IRS-wide furlough as a result of government shutdown
Most IRS operations closed due to lapse in appropriations
The IRS today announced that “[d]ue to the lapse in appropriations, most IRS operations are closed” and that “[a]n IRS-wide furlough began on October 8, 2025, for everyone except already-identified excepted and exempt employees.”
According to the updated FY2026 IRS Shutdown Contingency Plan, 39,870 employees (53.6%) of the total IRS employee population are designated as “exempt” and will be retained.
The IRS had previously announced it would continue normal operations through yesterday using funding provided under Pub. L. No. 117-169 (commonly called the “Inflation Reduction Act” (IRA)). Read TaxNewsFlash
Doug O’Donnell, who formerly served as IRS Acting Commissioner and Deputy IRS Commissioner and who joined KPMG in July 2025, believes that “IRS furloughs will have a significant impact upon taxpayers and tax professionals seeking in-person contact with the IRS. Reporting suggests this includes the Taxpayer Advocate Service whose responsibilities include assisting those facing a range of financial hardships. Additionally, IRS employees conducting audits of individuals and entities will [likely] halt those activities as will employees involved with tax treaty administration such as the Mutual Agreement Procedure, Advanced Pricing Agreements/Arrangements and Exchange of Information.”
For more information about the potential impacts on the IRS of a government shutdown, listen to the replay of the LinkedIn Live presentation How might the IRS manage through a government shutdown? from September 25, 2025, featuring Mr. O’Donnell.