IRS Enters Furlough Mode as Shutdown Deepens: What Taxpayers Should Expect

When the government’s funding expired at midnight on September 30, 2025, the IRS initially held course. For the first five business days, it operated under contingency funding from remaining Inflation Reduction Act (IRA) allocations, keeping all personnel on duty. That window closed on October 7, and beginning October 8 the agency formally entered an IRS-wide furlough, suspending most operations for all but essential and exempt employees.

Under its updated contingency framework, approximately 53.6 % of the IRS workforce, some 39,870 employees, remain on duty to carry out limited, mission-critical tasks. Meanwhile, nearly 46.4 % of staff have been furloughed.

With most of its workforce offline, the IRS has officially recognized that “most IRS operations are closed” during the shutdown. Among the functions still active are those tied to essential system maintenance, updating forms, and preparing for the 2026 filing season. But many taxpayer services—call centers, walk-in offices, correspondence, audits, appeals, and many legal operations—are severely curtailed or on pause.

What the Furlough Means for Taxpayers

The sudden shift from full operation to restricted service has tangible consequences for individuals and businesses alike. With fewer staff and shuttered offices, many inquiries, case reviews, and processing timelines are experiencing delays. Refunds, appeals, notices, and correspondence may be delayed beyond typical patterns.

One key reassurance: the IRS has confirmed that furloughed and excepted staff will be eligible for back pay once the shutdown ends. Even so, a White House Office of Management and Budget (OMB) memo suggests back pay may not be guaranteed unless Congress explicitly appropriates it, so uncertainty lingers.

In another development, the IRS alerted “shutdown-exempt” employees that if they take more than eight hours of leave in a pay period, they may be furloughed for the remainder of that period. This underscores the fragility of staffing in the current climate.

Strategic Steps to Mitigate Risk

In light of these constraints, taxpayers should adopt a more proactive posture:

• Act on time-sensitive issues. Matters requiring direct interaction—such as IRS notices, audits, or payments—should be escalated promptly, assuming staff may not be available later.
• Document every contact. Retain copies of submissions, emails, and attempts to reach IRS personnel; timeline evidence may prove essential if disputes arise.
• Plan for delays. Refunds, appeals, and case processing will likely stretch longer than normal. Adjust expectations accordingly.
• Monitor developments. The shutdown’s duration and any legislative changes will affect IRS operations with little warning.

A Note on Broader Risks

The IRS is not alone in this shuffle. The ongoing shutdown has put pressure across federal agencies, and the Trump administration has begun issuing reduction-in-force (RIF) notices to over 1,400 Treasury and IRS-adjacent staff, signaling that temporary furloughs may evolve into forfeitures of employment. A judge recently paused certain mass layoff actions involving unionized federal employees, adding a legal layer of uncertainty.

For all these reasons, the longer the standoff continues, the greater the risk of compounding backlogs, legislative disruption, and service erosion at the IRS and across federal tax programs.

Moving Forward with Confidence

In times of disruption, careful planning and expert guidance become even more critical. At Wei, Wei & Co., LLP, our tax professionals are actively tracking evolving IRS operations, legislative shifts, and compliance implications. If you or your organization face deadlines or uncertainties during this shutdown, we can help you reprioritize tasks, manage risk, and maintain documentation ready for when full operations resume. Reach out today.