Tax professionals at concurrent events this week examined the government shutdown, shifts at the IRS and its enforcement priorities, and practical strategies for navigating ongoing operational disruptions.
IRS Developments
At a New York University School of Law federal tax conference October 19, Kostelanetz Partner Megan L. Brackney, Ziering & Esman Managing Member Zhanna Ziering; and Withers Bergman Senior Associate Phillip Colasanto highlighted significant IRS workforce reductions, with tens of thousands of employees furloughed or let go in 2025.
This has resulted in slower processing of returns, refund claims, and correspondence. “Earlier this year,” said Colasanto, the IRS had “about 103,000” employees. “I believe that number is down to about 74,000 now,” Colasanto said.
Rochelle Hodes, principal at Crowe, added October 22 at an American Bar Association virtual conference that the IRS had furloughed employees since October 8, with only about half of the staff — approximately 40,000 employees — still working. “We’re seeing a lot of issues starting to bubble up,” Hodes said, including at the Taxpayer Advocacy Service (TAS), which lost about a quarter of its workforce to voluntary resignations and contributed to the overall “institutional brain drain” the agency is experiencing.
National Taxpayer Advocate Erin Collins, who oversees TAS, was invited to speak on the ABA panel but did not attend due to the shutdown. TAS is effectively closed, Hodes said, with the exception of some staff, many of whom have three years or less of experience. Some “folks are trying to make sure … they’re clearing out mailboxes and such so that when folks get back from the shutdown, that work is ready to be assigned — and hopefully TAS will continue and be able to assist,” said Hodes.
As for federal courts, Brackney said “[t]hey’re set to run out of their funding very soon, but they have contingency plans that will keep them operating for essential business.” She said that “essential cases tend to be where there’s criminal [prosecution] because there are constitutional rights involved.”
VDP & John Doe Summonses
The NYU speakers addressed recent developments in the IRS Voluntary Disclosure Practice. Ziering and Colasanto discussed the removal of a “willfulness” checkbox from the voluntary disclosure form, which previously required taxpayers to explicitly admit willful non-compliance. “This created problems for practitioners, especially for clients whose actions were negligent or due to reasonable cause,” Ziering said.
Brackney credited practitioner advocacy for the IRS’ decision to remove the checkbox, restoring some flexibility to the process. “We cannot, in good faith, recommend our clients to check the box … because it’s an admission of guilt without any ability to nuance it,” Ziering added. The panel agreed that voluntary disclosure remains best suited for taxpayers with potential criminal exposure, while others may benefit from streamlined or amended filings.
On John Doe summonses, the IRS is now required to narrowly tailor these summonses, particularly in cases involving cryptocurrency exchanges and gig economy platforms. Ziering cited recent court decisions that have limited the scope of IRS requests to documents directly related to tax liability. The NYU panel also noted the expansion of John Doe summonses into new areas, such as a recent summons for information on professionals earning over $5,000.
Surviving the Shutdown
Throughout both sessions, speakers offered practical advice for practitioners and their clients. Mandi Matlock, a legal lecturer at Harvard Law School and staff attorney at Texas RioGrande Legal Aid, stressed on the ABA panel the importance of being proactive and resourceful.
“Collect all possible IRS contacts and cultivate those relationships,” she advised, recommending a thorough paper trail, strategic use of FOIA requests, leveraging digital communication tools, and obtaining manager information before issues arise. Matlock also emphasized transparency when using multiple channels, such as TAS, congressional offices, and Appeals: “It’s important to make sure that all of the different parties know what you’re doing. You don’t want to make somebody feel like you’re gaming the system.”
Both Hodes and Matlock agreed that the current environment requires practitioners to be more resourceful and proactive. Hodes advised setting realistic expectations with clients, explaining that TAS “help[s] to prod the system along, but they can’t go into the IRS systems and make things happen.” Matlock added that providing complete, well-organized information — “something that’s very complete and substantiated and similar to a protest” — can help expedite TAS processing when assistance is needed.
The speakers at both panels emphasized the importance of meeting all statutory deadlines, such as those for Tax Court petitions, regardless of IRS delays or shutdowns. “As long as it’s deposited … with proof of receipt that it was done prior to midnight on the East Coast, you’ve met the deadline,” Ziering explained. Taxpayers should generally continue to meet all upcoming deadlines until specifically notified otherwise.
But practitioners are also encouraged to continue to speak out and raise systemic issues publicly. “If you’re seeing these things that the IRS or others are doing, it is productive for taxpayers to complain loudly and publicly and to the right person, and sometimes they do listen,” Brackney said.
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