The US government shutdown has led to unforeseen consequences, including furloughs at the IRS. The US Internal Revenue Service has begun to furlough over 34,000 employees as of Wednesday, which adds up to 46% of the department’s total workforce. The impact of the government shutdown has been limited so far, but there are very real concerns of the US government turning to permanent layoffs in addition to the sweeping cuts that have already been executed across federal forces. From the rolling back of contractor rights to the job cuts and RTO mandates, there is much uncertainty among federal employees, now made worse by the announcement of the IRS furloughs.
The IRS furloughs will affect 34,000 employees, or roughly 46% of its workforce. The threat of permanent layoffs looms on the horizon. (Image: Pexels)
IRS Furloughs in 2025 are Set to Affect 46% of the Agency’s Headcount
After the administration and Congress failed to strike a deal regarding the dissemination of federal funds, a government shutdown was announced. Now, in the second week of the government shutdown, the impact of the halt is starting to show in more ways than one. The IRS is set to furlough almost half of its workers, with most operations now closed until further notice.
As a result, about 39,870 employees, or 53.6% of them, will still remain on the job for the rest of the shutdown. The divisions of roles and targeted positions have not been shared publicly, but critical positions will likely remain operational. The IRS staff reductions for 2025 have not escalated to layoffs just yet, but the fear of mass job cuts has federal employees on high alert.
The president previously suggested that around 750,000 federal workers across the country could be furloughed as a result of the US government shutdown, with the possibility of permanent job cuts still on the cards. With 34,000 IRS employees furloughed, a significant portion of the estimate appears to have come true already.
Will Employees Affected by the IRS Furlough Receive Any Compensation?
There has been considerable confusion regarding the provision of back pay to federal employees affected by the furloughs this time around. The notice reportedly informed IRS employees that they would be eligible for back pay after the shutdown comes to an end. On the other hand, sources from the administration previously indicated that back pay may not be guaranteed with this particular shutdown.
With the threat of US government layoffs already hanging over them and uncertainty regarding the future of their jobs, this is a particularly trying time for federal workers. The furloughed state makes it difficult to fully cut ties with work and seek alternative employment, but the lack of back pay, particularly during a shutdown that might be extended indefinitely, is concerning.
With the IRS Holding Back 34,000 Workers, Taxpayers Can Expect Delays
The federal employee furloughs will not only impact the workers but also the performance of the department as a whole. Those who need clarity on tax laws or have filings that need to be addressed may face extended delays through the course of the shutdown. Even after workers are brought back on duty, there are likely to be some hiccups before work can return to normal.
According to AP News, Doreen Greenwald, president of the National Treasury Employees Union, said in a statement, “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.” She also added that, “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.”
HR Teams May Need to Step Up and Help Employees Struggling with Tax-Related Concerns
The temporary changes to the IRS are only one effect of the government shutdown, and they are particularly hard on the employees being furloughed. This does not mean other employees are not struggling similarly. The shutdown has many workers stressed, frustrated, and distracted by the potential impact of a prolonged shutdown.
The struggles of sorting through their tax documents can be overwhelming on a good day, but under the current circumstances, matters might be significantly harder to break down. Supporting employees by providing them with resources such as training, access to forms, connections with financial experts, etc., can be very useful to employees in 2025.
With proposed changes to tax systems, such as taxes on overtime or tips, many employees may be unaware of what documents are needed in their interactions with the IRS. Helping them with some quick FAQs is very considerate.
As of the employees targeted by the IRS furloughs, we’ll know more about their situation in the coming weeks when the full picture of the impact of the US government shutdown is revealed.
Subscribe to The HR Digest for more insights on workplace trends, layoffs, and what to expect with the advent of AI.
