IRS workforce reductions accelerate | Accounting Today

The Internal Revenue Service is continuing to shed employees, with over 25% of its workforce now gone since the beginning of the year, according to a new report, and more employees are expected to depart after the Supreme Court cleared the way.

The report, released Tuesday by the Treasury Inspector General for Tax Administration, provided a snapshot of IRS workforce reductions up through May of this year amid the cost-cutting plans of the Trump administration. 

According to IRS records, 25,386 employees have separated, taken a voluntary buyout offer under one of the deferred resignation programs, or used some other incentive to leave. Another 294 employees were sent termination notices due to reduction in force actions. The departures represent 25% of the IRS’s workforce and affect some business units more than others.

The separations hit particularly hard at employees in enforcement positions, with approximately 27% of tax examiners now separated, while 26% of revenue agents separated. Taxpayer service is also being affected by the layoffs. “There’s no one to answer the phones, no one to work cases,” said former IRS agent Michael Sullivan. “This is only supposed to get worse. … Most of the seasoned people who worked at the IRS have left. The effects of this are going to be felt at least a couple years. There’s no people to replace these agents.”

“If you have holes in your customer service staffing and in your processing staffing, and you need to hire people, are you going to have good candidates coming in the door?” said Rochelle Hodes, a principal in the Washington national tax office at Crowe, a Top 25 Firm based in Chicago.

Since January, the IRS has taken steps to reduce the size of its workforce in compliance with President Trump’s executive orders and guidance from the Office of Personnel Management. The administration encouraged employees to take either deferred resignation program offers or other incentives to separate and avoid possible RIF actions. According to the IRS, in February and March 2025, 7,315 probationary employees received termination notices. 

There were court challenges in California and Maryland, and federal courts ruled that federal probationary employees needed to be reinstated in March 2025. The effects of those rulings were paused by higher courts, including the U.S. Supreme Court. 

However, in May, leadership in the IRS and the Treasury Department decided to return all probationary employees to full work status by May 23, 2025. In July, the U.S. Supreme Court lifted the federal court’s prohibition on covered agencies implementing agency RIF and reorganization plans and issuing or executing RIF notices. Currently, it’s unclear whether any terminated probationary employees called back to work will be subject to a large-scale RIF, according to the report. However, further cuts are planned, with a House appropriations committee planning to slash IRS funding in fiscal year 2026 by around $2.8 billion.