As we move into November 2025, the federal government shutdown lingers on. Of the many federal agencies left paralyzed, few have been hit harder than the Internal Revenue Service (IRS). With funding lapsed since early October, the IRS is operating on fumes, prioritizing only the bare essentials, while sidelining much of its routine work. For taxpayers and businesses, this means delays, uncertainties, and a lot of waiting.
Here’s how the shutdown plays out for individual taxpayers and businesses:
IRS Workforce and Operations
The IRS is functioning on a fraction of its normal workforce. Roughly half of its 74,000 employees are furloughed, leaving a skeleton crew to maintain only essential systems.
This scaled-down team is focused on:
- Preserving basic infrastructure for e-filing and payments.
- Protecting taxpayer data and maintaining core IT systems.
Routine correspondence, inquiries, and compliance work have all but stopped, creating a mounting administrative bottleneck that could take months to clear.
IRS Services Impacted
Taxpayer-facing services have been hit hardest, with many communication channels either suspended or automated. For individuals and businesses, this means a bumpy road ahead for resolution on disputes, notices, or pending issues. Unfortunately, the longer the shutdown drags, the more this backlog builds, making it likely that delays will linger long after the shutdown ends.
| Service/Function | Status / Impact Description |
| Walk-in Centers | Closed until funding returns. |
| Taxpayer Advocate Service | Shuttered, leaving hardship cases unresolved. |
| Paper Returns and Correspondence | Sitting idle; no manual processing. |
| Audits, Appeals, and Compliance Actions | Frozen midstream. |
Despite the staff limitations, it is still possible to get a live representative when calling the IRS’ customer service lines to check your status, answer inquiries, and even resolve basic issues. We recently managed to reinstate a client’s passport and had a penalty abatement request granted with the help of a call-in representative.
The IRS Income Verification Express Service (IVES), which allows taxpayers to authorize mortgage lenders, banks and others to request their tax return or wage transcripts for income verification, also remains open and available.
Other services, however, are languishing. The IRS is not issuing new Employer Identification Numbers (EINs) or processing applications or determinations for tax-exempt status or pension plans. In general, the agency will not be responding to paper correspondence, so do not send any important correspondence or paper payments by mail. At this point, it is most effective – and most secure – to stick with online payments and electronic submissions.
What’s Still Working
Not everything is on pause. Electronic systems are still up and running
- E-filing and electronic payments: Returns and payments can still be submitted and processed automatically. But again, do not mail in a paper payment and expect efficient or swift results!
- Direct deposit refunds: Certain straight-forward, error-free 1040s are still moving through the system.
- Critical IT maintenance: A small group of employees continues to test and secure core systems to support future filing operations.
While these systems keep operations from coming to a full standstill, they can’t replace the human oversight needed for complex issues — and that’s where most taxpayers will feel the slowdown.
Tax Deadlines and Compliance Obligations
Unfortunately, the shutdown offers no reprieve for late filers. Tax filing and payment due dates continue as usual, with interest and penalties accruing on any late submissions just like in normal times.
- Filing deadlines: The October 15 deadline for extended 2024 filings was not extended. If you still haven’t submitted your return, you will be held accountable for late filing.
- Penalties and interest: Continue to accrue on late filings or payments.
- Compliance expectations: Taxpayers must meet obligations even though IRS assistance is limited.
In short, the IRS may be running slowly, but your due dates are not.
Refunds and Backlogs
Refunds are another pain point.
If you’re waiting for a payout, brace for potential delays. The IRS has paused most refund issuances during the shutdown— with the exception of straightforward, electronically filed Form 1040 returns that are error-free and include direct-deposit information can still be processed automatically.
This means some taxpayers might receive their money without interruption, but others— especially those with paper filings, credits like the Employee Retention Credit (ERC), or more complex situations— will likely have to wait until full operations resume.
Business and Professional Impact
One broader effect of the shutdown is that it prevents the IRS from issuing timely guidance on evolving tax laws. Tax professionals and businesses are still waiting for clarification on key provisions of the “One Big Beautiful Bill (OBBB).” Most federal agencies responsible for the OBBB are on pause for the duration of the government shutdown. Only essential or independently funded activities continue, so guideline and regulatory development is on hold until funding resumes.
Updates remain stuck in draft mode, leaving firms and advisors to interpret complex rules without official direction. This uncertainty makes planning difficult — particularly for companies dealing with new or changing tax provisions that require authoritative guidance.
Key challenges include:
- Stalled guidance: Policy updates and technical corrections are on hold, limiting the IRS’s ability to clarify new legislation.
- Planning paralysis: Without official interpretations, professionals must make assumptions that could later conflict with post-shutdown rulings.
- Heightened compliance risk: Businesses may proceed under outdated or incomplete rules, increasing exposure to penalties or audit findings later.
The shutdown doesn’t just pause operations — it pauses certainty, forcing taxpayers and professionals to move forward without authoritative information.
Enforcement and Compliance Activities
If there’s one area offering temporary relief, it’s slowed enforcement. Most manual audits (staff-led, interactive) and field collection actions are paused or delayed. As of this writing, the U.S. Tax Court has announced cancellations of in-person and remote trial sessions, though the clerk’s office remains open for e-filing and paper filing. Further decisions regarding cancellations for future weeks are updated weekly on the Tax Court website. Check with your specific IRS agent, representative, or court for the latest status since operations vary and fluctuate.
While this pause may provide a temporary breather for those under scrutiny, it isn’t a free pass. Once funding returns, enforcement will ramp up quickly to make up for lost time.
What Taxpayers and Businesses Should Do Now
While much of the IRS remains offline, compliance expectations haven’t changed. Experts recommend using this time to strengthen your position:
- File electronically to avoid mail delays.
- Payments should be made electronically, not by paper check.
- If you must submit anything by mail, make sure it is trackable and retain your mailing receipts as back-up.
- Document everything: Keep records of filings, payments, and correspondence.
- Review outstanding items: Prepare responses to notices, audits, or refund claims so you can move quickly when operations resume.
- Consult professionals: Tax advisors can help prepare you to fulfill your compliance obligations when enforcement resumes.
Staying proactive now helps minimize headaches later and ensures readiness when the IRS is back to full capacity.
Looking Ahead
The full scope of the shutdown is still unfolding. The longer it continues, the more pronounced the backlog will become, and the longer it will take for the IRS to return to normal operations. Businesses and individuals should anticipate a slow, uneven recovery period once funding is restored.
In the meantime, compliance remains mandatory. The best strategy is to stay current, stay organized, and stay patient. When the IRS does come back online, those who’ve used this downtime to prepare will be in a stronger position and ready to move forward with confidence.
This material has been prepared for informational purposes only, and is not intended to provide or be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.
