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Connect on LinkedInThe IRS has officially powered down.
As of October 8, 2025, a lapse in federal funding has sent most of the agency’s staff home on furlough—and left taxpayers, especially those overseas, wondering who’s still at the wheel.
For Americans abroad, this isn’t just a minor inconvenience. The IRS is the hub for refunds, foreign income exclusions, and all the paperwork that keeps your cross-border life running smoothly. And right now? The lights are off, the phones are silent, and your emails are going straight to the void.
Here’s what’s closed, what’s still ticking along in the background, and what expats can do to stay compliant (and calm) until Washington sorts itself out.
What’s actually closed
With the IRS now in shutdown mode, most of its normal operations are on pause. Nearly all employees have been furloughed, leaving only a small group of essential staff in place.
Here’s what’s currently affected:
- Phone lines, taxpayer assistance centers, and mail processing are closed.
- Paper correspondence, amended returns, and refund checks are on hold until operations resume.
- New updates, transcripts, and notices are not being processed or posted to taxpayer accounts.
- The IRS website remains live but is no longer updated daily—only critical alerts are added.
In short, if your issue requires a human response, it’s probably on hold for now.
💡Pro Tip:
A shutdown doesn’t stop the calendar. Tax deadlines and payment due dates remain exactly the same—so make sure you file and pay on time, even if no one’s at the IRS to pick up the phone.
What’s still operating
While most IRS functions are paused, a handful of essential systems are still running in the background—enough to keep basic tax processing alive, but not much more.
Here’s what’s still working during the shutdown:
- E-filing systems remain open, so individuals and businesses can continue submitting tax returns electronically.
- Online payment systems like Direct Pay and EFTPS are operational, allowing taxpayers to make estimated or balance-due payments.
- IRS.gov is still accessible for forms, prior guidance, and archived FAQs, though new updates are temporarily suspended.
- A small number of essential employees remain on duty to manage cybersecurity, protect taxpayer data, and handle legally mandated enforcement tasks.
It’s not business as usual, but it’s enough to keep the digital side of the tax system from freezing entirely.
💡Pro Tip:
If you’ve mailed any tax forms or payments recently, keep your proof of postage and delivery confirmation. Once the IRS reopens, those records could make all the difference in avoiding late-filing penalties.
Key impacts on Americans abroad
For Americans overseas, the IRS shutdown reaches far beyond Washington headlines. From delayed refunds to stalled certifications, these interruptions can ripple through every part of expat tax life. Here’s what’s happening—and why it matters.
1. Delays in return processing and refunds
E-filing still works, but returns needing human review are stuck in limbo until staff return. This especially affects expats with complex international filings that often trigger manual checks.
Expect delays if your return includes:
- Form 2555 (Foreign Earned Income Exclusion) – often reviewed to confirm residency and qualifying income.
- Form 1116 (Foreign Tax Credit) – requires IRS verification of foreign tax payments.
- Form 8938 (Statement of Specified Foreign Financial Assets) – reviewed for FATCA compliance.
- Form 14653 (Certification by U.S. Person Residing Outside the United States) – key for those filing under the Streamlined Filing Compliance Procedures.
Refunds linked to these forms—or to paper returns—won’t move forward until the shutdown ends.
And because processing is paused, IRS transcripts (often needed for student aid, mortgage applications, or immigration filings) will also be delayed until the agency reopens.
2. No live assistance
All IRS helplines, including the international taxpayer service line, are closed. That means:
- No access to live agents to verify identity or check filing status.
- No resolution for pending notices or correspondence.
- No taxpayer advocate assistance for ongoing disputes.
Even international callers reaching out via local toll-free numbers will hit automated messages. For now, the only reliable communication channel is the IRS website—and even that’s only partially updated.
3. Filing deadlines and penalties
Deadlines haven’t changed, even though most IRS functions have stopped. Taxes, extensions, and payments are still legally due.
Here’s what that means in practice:
- Returns and payments must still be filed on time, even if they aren’t processed immediately.
Automated penalty notices may still be issued by computer systems. - Corrections to erroneous notices could take months once the backlog clears.
If you’re filing close to a due date, prioritize e-filing and keep proof of payment—it’s your only defense against system-generated penalties.
4. Disruption to overseas tax certifications
Several IRS programs crucial for expats are on hold. This includes units responsible for:
- ITIN renewals and applications (for dependents or nonresident spouses).
- Streamlined Filing Compliance Procedures for Americans catching up on past filings.
- Foreign Earned Income Exclusion certifications tied to Form 2555 reviews.
These cases will sit untouched until staff return, extending already lengthy processing times.
💡 Pro Tip:
If your return or certification is pending, reach out to your tax preparer now to document the timeline. Having a professional record of when forms were submitted can help you prove “reasonable cause” if penalties arise later.
What’s next for expats–and why it matters
If the shutdown lasts more than a few days, expect a growing backlog that could take months to unwind. IRS systems don’t stop sending automated letters just because the humans are gone—and that’s where the trouble starts.
Here’s what’s likely to happen if the shutdown drags on:
- Response times will balloon: Even short shutdowns have caused delays lasting months once staff return.
- Automated notices will go out unchecked: The systems that issue late-payment or underreporting letters keep running, even when no one is available to review them.
- Refunds and amended returns will slow to a crawl: Anything requiring review—especially filings involving foreign income—will stack up fast.
For Americans abroad, who already juggle FATCA, FBAR, and complex foreign income reporting, these delays can disrupt financial planning, delay refunds, and even create compliance risks through no fault of their own.
💡 Pro Tip:
Use this downtime to get ahead—organize your tax documents, review prior filings for accuracy, and flag anything that may need clarification once the IRS reopens. Being proactive now means you’ll be first in line when processing resumes.
What taxpayers can do now
While the IRS is offline, there’s still plenty you can do to stay compliant and protect yourself from post-shutdown headaches. Think of this as your expat tax survival plan.
1. File electronically: E-filing remains open, and it’s the safest way to ensure your return is logged. Avoid sending paper forms or checks—mail will simply pile up until the IRS reopens.
2. Keep meticulous records: Save digital copies of every submission, payment confirmation, and correspondence. If you’ve mailed anything recently, hold onto proof of postage and delivery. These documents can help you prove timely filing later.
3. Monitor official channels: Check IRS.gov/newsroom and Treasury press releases for verified updates. Social media speculation spreads fast—stick to official sources.
4. Prepare for delays: Refunds, credits, and certifications will take longer than usual once operations resume. Build extra time into your financial plans if you’re waiting on IRS correspondence or approval.
5. Work with a professional: At Bright!Tax, our expat tax specialists stay fully informed on IRS operational updates. We can track your filings, confirm submissions, and help prevent unnecessary penalties while the IRS is offline.
💡 Pro Tip:
The most common post-shutdown errors come from mismatched or duplicate submissions. Before re-sending any form, double-check with your tax adviser—it’s often already in the system waiting to be processed.
Staying compliant when the IRS is closed
The October 2025 IRS shutdown may be short-term, but the ripple effects for expats could linger—especially if you’re waiting on refunds or international filings.
At Bright!Tax, we’re tracking IRS updates daily and helping clients stay compliant through every delay. If you need clarity, guidance, or just peace of mind while the agency is offline, we’re here to help.
Stay calm, stay compliant—and let Bright!Tax handle the rest.
