IRS Services Slowed by Shutdown — What Businesses and Taxpayers Should Do Now

The Internal Revenue Service (IRS) is facing major slowdowns because of the ongoing U.S. government shutdown. While the agency is not completely closed, many of its normal operations have been scaled back.

That means taxpayers may see longer wait times for help, slower processing of returns, and delays in getting refunds—especially for businesses.

However, here’s the key point: tax filing and payment deadlines have not changed. Even though the government is partially shut down, taxpayers still have to file and pay on time.

What Is A Government Shutdown?

A government shutdown happens when Congress cannot agree on a federal budget. When that happens, funding for many government agencies stops until a new budget is approved.

Some “essential” services—like national security and certain IRS functions—keep operating. But most other services slow down or pause completely.

The current shutdown means the IRS has limited staff and fewer resources. Only the most urgent or automated services are being handled, while many others are on hold.

What IRS Services Are Delayed

According to reports from BDO, the IRS is prioritizing only a few key tasks. The agency is processing electronically filed, error-free individual returns (Form 1040) that use direct deposit for refunds.

That’s good news for taxpayers who filed early and e-filed correctly. But for everyone else, there could be long waits ahead.

Here are the IRS functions currently facing delays:

• Business and corporate refunds — Processing is slowed or paused.
• Paper tax returns — Expect significant delays in review and processing.
• Audits and appeals — These are on hold until the shutdown ends.
• Live phone support — Taxpayers may struggle to reach IRS representatives.
• Guidance and new regulations — The IRS has paused the release of new tax guidance, including updates under the One Big Beautiful Bill Act.

This lack of communication adds even more uncertainty for tax professionals, businesses, and accountants trying to plan ahead.

What Hasn’t Changed

Even though the IRS is short-staffed, tax deadlines remain the same. According to Salina, taxpayers still need to file returns and make payments by their regular due dates.

The IRS is urging everyone to file electronically to avoid extra delays. Paper filings may sit untouched until funding returns, which could take weeks—or even months—depending on how long the shutdown lasts.

What This Means for Businesses

For businesses, this shutdown could cause big headaches. Refunds and credits may be delayed, which affects cash flow. If your business depends on timely refunds to manage expenses, plan ahead now.

Here’s what business owners should expect:

• Refund delays: Corporate refunds are not being processed as quickly.
• Audit interruptions: If your company is under review, expect a pause in communication.
• No new rulings: The IRS has stopped issuing updated guidance, leaving many tax questions unanswered.
• Slower correspondence: Letters, notices, and follow-up requests from the IRS will take longer to arrive or be reviewed.

These issues make tax planning more complicated. However, staying proactive can help businesses reduce the impact.

Why This Matters for Tax Preparers and Advisors

For tax professionals, this is a crucial time to communicate clearly with clients. Many taxpayers assume that “the IRS is shut down” means they can delay filing or skip deadlines. That is not true.

Tax advisers should remind clients that:

• Filing deadlines still apply.
• Penalties and interest will still accrue for late payments.
• E-filing is the best way to ensure faster processing.

If you manage or train tax staff, this is also a great opportunity to review workflow efficiency. Encourage your teams to double-check e-file submissions for accuracy, track refund timelines, and maintain up-to-date documentation for each client.

How Taxpayers Can Stay on Track

Here are some simple steps to stay ahead while the IRS is working at limited capacity:

1. File electronically.
   E-filing helps avoid mail delays and speeds up refund processing.
2. Choose direct deposit.
   Refunds sent by direct deposit are processed first.
3. Double-check your return.
   An error can push your file into the manual review pile—causing weeks of delay.
4. Keep your records organized.
   Store W-2s, 1099s, receipts, and other key documents in one place in case of follow-up.
5. Stay informed.
   Follow official IRS updates online or through your tax advisor for news about when services will return to normal.
6. Don’t wait.
   Even if the IRS is slow, missing deadlines will cost more in penalties and interest later.

Planning Tips During the Shutdown

If you’re a business owner or tax preparer, here’s how to plan smartly while the shutdown continues:

• Monitor cash flow: Expect refund delays and plan for short-term liquidity.
• Hold back on filing complex paper forms unless required immediately.
• Check IRS notices: Even if response times are slow, stay aware of any pending issues.
• Update clients regularly: Communication builds trust and helps reduce anxiety during uncertain times.
• Review pending legislation: The pause in IRS guidance may affect future tax credits or deductions—keep an eye out once operations resume.

What To Expect Next

The longer the shutdown continues, the more backlogged the IRS will become. Once funding returns, the agency will need time to catch up with delayed returns, audits, and correspondence.

That means even after the shutdown ends, taxpayers might still face several weeks of delays before services return to normal.

Experts at BDO say it’s best to stay proactive. Don’t wait for the government to reopen before preparing your returns or organizing your documents. Start now, and file as early as possible once all your paperwork is ready.