What Will the Government Shutdown Do to the IRS?

As has happened numerous times in recent years, the possibility of a government shutdown is spotlighting several federal agencies, including the IRS, and raising questions about what services might be impacted. (More on that below.)

Now those questions are arising again, with talk of a possible temporary government shutdown if lawmakers don't reach a funding agreement in time.

Additionally, the IRS is already in the news because of significant changes in its operations and leadership.

From just $107.88 $24.99 for Kiplinger Personal Finance

Be a smarter, better informed investor.

CLICK FOR FREE ISSUE

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Trump's most recent pick for IRS Commissioner, former Congressman Billy Long, was removed from his role just months after confirmation. Treasury Secretary Scott Bessent is handling IRS operations until a replacement is selected.

Also, the agency successfully launched its Direct File program, an IRS-run tax prep and filing service where some taxpayers can file their federal tax returns directly with the agency — for free. Direct File was available for this past 2025 tax filing season, though not all states are signed up for the service.

However, given Republican control of the White House and Congress, the future of the Direct File program for the upcoming filing season is far from certain.

IRS tax concerns

Under the Biden administration, the IRS had been cracking down on fraud and tax scams. The tax agency also wanted to hire 3,700 new agents to audit complex returns, though, as Kiplinger reported, the agency hit some roadblocks partly due to a lack of interest in the accounting field.

In addition to ramped-up enforcement efforts, the IRS recently touted gains such as reduced processing times, faster tax refunds, shorter wait times for taxpayer phone assistance, and improvements with paperless processing.

However, the agency is facing priority shifts and renewed chaos under the Trump administration.

As mentioned, Trump's pick for IRS Commissioner, a former congressman and auctioneer, Billy Long, was recently relieved of his duties at the tax agency after only a couple of months on the job. Long's limited tax expertise marked a significant leadership shift.

There have now been 7 acting IRS commissioners in just the first 8 months of Trump's second term.

The tax agency is also grappling with a revolving door of other senior officials, funding cuts, and significant workforce reductions that could impact its ability to carry out customer service responsibilities and implement Trump's new tax bill. initiatives.

So, a question has been whether IRS enforcement activity and process improvement would halt if the federal government shut down. And what services would be shuttered?

Here’s what you need to know.

Government shutdown 2025

Before looking at the specifics of the IRS contingency plan, it's important to note that the government has shut down following the midnight deadline.

• The key funding deadline was September 30, 2025, for lawmakers on Capitol Hill to reach a continuing resolution to fund the government.
• Congress did not finalize a new funding agreement, so the threat of a shutdown loomed as the deadline approached.
• On September 29, President Trump met with the Democratic leaders of the U.S. House of Representatives and U.S. Senate, though no funding agreement was reached.
• Instead, Trump posted an AI-generated video mocking Democratic leaders. The fake video featured House Minority Leader Hakeem Jeffries appearing to wear a sombrero and a mustache with deepfake audio of Sen. Chuck Schumer making crude remarks.
• Responding to the stalemate and while posting the video, Trump called the Democrats "deranged."
• The AI video and these statements were condemned as racist and bigoted by Jeffries and others, with Jeffries responding: "Bigotry will get you nowhere."

Democrats are fighting to repeal nearly $1 trillion in GOP Medicaid cuts that would reduce health care coverage for millions, including older adults, children, and people with disabilities. They also want to extend enhanced Affordable Care Act premium tax credits to keep health insurance affordable.

Some policy analysts and organizations argue that the proposed Medicaid cuts in Trump's 2025 tax and spending bill will force states to reduce benefits, jeopardize hospitals, and increase the uninsured population in the U.S. by over 10 million.

Meanwhile, President Trump and Republicans want a so-called "clean" continuing resolution through November 21, 2025.

Still, the Trump administration is reportedly directing federal agencies to prepare for potential large-scale, permanent layoffs of federal employees in the event of a shutdown. That would be a break from past shutdowns, which usually involved temporary furloughs.

What happens if the government shuts down?

In a government shutdown, most federal agencies and workers experience some impact. All "non-essential" work is forced to stop. However, federal agencies have backup plans, and essential services continue to function — at varying levels. For example, critical services like Social Security, Medicare, and Medicaid payments continue.

Of course, anytime the federal government shuts down, significant impacts ripple throughout the U.S., affecting people across the U.S. in different ways.

President of the National Treasury Employees Union, Doreen Greenwald, has emphasized in the face of previous shutdown threats, that “a government shutdown is not a harmless, DC drama. Federal employees in every American community will lose income, through no fault of their own, and, in many cases, they will be locked out of doing the work they were hired to do for the American people,” Greenwald stated in a release.

NTEU represents federal workers in 35 departments and agencies.

Note: Before this, the last time the government shut down was in 2019. It lasted 35 days from December 22, 2018, to January 25, 2019, and was the longest in U.S. history.

It occurred because President Trump, then in his first term, demanded $5.7 billion in funding for a border wall along the U.S.-Mexico border, which Democrats refused to fund. About 800,000 federal employees were furloughed or worked without pay.

Does the IRS close during a shutdown?

Initially, it was assumed that the IRS would function as usual during a government shutdown, at least for some period, as its operations could be sustained through IRA funding.

On September 29, the U.S. Treasury Department released an updated FY26 Internal Revenue Service contingency plan. Under that plan, it appears that in the event of a lapse of government funding on Oct. 1:

• Most core tax administration activities won't stop due to funding from the Inflation Reduction Act (IRA) passed during the Biden administration.
• Nearly 74,300 IRS employees are expected to remain on the job, according to the plan.
• Most services, authorized and funded by the IRA plan, would likely continue for at least five days or so.

These are just a few aspects of the plan. But it's difficult to know exactly how the IRS will implement its contingency plan, how long "normal operations" will continue, and how all of that might impact you and your tax filings.

As a result, stay informed about any potential impacts on your fax filing process (the Oct. 15 extension deadline is approaching) or communications from the IRS.

Note: This story has been updated to reflect recent developments.

Related Content

• How Many IRS Commissioners Have We Had This Year?
• IRS to End Paper Checks Soon: What to Know
• Trump's 'Big, Beautiful Bill' With Trillions in Tax Cuts