With the lingering shutdown and further staffing reductions, taxpayers and their advisors are working to navigate the IRS and meet filing deadlines. As the agency stressed in a release last week, the shutdown “does not affect the tax filing and payment responsibilities of taxpayers.”
A week into the shutdown, the IRS shared that it would furlough nearly half its workforce, prohibiting over 34,000 employees from continuing work on a wide range of tasks. The IRS had already been greatly downsized, from about 100,000 staffers at the start of the year to just 74,299 as of late July.
Then, on October 10, further layoffs were announced for federal workers, including those at the IRS. The American Institute of CPA’s (AICPA) Melanie Lauridsen said that “about 1,400 of their people received a 60-day notice for reduction-in-force,” adding “that means that their last day is December 9.”
Those at the IRS that got this RIF notice “are both furloughed and essential people,” Lauridsen said during AICPA’s October 16 town hall. “The majority of them are coming from compliance and enforcement,” she added.
Though a federal judge temporarily blocked this most recent round of layoffs, with the ongoing furlough and prior cuts, concerns about IRS functionality remain high.
Deadlines Persist
“The thing about the shutdown that’s hard is that we still have our deadlines,” Holland & Knight partner Lee Meyercord told Checkpoint. “Even though you’re not necessarily hearing from the IRS and you’re not getting notices, you are still subject to many of the same deadlines,” she added. But now taxpayers and practitioners “have to navigate the system with perhaps less assistance from the IRS.”
Meyercord, who represents taxpayers in IRS audits, administrative appeals, and litigation, said she was “very anxious” recently when submitting a partnership push-out election via the IRS’ online portal. The portal is “notoriously difficult,” she explained, adding that it will reject a form for “a whole host of reasons that you can never manage to anticipate.”
On Meyercord’s mind during the process: “Would we be able to get the support we needed to navigate this online portal? Was the team that was responding to questions about the portal considered necessary and, therefore, still working?”
Lauridsen, too, said AICPA is “still figuring out what is operational, what’s paused, what’s shut down.” She added that “every day it keeps changing – the numbers keep shifting.”
Among the open questions are whether refunds are still being paid for returns filed electronically. But regardless of the details, Lauridsen emphasized that it is her understanding that “there’s a skeleton crew” at the IRS. “It will be harder to be able to get through,” she stressed.
AICPA recently called on Treasury Secretary and acting IRS Commissioner Scott Bessent to ensure online systems remain fully operational and to “discontinue compliance actions and halt automated collection activities of liens and levies until at least 60 days following the end of the shutdown.”
As the shutdown enters week four, Meyercord suggests leaving “plenty of time” to navigate IRS filing deadlines and any related challenges. “I have basically advised clients who have these upcoming filing deadlines … that we need to try very early. We cannot go close to the deadline because we may not get support that we need,” she explained.
Broader Concerns with a Diminished IRS
Beyond the shutdown, the tax community continues to worry about how the IRS and Treasury will function with a much smaller workforce.
Meyercord says she’s “very concerned” about IRS staffing reductions, adding that “the system is not working like it should.” Among the issues she’s experiencing are “notices that don’t make sense” and “clients who are not able to get refunds to which they are entitled.”
With an even slimmer IRS, Meyercord is particularly worried about taxpayer service impacts. “I’m concerned that a bigger part of my workload will be helping people navigate a system when they shouldn’t even have to hire a lawyer,” she said.
After the October 10 RIFs were announced, Senators Elizabeth Warren (D-MA) and Ron Wyden (D-OR) pushed for details on Treasury workforce changes since President Trump took office and on who exactly received the latest layoff notices. They contend workforce cuts “will have a severe impact on Treasury’s component agencies” such as the IRS, which “is currently under immense strain due to layoffs, resignations, and chaotic leadership changes.”
Other concerns are whether implementation of the One Big Beautiful Bill Act (H.R. 1, P.L. 119-21) is still on track and when the filing season will begin. Lauridsen noted that in the wake of the 2018-2019 shutdown, the start of the filing season was delayed. And that year there wasn’t a major law like H.R. 1 to implement. This year, she added, “we believe there will be a delay, but we don’t have any concrete information from the IRS.”
House Ways and Means Committee Ranking Member Richard Neal (D-MA) told Bessent in a recent letter that a late filing season opening date “will cause further distress to American families at a time when the Administration’s tariffs, opposition to bringing down healthcare costs, and constant chaos have resulted in record-high consumer prices.”
As far as when we might know more, Lauridsen said on October 16, “our understanding is IRS will provide insights in about a week or so, once they’re able to assess where they’re at.”
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