IRS To Fire Thousands Of Workers This Week—In The Heart Of Tax Season

The IRS Layoffs: Understanding the Impact on Taxpayers and Employees

The IRS is facing significant workforce reductions as part of the Trump administration’s broader efforts to cut costs and streamline government operations. These layoffs, which began in early 2025, are expected to affect thousands of employees, particularly those in probationary status. While the exact impact on the 2025 tax filing season, which started on January 27, remains unclear, the cuts have raised concerns among both IRS employees and taxpayers. The reductions follow earlier efforts to trim the IRS budget and personnel, adding to the uncertainty surrounding the agency’s ability to manage its core responsibilities effectively.

The Scope of the Layoffs: Who Is Affected and Why

The layoffs disproportionately target probationary employees, who include not only recent hires but also those who have been promoted or transferred within the past year. At least 3,500 employees in the IRS’s Small Business/Self-Employed (SB/SE) division are expected to lose their jobs. The SB/SE division, led by Lia Colbert, serves over 57 million small business owners and self-employed taxpayers with assets under $10 million. Workers in this division handle critical functions such as audits, collections, fraud enforcement, and operational support. Beyond the SB/SE division, reports suggest that up to 15,000 IRS employees could be terminated, with additional cuts planned in cities like Atlanta and Kansas City.

Other Reductions in the IRS Workforce

The layoffs are part of a larger effort to reduce the IRS workforce. Earlier this year, the Office of Personnel Management (OPM) offered federal workers, including IRS employees, the option to resign through the Deferred Resignation Program (DRP) while remaining on the payroll until the end of the fiscal year. However, employees in "critical filing season positions" were exempt from the program until May 15, 2025. These exemptions include roles in Taxpayer Services, Information Technology, and the Taxpayer Advocate Service.

The Trump administration has also implemented a hiring freeze for most federal agencies, with the IRS being a notable exception. The freeze is set to remain in place for the IRS until the Secretary of the Treasury, in consultation with the Office of Management and Budget (OMB), determines it is in the national interest to lift it. Additionally, President Trump has hinted at more drastic measures, including firing IRS employees or reassinding them to the U.S.-Mexico border. These suggestions have drawn criticism, with former IRS officials labeling the rhetoric as misleading and dangerous.

The IRS Workforce: Challenges and Controversies

The IRS workforce has grown in recent years, thanks in part to funding from the Inflation Reduction Act, which allocated $80 billion to the agency over a decade to hire 87,000 new employees. However, this expansion has been met with resistance from Republicans, who have successfully clawed back $40 billion of the allocated funds. The IRS workforce is now under scrutiny, with critics arguing that the agency is overstaffed. However, the current workforce is comparable to levels seen a decade ago and significantly smaller than in the 1990s.

The layoffs and hiring freeze have created a climate of uncertainty for IRS employees. Many have expressed concerns about job security, particularly as the agency enters its busiest season. The IRS has not responded to requests for comment, and a source indicates that media inquiries are being tightly controlled, leading to a lack of transparency about the extent and impact of the cuts.

The Department of Government Efficiency (DOGE) and IRS Data Access

Amid the layoffs, the Department of Government Efficiency (DOGE), led by Elon Musk, has sought access to IRS data through the Integrated Data Retrieval System (IDRS). The IDRS contains sensitive taxpayer information, including tax returns and bank records. Senators Ron Wyden (D-Oregon) and Elizabeth Warren (D-Massachusetts) have raised alarm over this development, demanding that the IRS disclose the extent of DOGE’s access to IRS systems. The senators warned that unauthorized access could violate federal privacy laws and potentially disrupt tax filing operations.

The senators also expressed concerns that DOGE’s involvement could lead to delays in processing tax refunds, which millions of Americans rely on to manage their finances. Any disruption to the refund process could have serious financial consequences for taxpayers, particularly during an already challenging tax season.

Conclusion: The Broader Implications for Taxpayers and Government Efficiency

The IRS layoffs and workforce reductions represent a significant shift in how the agency operates, with potential consequences for taxpayers and employees alike. While the Trump administration has framed these cuts as a necessary step toward reducing government spending, critics argue that they could weaken the IRS’s ability to enforce tax laws, assist taxpayers, and prevent fraud. The involvement of DOGE in accessing IRS data adds another layer of complexity, raising questions about privacy and the role of external agencies in government operations.

As the 2025 tax filing season progresses, the impact of these changes will become clearer. For now, the uncertainty surrounding the layoffs, hiring freeze, and data access issues leaves both IRS employees and taxpayers bracing for what could be a challenging year ahead. The situation underscores the delicate balance between cost-cutting measures and maintaining the essential functions of a critical government agency.