The Internal Revenue Service is preparing to lay off thousands of employees as part of a broader federal workforce reduction under the Trump administration, potentially straining the agency during the ongoing tax-filing season, according to multiple sources familiar with the matter. The move follows a directive from the Office of Personnel Management (OPM), which instructed federal agencies to terminate probationary employees as part of restructuring efforts led by President Donald Trump and Elon Musk's Department of Government Efficiency (DOGE).
The scope of the layoffs remains unclear, but estimates suggest a significant impact on the agency's operations. The IRS workforce had expanded to approximately 100,000 employees under former President Joe Biden, with around 16,000 probationary staff hired to enhance auditing and enforcement efforts targeting corporations and high-income taxpayers. Many of these positions are now at risk.
A source familiar with the situation warned of the potential operational fallout, stating, "They are trying to reduce numbers across the board with no analysis to the impact it will have on operations." The IRS has yet to release an official response regarding the impending job cuts.
The layoffs coincide with a crucial period for the IRS, as millions of Americans are filing their tax returns ahead of the April 15 deadline. The agency is responsible for processing returns, issuing refunds, and providing taxpayer assistance-services that could face disruptions due to staff reductions.
The restructuring follows an earlier buyout program offered by OPM, which allowed federal employees to voluntarily resign in exchange for financial incentives. Approximately 40,000 federal workers across various agencies accepted the offer, representing around 2% of the federal workforce. Employees who opted for the buyout are expected to continue receiving pay through September.
IRS employees who accepted the buyout were informed that they would be required to remain on the job until May 15 due to the agency's tax season workload. Unlike other federal employees, who will be placed on administrative leave starting March 1, IRS staff deemed essential-such as those in Taxpayer Services, Information Technology, and the Taxpayer Advocate Service-must remain in their roles until after the tax filing deadline.
The planned reductions are part of the Trump administration's larger push to downsize the federal government, which officials argue has become bloated and inefficient. Trump has repeatedly pledged to cut costs by eliminating positions across multiple agencies, with DOGE spearheading efforts to streamline federal operations.
Accounting Today reported that a significant number of IRS employees were initially targeted in the buyout program, but the agency extended their work period to avoid immediate disruptions during tax season. The latest round of layoffs, however, could introduce new challenges as tax processing demands peak.
