Key Takeaways
- IRS operations will continue normally for the first five business days of the shutdown, thanks to funds from the Inflation Reduction Act.
- After five days, IRS services may face major disruptions, including furloughs, delayed refunds and slower audit resolutions.
- Tax filing deadlines remain unchanged and taxpayers must still meet obligations despite the shutdown.
- Customer service and audit functions will likely be delayed if the shutdown persists, affecting response times and enforcement.
- The shutdown threatens IRS preparations for the 2026 filing season, especially with new tax law changes from the One Big Beautiful Bill Act.
- Taxpayer Advocate warns of reduced support for hardship cases, identity theft and systemic issues during a prolonged shutdown.
- Taxpayers won’t receive relief despite IRS delays, so timely filing, payment and documentation are critical to avoid penalties.
How does the October 2025 government shutdown affect IRS operations and taxpayers?
As the federal government enters a shutdown following a congressional funding impasse, millions of Americans are left wondering how this disruption will affect their tax obligations and interactions with the IRS. While some federal agencies have gone dark, the IRS has implemented a contingency plan to maintain operations—at least temporarily. But if the shutdown stretches beyond a few days, taxpayers should brace for delays, disruptions and long-term consequences.
IRS Operations: Business as Usual—For Now
According to the IRS’s Fiscal Year 2026 Lapsed Appropriations Contingency Plan, the agency will continue normal operations for the first five business days of the shutdown.1 This is possible due to a strategic reallocation of funds from the Inflation Reduction Act (IRA), which provided the IRS with multi-year supplemental appropriations earmarked for modernization and enforcement.
During this initial period, all 74,299 IRS employees will remain on the job, and taxpayers can expect standard services such as return processing, phone support and audit activity to continue uninterrupted.2 However, the plan offers little detail about what happens after day five, leaving both taxpayers and tax professionals in a state of uncertainty.
What Happens After Five Days?
If the shutdown extends beyond the five-day buffer, the IRS may be forced to furlough employees, significantly reducing its capacity to serve taxpayers. Historically, prolonged shutdowns have led to backlogs in return processing, delays in hiring and training, and slower resolution of audits and tax notices.
The 2018–2019 shutdown, which lasted 35 days, left the IRS weeks behind schedule and took nearly a year to recover operationally. A similar scenario in 2025 could mean longer wait times for taxpayer assistance, delayed refunds and slower responses to correspondence and notices.
Filing Deadlines Remain Firm
Despite the shutdown, filing deadlines remain unchanged. Taxpayers who filed for an extension for their 2024 returns must still submit them by October 15, 2025, and tax-exempt organizations face a November 17, 2025 deadline.1 The IRS has made it clear that a lapse in appropriations does not override existing tax law.
This means taxpayers must continue to meet their obligations, including filing returns, making payments and complying with deposit schedules for payroll taxes. Failure to do so could result in penalties and interest, regardless of IRS staffing levels or processing delays.
Customer Service and Audit Delays Expected
If the shutdown persists, taxpayers should expect delays in customer service, including longer hold times on IRS phone lines and slower responses to written inquiries. Audit activity may also be scaled back, with fewer agents available to conduct reviews or resolve disputes.
While enforcement functions are typically prioritized, the IRS’s ability to initiate or complete audits may be hampered by staffing shortages. Taxpayers undergoing audits or waiting for resolution on notices should prepare for extended timelines.
Impact on 2026 Filing Season Preparation
The shutdown comes at a critical time for the IRS, which is actively preparing for the 2026 tax filing season. This year’s preparations are especially complex due to sweeping changes introduced by the One Big Beautiful Bill Act, signed into law on July 4, 2025.
The legislation makes permanent many provisions from the 2017 Tax Cuts and Jobs Act, including the expanded standard deduction and revised tax brackets. It also introduces new deductions for tip income, overtime pay and auto loan interest, while repealing several clean energy credits.
Implementing these changes requires updated IRS guidance, revised forms and reprogrammed systems, all of which could be delayed if the agency is forced to furlough staff. Tax professionals warn that any disruption now could ripple into the 2026 filing season, creating confusion and compliance challenges for millions of taxpayers.
Taxpayer Advocate Concerns
The National Taxpayer Advocate has expressed concern that a prolonged shutdown could undermine taxpayer rights and erode trust in the tax system. In previous shutdowns, the Advocate’s office struggled to assist taxpayers due to limited staffing and access to IRS systems.
This year, the Advocate’s ability to respond to hardship cases, identity theft issues and systemic problems may be similarly constrained if the shutdown continues beyond the initial five-day window.
No Relief for Taxpayers or Contractors
It’s important to note that while federal employees typically receive back pay after a shutdown ends, contractors and taxpayers do not receive any relief. Taxpayers must continue to meet deadlines and make payments, even if IRS services are delayed or unavailable.
This can be especially frustrating for those awaiting refunds, trying to resolve notices, or seeking assistance with complex tax issues. The shutdown does not pause interest accrual or penalty assessments, meaning taxpayers could face financial consequences despite the IRS’s limited capacity to respond.
Political Uncertainty and Economic Impact
The shutdown stems from a political standoff over health care funding and tax policy, with no clear resolution in sight. As the impasse continues, economists warn of broader economic consequences, including reduced consumer spending, delayed business investments, and potential GDP losses.
For the IRS, the longer the shutdown lasts, the more difficult it becomes to maintain operations, implement new laws and serve taxpayers effectively. The agency’s reliance on IRA funds offers a temporary lifeline, but it is not a sustainable solution for an extended lapse in appropriations.
What Taxpayers Can Do Now
Given the uncertainty, taxpayers should take proactive steps to minimize disruption:
- File early: Don’t wait until the October 15 deadline. Filing now reduces the risk of delays.
- Use electronic filing: E-filed returns are processed faster and are less likely to be affected by staffing shortages.
- Make payments on time: Even if the IRS is slow to process returns, penalties for late payments still apply.
- Document everything: Keep records of correspondence, payments and filings in case of future disputes.
- Consult a tax professional: With new laws and potential delays, expert guidance is more valuable than ever.
The October 2025 government shutdown presents a serious challenge for the IRS and taxpayers alike. While the agency has taken steps to maintain operations in the short term, a prolonged funding lapse could disrupt customer service, delay audits and complicate the rollout of new tax laws. Taxpayers should stay informed, meet their obligations and prepare for potential delays as the situation evolves.
Windham Brannon Can Help
For individuals and businesses navigating this uncertainty, proactive planning is essential. Windham Brannon’s Tax Controversy Practice professionals can help you manage IRS interactions, prepare for potential delays and align your tax strategy with evolving federal guidance. Whether you’re facing unresolved notices, audit activity, or need help interpreting new legislation, our team is here to support you.
For more information, contact your Windham Brannon advisor, or reach out to Tomika Bullet.
Sources
1 Thomson Reuters. (2025, October 1). IRS braces for shutdown. https://tax.thomsonreuters.com/news/irs-braces-for-shutdown/-
2 Ward, M. (2025, October 1). Government shutdown 2025: What’s still open. Politico. https://www.politico.com/news/2025/10/01/government-shutdown-2025-whats-still-open-00195598
