A potential lapse in IRS funding is looming this Saturday (January 31, 2026, or related dates in late January/early February), tied to a partial government shutdown impasse over funding for the Department of Homeland Security (DHS). This comes amid broader political tensions, including backlash against recent ICE operations and fatal incidents in Minneapolis, and could disrupt services during the early stages of the 2026 tax filing season (which opened in late January).
The funding package under debate would cover several agencies, but Democrats in the Senate are threatening to withhold support for DHS portions due to concerns over “brutality” in enforcement actions (e.g., Sen. Chris Van Hollen stated: “Americans are horrified & don’t want their tax dollars funding this brutality,” and “Not another dime to this lawless operation”).
Republicans have pushed back against separating DHS funding. Much of the government is already funded through September via prior bills, but the IRS remains at risk if no deal is reached by the deadline (likely Friday midnight).
IRS Potential Impacts on Taxpayers
If funding lapses and a partial shutdown begins:
- Limited IRS Operations: The IRS would implement its contingency plan, furloughing many employees (similar to the 2025 shutdown, where operations halted after about five days despite initial hopes). Physical Taxpayer Assistance Centers would close, phone support would be severely reduced or unavailable, and in-person services would stop.
- Tax Refunds and Processing: Most refunds could face delays. During past shutdowns (e.g., 2025), the IRS processed only electronically filed, error-free Form 1040 returns that could be automated and direct-deposited. Paper returns, amended returns, or those needing manual review would stall. Experts advise filing electronically with accurate bank info to minimize issues.
- Filing Deadlines Remain: Taxes are still due on normal timelines (e.g., April 15, 2026, for 2025 returns). A shutdown does not extend deadlines or waive penalties/interest—payments must continue.
- Other Disruptions: Issues requiring IRS employee contact (e.g., audits, identity verification, or complex questions) could go unresolved for extended periods. Larger refunds under recent tax changes (e.g., from the “One Big Beautiful Bill Act”) might still process if automated, but overall delays are expected.
- Expert Advice: Tax attorney Adam Brewer recommended: “Whenever possible taxpayers should file electronically, make sure they enter their bank information accurately so they receive their income tax refund (or can submit payment) timely, and hope they don’t have any issues that would require getting an actual IRS employee on the phone.”
The IRS has not released a new contingency plan specific to this lapse (as of late January 2026), but historical patterns suggest limited essential functions continue via multi-year or indefinite funding sources.
Broader Context and Current Status
This potential lapse follows recent IRS budget cuts (e.g., a proposed ~9% reduction to $11.2 billion for FY2026 vs. $12.3 billion in 2025) and workforce challenges, including staff reductions from prior legislation. The 2026 filing season is already complicated by new tax provisions (e.g., changes to tips, overtime, car loans, and depreciation), making smooth operations critical.
As of January 27-28, 2026, no resolution is confirmed—Democrats plan to advance non-DHS funding bills to limit broader impacts, but DHS disputes could trigger the lapse. If averted, normal operations continue; if not, expect disruptions similar to or worse than prior short shutdowns.
Taxpayers should prepare by filing early electronically, double-checking returns, and monitoring IRS.gov for updates. The situation remains fluid amid ongoing negotiations—stay tuned for developments as the deadline approaches.
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