With the 2025 regular tax season deadline just days away, the IRS is already bracing for more cuts in its workforce. Thousands of agency employees are expected to receive pink slips in mid-May, about a month after Tax Day, April 15.
Losses So Far
Earlier this year, the IRS fired approximately 7,000 probationary employees in response to an executive order signed by President Trump on February 11, 2025. Following the order, the Office of Personnel Management advised various federal agencies, including the Department of the Treasury (which includes the IRS), to fire non-essential probationary employees.
Several legal challenges followed, and in March, U.S. District Court Judge William Alsup for the Northern District of California ordered six agencies, including the Treasury Department, to rehire the employees. In his ruling, Alsup said the federal government was required to follow normal reduction in force (RIF) rules.
The government appealed the ruling—that case is currently pending in the Ninth Circuit Court of Appeals.
In the meantime, the matter was escalated to the U.S. Supreme Court, which paused Alsup’s order on administrative grounds. The unsigned Supreme Court order indicated that the group of unions and non-profit groups lacked standing to sue. Standing is a legal term that refers to your right to bring a lawsuit or have a court hear your case—to be heard, you typically have to show that another party has harmed you and that the only fix for that harm can be found in court. The idea is to ensure that matters that end up in court aren’t frivolous and are raised by the right parties.
The lack of standing is important here. The Supreme Court’s order does not mean that it found the firings lawful, just that the wrong parties raised the issue in court.
Another case may have a better outcome. In Maryland, 19 states and the District of Columbia filed a similar suit to bring back fired employees. In that lawsuit, U.S. District Judge James Bredar granted a preliminary injunction to stop the firings of probationary federal workers in those localities. (That doesn’t mean the employees can’t be sued, but it does mean that the federal government has to follow already established procedures.) The Supreme Court’s ruling in the California case does not apply here.
That means the IRS will allow previously fired probationary employees to return to work. Not everyone wants to take the government up on its offer, worrying that they will simply be fired again.
In addition to the firings of probationary employees, an estimated 4% to 5% of IRS workers accepted the “fork in the road” offer to resign from their positions but stay on the payroll through September 30, 2025 (the end of the fiscal year). Employees had until February 6 to accept the Deferred Resignation Program (DRP) offer.
Shortly after, the IRS recalled some workers, noting that specific, critical filing season positions would be exempt from the DRP until May 15, 2025. It is unclear who fit that criteria, but the memo noted that it included those in Taxpayer Services, Information Technology, and the Taxpayer Advocate Service. Those who had previously accepted the offer and stopped working but fell within the exception were advised to be told when to return to work.
More Cuts Coming
The Trump administration initially gave federal agencies until March 13 to finalize additional RIF plans. Despite the deadline, it remains unclear how many more IRS employees will be let go this year—estimates have ranged from 20%-50%.
Including those probationary employees, the IRS has cut about 11,000 to 12,000 employees. Some offices were hit more acutely than others. Approximately 3,500 IRS employees in the Small Business/Self-Employed (SB/SE) division of the IRS were impacted. The SB/SE division, currently headed up by Lia Colbert, serves more than 57 million small business owners and self-employed taxpayers—those with less than $10 million of assets. SB/SE employees may include those in the exam (audit) and collections departments and workers in operations support and fraud enforcement.
The Office of Civil Rights and Compliance lost 75% of its workforce. The office investigates complaints of discrimination by the IRS against taxpayers based on age, sex, color, disability, race, religion, and national origin.
The next wave of cuts will happen around May 15, a month after the tax filing season deadline. About 11,000 cuts are predicted, bringing the total loss of employees in the first half of 2025 to 20,000.
Additional firings are expected to happen in phases.
In addition to those staffing cuts, Republicans in Congress have clawed back roughly half—$40 billion out of the $80 billion—of the Inflation Reduction Act (IRA) funds. Hiring had been up, thanks to IRA funding. The extra money was intended to help the IRS hire 87,000 new workers—including customer service and IT workers—over the next decade. Former IRS Commissioner Danny Werfel had previously estimated that factoring in attrition, the IRS is approaching 90,000 full-time employees. That may look high compared to 2022, but it’s the same as roughly a decade ago and far below staffing numbers in the 1990s.
Leadership Is Also Leaving
Shake-ups have also happened at the top.
This week, Melanie Krause, the acting commissioner of the IRS, made plans to leave her position after the tax agency reached an agreement to share immigrant tax data with Immigration and Customs Enforcement (ICE). Treasury confirmed the departure in a statement, with a spokesperson saying, “Melanie Krause has been leading the IRS through a time of extraordinary change.”
Krause stepped in as acting commissioner in early March following the retirement announcement of Doug O’Donnell. O’Donnell had served in the role for just a few short weeks following former IRS Commissioner Danny Werfel’s departure on January 20, 2025 (one week before the tax season officially kicked off). O’Donnell’s departure on February 28 marked a remarkable 39-day span of rotating Commissioners. Krause becomes the fourth commissioner or acting commissioner to leave the agency in less than 80 days. This all happened during tax season—the season doesn’t end until April 15, 2025.
Weeks after O’Donnell departed, acting IRS chief counsel William Paul was removed. Paul was reportedly demoted because he refused to cooperate with Elon Musk’s Department of Government Efficiency, as DOGE representatives allegedly sought to share taxpayer information with other federal agencies.
What To Expect
Most tax professionals expect that the staffing cuts will make it more challenging to get answers from the tax agency.
While the IRS says that processing times for current year Forms 1040 that are e-filed are just 21 days, some forms are more than a year behind. For example, the IRS is currently processing Forms 14039 (for identity theft) received in October 2023. Individual general correspondence is now being opened from December 2024. And that’s before the additional personnel cuts. Last year, nearly 60.3 million taxpayers were assisted by calling or visiting an IRS office. Expect phone and in-person service to decline.
The IRS is also tasked with revenue collections which are expected to decline as the IRS workforce declines. During Fiscal Year (FY) 2023, the IRS collected nearly $4.7 trillion in gross taxes, processed almost 271.5 million tax returns and other forms, and issued about $659.1 billion in tax refunds.
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