How Will a Government Shutdown Impact the IRS?

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

The U.S. federal government shut down on October 1, 2025, and remained shuttered for the longest period in U.S. history: 43 days. That happened after Congress missed a September 30 funding deadline.

The shutdown impacted numerous individuals and federal agencies, with the IRS seeing its services reduced after an initial contingency period. Additionally, the IRS has already been in the news because of significant changes in its operations and leadership.

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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.

Adding to the confusion: During the 2025 shutdown, IRS enforcement paused, phone help was down, and paper processing halted in many cases.

Here’s more of what you need to know about how any lingering effects might impact you and the upcoming tax season.

Government shutdown 2025

Before looking at the specifics of the IRS contingency plan, it's important to note that the government shut down following the Sept. 30, 2025, deadline. The shutdown lasted 43 days until mid-November under a stopgap bill approved first in the U.S. Senate.

As Kiplinger has reported, Democrats were fighting to repeal nearly $1 trillion in GOP Medicaid cuts that would reduce health care coverage for millions, including older adults, children, and people with disabilities. They also want to extend enhanced Affordable Care Act premium tax credits to keep health insurance affordable.

Some policy analysts and organizations argue that the proposed Medicaid cuts in Trump's 2025 tax and spending bill will force states to reduce benefits, jeopardize hospitals, and increase the uninsured population in the U.S. by over 10 million.

Meanwhile, President Trump and Republicans wanted a so-called "clean" continuing resolution.

Still, the Trump administration directed federal agencies to prepare for potential large-scale, permanent layoffs of federal employees during the shutdown. That was a break from past shutdowns, which usually involved temporary furloughs.

What happens when 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.

Note: Before this, the last time the government shut down was in 2019. It lasted 35 days from December 22, 2018, to January 25, 2019.

It occurred because President Trump, then in his first term, demanded $5.7 billion in funding for a border wall along the U.S.-Mexico border, which Democrats refused to fund. About 800,000 federal employees were furloughed or worked without pay.

Does the IRS close during a shutdown?

Initially, it was assumed that the IRS would function as usual during a government shutdown, at least for some period, as its operations could be sustained through IRA funding. (That held for the first 5 business days of the 2025 shutdown.)

On September 29, 2025, the U.S. Treasury Department released an updated FY26 Internal Revenue Service contingency plan. Under that plan:

• Most core tax administration activities would not stop, mainly due to funding from the Inflation Reduction Act (IRA) passed during the Biden administration.
• Nearly 74,300 IRS employees would initially remain on the job, according to the plan.
• Most services, authorized and funded by the IRA plan, would continue for at least five days from the shutdown date.

Note: After about day 5 of the 2025 shutdown, half of the approximately 74,000 employees were furloughed as most IRS operations ceased. While E-filing and payments continued, refunds, in-person and telephone assistance, audits, appeals, and paper processing were delayed or temporarily suspended.

Many industry experts believe those delays will be felt in the upcoming 2026 tax filing season, since a backlog may persist.

As a result, 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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