IRS said to be planning to lay off half of workforce

The Internal Revenue Service is reportedly making plans to lay off up to half of its 90,000-person workforce.

The Associated Press reported the layoffs would be in addition to the 6,000 to 7,000 layoffs at the IRS last month, mainly of probationary employees. The AP noted that people of color comprise 56% of the IRS workforce, and women represent 65%.

The Elon Musk-led Department of Government Efficiency has been slashing jobs across the federal government. Soon after taking office, President Donald Trump signed an executive order mandating a hiring freeze across the federal government that would last longer for IRS employees. The IRS also rescinded job offers for any employee set to start after Feb. 8.

The layoffs come despite a move to prevent IRS employees from taking advantage of a deferred resignation program until May 15, a month after the end of tax season, although that buyout program has since ended.

Many of the layoffs so far have occurred within the IRS’s Small Business/Self-Employed Division, but the Large Business and International Division has also been affected. A number of the probationary employees who were laid off were experienced tax attorneys and accountants who had responded to the IRS’s recruiting drive in recent years seeking people with the necessary skills to do complex audits of wealthy individuals, large partnerships and corporations. Employees who were laid off have needed to set aside the audits and reports they were preparing, according to the International Consortium of Investigative Journalists and ProPublica, and the cases will likely be closed.

“A fair, transparent, and well-funded tax system is vital to a functioning democratic society,” said Ian Gary, executive director of the Financial Accountability and Corporate Transparency Coalition, in a statement. “The FACT Coalition is alarmed by reports of cuts of up to half of the 90,000-person IRS workforce. Cuts at such a massive scale would destroy the ability of our nation’s revenue agency to effectively operate. These cuts are also likely to disproportionately affect recent investments and hiring in the tax agency that have greatly improved its capacity to audit wealthy tax cheats and unscrupulous corporations. At the same time, such drastic staffing cuts will affect service levels for ordinary Americans.”

Former IRS commissioners have been criticizing the job cuts at the agency and the impact on tax season and beyond, recently co-authoring an editorial in the New York Times. Ironically, the IRS set a return to office deadline starting next Monday, according to the Federal News Network, even though some facilities don’t have enough office space. Meanwhile, Trump has announced plans to send thousands of IRS agents to police the border as well. 

In response to the recent elimination of thousands of IRS positions, the National Association of Tax Professionals has created a dedicated job resource to help affected tax professionals find new opportunities in the industry. The NATP hopes to bridge the gap between displaced IRS workers and tax firms in need of skilled professionals. The “Looking for Positions” section on natptax.com is a free platform for job seekers to post listings and for firms to connect with experienced candidates.

The NATP noted that the IRS reductions come amid broader efforts to decrease the federal workforce, with many of the affected employees being recent hires and said the reduction in staffing raises concerns about the potential impact on taxpayer services, response times, and the efficiency of tax administration, particularly during the critical tax filing season.

“The sudden elimination of thousands of IRS positions has left many individuals with a tax background in search of new opportunities,” said NATP CEO Scott Artman in a statement. “As the trusted resource for tax professionals, NATP is committed to supporting those affected by connecting them with firms looking for skilled talent. Our goal is to strengthen the industry and ensure taxpayers continue to receive high-quality service.”

Trump will probably need to rely on IRS employees to help with new provisions of the Tax Code that he would like to add as part of the negotiations around the extension of the Tax Cuts and Jobs Act, such as eliminating taxes on tips, overtime and Social Security income. Trump mentioned those proposals during his address to a joint session of Congress on Tuesday night. 

“We had tremendous success in our first term, with a very big part of our plan, we’re seeking permanent income tax cuts all across the board,” he said, according to a transcript in the New York Times. “And to get urgently needed relief to Americans hit especially hard by inflation, I’m calling for no tax on tips, no tax on overtime, and no tax on Social Security benefits for our great seniors. And I also want to make interest payments on car loans tax deductible — but only if the car is made in America.”