the plan includes furloughing about half of its employees.
2025 Government Shutdown
The 2025 U.S. government shutdown officially started just after midnight on October 1, 2025, after Congress failed to pass a spending resolution. That date—October 1, 2025—was important because September 30, 2025, marked the end of the fiscal year. Without a plan in place, government funding expired.
A shutdown typically means that federal agencies do not have the funding to continue to keep the lights on. However, according to the first version of the 2026 Lapsed Appropriations Contingency Plan released by the IRS on September 29, 2025, the agency planned to use money already allocated—specifically, Inflation Reduction Act (IRA) funds—to remain open for the first five days of a government shutdown.
(The IRA was signed into law by President Biden on August 16, 2022. As part of the IRA, Congress allocated an additional $80 billion in funding to the IRS over a ten-year period. In 2023, Congress reduced that funding. More cuts followed. Eventually, Congress recouped more than half of the funding, leaving the agency with just $37.6 billion. You can see how the IRS has spent the supplemental funding allocated by Congress under the IRA so far this year here.)
Now, the IRS has issued a second version of the 2026 Lapsed Appropriations Contingency Plan—and the cuts in that plan are substantial. The new plan is very different than those for the first five days. Here’s what you need to know.
About Half Of IRS Employees Will Be Furloughed
According to the 162-page plan, most core tax administration functions will stop. This will result in furloughs for about half—34,429 of the total employee population of 74,299—of the IRS workforce. It’s worth noting that the employee count already reflects a decrease in the IRS workforce—by comparison, in 2024, the IRS relied on 90,516 full-time equivalent staff.
This means that while “essential” functions will continue, most taxpayer services will be halted or delayed.
The remaining 39,870 non-furloughed employees are those who will perform shutdown duties, as well as those necessary to perform activities implied by law and to protect life and property. You may recall from my previous reporting that the law allows the IRS to process tax returns with taxpayer payments to protect those dollars.
Who is staying on the job? Acting IRS Commissioner Scott Bessent. The Commissioner is not subject to furlough. The Commissioner’s salary is paid regardless of the number of hours he works, so he cannot be placed in a non-duty, non-pay status. A handful of Deputy Commissioners and Chiefs of Staff would also remain on staff or on call as needed.
Also staying open? The Chief Operations Office, the Chief Risk Office, and the Chief Finance Office—along with staff. The Taxpayer Experience Office will also remain open and will retain some staff.
(It’s unclear whether the “newly created position” of IRS CEO would be exempt, as it was not referenced in the plan, but I assume that it would be.)
Also on the “excepted employees” list are some Appeals staff and lawyers to ensure that statutory deadlines are met. Missed deadlines impact the IRS as much as they do taxpayers, and the IRS assumes that federal and district courts will stay open. If courts do close, or if Appeals decides that staff and attorneys aren’t needed, they would be furloughed. The same general rules apply to the Office of Chief Counsel.
The Communications and Liaison Office (C&L) will also largely operate as usual, as personnel are needed to ensure that necessary information is communicated to all IRS personnel regarding the shutdown, furlough status, and recall. In addition, C&L will need to handle communications with the taxpaying public, Congress, practitioner groups, and other key stakeholders.
Dozens of employees would stay on with the Taxpayer Advocate Service in some capacity. Erin Collins (the National Taxpayer Advocate) will go to work, as well as 75 local advocates and various support workers. However, the TAS has posted a notice on its website that it will be closed: “Please be aware that due to the lack of an approved federal budget, all Taxpayer Advocate Service offices across the country are closed. No staff will be available to assist you during this time.”
Over 3,000 Criminal Investigation (CI) employees are scheduled to report to work. This makes sense—the bad guys aren’t stopping during the shutdown, so law enforcement won’t either. There are about 2,683 active criminal investigations and 3,541 investigations in the adjudication phase (pre-indictment, indictment, trial, and post–trial) across 94 judicial districts. As part of these 6,224 investigations, special agents are actively gathering evidence, conducting crucial interviews, testifying in court, executing search warrants, and making arrests. CI emphasizes that all these activities depend on investigative support staff to acquire, analyze, and preserve both existing and emerging evidence; delays could jeopardize investigations. CI will operate at nearly “normal” levels since federal courts, prosecutors, and law enforcement partners continue to work as usual.
Just over 4,500 IT-related workers will stay in place to ensure that taxpayer data is protected and that computer systems function appropriately. Additionally, employees will be required to maintain the IRS.gov website to ensure it remains up and running. During the shutdown, taxpayers should still be able to access various online services, including filing tax returns and paying taxes online.
All Large Business and International Division (LB&I) positions have been designated as exempt. In addition, nearly 5,000 Small Business/Self-Employed (SBSE) positions, including audit and collections, are exempt (according to the contingency plan, SBSE positions are funded through private debt collection and IRA Funds).
Some Customer Service Representatives (CSRs) will stay on the job. That includes approximately 3,500 new hire CSRs who will be onboarded between September 22 and November 3. According to the IRS, it’s “critical they remain in training during a shutdown if they are to be ready for filing season.” This will require approximately 420 instructors, 35 managers, and the new hires, totaling 3,955 exempt employees.
The contingency plan will run through the Filing Season, which is defined for these purposes as October 8, 2025, through April 30, 2026.
IRS Filing Deadline
The tax filing deadline remains unchanged. Taxpayers who are filing with a valid extension for the 2024 tax year still face a deadline of October 15, 2025. Taxes and payments are still due on schedule.
Similarly, any payments or collection activities will not be moved—you should continue to make scheduled payments, including those that are part of installment agreements. Employers must also continue to deposit federal income tax withholdings, along with Social Security and Medicare taxes, according to the regular deposit schedule.
Continuing IRS Activities
Here’s a look at some of the activities affecting taxpayers that would continue during the shutdown:
- Completion and testing of the upcoming Filing Year programs
- Processing of checks and other payments (the government wants to get paid)
- Protection of statute expiration, bankruptcy, liens, and seizure cases
- Upcoming Tax Year forms design and printing
- Maintaining criminal law enforcement and undercover operations
In the event a response to a disaster or emergency is required, the IRS will amend its plan to activate Disaster Response/Recovery efforts.
And, the IRS typically releases the tax brackets and other tax adjustments for the coming year in October of the previous year. It’s not clear whether those numbers will be released on time. However, you can check out the predicted adjustments for 2026 from Bloomberg here.
What Will Stop At The IRS
Here’s a partial list of functions that will likely be put on hold during a government shutdown:
- Tax refunds will be delayed or halted
- No processing of non-disaster relief transcripts
- No processing of forms 1040X, amended returns
- No non-automated collections
- Limited to no call site operations
The National Treasury Employees Union advised taxpayers to “Expect increased wait times, backlogs and delays implementing tax law changes as the shutdown continues. Taxpayers around the country will now have a much harder time getting the assistance they need, just as they get ready to file their extension returns due next week.”
Are IRS Employees Getting Paid?
Furloughed IRS workers were told in a letter they would receive back pay once the shutdown ends. The letter noted that, “Employee[s] who are not exempt or excepted are furloughed and placed in a non-pay and non-duty status until further notice.”
The letter came a day after an Office of Management and Budget memo indicated that the Trump administration might question its obligation to provide back pay to furloughed employees.
Have We Seen This Before?
In 2018, the government shutdown lasted 35 days, the longest in history. By the time it resumed, the IRS was weeks behind schedule in training and hiring new staff for the 2019 tax season. At the time, the National Taxpayer Advocate advised House officials that it would take “at least a year” for the IRS to return to normal operations.
Why so long? When the lights came back on, the IRS had a backlog of five million unanswered pieces of mail. At the height of the shutdown, the IRS was receiving more than 700,000 pieces of mail per day. Since in-person taxpayer assistance centers, fax lines, and phone systems were closed, taxpayers and tax professionals were forced to send all requests—even routine requests—by U.S. Mail.
The IRS and the rest of the government turned the lights back on January 25, 2019. The agency was already underfunded when operations resumed—there were no additional hands on deck. If the IRS reassigned workers from other departments to process the mail at a rate of 20,000 more letters per day—meaning that they would be removed from other tasks—the agency assumed they would be able to tackle the mail backlog alone in 250 business days, or roughly, a full calendar year.
What’s Next
As noted earlier, this situation remains very fluid. Even with the plan in place (you can find the full text of the plan here), changes may still occur.
Check back with the Forbes tax team for updates as they become available.
(Author’s Note: The article was updated to reflect a statement on the Taxpayer Advocate website.)