What Would a Government Shutdown Do to the IRS?
Some wonder how IRS operations would be affected if the government experiences another shutdown.
As has happened numerous times in recent years, the threat of another federal government shutdown was once again looming as lawmakers faced a Sept. 30, 2026, spending deadline to fund the government.
Lawmakers on Capitol Hill are debating stopgap funding measures to keep federal operations running; key agencies, including the IRS, are once again under the spotlight.
Though a deal seems to have been reached, the tension follows a historic precedent set just last fall, when the federal government shut down on October 1, 2025, and remained shuttered for 43 days — the longest shutdown in U.S. history.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Lawmakers averted another potential closure earlier in 2026 by passing short-term spending legislation, but ongoing budget disputes keep cyclical shutdown fears alive.
So, the question now is: How would a government shutdown impact the IRS and your taxes?
IRS tax season concerns
Under the Biden administration, the IRS focused heavily on enforcement, cracking down on tax scams and seeking to hire thousands of new agents to audit complex, high-income returns, though the effort faced hiring roadblocks due to a broader talent shortage in the accounting field.
In addition to ramped-up enforcement, the agency touted temporary gains, including reduced processing times, faster refunds, improved paperless operations, and shorter wait times for phone assistance.
However, during the second Trump administration, the tax agency has undergone massive priority shifts and organizational friction.
Leadership at the IRS has seen unprecedented turnover, operating with seven different acting or confirmed leaders since early 2025.
Treasury Secretary Scott Bessent initially took over acting duties, while Social Security Administration Commissioner Frank Bisignano was later appointed to a newly created "IRS CEO" position to oversee day-to-day operations.
Alongside a revolving door of senior officials, the IRS has weathered steep funding cuts and significant workforce reductions.
After losing roughly 28% of its staff last year through resignation programs and probationary terminations, oversight reports from the 2026 filing season noted increased paper-processing backlogs and longer taxpayer phone wait times.
These ongoing staffing and budget constraints continue to raise questions about the agency’s ability to handle basic customer service operations while implementing sweeping administrative priorities.
Government shutdown 2026?
Likelihood of a 2026 shutdown:
As of August 2026, the immediate threat of a government shutdown is low.
- Congressional leaders in both parties are working toward a deal to avoid a pre-election standoff.
- In early August, the U.S. Senate passed a stopgap funding bill that would keep the government open through Dec. 11.
- The House of Representatives will now take up the measure and is expected to do so before the Oct. 1 deadline.
Worthy of note: The last time the government shut down was following the September 30, 2025, deadline. That historic shutdown lasted 43 days until mid-November under a stopgap bill approved first in the U.S. Senate.
What happens when the government shuts down?
Normally, during a government shutdown, most federal agencies and workers experience some impact. All "nonessential" work is forced to stop.
However, federal agencies have backup plans, and essential services continue to function — at varying levels. For example, critical services such as Social Security, Medicare, and Medicaid payments continue.
Anytime the federal government shuts down, significant impacts ripple throughout the U.S., affecting people across the U.S. in different ways.
National Treasury Employees Union President Doreen Greenwald has emphasized in the face of previous shutdown threats, that “a government shutdown is not a harmless, D.C. 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, 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.)
Last fall, the U.S. Treasury Department released an updated fiscal year 2026 Internal Revenue Service contingency plan. Under that plan:
- Most core tax administration activities wouldn't 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 five 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.
If a 2026 shutdown happens:
- Expect some service delays, especially for refunds and customer assistance
- Tax deadlines would most likely remain in place
- IRS employees could be furloughed or working under contingency status without pay until funding resumes.
As always, 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.
Read More
- IRS Changes Key Penalty Relief Process for Taxpayers
- IRS Ending Paper Checks: What to Know
- What's in the 2025 Trump Tax Bill?
