The IRS is reportedly preparing to reduce its nearly 100,000 workforce by as much as half through layoffs, buyouts, and attrition — and experts say the disruption is already interfering with this tax season.
Close to 7,000 probationary employees were laid off on February 20, and now the agency is reinstating and placing those workers on paid administrative leave until further notice. That figure adds to about 5,000 IRS employees who have reportedly accepted the Trump administration’s fork-in-the-road deferred resignation offer to cut down federal spending.
As reported by Kiplinger, those deemed critical to the 2025 tax season have been barred from accepting the buyout
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Now, more layoffs could be on the horizon, as Elon Musk ’s Department of Government Agency (DOGE) plans to cut as much as 20% of the IRS by mid-May. The billionaire tasked by President Donald Trump to dismantle federal agencies and other spending expects to eliminate about 6,800 more federal workers, barely a month after tax season ends.
The dramatic downsizing could worsen as the IRS is drafting plans to eliminate up to 45,000 of its overall headcount, sources familiar with the matter told 2025 tax season
Here’s what you need to know about how IRS layoffs can impact you as a taxpayer, based on Kiplinger’s conversations with CPAs and tax experts.
When tax season rolls around, the saying “all hands on deck” is not lost at the IRS. The agency has been operating with that approach for years to overcome staffing shortages and successfully process millions of tax returns.
In fact, the IRS has been known to siphon employees from other departments to meet tax filing deadlines in previous years. This year is no different. According to the National Taxpayer Advocate
As reported by Kiplinger, Taxpayer Services accounts for half of the IRS entire workforce. The agency’s overall headcount had surpassed
But that progress has fallen back in barely two months.
With the recent wave of layoffs shaking up the IRS, some impacted employees likely belonged to the IDTVA. Between fiscal years 2023 and 2024, the department hired 663 new employees. Musk’s firings on February 20 mostly impacted probationary workers who had fewer protections compared to long-term colleagues, which may have included some of those recent hires.
Industry experts across the country have already noticed that it’s getting harder to reach an IRS agent on the phone, putting their clients’ tax returns and problems inevitably on hold.
“Typically, when we work a high-value collections case, we are working with a single point of contact for our clients’ case at the IRS known as a revenue officer,” Logan Allec, CPA and owner of tax relief company Choice Tax Relief
But what happens when IRS phone lines go unanswered? That’s a question many CPAs and taxpayers are asking themselves this year.
“We have already seen with several of our clients’ cases our communications — voicemails and taxes — with their revenue officers becoming a black hole. Although we don’t know for sure, we suspect that this means that these revenue officers are no longer with the IRS, and we have to wait for a new one — from the already reduced pool of revenue officers to be assigned.”
Logan Allec, CPA and founder of Choice Tax Relief
Harder to avoid tax penalties
With fewer employees at the IRS, taxpayers are likely to face more obstacles as they attempt to get their problems solved.
The National Taxpayer Advocate pointed
Delays in processing returns and refunds
Reduced access to knowledgeable IRS employees
Inconsistent application of tax laws and increasing errors
The sudden reduction in IRS staff has sounded alarm bells for one attorney in Michigan, particularly regarding its impact on taxpayers.
“Fewer IRS employees create a big problem for taxpayers when it comes to getting their tax issues resolved,” Stephen Weisberg The W Tax Group
As reported by Kiplinger, only 32% of callers reached an IRS employee last year during tax season, and 29% of callers were able to speak with an employee during the full year. While that is an improvement from previous years, it still required reassigning employees from other departments to assist with phone calls.
“The IRS is already overwhelmed,” Weisberg added. “With even fewer employees, there’s going to be no one to help taxpayers resolve these issues. Penalties will still accrue, as will interest, despite the fact that taxpayers won’t be able to get in contact with anyone in order to resolve their tax debt.”
‘Slow processing and refunds’
An IRS employee walks through tax documents in the staging warehouse at a Internal Revenue Service facility in Ogden, Utah.
(Image credit: Alex Goodlett for The Washington Post via Getty Images)
Taxpayers, particularly those with more complicated tax returns, often worry about delays.
Those concerns are within reason. It took the IRS an average of 180 days to manually process tax returns last year. Processing paper returns took an average of 20 days, instead of 13. Additionally, 66% of taxpayer mail was delayed and considered late by the end of 2024, according to the NTA.
If you were a victim of identity theft, the average time to reach a resolution and process refunds was nearly two years. Not to mention, the agency still faced a backlog of 1.2 million Employee Retention Credit
The Trump administration’s hiring freeze
Slow processing will not only hurt responsible taxpayers it would also increase the national deficit if the IRS no longer has the bandwidth to target complicated returns, such as large corporations and higher earners.
A separate study from Yale Budget Lab
“These layoffs within the IRS could slow processing and refunds; especially more complicated returns,” Thomas J. Cyran, attorney and author of Disrupting Taxes
‘A focus on low-hanging fruit’
Carts containing documents sit organized at the IRS Processing Facility on September 06, 2024 in Austin, Texas.
(Image credit: Brandon Bell via Getty Images)
The recent string of IRS layoffs spearheaded by Musk’s DOGE team reportedly call centers technology modernization
While those estimated 7,000 probationary agency workers were recently placed on paid leave until further notice, they are not allowed to work during this tax season. In a letter
“Unfortunately, to make up for the lost revenue from experienced auditors leaving the agency, we will likely see more of a focus on low-hanging fruit,” Allec told Kiplinger, explaining that these are “less sophisticated and often non-represented taxpayers whom the IRS can essentially railroad in an audit or collections case.”
Some examples of low-hanging fruit where the IRS may focus enforcement efforts on include:
Individuals behind on their taxes, or non-filers
Taxpayers on repayment plans
According to Allec, the IRS has a system called Automated Substitute for Return (ASFR), which can calculate a taxpayer’s liability. With less staffing, the IRS would have to lean on this automated software to pull in revenue.
“If we see more layoffs at the IRS, I have to believe that more resources will be allocated to the ‘automated’ programs,” he added.
Karla Dennis, an enrolled tax agent and CEO of KDA, Inc
“The IRS compliance sector is divided between processing returns and conducting audits,” Dennis said. “Since layoffs seem to be targeting auditors, we can expect a decrease in audits, especially those for small businesses.”
What’s next for the IRS
The IRS workforce could face more shakeups as the Trump administration pushes its goal to reduce federal spending.
To date, the agency has yet to confirm President Trump’s choice for commissioner IRS also demoted the acting chief counsel
Looking toward the future, Trump has suggested abolishing the IRS External Revenue Service
However, one fact is for certain: the recent layoffs at the IRS will cause some strain on taxpayers.
“In the short term, most likely it will cause some issues, but the goal is to shake things up and make things more efficient over time,” CFP and tax strategist Matt Chancey
Chancey, founder of Tax Alpha Title, cited a potential positive: “Will it get worse before it gets better? Most likely. But with new technology and some AI integration and being forced to become more efficient it should get better over time. What is the old expression — you have to break a few eggs to make an omelette.”
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