Why did the federal government shut down?
Because Congress failed to reach a deal on appropriations for federal agencies for federal fiscal year 2026, the federal government shut down at 12:01 a.m. ET on October 1. Government services deemed essential continue despite the shutdown under previously developed contingency plans.
How is the IRS impacted by the shutdown?
The IRS is using Inflation Reduction Act supplemental funding to stay fully operational through October 7. Phone lines are open; agents are working; and most services should remain uninterrupted.
If the shutdown extends beyond October 7, the IRS must reduce to only essential staff, and services will be reduced or halted:
- We will experience processing delays with paper returns, payments executed via check by mail, and IRS letter responses via mail.
- Support phone lines will likely be limited or paused.
- Audits, appeals, and some enforcement activities might be paused or delayed. Most automated collection processes will continue.
- Pending guidance related to OBBBA could be delayed.
What will not change?
- The October 15 extension deadline will not be extended. Any return and/or payment due on October 15 will still need to be paid. (Tennessee residents and businesses have until November 3 with the disaster declaration from April.)
- If a taxpayer has a payment plan in place, all payments should be made on the existing schedule, preferably as electronic payments.
- If a taxpayer has received an IRS notice with a “respond by” date, that date should still be considered as the deadline for response.
PYA’s Tax Services experts are dedicated to helping you stay up to date and respond to changing regulations and requirements.
Related: Read about the tax implications of OBBBA.
