Even after reports that a court ordered the Internal Revenue Service to rehire employees put on leave ahead of the Tuesday U.S. tax filing deadline, new reports indicate the service could see a 40% reduction in its workforce.
According to an internal memo cited by POLITICO, this “mass exodus” would be due to a combination of buyouts offered by the Trump administration and widespread layoffs. This memo said the agency plans to reduce its workforce to between 60,000 to 70,000 employees, down from approximately 100,000, per the outlet, with notices going out this week.
“Taxpayer services and compliance will need to be trimmed,” the memo stated, according to the report.
A person familiar with the matter who requested to remain anonymous told POLITICO that around 22,000 IRS employees have already opted to take the latest “deferred resignation” buyout offer from the current administration. CNN also reported that a “staggering 25% of Internal Revenue Service employees are planning to take buyouts and resign, according to three sources with direct knowledge of the matter.”
Since President Donald Trump took office in January, he has moved forward with plans to cut government spending, including extensive layoffs at many government agencies. His advisor, multibillionaire entrepreneur Elon Musk, has led some of these efforts has the head of the Department of Government Efficiency (DOGE).
POLITICO said the new figures it reported this week are on top of 7,000 probationary workers the IRS terminated earlier this year. It also said that some tax experts are concerned that the cuts could actually “result in the Treasury losing out in hundreds of billions in tax receipts.”
Meanwhile, a Treasury Department spokesperson said the cuts would lead to “consolidation of critical support functions” that “are vital to improve both efficiency and quality of service.” That spokesperson also said that expansion of the IRS under the administration of former President Joe Biden was “wasteful.” Just days after Trump took office for his second term, Trump issued an executive order halting the hiring of federal employees that included a halt in the onboarding of IRS agents.
“This is enormous,” a source told CNN of the potential IRS staff cuts.
Still, both CNN and POLITICO noted that the total number of resignations is not yet totally clear. Those who opted into the deferred resignation program could change their mind and decide to stay within a grace period, and numbers could shift as paperwork is finalized.
“I’m hearing a lot of people accepted the deferred resignation,” one IRS employee in Atlanta said, per CNN. “The workplace is toxic these days. Morale is low. People try to come in and think positively, but they don’t make it through a full workday without negativity, even in conversation with other employees, or getting the next email in their inbox with bad news.”
This week, the Associated Press also reported that the Trump administration plans to eliminate the IRS’ Direct File program citing two people familiar with the decision. That is an electronic system for filing tax returns directly to the agency for free established during the Biden administration.
“Republican lawmakers and commercial tax preparation companies complained it was a waste of taxpayer money because free filing programs already exist, although they are hard to use,” said the AP. It said users found the system easy and economical.