The Internal Revenue Service may have to furlough about two-thirds of its workforce if a government shutdown is triggered by Congress, according to a plan released Thursday.
“The IRS Lapse in Appropriations Contingency Plan describes actions and activities for the first five (5) business days following a lapse in appropriations. The plan is updated annually in accordance with guidance from the Office of Management and Budget (OMB) and the Department of Treasury,” the plan said. “In the event the lapse extends beyond five (5) business days, the Deputy Commissioner for Operations Support will direct the Business Continuity Officer to reassess ongoing activities and identify necessary adjustments of excepted positions and personnel.”
About 30,063 of the IRS's 89,944 employees are considered "excepted" or "exempt" from the furloughs and would work during the government shutdown, according to the plan. It means that about 59,881 IRS workers would be furloughed until a spending bill is passed, the plan said, adding that IRS Commissioner Danny Werfel will be retained because he is a presidential appointee and isn't subjected to the furloughs.
“In fiscal year 2024, the IRS does have available multi-year funding under the Inflation Reduction Act and will use that funding for the activities outlined in this plan. Employees working on excepted and exempt activities during a lapse in appropriations will be paid using Inflation Reduction Act resources,” the plan also said.
A spokesperson for the Treasury Department told the Federal News Network that the furloughs will have "significant impacts" on taxpayers. Most of the agency's tax functions would also halt during the event of a shutdown, the spokesperson added.
A former commissioner of the IRS, Charles Rettig, told the Washington Post that the shutdown would create havoc for some taxpayers.
"Taxpayers would be completely unable to contact most IRS employees during the shutdown," he said. During the 2018-2019 shutdown, "it took the better part of a year for the IRS to get back," he said.
"Don’t overlook the impact on the employees or future recruitment effort," Mr. Rettig said. "Current and prospective IRS employees have numerous options for employment in other organizations not similarly impacted by a dysfunctional Congress."
The U.S. Treasury Department's plan did not say whether the Oct. 16 deadline will be pushed back.
The IRS issued a press release on Friday warning taxpayers "about the upcoming tax filing extension deadline," and they should try to avert a "possible late filing penalty" by submitting "their Form 1040 on or before Monday, Oct. 16." The release made no mention of the furloughs or shutdowns.
The Treasury plan suggested that most taxpayer phone calls will likely not be answered, according to Forbes magazine. Also, 363 Taxpayer Assistance Centers, or TACs, will close during the shutdown.
Refunds won't be processed except in cases where they are electronically filed and error-free. The IRS will also not respond to paper correspondence, according to Forbes, which said taxpayers should expect a longer delay.
In a statement on Thursday, the National Treasury Employees Union released a statement warning that it will be "incredibly difficult" for taxpayers to communicate with the IRS in the event of a shutdown.
“According to the agency’s shutdown plan released today, 60,000 employees will be locked out of doing their jobs. These frontline employees—including those who open the mail and process tax returns—are now preparing for the financial hardship that comes with missed paychecks, which is possible if the shutdown extends well into October,” the statement said, calling on Congress to avert the shutdown.
On Friday, Treasury Secretary Janet Yellen made reference to the looming government shutdown.
"When I left Washington this morning, it was still unclear whether Congress would pass legislation in time to avoid a dangerous and unnecessary shutdown," she said at an event in Georgia, according to a transcript. "The Senate is advancing a bipartisan short-term funding bill. It is crucial that House Republicans also do their jobs and move quickly to keep the government open and adequately fund key priorities, as they agreed to in May."
It comes as House Speaker Kevin McCarthy (R-Calif.) told reporters Friday that he is still trying to pitch a bill to avert the shutdown.
"We actually need a stop-gap measure to allow the House to continue to finish its work, to make sure our military gets paid, to make sure our border agents get paid as we finish the job that we're supposed to do," he said.