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The Internal Revenue Service was expected to furlough nearly half of its workforce on Wednesday as the federal government shutdown stretches into its second week, the agency announced in a newly updated contingency plan.
According to the IRS, roughly 39,870 employees — or 53.6% of its current staff — will remain on the job, while the rest are being placed on unpaid furlough. Most of the agency’s day-to-day operations, including taxpayer assistance and audit functions, will be suspended indefinitely.
The move underscores the widening impact of the funding standoff between President Donald Trump and congressional leaders, who have failed to reach an agreement to reopen the government.
IRS operations largely halted
In a letter to employees, the IRS said most operations are closed, citing the depletion of Inflation Reduction Act funds that initially kept some offices running after appropriations lapsed. The agency’s earlier five-day contingency plan had allowed it to remain open temporarily using those funds.
But with no deal in sight, that plan has now expired. It remains unclear which workers will continue working under the updated plan.
Doreen Greenwald, president of the National Treasury Employees Union, warned that taxpayers should expect significant disruptions in the weeks ahead.
“Taxpayers around the country will now have a much harder time getting the assistance they need, just as they get ready to file their extension returns due next week,” Greenwald said in a statement. “Every day these employees are locked out of work is another day of frustration for taxpayers and a growing backlog of work that sits and waits for the shutdown to end.”
She called on the Trump administration and Congress to “reach an agreement that reopens government and restores the services that Americans need and deserve.”
Back pay uncertain despite prior warning
The IRS notice confirmed that both furloughed and “excepted” employees will receive back pay once the shutdown ends — a notable shift after the White House last week warned that back pay for federal workers could not be guaranteed.
Trump said previously that as many as 750,000 federal workers could be furloughed across agencies, and some might be permanently dismissed as part of a broader government restructuring effort.
Layoffs, shrinking workforce add pressure
The furloughs come after a year of steep workforce reductions at the IRS. Earlier this year, the agency underwent mass layoffs directed by the Department of Government Efficiency, trimming tens of thousands of jobs.
At the end of 2024, the IRS employed about 100,000 workers; that number has now dropped to roughly 75,000.
Representatives from the IRS, Treasury Department, and White House declined to comment on the new furlough plan.
As the shutdown enters its second week, the mounting disruptions — from delayed refunds to halted enforcement — are expected to ripple through the economy. For millions of taxpayers, the timing could hardly be worse.
