The Internal Revenue Service (IRS) has announced it will furlough nearly half of its employees due to the ongoing U.S. government shutdown that began on October 1, 2025. According to a revised contingency plan, approximately 34,429 of the agency's 74,299 workers will be placed on temporary leave, significantly impacting taxpayer services ahead of the upcoming filing season.
Key Takeaways
- Nearly 47% of the IRS workforce, or 34,429 employees, will be furloughed.
- Tax filing deadlines, including the October 15 extension deadline, remain unchanged.
- Core services like processing refunds and amended returns will be halted.
- Essential functions, including criminal investigations and IT security, will continue with reduced staff.
- The shutdown's impact could cause significant backlogs, similar to the 35-day shutdown in 2018.
Shutdown Forces Substantial IRS Cutbacks
The U.S. government shutdown, which commenced after midnight on October 1, 2025, has forced the IRS to implement a severe operational slowdown. Congress failed to pass a spending resolution before the fiscal year ended on September 30, 2025, leading to a lapse in federal funding.
Initially, the IRS planned to use funds from the Inflation Reduction Act (IRA) to maintain full operations for the first five days. However, with no resolution in sight, the agency released a second, more drastic version of its 2026 Lapsed Appropriations Contingency Plan.
This new plan details the furlough of 34,429 employees, leaving only 39,870 staff members to handle legally mandated and essential duties. This represents a significant portion of the agency's total workforce, which stood at 74,299 employees prior to the shutdown.
Workforce Reduction
The current IRS workforce of 74,299 is already smaller than in previous years. For comparison, the agency had 90,516 full-time equivalent staff in 2024, highlighting a pre-existing reduction in personnel before the shutdown furloughs.
Which IRS Functions Will Continue?
While many taxpayer-facing services will cease, the IRS has designated certain functions as essential to protect government property and carry out legal requirements. These operations will continue with a skeleton crew.
Leadership, including Acting IRS Commissioner Scott Bessent, will remain on the job as their positions are not subject to furlough. Key administrative offices such as the Chief Operations Office, Chief Risk Office, and Chief Finance Office will also retain staff.
Essential Personnel and Departments
Several critical departments will continue to operate, albeit with significantly reduced capacity in some cases. The goal is to maintain core security, legal, and enforcement activities.
- Criminal Investigation (CI): Over 3,000 CI employees will continue their work on more than 6,200 active investigations and cases in adjudication. The agency stated that delays could jeopardize these law enforcement activities.
- Information Technology (IT): More than 4,500 IT personnel are considered essential. Their duties include protecting taxpayer data, maintaining computer systems, and keeping the IRS.gov website operational for filings and payments.
- Legal and Appeals: A limited number of lawyers and Appeals staff will remain to meet statutory deadlines in ongoing legal cases.
- Taxpayer Advocate Service: National Taxpayer Advocate Erin Collins, along with 75 local advocates and support staff, will continue to work in a limited capacity.
- Business Divisions: All positions within the Large Business and International (LB&I) Division are exempt. Nearly 5,000 roles in the Small Business/Self-Employed (SBSE) division will also continue, funded by private debt collection and IRA funds.
IRA Funding's Role
The Inflation Reduction Act of 2022 initially allocated an additional $80 billion to the IRS over ten years. Subsequent legislative action reduced this amount to $37.6 billion. The IRS has been using these supplemental funds for modernization and enforcement, and some of these funds are now being used to keep certain positions exempt from furlough.
Impact on Taxpayers and Filing Season
The most immediate effect for the public will be a near-total halt in taxpayer support services. The shutdown occurs just before the October 15 deadline for taxpayers who filed for an extension on their 2024 returns.
The National Treasury Employees Union warned taxpayers to “Expect increased wait times, backlogs and delays implementing tax law changes as the shutdown continues. Taxpayers around the country will now have a much harder time getting the assistance they need.”
Despite the operational disruptions, all tax filing and payment deadlines remain in effect. Taxpayers with an October 15 extension must still file and pay by that date. Similarly, businesses must continue to make federal tax deposits on schedule, and individuals with installment agreements should continue their payments.
Services That Will Be Halted
The contingency plan outlines a long list of services that will be suspended until funding is restored. These include:
- Issuing tax refunds.
- Processing amended tax returns (Form 1040X).
- Live telephone support and call center operations.
- Processing of non-disaster relief transcripts.
- Most non-automated collection activities.
A critical function that will continue is the onboarding of new staff for the next tax season. Approximately 3,500 new Customer Service Representatives (CSRs) and their instructors will remain on the job to ensure they are trained and ready for the 2026 filing season, which the plan defines as running through April 30, 2026.
Lessons from Past Shutdowns
This is not the first time the IRS has faced a prolonged shutdown. The 2018-2019 shutdown, which lasted a record 35 days, provides a stark example of the potential long-term consequences.
When the government reopened in January 2019, the IRS was confronted with a backlog of five million unanswered pieces of mail. At the time, the National Taxpayer Advocate estimated it would take the already underfunded agency at least a full year to return to normal operations.
The 2019 Mail Backlog
During the peak of the 35-day shutdown, the IRS was receiving over 700,000 pieces of mail daily. With phone and in-person centers closed, all correspondence had to be sent via U.S. Mail, creating a massive logistical challenge that took months to resolve after funding was restored.
Furloughed federal workers are expected to receive back pay once the shutdown ends. However, the disruption to services and the potential for a growing backlog of work create significant challenges for both the agency and the American public. The situation remains fluid, and the full impact will depend on the duration of the funding lapse.
