Despite the apparent forthcoming government shutdown at midnight tonight, the IRS is prepared to briefly continue its operations according to its “lapsed appropriations” plan.  The plan, released yesterday, September 29, 2025, provides that funding from the Inflation Reduction Act will enable IRS employees to continue working for 5 business days following a government shutdown, through Tuesday, October 7, 2025. 

What happens after, however, is unknown: the IRS plan is based on employee headcount as of July 24, not September 30, and while it takes into account employees participating in the deferred resignation program, some of those employees were recently offered a chance to return.  The plan also does not address the possibility of reductions in force at the IRS proposed by the Office of Management and Budget last week.

The shutdown comes at a critical time for the IRS.  Extended returns for individuals are due October 15, for tax-exempt organizations on November 17, and for expatriates on December 15.  At the same time, the IRS is preparing for the 2026 tax filing season and implementing the tax provisions of the One Big Beautiful Bill Act.  All of these operations are mission critical and any delay, much less one similar in scope to the 35-day shutdown from December 2018 to January 2019, or even longer, will negatively impact the ability of the IRS to operate in a timely, efficient, and effective manner.

For additional information on Internal Revenue Service tax issues, please contact Brian Bernhardt at BBernhardt@FoxRothschild.com or another member of the firm’s Tax Controversy & Litigation practice group.