The IRS: Impact of Government Shutdown
Last week the IRS furloughed almost half its workforce as the government shutdown entered its second week, the agency said on October 8th in its updated contingency plan.
Earlier Wednesday, a public message to IRS employees said “most IRS operations are closed” due to the lapse in funding. The contingency plan “identifies those activities that will continue during a lapse of annual appropriations in order to prepare for the Tax Year 2026 filing season, to continue modernization efforts, and to ensure timely implementation of P.L. 119-21,” commonly known as the One Big Beautiful Bill Act, the IRS said.
Taxpayer Services will keep 24,470 staffers, the updated, 162-page plan said. Among those workers are about 3,500 new customer service representatives who began onboarding Sept. 22 and will continue through Nov. 3, “and it’s critical they remain in training during a shutdown if they are to be ready for filing season,” the plan said. The new employees will be in training until Presidents’ Day, February 16, 2026.
Under the updated plan, which covers Oct. 8 through April 20, 2026, 46.4% of IRS employees are furloughed. That leaves 39,870 employees working, most in jobs dealing with the public.
Last week, the AICPA had requested retention of IRS employees because of Oct. 15 tax deadlines and guidance needed for the new tax law. In a letter dated Sept. 29 and addressed to Treasury Secretary Scott Bessent, who’s also the acting IRS commissioner, the AICPA recalled the stress that the most recent government shutdown, 35 days in 2018–2019, caused on the tax system, including:
- Taxpayers continued to receive automated IRS collection notices, notices of intent to levy, and warnings of asset seizures with no means for resolution.
- With audit, examination, and appeals activities suspended, taxpayers were unable to resolve disputes and to stop penalties and interest from accruing.
- Taxpayers and their practitioners experienced unreliable online account access, varying ability to make electronic payments, and an inability to process critical tax documents.
- Taxpayers and their practitioners could not assist identity theft victims or address hardship issues when the IRS phone lines were not operating, and the IRS phone lines experienced significantly heavier call volume and, therefore, longer wait times upon resumption of operations.
The IRS then released this statement to the Tax Professionals community on October 10th: “Due to the current lapse in appropriations, IRS operations are limited. However, the underlying tax law remains in effect, and tax professionals should continue to help clients meet their tax obligations as normal. Check IRS.gov for the latest information”.
IRS.gov also includes numerous tools which remain available, including online accounts. Tax professionals can use their Tax Pro Account, while their clients can use online account for individuals and Business Tax Account.
In summary, tax filing business entities, individuals, fiduciaries, and estates need to adapt to the current operational challenges with IRS while the federal government shutdown continues, and likely after the shutdown ends.
The IRS: Leadership Instability in 2025
Social Security Administration Commissioner Frank Bisignano will also serve in the newly created position of “Chief Executive Officer” of the IRS, the Treasury secretary said on October 6th in a news release. Bisignano will report to Treasury Secretary Scott Bessent, who serves as acting IRS commissioner. Bessent said Bisignano is “a natural choice” for the IRS role because the “IRS and SSA – two of the most public-facing and broadly impactful federal agencies – also share many of the same technological and customer service goals.”
It was not clear if Bisignano’s appointment would require Senate confirmation, but it’s possible that it does not because Bisignano is a Senate-confirmed officer of the United States through his appointment as Social Security Administration commissioner, said H. Jefferson Powell, a professor at the Duke University School of Law and expert on the U.S. Constitution’s Appointments Clause. Treasury did not respond to emails about whether it planned to seek confirmation.
Bessent has served as acting IRS commissioner since the ouster of Billy Long in August. The turnover at the top of the agency began in January, when then-Commissioner Danny Werfel left the IRS. Four acting commissioners served — one as briefly as a few days — before Long was confirmed in June.
Bisignano’s naming as CEO of the IRS has prompted a wave of harsh reactions from many tax industry leaders and politicians. The near-term future of the ability of IRS to serve taxpayers may be very challenged. This situation could require alternative strategies with tax compliance as the 2026 tax filing season approaches.