By René Marsh, Tami Luhby

(CNN) — The Internal Revenue Service began furloughing nearly half its staff Wednesday because of the ongoing government shutdown, sparking chaos and confusion among employees as the news rippled through agency offices around the country.

The agency said in an updated shutdown contingency plan that it was furloughing more than 34,400 of its 74,300 employees on Wednesday. Initially, the IRS said that its entire workforce would remain on the job thanks to funding from the 2022 Inflation Reduction Act. But it noted in its original contingency plan that staffing would be in place only for the first five business days — and there is no sign that the shutdown that began October 1 is nearing its end.

A prolonged shutdown could cause bigger problems as the October 15 tax filing extension deadline approaches, said Maria Ramos, the National Treasury Employees Union chapter president in Austin, Texas, where she works in paper tax return processing.

“Tax returns will be arriving,” she said, “but there will be no one there to process them.”

In Kansas City, NTEU union chapter president Shannon Ellis described “lots of confusion” Wednesday morning as employees were notified of their status.

An emergency notification system, typically used for weather alerts or building emergencies, sent out a recorded message telling staff that “as of October 8th, you are considered furloughed” unless you receive notification from your manager, Ellis told CNN.

But soon after, Ellis said, managers began calling employees and telling them to “ignore that message” and “keep working as usual.”

Well into the late afternoon, some people still didn’t know their status, she said.

At the IRS and other agencies, some employees must continue working without pay during the shutdown, while other workers are furloughed without pay and stay home. But a third category, “exempt,” has added to the confusion. Employees classified as exempt will continue to work and receive pay, though union leaders say no one has explained where those funds are coming from.

In its updated contingency plan, the IRS said that virtually all of the 39,870 workers who will remain on the job will be compensated by “a resource other than annual appropriations.” In its original shutdown plan, the agency said it could pay its entire workforce with Inflation Reduction Act funds.

The IRA originally gave the agency roughly $80 billion in Inflation Reduction Act funds, to use over 10 years to improve customer service, expand enforcement, update technology and hire more staff.?GOP lawmakers have sought to rescind the money ever since — slashing nearly $42 billion from the appropriation.

Ellis said some employees who had been considered essential in previous shutdowns were furloughed this time around, including employees responsible for opening and scanning mailed tax returns and payments, critical paper-processing work. “To my knowledge, all of those people were furloughed,” Ellis said, adding that this was not the case in past shutdowns.

“We were already short-staffed after months of resignations and layoffs,” she added. “Now this.”

The IRS has a heavy workload: It is currently in the midst of putting into place dozens of tax law changes contained in the Republicans’ One Big Beautiful Bill Act, including some that take effect this year.

Adding to the confusion, the agency’s updated plan said both that the plan could be changed again in five days and also that the staffing levels would be in place until April.

The majority of the employees being retained work in taxpayer services, including customer service representatives, tax examiners and staffers who process tax returns with payments, according to the contingency plan. Also, some revenue agents and tax examiners in the small business division, as well as some local taxpayer advocates, will remain on the job, among other staffers.

Among the significant activities that will cease are taxpayer services, such as responding to taxpayer questions outside of the filing season, and non-automated collections.

In Memphis, where roughly 4,500 IRS employees make up the agency’s third-largest union chapter, Gibson Jones, the local NTEU union chapter president and IRS employee, told CNN that the “vast majority” of workers were furloughed Wednesday, leaving only “very limited skeleton crews” across IRS business units.

Like Ellis, Jones said the union has received no clarity on how the agency is deciding who is essential versus nonessential and noted that in prior shutdowns, many of the jobs furloughed Wednesday were treated differently.

“Customer service staff weren’t furloughed on the IRS Memphis campus in previous shutdowns,” he said. “This time, the vast majority of them have been sent home.”

According to Jones, about 150 revenue agents and tax collection officers have also been furloughed.

“We’re in a government shutdown over money,” Jones said, “and the people who could be out there collecting more money for the federal government have been furloughed. They’ve essentially halted these revenue and tax collection functions.”

Jones said he expects taxpayers to start feeling the impact immediately: longer hold times on phone lines, more dropped calls, and delays in refunds or processing as the October 15 extension filing deadline approaches.

CNN reached out to both the IRS and Treasury Department, the agency that oversees the IRS, for comment.

Normally, Treasury’s human resources officials coordinate with the union to explain which employees are considered essential. “That’s not happening this time,” Jones said.

“Managers are just telling employees one-on-one. The unions have been completely cut out of this.” He added that it’s unclear what criteria are being used. “There’s no rhyme or reason to who’s being told they’re furloughed and who’s not.”

In Atlanta, NTEU union chapter president, Denise Wells-Gomez said employees received “conflicting guidance from managers about whether essential workers could take scheduled leave or medical time off.”

Messages viewed by CNN instructed essential staff that vacation or sick leave could not be used, and that any absence, even for surgeries or medical procedures, would be treated as AWOL (absent without leave).

One internal message from managers to staff, viewed by CNN, warned that they could be terminated if employees weren’t present the day they decide to do an audit.

However, during a staff meeting, the director of the Atlanta office appeared unaware this guidance was being circulated and clarified that essential workers could still take leave, if approved by their manager. Despite that, employees continued receiving instructions that “no exceptions” would be allowed.

In Austin, Ramos was among those furloughed Wednesday. She said she drove an hour and a half in a carpool to the IRS office, waited around for four hours, and then was told to go home.

“At a time when we’re not going to be getting paid, people could’ve used that gas money,” Ramos told CNN. “That was time wasted and money spent that didn’t need to be spent just to sit around for four hours and find out you were furloughed. In past shutdowns, we knew that information in advance.”

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