We’re on Track. The IRS Isn’t. How the Government Shutdown Impacts Small Businesses

On October 1st, 2025, the U.S. government began its longest shutdown in history. The IRS is almost completely shut down, and even if it resumes operations soon, it will face massive delays. 

What does this mean for small business owners? Everything the IRS handles will be many months behind. Let’s talk about it!

At CSI Accounting & Payroll, we’ve provided small business accounting services for nearly 60 years. We saw what happened with the last shutdown, so we can predict what’s going to happen with this one. In this article, I’ll address some questions we’ve heard around this topic:

• What happened with the COVID delays in 2020-2021?
• How will this IRS shutdown affect small businesses?
• Can my accountant help me avoid any consequences of the shutdown?

The IRS’s COVID Delays (2020-2021)

In 2020-2021, the U.S. saw major delays from the IRS. By the time IRS staff could work from home, they were already very behind – and then they continued to fall behind more and more.

So, how much of a delay are we talking about? 

Typical response times changed from months to nearly a year. If you had an issue and needed to talk to a human, you couldn’t reach one.

Plus, there were reports of trailers filled with mail sitting in the IRS parking lots. Paper tax returns (and any refunds) overwhelmed the IRS for a few years, despite the vast majority of people filing electronically.

The IRS’s Government Shutdown Delays (2025-?)

How will this current shutdown affect small businesses, even if it starts back up today? Since this is the longest shutdown in history, we can expect similar delays as we saw in 2020-2021.

We’re sounding the alarm and foreseeing severe delays in:

• Issuing refunds. Tax refunds will likely be delayed by months at best. During COVID, some refunds even took over a year to be issued. Don’t factor a refund into your budget. You don’t know when you’ll get it! See the status of your federal refund here.
• Communication. If you need to call the IRS, you’ll likely just hear an automated message.
• Resolving any concerns. If you receive a written notice from the IRS about an issue, resolving it may take much longer than usual. This is especially frustrating if the letter was sent by mistake.

That’s just the basics. Again, everything that the IRS does is expected to be many months behind the usual timeline.

Can My Accountant Help Me With the Shutdown?

As an accounting firm, we can’t tell our clients exactly when they’ll hear back from the IRS, the status of resolving an IRS issue, or the status of their federal tax refund. We sincerely wish that we could, but it’s out of our control.

However, we can promise our clients that we’ll keep them in the loop and do whatever we can to plan around these expected delays. At the end of the day, we think that’s better than working with a firm that diminishes the severity of the situation or over-promises solutions that are beyond their abilities.

Get Honest Updates on IRS Delays!

Now that you know about the similar consequences from the last shutdown and the current one, plus how an accountant can only offer limited support, are you ready to switch to a monthly accounting firm that keeps it real with their clients?

If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:

Not ready to talk? That’s okay! First, learn more about what your monthly fee may be by clicking the image below: