IRS layoffs expected despite tax season assurances

The Internal Revenue Service is reportedly planning layoffs of thousands of first-year probationary employees in the midst of tax season, perhaps as soon as this week.

The layoffs are set to occur despite assurances that the IRS would wait until May 15, a month after the end of tax season, before it would accept voluntary buyout offers under the Trump administration's "deferred resignation" program. The administration instead moved to end that program last week soon after a federal judge allowed it to proceed. The buyout offer was accepted by approximately 75,000 federal employees.

The IRS and the National Treasury Employees Union did not immediately respond to requests for comment, but multiple news outlets, including the Associated Press, the New York Times, the Washington Post, NBC News and Fox News have reported on the plans. The cuts come after a team from the Elon Musk-led Department of Government Efficiency reportedly met with top IRS officials and sought access to sensitive taxpayer information that is normally closely guarded by IRS employees. 

"The IRS has been preparing for many months for the 2025 tax filing season," said Kelly Reyes, executive director of the Professional Managers Association, a group of IRS managers. "Disruptive actions like terminating large groups of IRS employees during the middle of the filing season threaten all of that careful planning, with taxpayers and businesses most likely to feel negative impacts of these decisions from the White House and DOGE."

Reyes, who was herself a former IRS manager for many years, pointed out that the IRS requires consistent ongoing funding to support agency operations, technology modernization and its workforce. The PMA has supported stable IRS appropriations and the additional multiyear modernization funds provided for by the Inflation Reduction Act of 2022.

"The past two filing seasons have seen significant improvement to all categories of customer service and taxpayer experience — investments made in the IRS by Congress have paid off with better service and Americans waiting far less time on hold for answers," said Reyes. "Government funding, including for the IRS, currently ends on March 14 in the middle of tax filing season. It is critical that Congress not allow the IRS to shut down during the filing season — it would be disruptive for taxpayers, and huge backlogs would be created for employees to tackle later at greater costs."

The IRS currently has approximately 102,000 employees, according to the PMA, and around 18,000 IRS employees are eligible for retirement. Approximately 28,000 IRS employees have been onboarded within the past year, including probationary employees, and about 30,000 IRS employees have less than three years of service. Between 4,000 to 5,000 IRS employees have accepted the "Fork in the Road" deferred resignation program, only to be told after the fact that they would still be required to work through filing season.

The American Institute of CPAs released a statement Sunday stressing the need for the IRS to have the ability to meet the needs of taxpayers and tax preparers during this filing season:

"For many years, one of the top priorities at the AICPA has been to promote efforts that ensure the IRS has the appropriate resources to meet the needs of taxpayers and preparers," said the AICPA. "Our goal is to support taxpayers and our members during times of uncertainty and to provide guidance to help navigate any changes that may affect critical, time-sensitive interactions with the IRS. Many are concerned with potential challenges that could arise from recent changes throughout government. While there is a lot of speculation and many unknowns, the AICPA is actively monitoring the situation and engaging with IRS leadership and other key stakeholders to understand and mitigate the impact of these changes on IRS services. IRS service levels and modernization efforts have seen progress since the COVID-19 pandemic and we are committed to seeing those efforts continue. Americans deserve a fully functioning agency that can be respected by taxpayers and their preparers, thereby allowing them to comply with their tax obligations."

The move to fire the probationary employees at the IRS comes as the Trump administration and DOGE have begun widespread layoffs at other departments of the federal government, not only of first-year employees, but of longer-serving employees who had earned civil service protections, along with effective shutdowns of agencies such as the U.S. Agency for International Development and the Consumer Financial Protection Bureau. That has prompted lawsuits and protests in Washington, D.C., and other cities across the country, but the layoffs have been paused at the CFPB for now by a federal judge. The same could happen with the IRS.

A group of Senate Democrats sent a letter Tuesday to the Trump administration and IRS officials expressing their concerns about the planned layoffs. Senate Finance Committee ranking member Ron Wyden, D-Oregon, Senate Minority Leader Chuck Schumer, D-New York, and seven other Democrats on the Senate Finance Committee warned that staffing reductions at the IRS resulting from Trump's hiring freeze and potential layoffs would likely delay tax refunds, harm taxpayer service and undermine law enforcement efforts. The senators urged the administration to end the IRS hiring freeze immediately, avoid further staffing cuts, and protect the role of the IRS Criminal Investigation division in combating drug and human trafficking, terrorism and sanctions evasion.

"Americans need the IRS to be fully staffed with employees who can answer their questions, process their returns, send them refunds, and keep IRS systems online and functional," the senators wrote. "It is nearly inevitable that this hiring freeze, compounded by layoffs and further reductions in staff mandated as a result of Elon Musk's unprecedented power grab, will delay refunds and degrade taxpayer service. Millions of Americans plan their budgets around timely refunds every filing season. These reckless decisions on the part of Elon Musk and the Trump administration will likely cause serious financial hardship for people across the country."