IRS furloughs nearly half its workers, closes most operations

The IRS furloughed almost half its workforce as the government shutdown entered its second week, the agency said Wednesday evening 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, which in 2026 is Feb. 16.

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.

The earlier public message explained how the furloughs would happen. All employees were to report for their next scheduled workday, when they would be given up to four hours to close out their work and receive furlough notification, it said.

AICPA advocacy

In a letter Thursday to Treasury Secretary Scott Bessent, who’s also the acting commissioner of the IRS, the AICPA recommended that the IRS implement “fair, reasonable, and practical relief measures to mitigate the negative impact of the shutdown on taxpayers and their practitioners.” The AICPA previously urged the IRS to keep all employees on the job during the shutdown, regardless of its length, because of Oct. 15 tax deadlines and guidance needed for the new tax law.

In the Thursday letter, the AICPA recommended, during the shutdown, that the IRS:

• Discontinue compliance actions and cease automatic collections activities;
• Maintain all online systems and accounts;
• Implement a modified reasonable cause penalty waiver; and
• Provide targeted estimated tax and late payment penalty relief.

On Wednesday, the AICPA posted a page of resources for navigating the shutdown.

Original contingency plan

Over 74,000 IRS employees kept working for the first five days of the shutdown, which began Oct. 1, under the original contingency plan. That plan did not explain what would happen after five business days, however.

The IRS used money from the Inflation Reduction Act of 2022, P.L. 117-169, to remain fully staffed and will use what it calls “multi-year funding” to maintain the reduced staffing.

The IRS’s original Inflation Reduction Act funding, $79.4 billion over 10 years, was reduced to $37.6 billion through congressional cuts as of March, according to an August report by the Treasury Inspector General for Tax Administration. As of March 31, the IRS had spent about $13.8 billion of that funding, the report said.

The National Treasury Employees Union, which represents IRS workers, warned that taxpayers should “expect increased wait times, backlogs and delays implementing tax law changes as the shutdown continues. Taxpayers around the country will now have a much harder time getting the assistance they need.”

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.