How the Government Shutdown Is Affecting the IRS—and What It Means for You
- shaybachelder
- Oct 16
- 2 min read
Posted by Casler Financial | October 2025
As the federal government shutdown continues, the IRS has entered a new phase of limited operations under its October 8, 2025 “Lapsed Appropriations Contingency Plan.” This updated plan explains how the agency will function while funding remains on hold—and what taxpayers can expect in the weeks ahead.
IRS Staffing and Operations Overview
According to the Treasury Department’s contingency plan, about 53.6% of IRS employees (roughly 39,870 workers) are being retained to continue critical functions.
These include:
Maintaining essential IT systems and protecting taxpayer data
Processing electronic tax returns and payments
Continuing criminal investigations and law enforcement activities
Providing disaster recovery and FEMA coordination
Preparing for the upcoming 2026 filing season and implementing new tax laws
The remaining 34,000 employees (46%) are temporarily furloughed until government funding is restored.
What’s Still Operating
Even during the shutdown, the IRS will continue several key services:
✅ E-Filing: Electronic filing remains open via IRS Free File and tax software providers.
✅ Electronic and Mail Payments: Payments can still be submitted, though processing may be slower.
✅ Law Enforcement: The IRS Criminal Investigation division and cybersecurity teams remain active.
✅ Disaster Assistance: Tax relief efforts in federally declared disaster areas will continue.
What’s Paused or Delayed
Many taxpayer-facing services are on hold until Congress passes a funding bill, including:
❌ Customer Service: Most phone lines and walk-in offices are closed.
❌ Taxpayer Advocate Service: All TAS offices are temporarily closed.
❌ Refund Processing: Refunds may be delayed, even for electronically filed returns.
❌ Audits, Collections, and Examinations: These compliance activities are largely suspended.
❌ Mail and Correspondence: Expect significant delays in paper-filed returns and responses.
What Taxpayers Should Do Now
Keep filing and paying on time. Tax deadlines remain in effect unless formally extended.
File electronically whenever possible. E-filing ensures timely submission, even if processing is delayed.
Expect slower communication. Most IRS offices are not staffed to handle phone calls or correspondence.
Stay informed. Official updates are available on the IRS Operations During a Lapse in Appropriations page.
Once the shutdown ends, furloughed IRS employees are expected to receive back pay under the Government Employee Fair Treatment Act of 2019.
Casler Financial Insight
At Casler Financial, we’re closely monitoring the shutdown’s impact on tax administration and client services. While many IRS operations are paused, we’re here to help you stay compliant, meet your deadlines, and minimize disruption.
If you have questions about payments, pending refunds, or IRS correspondence, please reach out to our office—we’re ready to help you navigate this period with confidence.
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