The shutdown officially started just after midnight on October 1, 2025, after Congress failed to pass a spending resolution. A shutdown typically means that federal agencies do not have the funding to continue to keep the lights on. However, in the first version of the IRS contingency plan, the agency planned to use money already allocated—specifically, Inflation Reduction Act (IRA) funds—to remain open for the first five days of a government shutdown.

(The IRA was signed into law by President Biden on August 16, 2022. As part of the IRA, Congress allocated an additional $80 billion in funding to the IRS over a ten-year period. In 2023, Congress reduced that funding. More cuts followed. Eventually, Congress recouped more than half of the funding, leaving the agency with just $37.6 billion. You can see how the IRS has spent the supplemental funding allocated by Congress under the IRA so far this year here.)

Those five days came and went. On October 8, the IRS issued a second version of the contingency plan. According to the 162-page plan, most core tax administration functions at the agency will stop. This means that while “essential” functions will continue, most taxpayer services will be halted or delayed.

Shortly after I reported on the revised contingency plan, I received feedback from IRS employees that the cuts are more dramatic and frustrating than the plan suggests. One email emphasized that shutting down key collections activities was particularly painful because “we bring in millions of dollars a day, so every day we are not working is millions lost.”

Still other federal employees took to social media to share their experiences as well as resources that may help their fellow colleagues while paychecks have stopped. You can find the official OPM furlough guidance here. You can find information about layoff loans and hardship grants here.

Overall, hundreds of thousands of federal employees are currently furloughed, including about half—34,429 of the total employee population of 74,299—of the IRS workforce. It’s worth noting that the employee count already reflects a decrease in the IRS workforce—by comparison, in 2024, the IRS relied on 90,516 full-time equivalent staff. 

Despite the shutdown, the IRS still pushed out the annual inflation adjustments for the year 2026, including tax rate schedules, tax tables and cost-of-living adjustments. Those figures are the official numbers for the tax year 2026—the tax year that begins on January 1, 2026. These are not the numbers that you’ll use to prepare your 2025 tax returns in 2026. These are the numbers that you’ll use to prepare your 2026 tax returns in 2027—and that you’ll use for your tax planning throughout the year. 

In addition to these announced changes, don’t forget that there have been several significant changes to the tax code, thanks to the One Big Beautiful Bill Act (OBBBA), including those that are retroactive to the beginning of 2025. As a result, the IRS updated the official 2025 tax numbers to include items like the increased standard deduction and a higher SALT cap. You can find the 2025 numbers, including the revisions, here.

Just before the shutdown, the IRS announced the per diem rates for taxpayers to use in substantiating the amount of business expenses incurred while traveling away from home. The new numbers take effect as of October 1, 2025.

The IRS allows the use of per diem (that’s Latin meaning "for each day”—remember, lawyers love Latin) rates to make reimbursements easier for employers and employees. Per diem rates are a fixed amount paid to employees to compensate for lodging, meals, and incidental expenses incurred when traveling on business, rather than calculating the actual expenses.

And there was still more news from the IRS: Secretary of the Treasury and Acting Commissioner of the IRS Scott Bessent announced that Commissioner of the Social Security Administration Frank Bisignano will serve as Chief Executive Officer (CEO) of the IRS. According to the Treasury, this is a “newly created position.” As part of his new CEO duties, Bisignano will report directly to Bessent, managing the organization and overseeing all day-to-day IRS operations while also continuing to serve in his role as Commissioner of the Social Security Administration.

If that sounds a lot like the work of the IRS Commissioner, you’re not wrong. One key difference: the IRS Commissioner must be confirmed by the Senate. Since this new role is an appointment, it does not appear to require confirmation.

The IRS press office is still open, so I expect that we’ll continue to see agency news during the shutdown. It’s unclear how long the shutdown will last. The Senate has already gone home for the long weekend and will return Tuesday for an eighth vote on spending. The House has been home for longer–Speaker Mike Johnson (R-La.) has made clear that he won’t bring the House back until the Senate reaches an agreement.

Speaking of long weekends, enjoy yours,

Kelly

I saw a video on TikTok that says that I should open a Roth IRA for my toddler. Is that true? And how do I do it? 

As with a lot of tax information that you’ll find online, there is a hint of truth here—but the devil is in the details.

If your child earned income in 2025, you can absolutely open a Roth IRA for them. Roths tend to work best when you can make contributions at low tax rates—since money is after-tax and contributions are not deductible. It’s also an excellent way to encourage long-term savings—while retirement may be the goal for older workers, penalty-free distributions can be made for certain medical expenses and the costs of higher education.

Your child can contribute up to the amount they earned from working for the year (up to $7,000 in 2025). You can make those contributions for 2025 through Tax Day, April 15, 2026.

Since your child is a minor, you must open a custodial Roth IRA in their name (ownership transfers to your child at age 18 or 21, depending on the state). You can easily do this at most brokerage firms (like Fidelity or Vanguard) and it only takes a few minutes.

Here’s where those details matter. Earned income is income from working. It would be unusual, though not impossible, for your toddler to be working—he or she might be a child model or actor. But most toddlers are not in the workforce.

Some of these videos suggest that, if you own a business, you can simply put your child on the payroll and voila, earned income! Putting your child on the payroll is totally fine so long as they are actually performing services—my kids have worked in my office at various points, doing cleaning, filing, and other jobs. But you can’t simply add your three-year-old to the payroll at your consulting firm and give them a check for doing nothing. Some of the workarounds in those videos—putting your kid’s face on your website and calling them a model—may also open you up for scrutiny. Be smart.

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If anyone would know, it would be Rich Pianoforte, Managing Director, and Head of Individual Tax at Fiduciary Trust International. In addition to his tax background—he holds a Bachelor of Science degree in accounting from St. John’s University and a Master of Science in taxation from the University of Hartford—Rich also happens to come from a family of construction workers and electricians.

While he still boasts those skill sets, his current job is serving high-net-worth individuals and families at Fiduciary Trust International, where he is part of the Wealth Planning team and a member of the firm’s wealth planning editorial board. Rich is also an Enrolled Agent and a Certified Financial Planner™.

Rich is the next professional to be featured in our Getting To Know You Tuesday series—a chance to get to know all kinds of tax professionals and understand that the field of tax is bigger than April 15. If you’d like to nominate a tax professional to be featured, send your suggestion to kerb@forbes.com with the subject: Getting To Know You Tuesday.

Voluntary compliance is measured by looking at the tax gap, which is the gap between taxes the estimates are owed and taxes collected. Most of the tax gap is due to underreporting. Harding suggests that if the IRS knows that underreporting is the primary issue, then maybe the agency needs to think differently about how data is reported. 

Looking at data and thinking about results is key to Harding’s plan. The plan sets out three vision objectives: efficiently collect every tax dollar owed, provide excellent customer service, and fiercely protect privacy while providing maximum transparency. “Those are great ideas,” Harding says. “The IRS has never been short of ideas…What we haven't had is a way to know whether or not we have done that thing.”

Harding says that it’s important to tie quantifiable results to the objectives.  So the core of the proposal is key results for each of those objectives. For compliance, she explains, it’s moving the voluntary compliance rate to greater than 85% and the net tax gap to less than 5%. “If both of those things are true,” says Harding, “we [the IRS] are doing our job on collections.”

You can read more about Harding and the IRS 2029+ plan here.

The cuts are aimed at saving Medicare dollars. Medicare is a federal health insurance program available to those aged 65 or older, regardless of income, as well as to some younger individuals with disabilities. It is a federal program—you typically sign up for Medicare through Social Security—largely paid for by payroll taxes.

(You can learn more about Medicare—and how it’s different from Medicaid—here.)

It’s one of the largest sources of healthcare in America. In 2023, Medicare covered over 66.7 million people. Total expenditures in 2023 were just over $1 trillion. 

The stated goal of the recent rule is cost-cutting, but critics and healthcare providers say it will restrict access to care and strain home health providers’ referral partners. It could also be more expensive for taxpayers: When patients are unable to access home health care, that often means more Medicare spending, thanks to increased emergency department visits and more expensive care in hospitals and rehabilitation centers. 

Debbie Stabenow, the former Senator from Michigan, suggests there’s a better alternative to making or pausing cuts: root out existing fraud.