Shutdown or Not, the Oct. 15 Deadline Holds for More Than 20 Million Extended Filers

The Internal Revenue Service reminded taxpayers on Oct. 14 that 2024 returns covered by an extension are due the next day, Oct. 15, and that the federal government shutdown that began Oct. 1 does not change that. The agency expects more than 20 million people to file by the extended due date. For affluent households, who often extend while waiting on partnership K-1s, trust statements or equity compensation records, the practical question is what still hinges on getting a return in by midnight.

What changed, and what did not

In IR-2025-104, the IRS said the lapse in appropriations does not affect taxpayers' obligations to file and pay. Electronic filing and electronic payments remain available, and the agency said it will keep accepting payments electronically and by mail during the shutdown. Paper filers can still get forms and instructions on IRS.gov.

Two groups have later deadlines. Taxpayers affected by terroristic action in Israel during 2024 and 2025 may have deadlines postponed to Sept. 30, 2026, and people in areas covered by federal disaster declarations may qualify for their own extended dates listed on the IRS tax relief page.

The shutdown's effect is on service, not deadlines. According to an analysis by accounting firm Windham Brannon, the IRS planned to keep all 74,299 employees working for the first five business days using Inflation Reduction Act funds, with furloughs likely afterward. The firm noted that the 2018-2019 shutdown lasted 35 days and left processing backlogs that took close to a year to clear.

Who is affected

Anyone who requested an automatic six-month extension for a 2024 individual return and has not yet filed is affected. That group skews toward households with complex returns: business owners, investors in private funds and partnerships, executives with multi-state wage income and families reporting foreign accounts. An extension extended only the time to file. It did not extend the time to pay, so any balance that was not paid by April 15 has been accruing a failure-to-pay penalty and interest since then.

The after-tax math

The IRS describes the failure-to-file penalty as 5% of the unpaid tax for each month or part of a month a return is late, capped at 25%. The failure-to-pay penalty is 0.5% a month, also capped at 25%. When both apply in the same month, the filing penalty is reduced by the payment penalty, so the combined charge is 5% a month.

Example: a couple still owes $80,000 on their 2024 return as of Oct. 15.

Interest is charged on top of both figures. The example shows why filing on time matters even when the full balance cannot be paid: the filing penalty is ten times the size of the monthly payment penalty. The IRS also says the failure-to-pay penalty drops to 0.25% a month for individuals who filed on time and have an approved payment plan.

Moves to discuss with your advisor

• SEP contributions. According to the IRS, an employer can set up a SEP for a year as late as the due date of the business's income tax return, including extensions, and contributions must be made by that same extended due date. For sole proprietors on an extended 2024 Form 1040, that window closes with the return.
• Filing with estimates. Households still waiting on a late K-1 often consider filing with the best available figures and amending later, rather than missing the deadline and triggering the 5% monthly penalty.
• Payment plans. For balances that cannot be paid now, a timely return combined with an approved plan halves the monthly payment penalty.
• Electronic filing. With staffing uncertain, paper returns and paper correspondence are more likely to sit in backlogs. E-filing gives immediate confirmation of receipt.

What to watch

Tax-exempt organizations on extension face a Nov. 17 deadline, which Windham Brannon notes is also unchanged. The longer the shutdown runs, the greater the risk of delays in customer service, audit resolution and notices, and of disruption to preparations for the 2026 filing season, the first to reflect this summer's tax law changes. Taxpayers expecting refunds or waiting on IRS responses to prior-year issues should expect slower replies until full funding returns.

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