IRS Furloughs Nearly Half Its Workforce Amid Funding Lapse

A lapse in federal funding has forced the Internal Revenue Service to furlough nearly half of its employees and significantly curtail operations, impacting tax services and modernization efforts.

Most IRS operations were closed today, October 10, 2025, after funding expired, according to a message to employees. While the agency is prioritizing preparation for the 2026 tax filing season and ongoing modernization initiatives, a contingency plan indicates that 24,470 staffers will remain on duty. This disruption comes as the IRS is implementing changes under the One Big Beautiful Bill Act, designed to overhaul the agency.

The shutdown also affects guidance for tax-exempt organizations, with the IRS announcing the phase-out of paper refund checks beginning September 30. Elsewhere, several ongoing investigations are facing delays. A recent data breach at South Carolina accounting firm Sheheen, Hancock & Godwin, LLP, impacting residents’ personal information, highlights the growing cybersecurity risks facing financial institutions, according to the Federal Trade Commission.

Officials stated that they are monitoring the situation and will resume normal operations once funding is restored, but the timing remains uncertain.