IRS to Furlough Nearly Half of Workers If Shutdown Persists (1)

The IRS is planning to significantly shrink the number of employees working if the government shutdown continues for longer than five business days, furloughing about 35,000 workers, according to a person familiar with the situation.

About 40,000 employees critical to the agency’s operations— just over half the agency’s workforce of roughly 75,000— will remain working if lawmakers can’t hammer out a deal to fund the government by the middle of next week, which is growing unlikely.

Employees working on filing season activities, implementing legislation, and IT modernization will remain working, the person said. Bloomberg Tax has talked with several employees who have been told whether they will be furloughed.

This plan is in line with an updated contingency plan the IRS released in the middle of the 2018 and 2019 shutdown, that called for 46,000 of the 80,000 workers to continue to work.

The furloughs are a shift from the current plan having IRS maintain normal operations for the first five days using funds from the 2022 tax-and-climate law. In past administrations when employees were proposed to be furloughed, audit functions, examinations of returns, non-automated collections, and answering taxpayer phone calls were to stop.

The shutdown comes as the IRS works to implement President Donald Trump’s multitrillion-dollar tax-and-spending package, and as the Oct. 15 deadline approaches for individuals and companies filing taxes with extensions.

The American Institute of CPAs called for the IRS to keep 100% of its workers for entire shutdown.

“Right now, taxpayers, C-corporations and tax advisors are working hard to meet the October 15th filing deadline – this can be stressful enough,” said Melanie Lauridsen, vice president of tax policy and advocacy, in a statement earlier Friday. “An extended government shutdown during this important filing deadline will compound this anxiety if the IRS is not 100 percent staffed.”

The standoff continues in Congress as Republicans demand a straight extension of current funding for federal agencies, while Democrats insist on a batch of fiscal policy changes centered on health care.

The IRS didn’t immediately respond to a request for comment.