The IRS is considering laying off 50% of its workforce

The IRS disclosed that it was drafting a plan to reduce its workforce by half. The agency started Trump’s presidency with almost 100K employees, but nearly 7K have been laid off since February 20th. Small business Tax professional and co-founder of The Collaboration Room Mike Sylvester said it was ‘an utterly awful idea’ that could potentially ‘jeopardize’ the agency’s tax collection services.

Employees who recently joined the agency without job protections were mostly affected by the layoffs; the rest took Musk’s offer to resign. ‘Losing half of its employees would severely strap the I.R.S., meaning Americans may have to wait longer to receive tax refunds,’ noted the New York Times. The cuts, including normal retirements, are part of the Trump administration’s goal of halving the IRS workforce and all the other agencies across the government.

The IRS has not yet specified how quickly the next terminations could take place or how they will affect each department. IRS officials have reportedly delayed some ‘firings’ until spring when the busy period will end. The agency is in the middle of reviewing the U.S. citizens’ tax returns during this year’s ‘annual filing season’.

Losing half of its staff presents a tough challenge for the IRS

Apparently the IRS has been directed to come up with a plan to reduce their workforce to 45,000. This is cutting it in half during a time when 90,000 is not enough due to the 50 year old technology the IRS has been saddled with.

As a tax professional, this is an utterly awful…

— Mike Sylvester, CPA (@FortWayneCPA) March 5, 2025

The IRS has reportedly struggled for years with hiring and retaining employees that could process millions of tax returns every year and conduct complex audits. However, the agency was directed to come up with a plan to reduce their workforce to 45,000. U.S. citizens may soon have to wait longer to receive refunds or speak with I.R.S. employees in future filing seasons. Corporations and wealthy Americans may also face less scrutiny from the understaffed tax agency. 

The Department of Government Efficiency (D.O.G.E) led by Gavin Kliger and Sam Corcos working from its Washington headquarters, has reportedly taken a keen interest in the IRS in recent weeks in connection with Musk’s cost-cutting effort. D.O.G.E continues to push for access to the IRS databases, which include the most recent records with information about the agency’s contractors. 

“This is cutting the IRS in half during a time when 90,000 is not enough due to the 50 year old technology it has been saddled with” – Mike Sylvester 

IRS leadership has been in ‘turmoil’ since the layoffs began and two leaders have already stepped down under President Trump. Melanie Krause, the current acting commissioner at the IRS, reportedly put the chief human capital officer at the I.R.S. on administrative leave this week.

IRS ‘disproportionately’ harms enforcement efforts

Vanessa Williamson, a senior fellow at the Urban-Brookings Tax Policy Center, said on a Thursday call with reporters that the IRS layoffs would disproportionately harm enforcement efforts. According to the latest IRS data, the IRS employs roughly 90K workers across the United States. People of color account for nearly 56% of the IRS workforce, and women represent about 65%.

The layoffs likely meant the end of ‘the agency’s plan to go after super-rich tax dodgers and could spell disaster for revenue collections’. The majority of the employees shown the door at the IRS so far were newly hired workers focused on compliance, which includes ensuring that taxpayers are abiding by the tax code and paying delinquent debts, among other duties. 

A union representing Treasury Department employees warned on Thursday that the IRS layoffs were one of the largest purges of probationary workers across the government this year, and it could hurt customer service and tax return processing during tax season. Former IRS Commissioner John Koskinen and six other former commissioners strongly opposed the planned downsizing, also warning that it could severely impact the agency’s ability to function. 

However, employees directly involved in the 2025 tax returns season have allegedly been barred from accepting Musk’s buyouts until after the April tax filing deadline in mid-May. 

DHS Secretary Kristi Noem formally requested IRS personnel in February to reassign some IRS employees to the Department of Homeland Security (DHS) to assist with immigration enforcement. 

Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot