What’s Next for the IRS After the End of the Shutdown, Explained

The end of the longest-ever government shutdown in US history will fully staff a battered IRS, which will be racing to play catch up and prepare for the first tax-filing season under the new GOP tax law.

Typically, in the months leading up to January, the agency is preparing systems, updating forms, and training added staff. But because of the shutdown, the agency had nearly half its workers furloughed and hundreds of IRS taxpayer assistance centers and taxpayer advocate service offices closed for more than one month.

That’ll likely mean taxpayers face delays—in processing, assistance, and regulations.

Also this year, the IRS needs to implement the giant GOP tax and spending law that President Donald Trump enacted in July. Some key provisions—like the tax break for tips and overtime—are in effect for the 2025 tax year.

The IRS has trudged through backlogs before, both in 2019 after the last shutdown and again during the Covid-19 pandemic. It took the help of tens of billions of funding from the 2022 tax-and-climate law to recover.

Here’s where things stand now that the shutdown is set to end.

1. What will happen with the IRS workforce furloughs?

Tens of thousands of IRS workers will return to work after about a month of being furloughed.

Federal workers will get back pay for the time during the shutdown under the deal to reopen the government. Although Congress passed a law during the first Trump administration guaranteeing back pay for furloughed workers, the current administration had threatened not to abide by that law.

After the first week of the shutdown, the IRS under a revised plan furloughed nearly half its workforce. Just under 40,000 workers remained on the job, in areas like implementation of the GOP tax law and filing season.

For the first week of the shutdown, the IRS kept everyone on with the help of the 2022 tax-and-climate law funds.

2. What’s happens to the IRS workers fired?

The Trump administration fired roughly 1,300 IRS employees during the shutdown as the president vowed to use further cuts as leverage. Unions representing federal workers pushed back and sued to stop the firings, which a judge subsequently blocked.

Democrats secured language in the deal that rescinds reduction-in-force notices for federal workers. IRS employees who got notices on Oct. 10 would have those rescinded and further reductions-in-force are barred for the duration of the deal, until Jan. 30.

3. What are expectations for filing season?

Employees critical to filing season were largely exempt from furlough and continued working. In practice though, the furloughing of everyone else still complicated work for those who stayed on. The agency warned that phone assistance, refund payments, and appointments with appeals would be hampered during the shutdown.

Workers following the shutdown will be managing a backlog of paper processing and tax refund payments, and will likely face a barrage of phone calls from people who couldn’t reach the IRS during the funding lapse.

Treasury Department Assistant Secretary for Tax Policy Ken Kies said Oct. 22 that the IRS has a plan to “catch up with what has slipped,” though he did not give details.

4. What about tax law regulations?

The IRS continued to release guidance both from the tax-and-spending law and other areas of the tax code during the shutdown, though at a slower pace. Guidance is expected to ramp up, but it could take time as lawyers get integrated back into work.

“We are very keenly focused on getting the guidance out,” Kies said .

The IRS in mid-October recalled 45 lawyers from furlough to return to work on implementation of the law.

5. What comes next for IRS funding?

The IRS, like most of the federal government, will be funded through Jan. 30. But how much money the tax collection agency gets past that is up in the air.

House GOP appropriators this summer proposed slashing the IRS’s budget by $2.8 billion. Democrats opposed the GOP measure, and any compromise that would be necessary to pass an appropriations package in both chambers of Congress likely means that topline figure changes.

But Senate appropriators haven’t said how much money they want to give the IRS. They’ve focused on reaching a deal on other domestic agencies before handling the thornier issues that get lumped into IRS funding.

The IRS is funded in the Financial Services and General Government appropriations bill, which has wider jurisdiction over agencies at the center of the Trump administration’s efforts to downsize the federal workforce and remake the physical office space in the nation’s capital.

For example, Democrats may push to address controversies like the White House East Wing demolition to make way for a privately funded ballroom. But that would put Republicans in a delicate position given Trump’s push for that project.

Read More:

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IRS Workers in Collections Take Biggest Hit in Shutdown Firings

Treasury Official Promises GOP Tax Law Guidance Amid Shutdown

House Panel Advances Bill to Cut IRS Enforcement Funding