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October 8, 2025

Tomika Bullet

Principal, Tax Controversy

Atlanta, GA

678-510-2817

[email protected]

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What Taxpayers Should Expect During a Full IRS Shutdown

With the IRS now fully shut down due to the ongoing government funding lapse, taxpayers and advisors are facing another uniquely challenging environment. While the agency initially maintained limited operations using carryover funding from the Inflation Reduction Act (IRA) passed in 2022, those resources have now been exhausted. As a result, nearly all IRS functions have ceased, including taxpayer assistance, audit activity, appeals processing and refund issuance.

This shutdown does not pause taxpayer obligations. Filing deadlines, including the October 15 extended deadline for individual returns, remain in place. Taxpayers are still expected to file and pay on time and penalties and interest will continue to accrue for late filings and/or payments. However, with IRS systems offline or minimally staffed, taxpayers may be unable to access transcripts, verify identities or resolve issues that would normally be handled through IRS support channels, including Taxpayer Advocate Services (TAS) resources. The IRS phone lines are expected to be impacted as well, leaving phone lines unanswered.

Refunds are also on hold including Employee Retention Credit (ERC) refunds which have already been severely backlogged. Returns submitted electronically will be received and stored, but they will not be processed until the IRS resumes operations. This delay could impact cash flow for individuals and businesses expecting refunds, especially those relying on them for year-end planning or reinvestment.

For taxpayers facing hardship or needing urgent resolution—such as identity theft victims or those in the middle of audit or appeals proceedings—there is currently no path forward until the IRS reopens. Advisors should document all attempts to comply and communicate with the IRS during this period, as this may support future penalty abatement or relief requests.

Looking ahead, a prolonged shutdown could have ripple effects into the 2026 filing season. The IRS is already preparing to implement new guidance under the One Big Beautiful Bill Act, and any delay in staffing or system readiness could compress timelines and increase the risk of processing backlogs.

In the meantime, Windham Brannon recommends that taxpayers:

  • File and pay as scheduled, even if IRS confirmation is delayed.
  • Retain documentation of all filings and payments.
  • Consult with advisors about potential relief options once the IRS reopens.
  • Stay informed about IRS contingency plans and reopening timelines.

We will continue to monitor developments and provide updates as more information becomes available.

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.