As the federal government shutdown continues, the Internal Revenue Service (IRS) has furloughed a significant portion of its workforce — a move that will impact millions of taxpayers and businesses nationwide.
According to Reuters, approximately 34,000 IRS employees — nearly 46% of its workforce — were placed on furlough effective October 8, 2025. The agency’s limited operations will affect taxpayer services such as refund processing, audits, and customer support.
Although the IRS initially continued some operations using Inflation Reduction Act funding, those resources have now been stretched thin as the shutdown drags on. Below, our tax attorneys explain how these furloughs could affect filing deadlines, refund processing, ERC claims, and enforcement actions — and how to protect yourself.
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Filing Deadlines and Tax Payments Still Apply
Despite the shutdown, IRS filing deadlines remain in effect.
Taxpayers must continue to file returns and pay taxes on time to avoid penalties and interest.
While essential IRS functions — such as accepting tax payments and maintaining federal revenue systems — will continue, staffing shortages mean longer processing times across most departments.
If you need assistance filing accurately and on time, our Tax Preparation team can help you stay compliant even during IRS disruptions.
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Expect Longer Wait Times and Service Delays
With nearly half of the IRS workforce furloughed, taxpayers should anticipate significant service slowdowns, including:
- Delayed tax refunds
- Slower audit responses and appeals processing
- Reduced customer service availability
- Longer turnaround for transcript or record requests
Only “excepted” (essential) employees remain active, while non-exempt staff are legally prohibited from working during the furlough.
Bottom line: Expect delays, but don’t let that stop you from staying compliant.
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Major Delays for Employee Retention Credit (ERC) Claims
If you’ve filed for the Employee Retention Credit (ERC), expect additional delays.
The IRS previously issued a moratorium on new ERC claims filed after September 14, 2023, due to widespread fraud and compliance reviews. For claims submitted before that date:
- Processing continues but at a much slower pace
- Furloughs will likely extend existing backlogs
- ERC audits and verifications may take months longer
Businesses awaiting ERC refunds should maintain complete documentation, monitor correspondence, and stay in close contact with their tax representatives.
Learn more about how our ERC Services can help you prepare for IRS inquiries and ensure your claim is fully supported.
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IRS Collections, Audits, and Enforcement Still Possible
Even during the shutdown, IRS collections and audits may proceed in certain cases. The IRS tends to prioritize legally time-sensitive actions such as levy notices or statutory assessments.
Taxpayers should not assume that enforcement is paused — penalties and interest continue to accrue, and ignoring notices could worsen your situation.
Our Tax Resolution Attorneys can help you respond strategically to any collection or audit action during this period.
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What Taxpayers Should Do During the IRS Shutdown
To protect yourself and minimize disruption during the IRS shutdown:
- ✅ Meet all tax filing and payment deadlines as usual
- ✅ Do not ignore IRS notices or audit requests
- ✅ Stay in contact with your tax attorney or CPA
- ✅ Maintain organized documentation for ERC, audits, and collections
- ✅ Plan for extended response times once operations resume
Proactive communication and professional guidance remain your best defense against unnecessary penalties or missed opportunities.
How Moskowitz LLP Can Help
At Moskowitz LLP, our team of tax attorneys, CPAs, and enrolled agents in San Francisco, Los Angeles and Salt Lake City is actively tracking the latest IRS shutdown developments. We’re helping clients manage filing deadlines, resolve audits, and pursue ERC claims — even amid operational delays.
If you’ve received a notice, are waiting on an ERC claim, or need urgent help with an IRS issue, contact us today.
Call (888) 829-3325 or visit www.moskowitzllp.com to schedule a confidential consultation.
Bottom Line: Stay Compliant and Seek Professional Guidance
With nearly half of the IRS workforce furloughed, delays are inevitable, but compliance remains critical. Having an experienced tax attorney on your side ensures your rights are protected and your case moves forward as efficiently as possible — even when the IRS is short-staffed.