IRS Staffing Shake-Up Sparks Uncertainty As Tax Season Approaches

"Internal Revenue Service building sign"

The IRS is set to lay off thousands during tax season, raising concerns about the efficiency of tax processing and customer service.

Key Takeaways

The IRS plans to lay off thousands of probationary workers during the tax season. The exact number affected is unclear, but up to 15,000 could face layoffs.
The layoffs align with the Trump administration’s efforts to downsize the federal workforce by removing probationary employees without civil service protection. This represents about 17% of the IRS’s 90,000 full-time staff.
The decision has sparked concern among IRS employees, taxpayers, and organizations such as the American Institute of CPAs regarding potential disruptions in tax processing and customer service.
The Biden administration previously invested $80 billion into the IRS for hiring and technology improvements, but Republicans are working to reduce this funding.
A lawsuit has been filed against the Department of Government Efficiency, contesting their authority and actions on constitutional grounds.

IRS Layoffs Amid Tax Season

The IRS faces a controversial decision to terminate thousands of probationary workers as the 2025 tax season is underway. With the tax filing season, which started January 27, expected to handle over 140 million tax returns by April 15, the layoffs have triggered alarm among various stakeholders, from employees to seasoned taxpayers.

The IRS’s decision reflects part of the Trump administration’s strategy to streamline the federal workforce, focusing on probationary employees without civil service protection. This plan could lead to the elimination of around 15,000 positions, impacting taxpayer response capabilities, junior audit roles, and operations at phone centers. These layoffs might challenge the IRS’s ability to meet the demands of the current tax season.

The IRS will lay off thousands of probationary workers in the middle of tax season, according to two sources familiar with the agency’s plans, and cuts could come as soon as this week. https://t.co/43dJubMjuq

— FOX 5 DC (@fox5dc) February 17, 2025

A Financial and Operational Challenge

In response to widespread concerns, Mark Koziel of the American Institute of CPAs stated, “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.” Source: www.cpapracticeadvisor.com/2025/02/16/irs-could-lay-off-15000-staff-this-week-during-peak-tax-season/156108/

As the Biden administration allocated $80 billion to strengthen IRS infrastructure and staffing through the Inflation Reduction Act, proposed Republican cutbacks now threaten those developments. Prominent figures like Elon Musk have voiced support for substantial reductions, suggesting an overhaul of federal agencies. Concerns of management efficiency and data privacy have risen following similar layoffs in other agencies.

A Broader Political and Economic Impact

Meanwhile, the Department of Government Efficiency (DOGE) actions face a lawsuit involving 14 states, challenging their authority. The bipartisan lawsuit signals an intensified scrutiny over federal fiscal policies amid broad financial tightening initiatives aimed at reducing the federal budget by $2 trillion. These actions underscore an evolving landscape of economic policymaking amid political contention within the federal administration.