In this post about the government shutdown IRS tax collection

• What happens to IRS tax collection during a federal government shutdown 
• Which IRS services keep running and which ones pause 
• How shutdowns affect taxpayers, small businesses, and tax professionals 
• Why your IRS tax debt still grows during a shutdown 
• The difference between federal and state tax collection (IRS vs California’s FTB) 
• What you can do right now to stay compliant and protect yourself 
• What to expect once the government reopens 

What Happens to IRS Tax Collection During a Government Shutdown? 

When the federal government shuts down, many taxpayers wonder what happens to the IRS. Do tax collections stop? Do payments or audits pause? The short answer is no—the IRS doesn’t completely close. While many employees are furloughed, tax systems stay online, payments still process, and interest on unpaid balances continues to grow. The result is slower service and more confusion, but not a total stop to IRS tax collection.

How a Government Shutdown Affects IRS Tax Collection

A federal government shutdown happens when Congress can’t agree on a budget to keep the government running. When that happens, every agency—including the IRS—must quickly decide which jobs are considered “essential” and which ones can pause until funding is restored. It’s a complicated process that leaves some parts of the agency operating almost normally while others come to a complete stop.

At the IRS, “essential” doesn’t necessarily mean “everything important.” It means the work that absolutely cannot stop under federal law. That usually includes things like:

• Processing tax payments that have already been made so the government continues to receive revenue. 
• Keeping computer systems secure to protect sensitive taxpayer data and prevent cyberattacks. 
• Maintaining property and facilities, including data centers and digital infrastructure. 
• Continuing criminal investigations and urgent enforcement actions that involve fraud, theft, or risk of significant revenue loss. 

Most other functions, however, are placed on hold. During a shutdown, tens of thousands of IRS employees are temporarily furloughed—meaning they’re not working and not getting paid until Congress passes a funding bill. That includes most of the people who answer phones, process paper mail, issue refunds, or review taxpayer appeals.

For taxpayers, this creates a strange situation: IRS tax collection doesn’t stop, but IRS customer service does. The computers keep running, the balances keep growing, and the automatic notices continue to go out. But if you have a question, a problem, or an ongoing case, the person who would normally help you is likely out of the office.

If you owe money to the IRS, your account remains fully active during the shutdown. Interest and penalties continue to add up daily, even while staff are furloughed. You can and should still make payments online through IRS Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or your IRS Online Account.

The biggest challenge for most people isn’t paying—it’s communication. Without access to IRS staff, it’s hard to verify balances, set up payment plans, or confirm whether forms have been received. For small businesses, that can create real stress, especially if cash flow is tight or payroll taxes are due.

In short, the IRS doesn’t go dark—it just goes quiet. The systems stay on, the money keeps moving, and the responsibility to stay compliant remains fully in place. What changes is your ability to reach someone for help when you need it.

 

IRS Tax Collection During the Current Government Shutdown

Right now, the IRS is operating with limited staff. Based on current guidance:

• Automated collections and computer-generated notices continue. 
• Mail and paper filings are accepted but processed slowly. 
• Phone lines are limited, often with long hold times or recorded messages. 
• Audits, appeals, and most civil enforcement are paused unless urgent. 
• Refunds may be delayed depending on funding. 

So while you can’t easily reach an agent, IRS tax collection continues in the background. If you owe IRS tax debt, your balance will still increase until it’s resolved.

Lessons from Past Government Shutdowns and IRS Tax Collection

Looking at previous shutdowns shows what taxpayers can expect now.

2013 Shutdown (16 days)

• About 90% of IRS employees were furloughed. 
• Refunds and phone support stopped. 
• Automated systems kept running. 
• Backlogs took months to clear once the government reopened. 

2018–2019 Shutdown (35 days)

• Happened at the start of tax season. 
• IRS issued some refunds but had limited staff. 
• Taxpayers with IRS tax debt couldn’t set up new payment plans. 
• When the shutdown ended, correspondence delays lasted months. 

The takeaway: the IRS never shuts down completely, but everything people-powered—calls, letters, reviews—slows to a crawl. Once Congress restores funding, the backlog can take months to clear.

What the IRS Shutdown Means for Taxpayers and Businesses

Every shutdown looks a little different, but the general pattern is the same: things slow down, communication gets harder, and taxpayers are left in limbo. The impact depends on your situation—whether you owe the IRS, are expecting money back, or have an active case already in progress.

If You Owe the IRS

If you already owe the IRS, a shutdown doesn’t erase or pause your balance. The interest and penalties on unpaid taxes continue to build every single day. Even though many IRS employees are on furlough, the agency’s automated systems continue tracking your debt and adding new charges each month.

The good news is that you can—and should—keep making payments. Online systems like IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS) remain available. If you have an installment agreement, continue making your payments as scheduled. Missing even one payment could cause your plan to default, which can trigger additional penalties or collection activity once the government reopens.

If you were working with the IRS to set up an Offer in Compromise, request a lien release, or apply for penalty abatement, you can still prepare your paperwork, but processing won’t happen until staff return. This downtime is a good opportunity to gather missing documents, organize financial records, and make sure your application is complete. That way, when the IRS reopens, you can move quickly and avoid falling behind in the backlog.

For business owners, this can be especially stressful. Payroll deposits still process normally, but assistance from revenue officers or collection agents is limited. Staying current on new payroll taxes should be the top priority, even if older balances must wait to be addressed.

If You’re Expecting a Refund

Refunds may still be processed during a government shutdown, but expect delays. The IRS usually designates refund issuance as an “essential function,” but with fewer employees, the turnaround time lengthens. If your refund requires any extra review—like verification of income or identity—it could be delayed until full operations resume.

You can still check your refund status using the “Where’s My Refund?” tool online, though updates may appear slower than usual. Paper filers may face longer delays since most mail processing and manual reviews are suspended.

If you depend on your refund for upcoming bills, it’s best to plan for extra time. The IRS always works through the backlog once the shutdown ends, but it can take several weeks for refunds to catch up.

If You’re Under Audit or Review

Most civil audits and reviews stop during a government shutdown. IRS auditors are typically not considered essential staff, so they are furloughed until funding returns. If your audit was in progress, expect a pause in correspondence, meetings, or document requests.

However, criminal investigations and urgent enforcement actions do continue. The IRS Criminal Investigation Division keeps operating because its work is classified as essential to protect federal revenue and prevent fraud.

If your audit or appeal was paused, don’t worry—this won’t count against you. Deadlines associated with IRS requests are typically adjusted once the agency reopens. Still, it’s a good idea to keep records organized and respond quickly once communication resumes.

If You Need Documents

Many taxpayers and professionals rely on the IRS for copies of tax transcripts, wage records, or verification letters. During a shutdown, these requests can take much longer. Paper-based requests, in particular, may sit unopened until staff return.

If you need information urgently, the IRS’s online transcript tool remains your best option. You can download wage and income transcripts, verification of non-filing letters, or account summaries almost instantly if you have an online account.

For mortgage applications, student aid verification, or other financial needs, it’s best to use these self-service options instead of waiting for a mailed copy.

In Short

Whether you owe the IRS, expect a refund, or are mid-audit, the key takeaway is that your tax obligations don’t pause just because the government does. Payments still process, balances still grow, and systems keep running—even when the people behind them aren’t there to answer the phone.

The more prepared and proactive you are now, the easier it will be to move forward once full IRS operations resume.

 

Why IRS Tax Debt Keeps Growing During a Government Shutdown

Even when many IRS employees are furloughed, the systems keep running. Automated programs continue to:

• Add daily interest on unpaid balances 
• Apply monthly penalties for late payment or filing 
• Generate automated notices reminding taxpayers of overdue accounts 

Waiting for the government to reopen doesn’t pause these charges. The debt keeps growing quietly in the background. Making even small payments shows good faith and can help reduce future penalties.

Federal vs. State Tax Collection During a Government Shutdown

Many people assume that when the federal government shuts down, all tax collection stops—but that’s not true. Federal and state tax agencies operate separately.

The IRS handles federal income taxes. State agencies, like the California Franchise Tax Board (FTB) , manage state income taxes.

So while IRS tax collection slows down during a shutdown, state agencies like the FTB keep working as usual. If you owe both federal and state taxes, your federal case may pause, but your state obligations continue without interruption.

This is one of the most common misunderstandings taxpayers face during a shutdown—and it’s an expensive one to make.

How the Government Shutdown Affects Tax Professionals and Small Businesses

Tax professionals—attorneys, CPAs, and enrolled agents—also feel the impact. They can still submit forms and payments online, but IRS case officers, appeals officers, and collections representatives may be unavailable.

For small businesses, especially those with payroll tax obligations, this can create uncertainty. Deposits still process normally, but assistance for payment plans, penalty abatement, or disputes may be delayed until full staffing returns.

What You Can Do During a Government Shutdown

Even though IRS services are limited, there are smart ways to stay on top of your taxes:

1. Keep filing and paying current taxes.
   Don’t let new obligations fall behind. 
2. Continue installment payments.
   Skipping payments now can cause your plan to default. 
3. Get organized.
   Use this time to gather financial documents and prepare for future communication. 
4. Read every IRS notice.
   Automated letters may still go out—save them for later reference. 
5. Work with a tax professional.
   Firms like Tax Crisis Institute can monitor your case and step in the moment IRS operations resume. 

What Happens When the Government Reopens

When Congress approves funding, the IRS brings employees back in stages. Their first priorities are:

• Processing mail and backlogged returns 
• Restarting paused audits and appeals 
• Catching up on delayed refunds 
• Responding to taxpayer correspondence 

Because the backlog can be large, acting early and staying organized helps your case move faster once things reopen.

The Bottom Line: Government Shutdowns Slow IRS Tax Collection—but They Don’t Stop It

A government shutdown doesn’t halt IRS tax collection—it just slows the human side of it. Automated systems keep running, interest keeps growing, and taxpayers with existing IRS tax debt still need to stay proactive.

The smartest step you can take is to stay current, keep records organized, and work with a trusted tax professional who understands how shutdowns affect IRS operations.

At Tax Crisis Institute, we help individuals and businesses navigate complex situations like this every day. If you’re unsure how this shutdown affects you—or if you’re already dealing with unpaid taxes—reach out today. We’ll help you understand your options and get ready for when things return to normal.