As the shutdown continues, taxpayers should expect longer wait times and ramifications for the 2026 filing season.
On October 8, 2025, the IRS began furloughing staff as well as closing most operations due to the ongoing government shutdown.
According to an updated shutdown plan released the same day, the IRS is furloughing just under half its workforce, retaining 39,870 employees to continue essential functions such as preparing for the 2026 filing season.
The plan indicates that retained IRS employees are tasked with implementing the One Big Beautiful Bill Act, testing systems for the upcoming filing season, processing remittances, and updating tax forms, among other prioritized exempt and excepted activities. IRS operations that are halted during the shutdown include nonautomated collections, responses to taxpayer questions at call sites, and legal counsel for certain activities.
The most significant staff reductions come from tax enforcement, with the Large Business and International Division losing about 74% of staff, the Small Business/Self-Employed Division losing about 67% of staff, and the Tax-Exempt and Government Entities Division losing about 84% of staff.
The IRS has not announced any deadline extensions as a result of the shutdown. Accordingly, individual taxpayers that requested an extension on their 2024 federal income taxes have until October 15 to file.
The IRS Taxpayer Advocate Service and US Tax Court proceedings are also affected, with TAS offices closed and only 93 employees retained. The Tax Court announced potential trial session cancellations if the shutdown continues — though the clerk’s office remains open for filing. The federal judiciary announced that Article III federal courts, which include all US district courts and the US Court of Federal Claims, have enough funds to continue operations through October 17.
On October 10, White House Office of Management and Budget Director Russell Vought posted on social media that reductions in force, or RIFs, had begun broadly across the government. The government has not yet publicly indicated the scope of any IRS reduction in force.
How Latham Can Help
Latham understands the complexities and challenges that a government shutdown can present. Our cross-disciplinary team is equipped to provide guidance and support to businesses navigating regulatory delays, contract disruptions, and compliance challenges. We can assist in reviewing agency contingency plans, advising on regulatory obligations, and helping businesses manage the impact on their operations.
We will continue to monitor and report on the latest developments as the situation evolves.