Tax filings and payments are still due and Criminal Investigation will stay on the job. But processing of refunds and amended returns will likely be delayed.
The IRS has finally indicated what operations will look like during the government shutdown. Despite the need to prepare for the upcoming tax filing season—with new tax laws like no tax on tips in place—the plan includes furloughing about half of its employees.2025 Government Shutdown
The 2025 U.S. government shutdown officially started just after midnight on October 1, 2025, after Congress failed to pass a spending resolution. That date—October 1, 2025—was important because September 30, 2025, marked the end of the fiscal year. Without a plan in place, government funding expired.
A shutdown typically means that federal agencies do not have the funding to continue to keep the lights on. However, according to the first version of the 2026 Lapsed Appropriations Contingency Plan released by the IRS on September 29, 2025, the agency planned to use money already allocated—specifically, Inflation Reduction Act (IRA) funds—to remain open for the first five days of a government shutdown.
(The IRA was signed into law by President Biden on August 16, 2022. As part of the IRA, Congress allocated an additional $80 billion in funding to the IRS over a ten-year period. In 2023, Congress reduced that funding. More cuts followed. Eventually, Congress recouped more than half of the funding, leaving the agency with just $37.6 billion. You can see how the IRS has spent the supplemental funding allocated by Congress under the IRA so far this year here.)
Now, the IRS has issued a second version of the 2026 Lapsed Appropriations Contingency Plan—and the cuts in that plan are substantial. The new plan is very different than those for the first five days. Here’s what you need to know.About Half Of IRS Employees Will Be Furloughed
According to the 162-page plan, most core tax administration functions will stop. This will result in furloughs for about half—34,429 of the total employee population of 74,299—of the IRS workforce. It’s worth noting that the employee count already reflects a decrease in the IRS workforce—by comparison, in 2024, the IRS relied on 90,516 full-time equivalent staff.
This means that while “essential” functions will continue, most taxpayer services will be halted or delayed.
The remaining 39,870 non-furloughed employees are those who will perform shutdown duties, as well as those necessary to perform activities implied by law and to protect life and property. You may recall from my previous reporting that the law allows the IRS to process tax returns with taxpayer payments to protect those dollars.
Who is staying on the job? Acting IRS Commissioner Scott Bessent. The Commissioner is not subject to furlough. The Commissioner’s salary is paid regardless of the number of hours he works, so he cannot be placed in a non-duty, non-pay status. A handful of Deputy Commissioners and Chiefs of Staff would also remain on staff or on call as needed.
Also staying open? The Chief Operations Office, the Chief Risk Office, and the Chief Finance Office—along with staff. The Taxpayer Experience Office will also remain open and will retain some staff.
(It’s unclear whether the “newly created position” of IRS CEO would be exempt, as it was not referenced in the plan, but I assume that it would be.)
Also on the „excepted employees“ list are some Appeals staff and lawyers to ensure that statutory deadlines are met.
