Key points covered in this article:

  • The recent government shutdown has caused significant backlogs at the already understaffed IRS, leading to expected delays in processing tax returns, issuing refunds, and responding to taxpayer correspondence.
  • Taxpayers should prepare for a slower 2026 tax season by filing electronically as early as possible, organizing all tax-related documents, and anticipating that refunds and guidance on new legislation like the OBBBA may take longer than usual.
  • IRS services, including phone assistance and notice resolution, will be limited as staff work to clear weeks of unopened mail and thousands of unanswered calls, potentially causing confusion and administrative burdens for taxpayers.

 

The longest federal government shutdown in history has ended after 43 days, and the IRS is now working to bring its operations back online. With tax season just around the corner, taxpayers are watching closely to understand how this will affect refunds, planning, and routine IRS correspondence. Early indications suggest slower processing times across several parts of the agency. 

Background

The shutdown came at a time when the IRS was already operating with a much smaller workforce. Earlier this year, staffing dropped from more than 100,000 employees to roughly 75,000. When the shutdown began on October 1, 2025, the agency relied on a short-term funding plan to keep all staff working, but once that funding expired, about half of the remaining employees were furloughed. Many non-essential functions were paused during that period. As staff return, they are facing weeks of unopened mail and thousands of unanswered calls. 

 Tax season typically begins toward the end of January. Under the current funding bill, the federal government is funded only through January 30, 2026. As a result, the IRS may be preparing to open the filing season at the same time another potential shutdown deadline approaches. This only adds to the uncertainty ahead for taxpayers.  

What This Means for Taxpayers

Refunds May Be Delayed — Refunds were not issued during the shutdown. Mail continued to arrive, but processing was limited because nearly half of IRS employees were furloughed. The agency must continue working through this backlog while handling new returns. Refunds that require manual review will move the slowest. This includes amended returns and filings that trigger identity checks or credit reviews. Electronic filing will help, but even those refunds may take longer than usual.  

Processing Will Be Slower — Many IRS processes require human review. During the shutdown, activities like identity verification, error resolution, amended returns, and general correspondence review were paused. This created a massive backlog for staff. Now, they must sort and review several weeks’ worth of mail before they can get to filings that arrive during tax season.  

IRS Service Will Be Limited — Phone assistance, walk-in help, appeals appointments, and Taxpayer Advocate Service meetings were paused or reduced. All of these services must be restarted and rescheduled. Many taxpayers have been waiting for information or resolution for more than a month. It will take time to work through that demand. As a reminder, even when taxpayers can’t reach the IRS, penalties can be issued and interest may continue to accrue.  

Notice Resolution Will Take Longer — An IRS notice is a letter the agency sends when it needs more information or believes something on a return needs attention. These notices continued to be sent during the shutdown, but most taxpayer responses were not reviewed. As the filing season approaches, many of those responses may still be sitting unopened. 

The AICPA warned that automated systems can continue to generate new notices even when earlier responses have not been read. This can create confusion for businesses that already sent the information the IRS requested. It also increases the administrative burden for accounting teams who must track several notices on the same issue and confirm whether the IRS has finally processed their response. 

Potential Delays to Filing Season — The IRS has not said whether the filing season will be delayed. The 2013 shutdown lasted 16 days and pushed the start of tax season back by about 10 days. The 2018 to 2019 shutdown lasted 35 days and required more than a year for the IRS to fully recover. The recent shutdown lasted longer than both of the previous shutdowns, and the agency has fewer employees today. A slower start to the season would not be surprising. 

Guidance on OBBBA May Arrive Later Than Expected — Many businesses are waiting for more information on the One Big Beautiful Bill Act (OBBBA). Key questions remain about business deductions, workforce-related credits, and cost-recovery rules for equipment and capital investments. The IRS was reviewing these issues before the shutdown, but much of that work was paused. Any delays in guidance may affect year-end planning and how businesses prepare returns for this filing season. 

How Taxpayers Can Prepare

Preparing early is the best way to avoid disruption. Filing returns as soon as possible gives businesses a better chance of moving ahead of the backlog. Electronic filing should be used whenever available because it avoids the slowest part of the IRS system. Paper returns will take longer to process this season. Businesses and individuals will want to begin organizing documentation now. This includes notices, payment records, and mailed responses. This will make follow up easier if the IRS takes longer than usual to respond. 

If a refund or credit is part of early-year planning, it may be helpful to build in extra time. Businesses with more complex returns or several entities should talk with their tax advisors sooner rather than later. Starting early can prevent slowdowns and help manage deadlines. 

What’s Next 

The 2026 filing season is coming up fast, but many IRS processes may move more slowly than normal. The shutdown created backlogs at a time when the agency was already short staffed. Taxpayers who plan ahead, file early, and stay organized will be in a better position to deal with any delays. For more information on tax planning this year, contact Charles Dean Smith, Jr. and Ed Yoder, Partners on PBMares’ Tax team.