IRS lays off thousands of employees during tax season

The threatened layoffs of Internal Revenue Service employees appeared to be underway Thursday, with estimates of between 6,000 and 7,000 employees being laid off at the agency in the middle of tax-filing season.

The total includes over 3,500 probationary hires from the Small Business/Self-Employed division, according to an email Wednesday from SB/SE commissioner Lia Colbert and deputy commissioner Maha Williams, per CBS News. The Large Business and International division is also seeing job cuts, with managers asked in an email Wednesday to report to the office to “support offboarding activities.”

Up to 1,000 employees are expected to be laid off in the IRS’s processing facility in Ogden, Utah, according to local news outlet KSL. There were also mass layoffs of up to 100 probationary employees at IRS facilities in the Kansas City area, according to local news outlet KCTV, with some employees being escorted from the premises. The affected employees there mainly worked in audits, compliance and collections. Up to 6% of the IRS workforce are expected to be laid off as part of the cutbacks.

The head of the IRS’s main labor union, the National Treasury Employees Union, expressed concern about the widespread layoffs, with employees being escorted from the premises. 

“Indiscriminate firings of IRS employees around the country are a recipe for economic disaster,” said NTEU national president Doreen Greenwald in a statement. “In the middle of a tax filing season, when taxpayers expect prompt customer service and smooth processing of their tax returns, the administration has chosen to decimate the whole operation by sending dedicated civil servants to the unemployment lines. These layoffs are arbitrary and unlawful, and NTEU will keep fighting until every wrongful termination is reversed.”

“It is especially devastating that removing probationary employees impacts so many young people who chose to start their career in public service,” Greenwald continued. “They passed the IRS’ extensive background checks, received extensive training at taxpayer expense, delivering for the American people, and are now being told they are no longer valued. Much of the IRS workforce is outside of the Washington, D.C. area, which means these layoffs are disrupting their local economies and hurting middle-income families in every state. We have multiple legal challenges now pending over the administration’s mass layoffs and other attacks on federal workers because of the severe damage that is being done to civil servants and the valuable services their agencies are tasked by Congress to provide.”

The top Democrat on the tax-writing House Ways and Means Committee, Rep. Richard Neal, D-Massachusetts, blasted the firings, which came after employees from Elon Musk’s Department of Government Efficiency reportedly visited IRS headquarters to talk with top officials and seek access to sensitive taxpayer information.

“In the middle of tax season, under the deceitful guise of ‘efficiency,’ the President and his reckless billionaire Cabinet are purging the agency responsible for processing Americans’ returns, issuing timely refunds, and holding wealthy tax cheats accountable,” Neal said in a statement Thursday. “This isn’t about efficiency; it’s about giving a free pass for the Administration’s rich friends while leaving everyday Americans to suffer from strained services. When the IRS is adequately staffed and funded, the American people benefit. After the Biden administration and Congressional Democrats made historic investments in the IRS, the agency collected over $1 billion from rich tax dodgers. Now, the Trump-Musk Administration is tearing down that progress to roll out the red carpet for their wealthy interests. This isn’t efficiency — it’s a billionaire bailout. Republicans might be silent, but their hypocrisy is deafening.”

A small business advocacy group pointed to the problems the SB/SE division layoffs could cause for business owners. 

“Reports that the Trump administration will fire 3,500 IRS agents working in the division that oversees small businesses and the self-employed shows once again that the administration and Elon Musk remain at odds with what small businesses want and need,” said Small Business Majority CEO John Arensmeyer in a statement. “Our research has found that small business owners agree that the IRS needs continued additional funding to support them, and a large majority believe that additional funding is needed to properly audit large corporations and wealthy taxpayers, as well as offer improved customer service overall. The timing, of course, could not be worse. The IRS is in the midst of tax season, and an agency that serves more than 57 million small businesses and self-employed individuals will surely be unable to offer better service with less staff. Small businesses have the right to timely tax return processing, and feel strongly that big corporations should pay their fair share of taxes. Both seem impossible without an IRS that is well-funded and staffed.”

An advocacy group for financial accountability and corporate transparency also criticized the job cuts. “A fair, transparent, and well-funded tax system is vital to a functioning democratic society,” FACT Coalition executive director Ian Gary said in a statement. “The FACT Coalition is alarmed by reports of major staffing cuts to the IRS. These cuts are likely to disproportionately affect recent investments and hiring in the tax agency that have greatly improved its capacity to audit wealthy tax cheats and corporations. At the same time, staffing cuts will affect service levels for ordinary Americans during the middle of tax filing season. Tax evasion is a crime. Americans need to know that our tax laws will be enforced fairly for rich and poor alike. Rather than creating efficiency, these drastic cuts will invite more tax evasion and rob the U.S. Treasury of vital revenues needed for social investments. Congress should ensure that lawfully appropriated investments in the IRS are protected.”