The Internal Revenue Service plans to tap Inflation Reduction Act funds to keep operations running for the first five days of a possible federal shutdown, preserving pay for more than 74,000 employees while Congress negotiates a budget deal.
The move would bridge a short stretch in which government funding could lapse, according to people familiar with the agency’s planning. It would maintain core services and protect taxpayer support during a period that often disrupts call centers, processing, and enforcement.
The decision matters because shutdowns usually force agencies to halt non-essential work under the Antideficiency Act. The IRS appears to be preparing a temporary buffer to avoid an immediate stall in service.
What the Plan Says
“The IRS would use money from the Inflation Reduction Act to keep the agency’s over 74,000 employees working for the first five days of a potential government shutdown.”
The agency’s approach aims to reduce early shutdown shocks. A five-day window could allow time for Congress to pass a short-term funding bill or finalize a broader agreement, without shuttering taxpayer services on day one.
Why the IRS Has Flexibility
New funding from the Inflation Reduction Act, enacted in 2022, provided long-term money for technology, customer service, and enforcement. Portions of that funding are multi-year and not tied to annual appropriations.
That structure gives the IRS some room to manage near-term disruptions. Using that money for limited operations during a shutdown would focus on preserving continuity of service and protecting ongoing projects.
Some of the Inflation Reduction Act money has been reallocated by later agreements. But the agency still holds multi-year funds that can help cover targeted needs, especially during a short gap.
Impact on Taxpayers and Businesses
Keeping staff on the job would help taxpayers get answers during a tense period. It would also keep time-sensitive processing on track, including responses to notices and payment issues.
- Customer service lines could remain available during the initial days.
- Processing backlogs might not worsen immediately.
- Compliance and tech upgrades could stay on schedule for the short term.
Tax professionals say even a short shutdown can ripple through filing and dispute timelines. A five-day cushion would not erase those risks, but it could prevent an abrupt halt.
Lessons From Earlier Shutdowns
Past lapses have stalled routine IRS work. During the 2018–2019 shutdown, the agency initially scaled back operations and later recalled thousands of employees to handle refunds. The stop-and-start approach strained service and created confusion for taxpayers waiting on responses.
By planning to fund five days of work, the IRS may avoid the most disruptive early effects. It also gives the agency time to update contingency plans as the budget picture changes.
What Experts Are Watching
Budget analysts will watch how the IRS allocates funds during the window. The goal will be to protect frontline services and critical systems without draining money intended for long-term improvements.
Labor groups are likely to support temporary pay protection for staff. Taxpayer advocates will push for clear guidance on refunds, audits in progress, installment agreements, and appeals timelines if a shutdown lasts longer than five days.
What Happens If the Shutdown Persists
If Congress fails to act after five days, the IRS would likely shift to a stricter contingency posture. That could reduce staffing to “excepted” functions, such as activities needed to protect life and property or safeguard revenue.
In that case, non-urgent tasks would slow. Waiting times could grow, and some deadlines might require later relief from the agency or Congress.
The IRS’s plan signals a bid to shield taxpayers from immediate disruptions as Washington works on a funding deal. The five-day bridge could keep phones answered, filings moving, and systems stable while negotiations continue. If lawmakers reach a quick resolution, most taxpayers may not notice a change. If talks stall, expect updated guidance from the agency on service levels, filing relief, and priorities for limited staffing.
