The IRS says it will remain open for five business days in the event of a government shutdown starting October 1, 2025—thanks to billions in leftover funding from the Inflation Reduction Act. After that? It’s unclear.
IRS will operate during the first week of a shutdown
In updated contingency plans released just days before the potential shutdown, the IRS confirmed that nearly all of its 75,000 employees will report to work—even if Congress fails to pass a funding deal in time.
- The IRS is tapping into modernization funds from the 2022 Inflation Reduction Act (IRA)
- These funds allow five full business days of continued operation without congressional appropriations
- After five days, the agency’s ability to stay open is uncertain
The agency has already lost more than 25% of its workforce this year through early retirements and voluntary resignations, leaving it stretched thin even before a shutdown.
Trump contingency relies more heavily on IRA funds
The current administration is leaning on Inflation Reduction Act funding more aggressively than the Biden administration did during shutdown preparations in 2023. That year, the IRS reversed course and prepared to furlough two-thirds of its staff.
This time around:
- $13.8 billion of the original $79 billion in IRA funding has been spent
- The IRS claims it won’t experience a lapse in operations through October 1—at least initially
- The plan emphasizes that IRS staff will not receive pay until after the shutdown ends
The funding is intended for IT modernization, hiring, and rebuilding staff, but it’s now acting as a stopgap measure to keep the agency operational.
Shutdown could impact next tax season and guidance rollout
The shutdown threat arrives as the IRS prepares for major changes to the tax code under the new “One Big Beautiful Bill Act”, signed into law by President Trump in July.
The AICPA has warned that any disruption now could delay:
- 2024 tax returns due October 15
- Tax-exempt organization returns due November 17
- Expatriate returns due December 15
- The 2026 filing season, including publication of new tax guidance
Back pay guaranteed, but no paycheck during shutdown
Federal employees—including those at the IRS—will receive back pay once the shutdown ends. However, during the shutdown itself, paychecks are paused.
The National Treasury Employees Union criticized the situation, saying workers are once again “caught in the middle of a political dispute” and being asked to work without pay.
Meanwhile, the IRS is rescinding previous layoff notices and preparing to rehire hundreds of former employees who left under a deferred resignation program earlier this year.
IRS warns: Phone service may suffer
The IRS typically answers around 46,000 taxpayer calls per day in October. Without full funding, that number could drop sharply.
- The IRS wants to hire 11,000 new call center workers to maintain service
- But Congress has not approved the requested $850 million to fund those hires
- If no new funding arrives, only 16% of calls could be answered during tax season
What happens next?
The House has passed a short-term funding bill to extend government operations by seven weeks, but the Senate has yet to reach agreement. Without a deal by 12:01 a.m. on Wednesday, the government will shut down.
If that happens, the IRS will operate for five days—but what comes next is uncertain.
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