Contact us

Insights & Resources

•

Significant Reductions in IRS Workforce on the Horizon

Significant Reductions in IRS Workforce on the Horizon

Filed under

Massive IRS Job Cuts Underway

As part of the Trump Administration’s effort to reduce the size of the federal workforce, the IRS has so far eliminated over 6,000 jobs, with further deep cuts to come. At the same time tax season was kicking off, the IRS’s newest employees were walking out the door, many of them hired under the increased IRS funding in former President Biden’s Inflation Reduction Act.

IRS Workforce to Shrink by 50%

The Administration has indicated that it intends to cut the IRS workforce by up to 50% through “layoffs, attrition and incentivized buyouts”, according to AP News. As of fiscal year 2023, the IRS had over 85,000 employees with operating costs of about $16 billion. The number of employees increased to almost 100,000 in 2024. Almost 10% of the IRS is staffed by veterans. Buyouts are not allowed, however, until the filing season is over this year. Also, the IRS has indicated that personnel critical to tax return processing will not be immediately affected.

Government Plans for Workforce Reductions

In a February 26, 2025 memorandum to federal agency heads, Russell Vought, Director of the Office of Management and Budget, provided an outline for agency reduction in force (RIF) and reorganization plans. The first benchmark is March 13, when each agency must complete its first plan. Agencies are instructed to consult with their Department of Government Efficiency (“DOGE”) team leads within the agency in developing the contraction plans.

By April 14th, the agencies should complete Phase 2 of the reorganization by presenting a new organizational chart that shows functional areas that will remain and the consolidated management structure. Phase 2 plans should be implemented by September 30, 2025, and monthly progress reports must be filed by the agencies.

How Will the IRS Cuts by Implemented?

The workforce reductions are to be implemented through a number of actions, including a government-wide hiring freeze, RIFs, attrition, removal for misconduct or poor performance, separating reemployed annuitants and letting temporary positions expire. Although the memorandum contemplates exceptions for direct services to citizens and for statutorily-required functions, it is unclear how those exceptions will apply to the IRS.

IRS Workforce Cuts Spark Controversy

Six former IRS Commissioners appointed by both Republican and Democratic presidents wrote an opinion piece in the New York Times in late February decrying the workforce reduction plan, stating that it would render the IRS “dysfunctional.” Likening the move to a business’s “taking an ax” to accounts receivable, the former Commissioners warned that it will increase, not decrease the U.S. deficit. On the other hand, former IRS Commissioner Charles Rettig told the Washington Post that he did not expect the cuts to affect the 2025 filing season.

What Taxpayers Need to Know for the 2025 Filing Season

Meanwhile, the IRS is being run by Melanie Krause, former IRS Chief Operating Officer, as acting IRS Commissioner while former Congressman Billy Long, (R-MO) awaits confirmation by the Senate as the new IRS Commissioner. Given the temporary status of the Commissioner and the uncertainty over the workforce reductions, taxpayers should get their filings ready as soon as they can to avoid possible delays in IRS services this filing season.

Explore related insights

Explore Insights & Resources