For a month, the US federal government has been shut down, which generally means many federal workers have not been working in October 2025. But some federal workers have continued to work during the last month (even though they have not been paid), because they have been deemed “essential” and therefore these workers have not been allowed not to work (pay or no pay) during the shutdown. So where does the IRS (a department of the US Treasury) fit into all of this? Can you currently call the IRS to check on your refund? Are they still processing IRS refunds during the shutdown? Are they still processing ITIN’s during the shutdown? Is the IRS still receiving and processing withholding tax payments for foreign seller transactions (via the forms 8288 and 8288-A’s) during the shutdown? Remember these forms and the withholding tax must be submitted to IRS within 20 days of the closing (or major IRS penalties could ensue), so somebody at the IRS has to be receiving and processing these forms and the withholding tax payments even during a shutdown, right? It’s hard to answer any of this with certainty, but below I will review our experience (at DIRECTS) with respect to the refunds of non-US sellers of US real estate over the month of October 2025 (the first month of what may become the longest federal government shutdown in US history).
Can You Call the IRS to Discuss the Status of Your Refund Right Now?
You may be surprised to learn that the IRS has been fielding phone calls during the month of October 2025. You (or we on your behalf) will probably wait a long time on hold (expect over an hour or even two), and you may call and the IRS outgoing phone message says they are too busy to take your call at that time, but the bottom line is the IRS has been fielding phone calls during October (even though the federal government has been shut down). Some IRS employees are working! Keep in mind, these are IRS representatives who will merely give you an update on your refund status. These are not processors of the tax returns (generally) who you speak to on the phone, they are IRS representatives who can communicate to you the status of your withholding tax refund. If there has been a delay, they might be able to tell you why the refund has not been processed (maybe it’s something we can cure). There were prior shutdowns (in 2018 for example) where I recall the IRS phones just being dead, and during the pandemic year of 2020 there were many months where the IRS simply stopped working, but so far during the shutdown of October 2025 that has not been the case. Basically if you’re patient, and you’re satisfied (at least for the moment) with merely knowing the status of your refund via an IRS representative, we have been able to contact the IRS and get an update on the status of our clients’ refund during in October 2025.
Is the IRS Actually Processing Refunds During the IRS October 2025 Shutdown?
Once again, the answer to this question appears to be a surprising yes- we do have clients who received their refund during the month of October 2025. Were the refunds ready to go out the door before October, and did the IRS just send the refund in October? It’s hard to say precisely, but based on the later in the month receipt of some our client’s refunds, it does appear there has been some processing of refunds during the shutdown. I do not believe the IRS is still processing refunds at anywhere near the level they were prior to the shutdown. I do believe there are many regular IRS refund processors who have not been working during the shutdown. We have several clients who have experienced delays in their refund process (we do unfortunately have some clients who have been waiting some time for their refunds), and those delayed refund/ troublesome cases have not been solved in October. So it does not appear the IRS is processing refunds at nearly the pace they were prior to the shutdown. But they are still processing (some) refunds for non-US persons (our only clients at DIRECTS are non-US persons) during the shutdown, and that alone makes this shutdown (at least so far) somewhat more positive than prior shutdowns (in our experience).
Is the IRS Processing ITIN’s (Individual Taxpayer Identification Numbers) During the Shutdown?
You may begin to see a pattern here, but once again the answer is yes. We have clients who were assigned ITIN’s in October 2025, so it appears the IRS has continued processing some ITIN’s in Austin, Texas (this is the location of the IRS office where the ITIN’s are processed). Again, it’s unlikely the ITIN’s are being processed at anywhere near the normal rate, but they have not shut it all down. Some ITIN processing is better than no ITIN processing, but we believe the rate of IRS processing has slowed down.
Is the IRS still processing the receipt of the IRS withholding tax with the IRS Forms 8288 and 8288-A?
We have seen no evidence that they are not still processing the withholding tax and the appropriate accompanying IRS forms during the October 2025 shutdown. Escrow companies and other closing agents continue to remit the withholding tax via the US mail incidentally (from what we have seen anecdotally); this despite the executive order in March 2025 mandating payments into and out of the IRS via electronic form (and not via the US mail). But at least with respect to tax payments being submitted to the IRS, the IRS continues to accept payments via the US mail we believe.
In summary, despite the many drawbacks to a US federal government shutdown, at least through October 2025 according to what we at DIRECTS has observed, the IRS has continued to process withholding tax refunds, albeit in a likely limited capacity. Will the limited processing/ taxpayer assistance continue into November 2025 if the shutdown continues? We have no idea.