How Impending IRS Resignations Might Impact Tax Collection And Government Operations

20,000 IRS employees hint at a possible resignation, sparking concerns about severe disruptions to tax collection and government functioning.

Key Takeaways

IRS faces potential mass resignation affecting tax collection and government functioning.
The “deferred resignation” program by the Trump administration is under legal scrutiny.
Lawsuit filed by federal employee unions to stop the program.
The IRS plans a significant workforce reduction post-tax season.
The Biden-era IRS expansion is set to reverse.

Impending Crisis at the IRS

In an unprecedented move, 20,000 IRS employees are contemplating a resignation following the Trump administration’s “deferred resignation” program. This plan allows federal workers the option to receive buyouts with salary and benefits until September 30, on the condition of resigning by February’s end. Legal concerns surround this initiative, with potential violations of the Anti-Deficiency Act and congressional appropriations being cited.

In response, federal employee unions have filed a lawsuit, aiming to halt the program, which they argue infringes upon the Administrative Procedures Act. The IRS’s internal operations are also under pressure, with a hiring freeze enforced by President Trump remaining in effect until the Treasury secretary deems lifting it necessary. This decision has already resulted in the cancellation of job offers, affecting multiple IRS departments.

Legal and Operational Challenges

The deferred resignation program is not without its critics. “As a reminder, the deferred resignation offer—which allows eligible employees to keep their government pay and benefits through September 30, 2025, without any expectation of performing work—expires on February 6, 2025,” remarked Chris Nelson, the Agriculture Department’s acting chief human capital officer.

The IRS anticipates cutting 40% of its workforce after the current tax season ends. Bi-weekly Reduction in Force (RIF) notices have started, part of a plan to reduce personnel from 102,000 to between 60,000 and 70,000 employees. Such cuts are expected to significantly impact taxpayer services and compliance capabilities.

Consequences of Workforce Reductions

Experts have raised alarms regarding the consequences of reduced IRS staffing. “Under a hiring freeze, there is no way to compensate for normal attrition and make sure that retirees are replaced with the next generation of public servants trained to help Americans file their taxes and catch those trying to cheat the system,” said Doreen Greenwald, National Treasury Employees Union president.

The IRS has already begun to abandon certain audits due to insufficient staff, raising concerns about its ability to effectively collect taxes, which could lead to decreases in federal revenue. The administration believes consolidating functions as necessary to improve efficiency, even as approximately 20,000 workers express interest in the resignation plan. Broader discussions about institutional governance and public confidence are likely to follow as this situation develops.