By Kenneth Corbin

As the government shutdown drags into its fourth week, the essential functions of the IRS such as revenue collection and criminal investigations remain in effect, but taxpayers with a special situation requiring the agency's involvement can expect delayed responses.

"For advisors and clients, the ongoing shutdown has a significant impact on day-to-day tax-related items," says Andrew Kulha, partner and director of estate strategy at Mission Wealth Advisors. "Just about anything that might require reaching an individual within the IRS will be met with delays or it may "be impossible to get a hold of someone."

Nearly half of the IRS staff is furloughed under the terms of the agency's shutdown plan, and another 1,300 staffers, predominantly in IT and human resources roles, have reportedly been laid off through reduction-in-force notices.

The IRS says that "limited" live customer support will be available, and that its automated phone services will remain operational. The agency is shuttering its walk-in taxpayer assistance centers and canceling all appointments.

Rules in effect. Despite the limited assistance available, experts say the basic rules remain in place. "One of the most important points to remember is that a federal shutdown does not suspend tax laws," says Paul Vargas, a tax lawyer with the firm Moskowitz who has been tracking the effect of the shutdown on the agency. "Filing deadlines, interest, and penalties still apply."

For example, the agency expects filers who had secured an extension to have submitted their 2024 returns by the Oct. 15 deadline.

The IRS didn't immediately respond to a request for comment on its operations during the shutdown. Many federal agencies aren't responding to media inquiries during the funding impasse.

The IRS will continue processing those returns, but diminished staffing levels throughout the agency could mean delayed refunds. Filers who submit paper returns will almost certainly encounter processing delays.

The IRS issued an update on its operations during the shutdown on Tuesday, saying that "tax refunds will generally not be paid during this period with one key exception."

To get a refund during the shutdown, taxes must be "electronically filed, error-free," and eligible for automatic processing and direct deposit, the agency says. "The IRS urges individual taxpayers to file electronically with direct deposit to avoid delays."

Certain types of returns, such as Form 706 for estate tax returns, cannot be filed electronically, so processing of those filings will be delayed, Kuhla says.

Fewer, slower audits. The agency's enforcement operations remain in effect, in particular with cases involving active, ongoing criminal activity or ones in which a statute of limitations is approaching.

"Taxpayers should not assume that enforcement is paused," Vargas says. "Ignoring notices could worsen your situation."

The agency will initiate fewer audits, and taxpayers who are in the midst of a review of their return or seeking a resolution on a contested tax issue should expect delays.

"Cases in front of the tax courts are currently on pause, as are audits, which doesn't mean that they are automatically resolved in the taxpayers favor, but will continue again once funding is restored," Kulha says.

He also notes that the IRS' Taxpayer Advocate Service, which helps filers resolve issues with the agency, is fully closed.

Delays could be extended. Past shutdowns have left the IRS with a significant volume of unprocessed filings, incomplete audits, and other unfinished work that created delays that extended past the resolution of the budget impasse. That means that once Congress reaches a deal to fund the government, improvements in response times and processing returns won't be immediate, according to Kulha.

"Once the shutdown ends and funding is restored, there will be a backlog of items for the IRS to work through, so delays are likely to continue past the initial 'reopening' date," he says.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

October 23, 2025 09:22 ET (13:22 GMT)

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