Will mass layoffs at the IRS make a mess of this year’s tax season?
That’s one of the big questions amid reports that the agency has begun the process of dismissing more than 6,000 employees this week — the latest move in the Trump administration’s blitz aimed at shrinking the federal bureaucracy.
How IRS cuts could affect taxpayers
The White House appears to be hoping it can slash headcount without causing major headaches for taxpayers who are just trying to send in their Form 1040. According to multiple reports, IRS managers sent emails to their staff explaining that they had been “directed to terminate probationary employees who were not deemed critical to filing season.” Most of the cuts are believed to be targeted at enforcement staff, with more than 3,500 coming from the division that handles returns from small business owners and the self-employed.
The agency had previously said that workers whose jobs were crucial to tax season would not be eligible for the buyout Trump officials offered to federal employees.
But former Biden tax officials are raising concerns about a potential blow to customer service. Tax filing season, they said, tends to be an all-hands-on-deck period where staff from one part of the IRS are pulled into the process to help with the load, and the wide-scale cuts could bog down processing.
Learn more: How to check on your tax refund status
“I’m hearing the firings are across all major functions, including taxpayer services and IT,” New York University professor Lily Batchelder, who served as assistant secretary for tax policy at the Treasury Department, told Yahoo Finance in an email. “They are so large that I don’t see how one can guarantee they won’t disrupt the filing season, and they could mean people’s refunds could be late or wrong.”
How IRS cuts could affect collections and enforcement
Rebuilding the IRS and amping up its enforcement after years of decline had been a major priority for the Democrats under the Biden administration, who included an $80 billion infusion for the agency in the Inflation Reduction Act. That money helped its head count rebound to over 100,000 agents and other staff in 2024, up from a multi-decade low of about 73,000 in 2017, and began a process of upgrading its IT and customer service capabilities.
Republicans have sought to claw back much of that new funding, often inaccurately claiming that it had been used to hire 80,000 new agents. In January, President Donald Trump half-jokingly suggested he would either look to fire the agency’s new hires or send them to police the southern border.