The
The total includes over 3,500 probationary hires from the Small Business/Self-Employed division, according to an email Wednesday from SB/SE commissioner Lia Colbert and deputy commissioner Maha Williams, per
Up to 1,000 employees are expected to be laid off in the IRS's processing facility in Ogden, Utah, according to local news outlet
The head of the IRS's main labor union, the National Treasury Employees Union, expressed concern about the widespread layoffs.
"Indiscriminate firings of IRS employees around the country are a recipe for economic disaster," said NTEU national president Doreen Greenwald in a statement. "In the middle of a tax filing season, when taxpayers expect prompt customer service and smooth processing of their tax returns, the administration has chosen to decimate the whole operation by sending dedicated civil servants to the unemployment lines. These layoffs are arbitrary and unlawful, and NTEU will keep fighting until every wrongful termination is reversed."
"It is especially devastating that removing probationary employees impacts so many young people who chose to start their career in public service," Greenwald continued. "They passed the IRS' extensive background checks, received extensive training at taxpayer expense, delivering for the American people, and are now being told they are no longer valued. Much of the IRS workforce is outside of the Washington, D.C. area, which means these layoffs are disrupting their local economies and hurting middle-income families in every state. We have multiple legal challenges now pending over the administration's mass layoffs and other attacks on federal workers because of the severe damage that is being done to civil servants and the valuable services their agencies are tasked by Congress to provide."
On Thursday, a federal judge
Former IRS Commissioner Chuck Rettig pointed out that the layoffs might not actually save any money. "The expenses of operating the U.S. don't disappear if the IRS suffers," he said in an email to Accounting Today. "Each year, almost 95% of the gross revenue of the United States flows thru the IRS, typically at least $4.9 trillion, on an annual budget of approximately $14.1 billion. When pursuing a reduction in force, it would seem important to take a close look at the numerous functions within the agency rather than a blanket termination across every lane of operations. Annually the IRS receives more than 40 million phone calls (and received more than 280 million in each of 2020 and 2021). There is a staff of Customer Service Representatives of 15-20,000 people to handle those calls (the number of CSRs is expressly limited by Congressional budget appropriation)."
A great deal of the IRS staff is made up of military veterans, he pointed out.
"Almost 10% of current IRS employees (including 'on probation' new hires) are military veterans, more are proud members of the military reserves, many have volunteered to be deployed to war zones in defense of our country, numerous others are proud military families of active duty military personnel," Rettig added. "Many IRS filing season employees are spouses of current military personnel. A blanket reduction in force will disproportionally harm those who serve or have served our country and supported our military. I'm not advocating that every IRS employee remain in their current position, but IRS employees can be reskilled to help the IRS and taxpayers where such assistance is most needed."
The National Association of Tax Professionals expressed concerns about the layoffs aftecting service. "Reducing IRS staffing during tax season could create unnecessary backlogs and frustrate taxpayers," said NATP CEO Scott Artman in a statement. "While automation holds promise for efficiency, these systems are not yet fully implemented. Now is not the time to disrupt service continuity."
The NATP said it supports strong enforcement of the IRS Taxpayer Bill of Rights, which guarantees fairness, transparency and access for all taxpayers. These protections rely on adequate staffing to ensure efficient dispute resolution and timely taxpayer support.
"Premature staffing cuts will strain taxpayer services, undermining efficiency gains promised by automation," Artman added. "Maintaining sufficient personnel ensures a smooth transition and uninterrupted support for taxpayers and tax professionals."
There may be disparate impacts from the layoffs in different divisions of the IRS. "With the initial focus on terminating Small Business Self-Employed Division (SBSE) probationary employees (generally, those hired within the past year), there should not be a significant impact on current filing season operations (which are managed by the Wage & Investment Division)," said Rettig. "Most SBSE examiners hired within the past year have likely been in training for much of that time which implies there will not be much impact on current, open examinations. Much of that training is conducted by experienced examiners and IRS Counsel who will now return to the field to assist in current examinations and ongoing litigation."
But there is likely to be an impact on the number of tax examinations and audits. "There will be a significant impact on the ability of the IRS to expand the volume of examinations going forward," said Rettig. "However, the IRS is in a better position to identify potential noncompliance and conduct meaningful issue-focused examinations as a result of many important technological enhancements that have been implemented over the past five years. The IRS can now identify issues of non-compliance that would not have been remotely possible just a few years ago."
"A lack of important staffing and funding may well impact the volume of examinations the IRS can conduct, but those selected for an examination will understand that a traditional tax examination by a modernized agency in a target-rich environment does not represent a significant challenge," he added.
He pointed out that the IRS has made strides in terms of its technology advances, including the use of artificial intelligence.
"Fundamental technology upgrades and the onboarding of sophisticated data scientists have significantly enhanced internal and external IRS operating systems," said Rettig. "The use of AI combined with enhanced Service-wide technology enhancements has greatly improved the ability of the IRS to select appropriate cases for examination and has greatly accelerated the pace of these examinations. However, these upgrades have not kept pace with ever-increasing responsibilities and challenges facing the IRS. Technology helps define the path forward but the ultimate resolution of an issue typically requires an experienced person to be involved. The IRS still needs specialized examiners and related resources to actually conduct examinations and determine deficiencies, as well as others to represent the IRS in administrative appeals and possibly litigation. All of these folks need constant training, and the more experience, the better for both the IRS and the taxpayer."
The IRS has also improved the array of digital tools available to taxpayers. "Regarding Taxpayer Services, the IRS has launched more digital tools in the last two years than in the previous 20 years, including more than two dozen new features and enhancements to individual and tax professional online accounts; the launch of a business tax account; the release of 30 digital mobile-adaptive forms; the ability for taxpayers to receive their refund status via a conversational hotline; a mobile-friendly web tool for Where's My Refund; and Direct File, which allows taxpayers to file directly with the IRS for free," said Rettig. "On the horizon, enhanced IRS digital self-service options will provide a private-sector-like experience, allowing taxpayers to interact almost entirely from their mobile phones, in the language most convenient for the taxpayer."
He noted that during his term as IRS Commissioner from 2018 to 2022, the IRS Criminal Investigation Cyber Unit "significantly disrupted Dark Web terrorist financing arrangements for Hamas, al Qaeda and ISIS, disrupted international child exploitation sites operating in the Dark Web, disrupted financial transactions involving international drug cartels, located concealed assets of sanctioned Russian oligarchs and performed the largest digital asset financial seizure ($3.6 billion) in our country's history."
The IRS has already been having a difficult time recruiting new employees to replace retiring workers.
"A high rate of attrition coupled with an aging workforce and a general hiring freeze from 2011 to 2018 is a significant concern in trying to determine the appropriate level of experienced staffing going forward," said Rettig. "The current hiring freeze and terminations of probationary employees will serve to exacerbate these concerns. In the federal government system, it has historically been extremely difficult to compete with the private sector for top talent. Further, the recruitment, onboarding and training programs are somewhat cumbersome, at best. Most IRS employees come onboard with a sense of dedication to serving our country. It remains to be seen how current events might impact that dedication going forward."
He believes Congress needs to do more. "Given the voluntary compliance nature of our system of taxation, Congress should start helping the IRS earn the trust and respect of the American people rather than attack it for political gain," said Rettig. "For decades, the IRS has welcomed Congressional oversight at any level or degree desired."
The top Democrat on the tax-writing House Ways and Means Committee, Rep. Richard Neal, D-Massachusetts, blasted the firings, which came after employees from Elon Musk's Department of Government Efficiency reportedly visited IRS headquarters to talk with top officials and seek
"In the middle of tax season, under the deceitful guise of 'efficiency,' the President and his reckless billionaire Cabinet are purging the agency responsible for processing Americans' returns, issuing timely refunds, and holding wealthy tax cheats accountable," Neal said in a statement Thursday. "This isn't about efficiency; it's about giving a free pass for the Administration's rich friends while leaving everyday Americans to suffer from strained services. When the IRS is adequately staffed and funded, the American people benefit. After the Biden administration and Congressional Democrats made historic investments in the IRS, the agency collected over $1 billion from rich tax dodgers. Now, the Trump-Musk Administration is tearing down that progress to roll out the red carpet for their wealthy interests. This isn't efficiency — it's a billionaire bailout. Republicans might be silent, but their hypocrisy is deafening."
In the Senate, the top Democrat on the Senate Finance Committee also criticized the job cuts.
"These cuts will be devastating to ongoing efforts to make sure that the ultra-wealthy and big, profitable firms pay a fair share, including crackdowns on tax cheating involving corporate jets and millionaires and billionaires who don't even bother to tax returns like everybody else," said Sen. Ron Wyden, D-Oregon, in a statement. "As a result of these layoffs, the burden of tax enforcement will be skewed much more toward working families and small businesses."
A small business advocacy group pointed to the problems the SB/SE division layoffs could cause for business owners.
"Reports that the Trump administration will fire 3,500 IRS agents working in the division that oversees small businesses and the self-employed shows once again that the administration and Elon Musk remain at odds with what small businesses want and need," said Small Business Majority CEO John Arensmeyer in a statement. "Our
An advocacy group for financial accountability and corporate transparency also criticized the job cuts. "These cuts are likely to disproportionately affect recent investments and hiring in the tax agency that have greatly improved its capacity to audit wealthy tax cheats and corporations," FACT Coalition executive director Ian Gary said in a statement. "At the same time, staffing cuts will affect service levels for ordinary Americans during the middle of tax filing season. Tax evasion is a crime. Americans need to know that our tax laws will be enforced fairly for rich and poor alike. Rather than creating efficiency, these drastic cuts will invite more tax evasion and rob the U.S. Treasury of vital revenues needed for social investments. Congress should ensure that lawfully appropriated investments in the IRS are protected."
