If you've been watching the news, you know the federal government shut down on October 1st after Congress failed to reach a funding agreement. The IRS government shutdown is now well into its second week with no end in sight. And if you're dealing with a tax problem or waiting on the IRS for anything important, you're probably wondering: What does this mean for me?
The situation has evolved significantly since the shutdown began, and there are some critical things you need to understand about how this impacts your taxes, your deadlines, and your ability to resolve tax problems.
How the IRS Government Shutdown Unfolded: From Full Operations to Massive Furloughs
When the shutdown first began on October 1st, the IRS announced it would keep ALL of its approximately 74,000 employees working for the first five business days. The agency used funding from the Inflation Reduction Act of 2022—special money set aside to help the IRS modernize and improve taxpayer services—to continue normal operations.
During those initial five days, the IRS operated relatively normally. Returns were processed, refunds were issued, and phone lines stayed open (well, as "open" as IRS phone lines ever are).
Then Everything Changed: Mass Furloughs Hit on Day Six
Once those five days ended, reality hit hard. The IRS implemented an updated contingency plan that furloughed approximately 34,400 employees—nearly half of its workforce. The agency officially announced that "due to the lapse in appropriations, most IRS operations are closed."
Only about 39,870 employees (roughly 54% of the workforce) remain working, with most focused on essential public-facing services needed for the upcoming filing season.
IRS Government Shutdown: What's Working and What's Not
What's Still Operating During the Shutdown
- E-filing systems continue to accept tax returns
- Automated refund processing is still happening for electronically filed returns (though with limited staff, expect potential delays)
- Payment processing remains operational—yes, they'll still take your money
- Online tools like "Where's My Refund?" and IRS online accounts remain accessible
- Critical functions for Social Security Administration support continue
- Computer systems are maintained to prevent data loss
- The October 15th extension deadline hasn't changed—it's still October 15th
What's NOT Working (or Severely Limited)
- Phone support is essentially unavailable—most customer service representatives have been furloughed
- Live assistance at Taxpayer Assistance Centers is closed or severely limited
- Mail processing for paper returns and correspondence has largely stopped
- Audits and collections activities have paused
- The Taxpayer Advocate Service has shut down operations
- Customer service response times have dramatically increased where available
- Processing paper returns has been suspended
The October 15th Extension Deadline: Still in Full Effect
Here's something absolutely critical: If you filed an extension for your 2024 tax return, the October 15th deadline is STILL IN EFFECT. The IRS government shutdown does not extend deadlines, and the IRS has made this crystal clear.
According to the IRS, tax deadlines remain in place despite the shutdown and furlough of staff. If you miss the October 15th deadline, you could face:
- Failure-to-file penalties: 5% of unpaid taxes per month (or partial month), up to 25%
- Failure-to-pay penalties: 0.5% per month on unpaid taxes
- Interest charges that compound daily on unpaid balances
- Minimum penalties: If your return is over 60 days late, you'll face a minimum penalty of $510 or the amount of tax owed, whichever is smaller
Don't let the shutdown become an excuse. The IRS has confirmed that interest and penalties continue to accrue during the shutdown. File electronically and pay what you owe by October 15th to avoid these penalties.
What the IRS Government Shutdown Means If You're Dealing with a Tax Problem
If you owe the IRS money or you're in the middle of resolving a tax issue, the shutdown creates both challenges and opportunities:
The Challenges
- Severely delayed responses: If you're waiting for the IRS to respond to correspondence, approve a payment plan, or process an Offer in Compromise, expect significant delays with nearly half the workforce furloughed
- Almost no phone access: Getting someone on the phone at the IRS was already difficult—now it's virtually impossible with customer service staff furloughed
- Processing delays: Paper returns, amended returns, and manual processes are on hold
- Uncertainty: With no end to the shutdown in sight and over a week already elapsed, planning becomes extremely difficult
The Silver Linings
- Collections paused: Aggressive collection actions have largely stopped with collections officers furloughed
- Time to prepare: Use this pause to gather documentation, organize records, and develop a solid resolution strategy
- Professional representation matters more than ever: With the IRS operating at half capacity, having an experienced tax attorney or enrolled agent who knows how to navigate the system and cut through bureaucratic delays is invaluable
Why This IRS Government Shutdown Is Particularly Troubling
This isn't the first government shutdown to impact the IRS, but the circumstances make it especially problematic:
Timing couldn't be worse: The IRS is simultaneously:
- Preparing for the 2026 filing season (which begins in just a few months)
- Implementing dozens of major tax law changes from the "One Big Beautiful Bill Act" signed in July 2025
- Dealing with the approaching October 15th extension deadline
- Already operating with 25% fewer employees than it started with this year due to voluntary resignations and early retirements
A recipe for backlogs: During the record 35-day shutdown from December 2018 to January 2019, the IRS faced massive backlogs that took months to clear. This shutdown is already in its second week with no resolution in sight. The longer it continues, the worse the backlog will be.
Reduced workforce dealing with complex changes: With approximately 34,400 employees furloughed and major new tax law changes to implement, the remaining skeleton crew faces an enormous challenge.
What You Should Do Right Now During the Shutdown
Whether you have a current tax problem or you're just trying to stay compliant, here's what we strongly recommend:
1. File That Extension Return IMMEDIATELY If you filed an extension, get your 2024 return done and filed NOW. Don't wait until October 15th—file as soon as possible. The IRS will still assess penalties if you miss the deadline, shutdown or no shutdown. E-filing is your best option.
2. Pay What You Owe By October 15th Even if you can't pay in full, pay as much as possible by the deadline to minimize penalties and interest. The online payment system is still working.
3. Use Direct Deposit for Refunds If you're expecting a refund, make sure you've chosen direct deposit. Paper checks will face indefinite delays with mail processing suspended.
4. Keep Making Payment Plan Payments If you're on an installment agreement, continue making your payments on time using the online payment system. Missing payments could jeopardize your agreement.
5. Document Everything Save copies of everything—returns filed, payments made, correspondence sent. Detailed records will be crucial if issues arise later.
6. Get Professional Help for Complex Issues If you owe significant back taxes, are facing liens or levies, or need to negotiate with the IRS, this is absolutely NOT the time to go it alone. With the IRS operating at half capacity and services severely limited, having a professional who knows exactly how to navigate the system—and who often has access to channels unavailable to the general public—is more critical than ever.
The Bottom Line on the IRS Government Shutdown
The government shutdown has created serious complications for taxpayers. The IRS is operating at approximately 54% capacity, most services are suspended or severely limited, and response times are dramatically worse than usual.
But here's what hasn't changed: tax deadlines, penalties, and interest. The IRS government shutdown doesn't give you a pass on your obligations. According to tax professionals and the IRS itself, waiting for things to "get back to normal" will only make your situation worse.
The October 15th deadline is approaching fast. Penalties and interest continue accruing. And with no end to the shutdown in sight, the backlog will only grow.
This is exactly the kind of situation where having experienced representation makes all the difference. At Tax Problem Solver, we've been navigating IRS complications for over 41 years. We know how to get things done even when the IRS is short-staffed and operating in crisis mode. We have the relationships, expertise, and strategies to cut through the red tape.
If you're worried about how the shutdown affects your case, or just need someone to help you figure out your next move, don't wait another day.
Need Help? We're Here
The IRS may be operating at half-speed with no end to the shutdown in sight, but we're not. Our team is fully staffed and ready to help you resolve your tax problems—shutdown or no shutdown.
Call us today for a FREE consultation.
We've been beating the IRS since 1983. Let us put our decades of experience to work fighting your IRS battle—especially now when you need expert guidance more than ever.
You can contact me by one of the methods below in the blue box, or email me at Larry@TaxProblemSolver.com and we can review your specific issues and solve them. You can also click here to book a free consultation.
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