How IRS Layoffs Will Impact Upcoming Tax Season Efficiency

The IRS plans to lay off thousands of probationary workers, raising concerns about tax season efficiency and potential delays.

Key Takeaways

The IRS is set to lay off thousands of probationary workers during the tax season.
The layoffs aim to reduce the federal workforce by targeting probationary employees.
The exact number of affected workers is unclear, but it could be up to 15,000.
A “deferred resignation program” offers buyouts to federal employees with specific restrictions.
The Biden administration’s $80 billion IRS investment faces opposition.

IRS Staff Layoffs Amid Tax Season

As tax season approaches, the IRS plans to lay off thousands of probationary workers following a directive from the Trump administration. These workers, without civil service protection, are in vulnerable positions, risking significant impacts on IRS operations. The timing, during the busy tax season, raises concerns about potential inefficiencies in managing tax filings and handling taxpayer queries. Insiders reveal that up to 15,000 employees may be affected, representing about 17% of the IRS’s workforce.

This decision is part of broader efforts to streamline the federal workforce. The Department of Government Efficiency aims to reduce spending by cutting programs and positions. Critics, including attorneys general from 14 states, have challenged these actions, citing constitutional concerns. The layoffs may particularly impact customer-facing roles, such as taxpayer response units and audit positions.

IRS will lay off thousands of probationary workers in the middle of tax season https://t.co/twsssEuz6r pic.twitter.com/1TRSy358Rx

— Eyewitness News (@ABC7NY) February 17, 2025

Operational Impact on IRS Services

The “deferred resignation program” offers buyout options for federal employees, though IRS staff working during the tax season cannot accept these until after the filing deadline. This creates uncertainty in workforce stability amid efforts to efficiently manage 140 million expected tax returns by April 15. The American Institute of CPAs expresses concern regarding the layoffs’ potential impacts on taxpayers and tax preparers, possibly leading to delays or reduced service levels.

“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,” said Mark Kozie, president and CEO of the American Institute of CPAs, or AICPA for short.

The Biden administration had previously allocated $80 billion for IRS improvements, but efforts to reduce this funding have gained traction among Republicans. This environment has created a complex web of interests and challenges as the IRS attempts to maintain its service levels, which have recently seen improvement due to technological upgrades and increased staffing during previous tax seasons.

The IRS will lay off thousands of probationary workers in the middle of tax season, according to two sources. https://t.co/3AaINXYCON

— ABC7 News (@abc7newsbayarea) February 16, 2025

Future Prospects and Ongoing Debates

Both the layoffs and the policy of driving efficiency reflect broader debates about federal budget management and the role of technology and staffing in government operations. The IRS aims to continue its modernization efforts to support taxpayers, yet faces hurdles with reduced workforce levels and budgetary constraints. IRS Commissioner Danny Werfel emphasizes the importance of ongoing investment in the tax system to facilitate smooth tax operations and meet taxpayer needs.

“This has been a historic period of improvement for the IRS, and people will see additional tools and features to help them with filing their taxes this tax season. These taxpayer-focused improvements we’ve done so far are important, but they are just the beginning of what the IRS needs to do. More can be done with continued investment in the nation’s tax system,” said IRS Commissioner Danny Werfel.

The outcome of this situation may heavily depend on legislative discussions regarding the federal budget and efficiency-related reforms. Meanwhile, taxpayers and preparers must brace for potential adjustments and challenges as the agency navigates these complex operational dynamics.