Impacts of the Government Closure
October 27, 2025 | By Raphael and Raphael LLP
Looking Backwards to Anticipate Post-Shutdown IRS Backlog
Since October 1st, the U.S. government has been shut down with 46% of the IRS workforce furloughed as of October 8th (1). As only essential functions are being maintained, taxpayer correspondence and services have largely halted, creating a situation that could lead to significant delays in processing paper-filed returns or issuing outstanding refunds.
Taxpayers should also expect limited or suspended customer service, postponed compliance activities (including audits and appeals), and slower updates on tax law guidance. As a result of compliance delays, taxpayers might expect to see increased interest and penalties on IRS notices.
Only one shutdown has lasted longer when the 35-day partial shutdown during the first Trump administration occurred. However, this current closure is a full shutdown. Analyzing both the 2018 and the COVID era shutdowns offers useful insight into what taxpayers may face once operations resume.
Lessons from the 2018–2019 Partial Shutdown
In December 2018, a five-week partial shutdown began after Congress failed to pass seven of twelve funding bills. While it occurred outside the main filing season, the impact on taxpayers was still significant.
The 2018 shutdown resulted in reduced response rates and increased wait times for taxpayers trying to get in touch with the IRS over the phone.
Mail correspondence also suffered. Over the 35 days, the IRS received an estimated five million pieces of taxpayer mail — none of which could be processed until the shutdown ended. Normally, the IRS allocates additional staff to correspondence in December and January, but the timing of the shutdown prevented this, compounding the backlog further. As a result, taxpayers faced increased financial stress and confusion as they were unable to get updates on any outstanding tax issues.
It is important to note that the 2018 shutdown was only partial, and the current full shutdown may have more severe effects. To better understand those potential impacts, it’s helpful to look at another major disruption: the COVID era shutdown.
Insights from the COVID-19 Pandemic
In March of 2020, the IRS reduced operations under its “People First Initiative,” suspending many compliance programs to focus on taxpayer relief during the pandemic (2). This shift, combined with remote work and limited staffing, led to a massive backlog in IRS correspondence, such as notices, paper returns, and more. IRS offices were reported to be using trailers to store unopened mail, highlighting the incredible delays created by the lack of in-person workers.
By June of 2020, the IRS reported 12.3 million pieces of unopened correspondence and more than 20 million unsent notices (3)(4). These backlogs persisted through 2023 (5), with some taxpayers waiting over 15 months for responses from the IRS.
Once correspondence-activities did resume at the IRS, many taxpayers received outdated and confusing notices, creating even more traffic with IRS customer service and leading to additional interest and penalties.
What to Expect with the Current Shutdown
Even before the shutdown, customer service at the IRS was under strain.
During the shutdown, there will be limited access to live IRS telephone customer service, though all automated lines will remain functional, limiting taxpayers’ abilities to receive updates or resolve issues related to their taxes. When the government reopens, taxpayers can expect even longer wait times as pent-up demand adds to the regular call volume.
Paper-filed returns will also face significant delays in being processed and delays in receiving refunds. In 2024—when the IRS was operating at full capacity—it took an average of 20 days to process paper returns (6). After the shutdown, that timeframe will likely extend considerably.
Taxpayer correspondence, such as responses to notices, penalty waiver requests, and audit appeals, will also be delayed. Under normal conditions, the IRS responds to correspondence late 66% of the time (taking more than 45 days) (6), so one can only assume that post-shutdown these delays could stretch for months.
Finally, it is likely for guidance for the upcoming 2026 filing season to be delayed, potentially leading to confusion or errors in taxpayers’ 2025 returns.
The IRS has put together its own summary page of services that will be limited during the shutdown, including a link to their full plan for an expected funding lapse (7). In times like these, guidance from a qualified CPA becomes especially crucial to help you interpret notices and tax law changes, avoid costly errors, and make informed decisions about your tax obligations.
Final Thoughts
IRS backlogs following shutdowns and other disruptions have historically taken months and even years—to resolve. If you’re navigating tax issues, awaiting correspondence, or looking for guidance for the upcoming tax season, expert assistance can make a difference. At Raphael and Raphael LLP, our experienced advisors are here to help. Reach out to an advisor at Raphael and Raphael LLP today to review your filings and ensure your tax matters stay on track.
Citations
- https://www.nbcnews.com/data-graphics/government-shutdown-key-dates-social-security-wic-smithsonian-museums-rcna235198
- https://www.irs.gov/newsroom/irs-unveils-new-people-first-initiative-covid-19-effort-temporarily-adjusts-suspends-key-compliance-program
- https://www.finance.senate.gov/imo/media/doc/45917.pdf
- http://taxpayeradvocate.irs.gov/wp-content/uploads/2020/08/JRC21_2020Review.pdf
- https://www.taxpayeradvocate.irs.gov/reports/2025-objectives-report-to-congress/
- https://www.gao.gov/products/gao-25-107375
- https://www.irs.gov/newsroom/statement-on-irs-operations-limited-during-the-lapse-in-appropriations-regular-tax-deadlines-remain