What Would a Government Shutdown Do to the IRS?

As has happened numerous times in recent years, the possibility of a government shutdown is spotlighting several federal agencies, including the IRS, and raising questions about what services might be impacted. (More on that below.)

Now those questions are arising again, with talk of a possible temporary government shutdown if lawmakers don't reach a funding agreement in time.

Additionally, the IRS is already in the news because of significant changes in its operations and leadership.

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Trump's most recent pick for IRS Commissioner, former Congressman Billy Long, was removed from his role just months after confirmation. Treasury Secretary Scott Bessent is handling IRS operations until a replacement is selected.

Also, the agency successfully launched its Direct File program, an IRS-run tax prep and filing service where some taxpayers can file their federal tax returns directly with the agency — for free. Direct File was available for this past 2025 tax filing season, though not all states are signed up for the service.

However, given Republican control of the White House and Congress, the future of the Direct File program for the upcoming filing season is far from certain.

IRS tax concerns

Under the Biden administration, the IRS had been cracking down on fraud and tax scams. The tax agency also wanted to hire 3,700 new agents to audit complex returns, though, as Kiplinger reported, the agency hit some roadblocks partly due to a lack of interest in the accounting field.

In addition to ramped-up enforcement efforts, the IRS recently touted gains such as reduced processing times, faster tax refunds, shorter wait times for taxpayer phone assistance, and improvements with paperless processing.

However, the agency is facing priority shifts and renewed chaos under the Trump administration.

As mentioned, Trump's pick for IRS Commissioner, a former congressman and auctioneer, Billy Long, was recently relieved of his duties at the tax agency after only a couple of months on the job. Long's limited tax expertise marked a significant leadership shift.

There have now been 7 acting IRS commissioners in just the first 8 months of Trump's second term.

The tax agency is also grappling with a revolving door of other senior officials, funding cuts, and significant workforce reductions that could impact its ability to carry out customer service responsibilities and implement Trump's new tax bill. initiatives.

So, a question has been whether IRS enforcement activity and process improvement would halt if the federal government shut down. And what services would be shuttered?

Here’s what you need to know.

Government shutdown 2025?

Before looking at the specifics of the IRS contingency plan, it's important to note that the latest government shutdown, feared for March 2025, was averted.

• The next key funding deadline is September 30, 2025, for lawmakers on Capitol Hill to reach a continuing resolution to fund the government.
• Congress has yet to finalize a new funding agreement, so the threat of a shutdown will once again loom as the deadline approaches.

As of mid-August, the threat of a shutdown is moderate, given deep divides on Capitol Hill. Congress is out on recess until early September.

What happens if the government shuts down?

In a government shutdown, most federal agencies and workers experience some impact. All "non-essential" work is forced to stop. However, federal agencies have backup plans, and essential services continue to function — at varying levels. For example, critical services like Social Security, Medicare, and Medicaid payments continue.

Of course, anytime the federal government shuts down, significant impacts ripple throughout the U.S., affecting people across the U.S. in different ways.

President of the National Treasury Employees Union, Doreen Greenwald, has emphasized in the face of previous shutdown threats, that “a government shutdown is not a harmless, DC drama. Federal employees in every American community will lose income, through no fault of their own, and, in many cases, they will be locked out of doing the work they were hired to do for the American people,” Greenwald stated in a release.

NTEU represents federal workers in 35 departments and agencies.

Does the IRS close during a shutdown?

Initially, it was assumed that the IRS would function as usual during a government shutdown, as its operations could be sustained through IRA funding.

Then, reporting indicated that the IRS would likely partially shut down and potentially furlough thousands of its employees, which would significantly impact agency operations. Now, the Treasury Department is reportedly indicating that IRS staff would continue working (more on that below.)

Last year, the U.S. Treasury Department released an Internal Revenue Service contingency plan. Under that plan, it appears that in the event of a shutdown:

• Most core tax administration activity would typically stop.
• Nearly 60,000 IRS employees could be furloughed.
• Some services could continue, normally supported by only about a third of the IRS workforce.

These are just a few aspects of the plan. But it's hard to know exactly how the IRS would implement its contingency plan and how that might impact you and your taxes.

Most recently, former acting IRS Commissioner Maline Krause and the Treasury Department reportedly signaled that IRS staff would be expected to keep working through a shutdown, according to a March 2025 IRS memorandum. According to several news reports, the memo indicated that IRS employees would remain exempt from furlough in the early days of a lapse in government funding.

However, it's hard to say exactly how the Trump administration leadership would handle a shutdown now.

As a result, as the next funding deadline approaches, stay informed about any potential impacts on your fax filing process or communications from the IRS.

Note: This story has been updated to reflect recent developments.

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