MW Shutdown won't stop IRS from fining people who miss key Oct. 15 tax deadline

Andrew Keshner

The government shutdown might delay the 2026 filing season's start, one expert notes

The government shutdown just added more pressure to last-minute filers.

Many staffers at the Internal Revenue Service are off the clock for now - but tax filers are not.

As the government shutdown dragged into its eigth day, the IRS told workers that most of the agency's operations were closed. The agency stayed fully open for the shutdown's first five business days, but started sending furlough notices Wednesday.

Nevertheless, the IRS is still requiring millions of tax filers to submit their 2024 tax returns by Wednesday, Oct. 15, if they received an extension. The IRS and tax experts emphasized that next week's deadline still stands - as do the penalties for missing it. That's even if much of the IRS is in limbo.

Missing the due date could cost people significantly, considering the stiff penalties and interest that late filers must pay. The pressure to make the deadline and quickly submit a return will only increase in the coming days.

"Taxpayers should continue to meet any federal tax-filing or payment obligations as normal," the IRS said last week at the shutdown's start. An IRS spokesman reiterated to MarketWatch this week that all standard deadlines still apply.

Oct. 15 is the extended deadline to submit a 2024 return, not an extension to pay any owed 2024 taxes; the payment deadline was April 15. Last year, more than 17 million people filed tax returns between the end of the filing season and mid-October, IRS statistics show.

The IRS imposes a failure-to-file penalty that's 5% of owed tax, subtracting any taxes paid on time and available credits. The penalty applies to each month or partial month that the return is late, and it runs up to 25%.

Households that owe the IRS tend to file later in the year. But if they are expecting a refund after they file at this point of the year, they may have to wait longer for the money while many IRS staff are on furlough.

"Every government shutdown is different, but taxpayers could start to notice a delay in processing returns or issuing refunds," said Mark Steber, chief tax officer at Jackson Hewitt Tax Services.

Around 54% of the IRS workforce is expected to continue working without pay, according to shutdown contingency plans the agency released Wednesday.

Taxpayers should brace for longer wait times, bigger backlogs and more difficulties getting help from the IRS at a critical juncture, said Doreen Greenwald, national president of the National Treasury Employees Union. "Every day these employees are locked out of work is another day of frustration for taxpayers and a growing backlog of work that sits and waits for the shutdown to end," she said.

At this point, people should file as soon as possible and do it electronically if they can, said Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals. Returns filed closer to Oct. 15 face a bigger risk of lingering. That's especially true if they are paper returns, he noted.

Late filers may include procrastinators, but they also include natural-disaster victims. People facing the Oct. 15 deadline include Los Angeles County businesses and individuals recovering from Los Angeles County wildfires at the start of the year. Storm victims in other states, like Arkansas and Tennessee, have filing deadlines looming in early November.

The Capitol Hill clash causing the shutdown has a tax angle itself. Democrats are pushing for an extension of expiring tax breaks that defray healthcare costs for people buying coverage through Affordable Care Act marketplaces. Republicans say they want to negotiate on the tax subsidy, but after the government reopens for business.

Shutdown ripple effects into 2026 could include later filing-season start

Some accountants are having worrisome flashbacks to the last lengthy shutdown, which stretched over 30 days from late 2018 through early 2019.

At that time, online account access was unreliable, according to the American Institute of CPAs. The IRS automatically sent out penalty notices, but people had no way of responding to the agency because of the closure, the accountants' professional group said. The AICPA pressed for all IRS workers to be exempted from this shutdown as it remembered the past and looks ahead to the next tax season.

The IRS is furloughing staff just as it was preparing for the first tax-filing season implementing new rules and tax breaks from President Donald Trump's One Big Beautiful Bill Act.

IRS ranks shrank by roughly 25% during the first five months of the Trump administration, according to a Treasury Department watchdog. The staff reductions didn't impact the 2025 filing season because many departures were paused during filing season, said a report from the Treasury Inspector General for Tax Administration.

But the watchdog is worried about the 2026 filing season. The departments needed for a smooth filing season have lost between 17% and 19% of their staff, it noted.

The Treasury Department did not immediately respond to a request for comment.

"As we enter the next filing season, that's where my concerns come in," said Melanie Lauridsen, vice president of tax policy and advocacy at the AICPA.

The IRS will likely have to push back the 2026 filing season's start dates, she said - which means people may have to wait longer for their refund money.

How much longer would people have to wait before filing their taxes next year? "It really comes down to how long the government shutdown will last," Lauridsen said.

-Andrew Keshner

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October 08, 2025 16:35 ET (20:35 GMT)

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