The Internal Revenue Service plans to slash its workforce by up to 40%, potentially reducing staff from 102,000 employees to between 60,000 and 70,000, according to internal agency documents.
This dramatic downsizing will occur through a combination of layoffs, voluntary buyouts, and attrition as part of what Treasury officials describe as an effort to streamline operations. Approximately 20,000 IRS employees have already opted for the second deferred resignation program, with some eligible to depart as early as April 28, while others will remain on administrative leave until September 30.
The cuts reverse staffing increases implemented during the Biden administration and come amid concerns about potential impacts on taxpayer services.
Senior officials, including Acting Commissioner Melanie Krause, have reportedly accepted buyout offers, raising questions about leadership continuity during this transition period.
“The reductions currently being considered at the IRS are part of—and driven by—process improvements and technological innovations that will allow the IRS to collect revenue and serve taxpayers more effectively,” the Treasury Department stated in its defense of the plan.
Critics, including former IRS commissioners, have warned these cuts “would render the IRS ‘dysfunctional'” and potentially increase the U.S. deficit, according to industry analysts.
The agency has already terminated approximately 7,000 probationary workers, though a federal judge later ordered their reinstatement. It remains unclear whether these employees have returned to work.
“The Treasury Department argues that these cuts are part of efforts to improve efficiency and service quality by consolidating support functions,” according to Politico’s reporting on the situation.
Tax experts warn that the substantial workforce reduction could lead to longer wait times for phone assistance and delays in processing returns, particularly impacting the 2026 tax filing season.
While current tax return processing times remain comparable to previous years, industry observers express growing concern about the IRS’s future capacity to efficiently handle tax filings with a significantly reduced workforce.