The federal government is in a shutdown as of October 1, 2025. While headlines focus on politics, taxpayers want to know one thing: How does this affect my taxes, refunds, audits, and deadlines?
Good news: The IRS has a short-term plan to keep operating for the first five business days using Inflation Reduction Act funding. After that, some services may slow or pause if the shutdown continues.
What Is a Government Shutdown (and Why It Matters for Taxes)?
A shutdown occurs when Congress does not pass funding on time. Agencies must suspend non-essential activities until funding resumes, while “essential” and legally exempt functions continue. Taxpayers feel the impact through potential delays in assistance, guidance, and processing even as filing and payment obligations remain in force.
IRS Status: First 5 Business Days vs. Longer Shutdown
Days 1–5 of the shutdown: The Treasury/IRS contingency plan authorizes the IRS to continue normal operations for the first five business days by tapping multi-year IRA (Inflation Reduction Act) funds. That means phones, processing, online services, and ongoing operations are expected to function initially.
Beyond Day 5: The plan does not commit to operations after the initial window. If the shutdown persists, non-essential IRS services could slow or pause, and response times will likely lengthen until funding is restored.
- Keep filing and paying on time — deadlines are still in effect.
- E-file and use Direct Pay or EFTPS to avoid mail delays.
- Expect slower responses on notices, audits, and phone lines if the shutdown lasts.
- Document everything (calls, letters, transcripts) for your records.
What Likely Continues vs. What May Slow or Pause
Likely to Continue (initially)
- E-filing and payment processing (including direct debit/Direct Pay).
- Automated systems (account postings, some notice generation).
- Online Account, transcript delivery via Get Transcript.
- Collections & compliance functions that are automated or already in process.
At Risk if Shutdown Prolongs
- Live phone support (hold times stretch; Practitioner Priority Service may be limited).
- Audit meetings, appeals conferences (postponements likely).
- Paper return & correspondence processing (backlogs can build).
- New guidance/forms updates tied to recent tax law changes.
About refunds: During past shutdowns, refund authority has been handled differently by administrations. In 2019, the IRS issued refunds during a shutdown following OMB direction, even as a prior GAO opinion questioned authority during lapses. For 2025, initial operations may allow refunds to continue during the first five business days; if the shutdown persists, refund timing could be affected until funding is resolved.
Key Deadlines Still Apply
- October 15, 2025 — extended individual returns due.
- November 17, 2025 — many tax-exempt returns due (calendar-year orgs).
- December 15, 2025 — expatriate individual returns (common deadline).
- Deposits/payments (payroll, excise) — remain due on normal schedules.
Important: A shutdown does not extend due dates. Penalties and interest continue to accrue on late filings/payments. If you need time to pay, submit/adjust an Installment Agreement online and keep records of your confirmation.
If You Have an Audit, Notice, or Collection Matter
- Respond by the stated deadline (mail and keep proof of mailing). If meetings are postponed, your timely response helps protect your rights.
- Use your Online Account to view balances and notices; upload documents if your case contact provides a secure link.
- For businesses: keep payroll tax deposits current. Missed deposits can trigger steep penalties.
- For hardship: consider Currently Not Collectible or revising your payment plan; document income/expense changes.
Scam Alert (Shutdown Edition)
- Beware emails/texts claiming the IRS “needs info to release your refund” during the shutdown.
- The IRS does not initiate contact by email, text, or social media for payments or personal data.
- Check official status only at IRS.gov.
Frequently Asked Questions (FAQ)
Is the IRS open during the shutdown?
For the first five business days, the IRS is operating normally using Inflation Reduction Act funds. If the shutdown continues, some services may slow or pause.Do tax deadlines still apply?
Yes. Filing and payment deadlines (e.g., October 15 for individual extensions) remain in effect. A shutdown does not extend due dates or stop penalties/interest.Will refunds be delayed?
During the initial five-day window, the IRS plans to operate normally, which may allow refunds to continue. If the shutdown lasts longer, refunds and paper processing could be delayed until funding resumes.What about audits and appeals?
Expect postponements if the shutdown continues beyond the first week. Continue responding to all notices by the stated deadlines and keep copies of your submissions.Can I still set up a payment plan?
Yes. Use the IRS Online Payment Agreement tool to start or modify an installment plan. Keep the confirmation for your records.Are Social Security and other benefits affected?
Core benefits like Social Security and SSI continue, though some customer-service functions may be limited during the shutdown.I moved. Will the IRS still get my response?
Yes—if you mail it to the address on your notice and keep proof of mailing. Also update your address with the IRS to keep account records current.Helpful Resources
- IRS FY2026 Lapse in Appropriations Contingency Plan (PDF)
- OPM Guidance on Shutdown Furloughs
- Committee for a Responsible Federal Budget: Shutdown Q&A
- Reporting Delays: Jobs/Inflation Data During Shutdown
- Coverage: IRS to Operate First 5 Business Days
Need Help Navigating Taxes During the Shutdown?
Amro Badran, EA, is the Managing Partner of Badran Tax,
With over 40 years of experience and accreditation as a Federal Enrolled Agent,
Amro Badran and his team of tax professionals specialize in helping individuals and businesses resolve complex IRS & state tax issues and controversies.
Experienced and Trusted Tax Resolution Firm based in New Brunswick, NJ.
Disclaimer
This blog post is provided for educational and informational purposes only.
It does not constitute tax, legal, accounting, or financial advice and should not be relied upon as a substitute for professional counseling tailored to your specific situation.
Always consult a qualified tax advisor or legal professional before making decisions based on this content.
Use of this site or information herein does not create a professional relationship between you and BadranTax LLC or its principals. Any reliance on the material is solely at your own risk.
While we strive to provide accurate, up-to-date information, BadranTax makes no warranties, express or implied, regarding accuracy, completeness, or suitability of the content.
Links to external websites are provided for convenience only. BadranTax does not endorse and is not responsible for the content or practices of third-party sites.
BadranTax and its affiliates expressly disclaim all liability for any actions taken or not taken based on this information.
