The IRS has finally indicated what operations will look like during the government shutdown. Despite the need to prepare for the upcoming tax filing season—with new tax laws like no tax on tips in place—the plan includes furloughing about half of its employees.

The 2025 U.S. government shutdown officially started just after midnight on October 1, 2025, after Congress failed to pass a spending resolution. That date—October 1, 2025—was important because September 30, 2025, marked the end of the fiscal year. Without a plan in place, government funding expired.

A shutdown typically means that federal agencies do not have the funding to continue to keep the lights on. However, according to the first version of the 2026 Lapsed Appropriations Contingency Plan released by the IRS on September 29, 2025, the agency planned to use money already allocated—specifically, Inflation Reduction Act (IRA) funds—to remain open for the first five days of a government shutdown.

(The IRA was signed into law by President Biden on August 16, 2022. As part of the IRA, Congress allocated an additional $80 billion in funding to the IRS over a ten-year period. In 2023, Congress reduced that funding. More cuts followed. Eventually, Congress recouped more than half of the funding, leaving the agency with just $37.6 billion. You can see how the IRS has spent the supplemental funding allocated by Congress under the IRA so far this year here.)

Now, the IRS has issued a second version of the 2026 Lapsed Appropriations Contingency Plan—and the cuts in that plan are substantial. The new plan is very different than those for the first five days. Here’s what you need to know.

According to the 162-page plan, most core tax administration functions will stop. This will result in furloughs for about half—34,429 of the total employee population of 74,299—of the IRS workforce. It’s worth noting that the employee count already reflects a decrease in the IRS workforce—by comparison, in 2024, the IRS relied on 90,516 full-time equivalent staff.

This means that while “essential” functions will continue, most taxpayer services will be........

© Forbes