Federal government shutdown continues; IRS furloughs expected

The federal government shutdown continues after federal funding lapsed at the start of fiscal year 2026 on Oct. 1, 2025. Tensions remain high on Capitol Hill, as federal agencies including the IRS look to begin furloughs amidst ongoing disagreement among Republican and Democratic leadership on a stopgap funding bill needed to turn the lights on.

IRS

Notably, the IRS is reportedly preparing to furlough nearly half of its approximately 74,000 employees as a result of the shutdown lasting beyond its five-day FY 2026 Lapsed Appropriations Contingency Plan released last week. Under its initial plan, the IRS stated it would be able to continue normal operations because of supplemental funding provided under the Inflation Reduction Act (P.L. 117-169). However, the contingency plan only details “actions and activities” for five business days after the lapse of appropriations on Oct. 1, 2025.

The American Institute of CPAs (AICPA) is calling on the IRS to retain all employees through the government shutdown, citing concerns for tax practitioners and taxpayers alike as the Oct. 15, 2025, deadline approaches. “The consequences of such a drastically reduced workforce during a tax filing deadline and immediately preceding the start of next year’s tax filing season would be dire,” the AICPA said in an Oct. 3, 2025, press release.

Further, a reduction in IRS workforce could delay much needed regulatory guidance after enactment of the sweeping tax reform and spending legislation known as the One Big Beautiful Bill Act (OBBBA) (P.L. 119-21). “Even a partial shutdown of the IRS for an extended period is deeply concerning, and we urge the IRS to retain its full staff until the shutdown is over,” stated Melanie Lauridsen, vice president of tax policy & advocacy with AICPA.

Additionally, Treasury Secretary and Acting IRS Commissioner Scott Bessent announced on Oct. 6, 2025, that Commissioner of the Social Security Administration Frank Bisignano will serve as chief executive officer of the IRS. In this newly created position, Bisignano will report directly to Bessent, managing the agency and overseeing all day-to-day IRS operations while also continuing to serve in his role as commissioner of the Social Security Administration.