The IRS could suffer more internal shakeups as Elon Musk’s Department of Government Efficiency (DOGE) embeds itself further into the agency.
IRS acting chief counsel, William Paul, was reportedly demoted from his role at the agency and is expected to return to his prior role as deputy chief counsel technical, according to TaxNotes. Paul has been replaced by another IRS attorney Andrew De Mello, who sources say is supportive of DOGE.
President Donald Trump had nominated De Mello for inspector general of the Education Department during his first term.
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The chief counsel serves as the top legal advisor to the IRS Commissioner, the Treasury, and taxpayers. The position, along with the commissioner, is appointed by the President and confirmed by the U.S. Senate.
It’s unusual, however, for the role to be changed as the presidency changes hands. Paul had previously served as acting chief counsel under President Biden and during Trump’s first term.
Although the reason for the demotion is unclear, it comes as IRS leaders are at odds with DOGE employees gaining access to sensitive tax databases. It also follows a dramatic reshaping of the IRS workforce, as Musk has set off to fire thousands of federal workers and cut nearly 20% of all IRS employees by May 15.
“I had never heard of a president firing a career acting chief counsel while awaiting Senate confirmation of the duly appointed chief counsel,” former IRS Commissioner John Koskinen told CNN. “In this case, it’s especially troubling since Bill Paul is a wonderful lawyer and a dedicated and devoted public servant.”
Related: Check out Kiplinger’s tax blog for the 2025 filing season. We’re providing live updates, news, information, and commentary to help you navigate your taxes.
Trump IRS leadership up in the air
This latest restructuring of IRS leaders may come as little surprise to some.
Paul’s removal follows IRS Commissioner Danny Werfel’s resignation before the end of his term. Werfel departed from his role on January 20, paving the way for President Trump’s choice for commissioner — ex-congressman and auctioneer Billy Long (R-Missouri).
- As reported by Kiplinger, Long’s background lacks tax experience which is typical for IRS commissioner nominees.
- He would also be the first politician appointed to the role in more than 80 years.
Long is still pending a Senate confirmation date, casting further doubt on the agency’s future as Trump has suggested abolishing the IRS and replacing it with a tariff-led revenue system administered by a so-called External Revenue Service.
Since Werfel’s departure, Douglas O’Donnell briefly stepped up as acting IRS Commissioner before announcing his retirement on February 25 after serving 38 years at the agency. It’s unclear whether inner turmoil at the IRS and recent layoffs, spurred by the DOGE incident, influenced his decision to exit.
In his place is Melanie Krause, former IRS Chief Operating Officer, who joined the IRS in 2021. Before her career at the IRS, Krause spent 12 years in the federal oversight community, including the Government Accountability Office and the Department of Veterans Affairs Office as Inspector General.
IRS workers feel ‘paralyzed’ by DOGE
Former Internal Revenue Service workers leave their office after being laid off in downtown Denver, Colorado on Thursday, February 20, 2025. The IRS began laying off roughly 6,000 employees in the middle of tax season as the Trump administration via the Department of Government Efficiency (DOGE) works to downsize the federal workforce.
(Image credit: Hyoung Chang for The Denver Post via Getty Images)
This year has not been easy for the IRS.
The disruptions at the agency began as soon the first DOGE staffer embedded in the agency’s Washington, D.C. headquarters last month, according to CNN.
Allegedly, Musk’s DOGE staffers began to demand access to the tax collection agency’s sensitive internal databases, according to sources familiar with the matter. Some information on those servers includes the Social Security numbers and bank account information of millions of private citizens like you.
Privacy experts and government officials cited concerns that DOGE’s access to tax records could lead to a breach of confidential taxpayer information.
“They just randomly drop by people’s offices, demanding access to systems; they’re bullying us and there’s no discipline in what they are doing, which really worries me,” an IRS employee told CNN anonymously.
Another source reported they were “paralyzed” as DOGE announced widespread layoffs of federal employees, including IRS workers handling the tax season. To summarize:
- Approximately, 6,700 IRS employees were fired in February, particularly new hires, in the middle of the 2025 tax filing season.
- The National Treasury Employees Union estimates that as many as 5,000 IRS workers accepted Musk’s DOGE-arranged buyout offer by the Feb. 12 deadline.
- IRS workers deemed essential to IRS tax filing season are required to work through May 15, even if they took the buyout.
Overall, the Trump administration and DOGE are aiming to slash the IRS workforce by nearly 20% by May 15. That means nearly 6,800 employees would be terminated, adding to the roughly 11,400 that have been laid off or accepted the buyout. That’s more than 18,000 IRS employees that would be out of work.
Before the overhaul of the IRS workforce, the agency had approximately 100,000 employees. Nearly half of those were appointed to critical areas to ensure tax filing, compliance, and taxpayer services.
That includes federal workers who answer your phone calls during tax season, flag taxpayer errors, and administer refunds, among some examples.
Trump’s dramatic downsizing of IRS personnel has since raised concerns about the agency’s ability to assist taxpayers, run compliance checks, and process tax returns without further delays.
Despite the challenges, the IRS expects to receive more than 140 million individual tax returns by the April 15 deadline — also known as “Tax Day.“
What’s next for the IRS under Trump?
The future of the IRS is facing a myriad of challenges under the Trump administration.
Congress has paralyzed $20 billion in critical funding allocated for key enforcement programs, which Treasury officials warned could lead to an increase in the national deficit of $140 billion, as many as 6,000 fewer audits to the wealthy, and 2,000 fewer audits to large corporations.
This month, a Treasury official said that the IRS is pausing modernization efforts due to the budgetary pause.
The leadership of the IRS still hangs in a state of limbo as Trump’s nominee for IRS Commissioner, Mr. Long, has yet to have a Senate confirmation.
Additionally, Musk-led DOGE efforts to downsize the IRS workforce have raised doubts about the agency’s future efficiency, which already struggles to address ERC delays and taxpayer fraud due to a lack of staff — among other challenges.
Lastly, the Trump administration has suggested tariffs may abolish income tax for certain taxpayers. Some GOP lawmakers have even suggested eliminating the IRS and substituting revenue with a national sales tax.
All of these dramatic changes can have an impact on your finances and your experience as a taxpayer, so stay tuned to our coverage.
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