The U.S. government is getting back up to speed after the longest government shutdown in history. Airports have resumed their full schedules, which is a relief to anyone who’s planning to fly this holiday season. At the Internal Revenue Service, however, things are taking a bit longer to ramp back up, which could cause tax headaches for business owners and individual taxpayers over the next few months.
A tremendous backlog of correspondence, appeals and filings built up during the 44 days workers were furloughed. Operations have resumed, but the IRS was short-staffed long before the shutdown, after massive DOGE layoffs earlier this year and funding cuts. That means cutting through that accumulation of work is slow-going.
“The system is simply overwhelmed,” says Sharon Goldstein-Shapiro, a spokesperson for Legal Tax Defense, which provides legal representation to individuals and businesses facing tax problems. “Taxpayers waiting for refunds, installment approvals, or audit resolutions are seeing long delays.”
That backlog is going to cause a host of problems. Communications are likely to be delayed, which could give the impression to some people that timeliness isn’t as high a priority as it normally is for the IRS. That would be incorrect.
There’s not a lot you can do when it comes to getting a response in a faster period of time, but it’s critical for business owners to take steps to protect themselves and their businesses from being financially impacted by the backlog.
That’s especially true if you’re in the midst of a dispute with the IRS. It could be weeks before submitted requests for penalty abatements or compromise offers are seen. Penalties and interest continue to accrue in that period, however.
The best way to minimize that is through careful record keeping. Keep copies of all of the letters, notices and payment confirmations you receive and send. And any correspondence should be sent through a certified tracking system, so you can confirm when it was accepted.
Most importantly, Goldstein-Shapiro says, don’t assume a lack of response means your case has been closed. And if you are facing a lien or levy, she suggests securing legal representation to ensure you are protected as case processing gets back underway.
“For small businesses, a two-month delay can disrupt cash flow and planning,” she says. “Having professional representation ensures your case is documented and prioritized once review resumes.”
It’s not just existing cases that experts are worried about. With the 2026 filing season just around the corner, the backlog could cause delays with new filings as well.
“It’s too early to say definitively, but any sustained shutdown has a ripple effect that can carry well beyond the immediate timeline,” says Garrett Wagner, founder of accounting firm consultancy C3 Evolution Group. “The IRS was already facing delays and a growing backlog. Even a short pause in IRS operations will expand the issues we are already seeing.”
Meanwhile, changes to the tax law as part of the 2025 budget bill that was passed earlier this year, are extensive, requiring the IRS to create new forms and instructions, which need to be sent out to tax professionals and reworking of software systems. The shutdown put that on pause, which could create a crunch as the 2026 tax season gets underway – and could delay the start of the season.
Will that mean the filing deadline is extended? That’s possible, but it’s much too early to say with any certainty.
The IRS does seem to grasp just how overwhelming the situation could be on its end. Over the first half of 2025, the IRS reduced its workforce from 100,000 to 60,000 employees, but later realized that created serious gaps in expertise and key areas, including IT and tax processing. In August, officials halted planned layoffs and began reaching out to employees who had been let go, encouraging them to rejoin the agency. There’s also been volatility when it comes to leadership at the agency. Since the start of 2025, the IRS has had seven directors or acting directors (and, as of October, one CEO).
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Chris Morris
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