The Internal Revenue Service (IRS) has begun sending mass furlough notices to its employees and has shuttered the majority of its operations, as a government shutdown has continued beyond the agency’s initial contingency plan.
As the IRS stated on its website Wednesday morning, “due to the lapse in appropriations, most IRS operations are closed.”
Updated contingency plans released Wednesday afternoon indicated that about 53% of IRS employees would remain at work as the shutdown enters its second week. Most of those who will continue working are in public-facing roles that provide taxpayer services.
At the onset of the shutdown, the IRS had kept all its employees on the job for the first five business days, but the agency’s original contingency plans did not clarify actions if funding lapsed beyond October 7.
An announcement sent to all IRS staff declared that an “IRS-wide furlough” commenced Wednesday morning, impacting everyone except those employees who had been specifically identified as excepted or exempt.
Furloughed employees and those deemed essential will be compensated for their time once the shutdown concludes, per the notice sent to all staff.
However, on Tuesday, the Office of Management and Budget (OMB) suggested in a draft legal opinion that furloughed federal employees might not automatically be guaranteed back pay. According to OMB, it would require explicit legislative approval for federal employees’ compensation in a stopgap spending bill.
This proposal elicited bipartisan criticism from congressional leaders, and experts indicated it would likely face legal challenges.
House Speaker Mike Johnson (R-La.) stated on Wednesday, “it’s my understanding that the law is that they would be paid.”
He added, “There is some other legal analysis that’s floating around. I have yet had time to dig into and read that. But it has always been the case — that is, tradition and I think statutory law — that federal employees be paid.”
“And that’s my position. I think they should be. They should not be subjected to harm and financial dire straits.”
IRS employees have been granted up to four hours to conclude work-related tasks, such as updating their out-of-office voicemail and email messages.
David Traynor, the Acting Chief Human Capital Officer, communicated that certain staff members would not face furlough, as they were categorized as excepted or exempt based on their particular duties.
Traynor informed employees, “Unless you have received specific notification that you are excepted or exempt from the furlough, you are being furloughed beginning October 8, 2025.”
The last government shutdown ended on January 28, 2019, coinciding with the first day of that year’s filing season. Despite this record lapse in funding at that time, former IRS Commissioner Chuck Rettig noted that the filing season was “highly successful.”
Rettig remarked, “IRS Filing Season employees are resilient and well know and respect the importance of processing returns and generating refunds and refundable credits to eligible individuals.”
He expressed confidence in their ability and commitment to achieve yet another successful filing season, even amidst the uncertainties that a funding lapse presents.
Doreen Greenwald, the national president of the National Treasury Employees Union, warned that taxpayers should anticipate increased wait times, backlogs, and delays in implementing changes to tax laws as the shutdown continues.
“Every day these employees are locked out of work is another day of frustration for taxpayers and a growing backlog of work that sits and waits for the shutdown to end,” she stated.
Greenwald added, “For frontline employees, the complete lack of planning left them in the dark about their work status until their supervisor informed them today.”
An IRS employee in Kansas City mentioned that local management began notifying workers about their furlough status that afternoon.
In contrast, another IRS employee reported that front-line managers were instructed to update personnel about the agency’s contingency plans after their work hours, leading to confusion among staff.
During its operational planning, the Trump administration heavily relied on budgetary allocations from the Inflation Reduction Act to ensure IRS functionality, a strategy that differed from the approach proposed under the Biden administration’s shutdown plans.
This funding was intended to help rebuild the IRS workforce and modernize its legacy information technology systems, which had suffered from more than a decade of budget constraints.
Faced with the looming threat of a funding lapse in September 2023, the IRS initially aimed to remain “fully operational” and retain employees using funds from the Inflation Reduction Act.
However, due to legal and operational constraints, the agency later determined that there were limitations to how those funds could be utilized during a lapse in appropriations.
As a result, the IRS revised its stance and planned to furlough two-thirds of its staff amid the shutdown.
A spokesperson for the Treasury stated that IRS activities funded through the Inflation Reduction Act during the fiscal year 2023, or activities exempt under long-established government procedures during funding lapses, would continue, while all other operations would halt.
This situation adds urgency as the IRS prepares for the upcoming tax filing season and seeks to address significant changes to the tax code associated with the “Big Beautiful Bill” signed into law by President Donald Trump in July.
Some of these tax law changes are set to take effect for the forthcoming tax filing season.
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