The Internal Revenue Service announced plans to furlough almost half its employees as the U. S. government shutdown extends past its initial contingency period. The move signals a drastic scaling back of tax-collection operations and invites legal scrutiny over potential permanent layoffs.

Under the updated contingency plan, around 39,870 IRS staffers-roughly 53.6 per cent of its workforce-will continue to work, while the remainder will be placed on furlough. The agency has already begun sending mass furlough notices and shutting down most of its non-essential functions.

President Donald Trump and his administration have floated the possibility of using the shutdown as cover for permanent terminations, a strategy that legal experts and federal unions warn could breach long-standing federal protections. District Judge Susan Illston, who previously blocked mass firings, will preside over a new lawsuit opposing these cuts.

Until now, the IRS had relied on supplemental funding from the Inflation Reduction Act to maintain operations during the first five business days of the funding lapse. That funding has been depleted. With appropriations stalled, the agency is executing contingency protocols that shrink its active workforce almost in half.

The administration's evolving position on back pay has sown further uncertainty. One day, White House guidance omitted language promising guaranteed back pay for furloughed employees; the next, notices were issued affirming that federal law entitles them to compensation once the shutdown concludes.

The IRS's leadership is also in flux. The Treasury has appointed Frank Bisignano to head daily operations at the IRS, in addition to his current role as head of the Social Security Administration. Critics argue the dual appointment concentrates power and lacks accountability, while supporters cite his private sector management experience.

The looming threat of permanent cuts is mired in legal ambiguity. Experts caution that mass firings during a shutdown may run afoul of the Antideficiency Act, which restricts agency actions absent congressional funding. Federal unions contend that bypassing required notice periods would violate civil service protections.

Already, unions have filed suit alleging that draft memos from the Office of Management and Budget and the Office of Personnel Management improperly seek to skirt congressional oversight. They argue that sweeping workforce reductions should not be conflated with routine shutdown protocols.

Across regional IRS centres, employees are bracing for impact. In Kansas City, more than 6,000 workers may face furlough notices, threatening a near-shutdown of one of only three nationwide service centres.

Over the course of 2025, the IRS has already experienced staffing turbulence. Earlier cuts eliminated over 20,000 positions-about 20–25 per cent of the workforce-with the civil rights office among the hardest hit. The current shutdown measures add further strain.

MENAFN12102025000152002308ID1110183648