IRS Slowdowns and Shutdowns: What Taxpayers Should Do Now

Between the start of the 2025 filing season and June, the IRS workforce decreased from about 102,000 employees to fewer than 76,000, a drop of about 26 percent due to federal budget cuts and government shutdown impacts. 

This means the 2026 tax season could be bumpy, with delays getting refunds, slower notice responses, and under-staffed service centers.

While this can be frustrating, it’s also manageable if you prepare correctly.

What’s Happening

The IRS entered this tax season with one of its smallest teams in decades. Ongoing layoffs and furloughs mean:

• Longer processing times for refunds, notices, and correspondence
• Inconsistent communication (sometimes conflicting letters from different departments)
• Delays for paper filings and mailed documents
• Reduced phone support (expect hours on hold, if you get through at all)

Four actions that protect you during IRS delays:

1. File electronically and prepare early: Even if the IRS delays its official opening date, get your information organized now. Electronic filing remains the fastest, most secure way through the system.

To do: Gather your 2025 tax documents. Schedule your tax preparation appointment now, not in March.

2. Document everything: When systems are strained, documentation is your protection. You may need to prove you sent something, received something, or paid on time. Keep digital copies of all correspondence, notices, and payments. If you mail anything, use certified tracking with return receipt.

To do: Create a 2025 tax folder (digital or physical) and start filing documents now.

3. Stay current on payments, even if refunds are delayed: If your refund is delayed, that doesn’t pause your payment obligations. Continue making estimated tax payments on time to avoid penalties and interest.

To do: Review your 2025 estimated tax payment schedule. Mark deadlines on your calendar.

4. Work with your accountant before contacting the IRS: Before you spend hours worrying about a confusing notice, have your advisor review it. We track federal guidance and can distinguish real issues from processing delays.

To do: Forward any IRS notices to your accountant immediately, don’t wait or assume you understand what’s being requested.

What NOT to Do:

• Don’t ignore notices because “the IRS is slow anyway”: Notices have deadlines. Missing them creates bigger problems regardless of IRS staffing.
• Don’t assume delayed refunds mean delayed obligations: Your payment deadlines remain the same even if the IRS is behind on processing.
• Don’t mail paper returns unless necessary: Paper processing can be 10-20x slower than electronic filing during normal times.
• Don’t expect phone support to be the solution: IRS phone lines are often overwhelmed. You can spend hours on hold only to get disconnected or told to mail something in.

Special Considerations for Business Owners:

• Payroll tax deposits: These deadlines don’t change regardless of IRS delays. Continue making timely deposits.
• Quarterly estimated payments: These are still due on schedule. Don’t skip or delay them assuming “the IRS won’t notice.”
• Form 941 and other employment filings: File electronically and on time. Penalties for late employment tax filings are severe.
• Extension strategies: If you need more time, file for an extension, but remember, extensions extend filing deadlines, not payment deadlines.
• Notice responses: If you receive a notice, respond by the deadline even if you’re still waiting on prior correspondence. Each notice is separate.

For Those Waiting on Refunds:

• Expect delays: Even e-filed returns with direct deposit can take longer than usual.
• Don’t build refunds into cash flow planning:If your business operations depend on a tax refund arriving by a specific date, you’re exposed. Plan as if it won’t come on time.
• Check your refund status onlineat IRS.gov rather than calling: The “Where’s My Refund?” tool updates more reliably than phone representatives can answer.
• Consider adjusting withholding going forward:Large refunds mean you’re essentially giving the government an interest-free loan. If you’re regularly waiting on significant refunds, adjust your withholding or estimated payments to keep more cash working for you during the year.

How CGP Group Helps During IRS Uncertainty

IRS delays are frustrating, but they don’t have to derail your plans. The key is preparation and documentation, not panic. We help our clients navigate IRS delays and disruptions with preparation, documentation, and direct advocacy.

Ready to prepare for tax season despite IRS uncertainty? Contact us today.