IRS Likely To Feel Strain Of Layoffs Now Filing Season’s Over Published April 30, 2025
The IRS’s filing season ran relatively smoothly with minimal disruptions to customer service and taxpayer assistance, but the impending loss of a quarter of the agency’s employees is already wearing on its workforce and will likely erode customer service, refund processing and institutional knowledge, experts say.
The Internal Revenue Service has made improvements in recent years by beefing up its customer service staff, recruiting younger employees as others retire and boosting enforcement efforts, mostly thanks to the funding boost the Inflation Reduction Act provided. But the agency’s impending loss of 7,000 probationary employees and over 20,000 employees who accepted early buyouts by the fall is likely to reverse some of those gains.
Customer service hasn’t slipped dramatically since last year’s tax filing season, but the agency is feeling some early effects of the plans by President Donald Trump’s administration to significantly reduce the agency’s workforce, said Eric Santos, executive director of the Georgia Tax Clinic. Employees already have less time to do substantive reviews of taxpayer files and less understanding of cases when they do come in, Santos told Law360.
“We have not seen major issues with tax filing at this time,” Santos said. He added that there hasn’t been anything especially abnormal in terms of resolutions and customer service and that it seems as if the agency shifted employees to customer service functions in order to ensure a smooth tax filing season.
“I think it has been harder, in general, to reach folks … in particular on the substantive side,” Santos said. “We’ve experienced a number of folks at the IRS who are pretty clearly overextended.”
As a result of increased workloads, the tax clinic has seen more cases in which documents being sent in by clients haven’t been read or reviewed because employees are working to move cases off their plates more quickly, Santos said. The agency is doing its best with the cuts that have already been made, but there is a sense that employees are wary of future cuts now that tax filing season is over, he said.
The sense of urgency may stem from uncertainty about whether the agency will retain the staff to work on cases in the immediate short term now that filing season is over, Santos said. The agency’s employees are still professional and take their jobs very seriously, but at some point the agency’s diminished workforce could lead to serious disruptions, he said.
Despite the agency, as it stands now, doing the work to prevent “serious customer service disruptions,” Santos said, “it’s very unclear how much more they can be reduced.”
“Stuff is already kind of cracking at the edges,” he added.
The shift to prioritizing certain IRS functions in the face of staffing and funding cuts isn’t something the agency hasn’t experienced before, Daniel Reck, an assistant professor of economics at the University of Maryland, said. Civil servants at the agency are not new at placing immediate needs ahead of long-term goals, Reck said.
Nevertheless, the agency will eventually feel the effects of the layoffs, he said.
“We’ve seen this before, with the IRS facing very sudden cuts and having to prioritize filing season, so I do kind of expect that they will grind this filing season out and that you’ll start to see the long-term effects materialize as soon as next year,” Reck said.
Beyond customer service changes, effects of the planned workforce reduction will likely be felt in information technology modernization and data processing to detect noncompliance and improve tax enforcement, Reck said. The speed at which taxpayers receive refunds and have their returns processed will be one area to look for changes as the agency’s workforce reductions begin to escalate into the summer and fall and taxpayers with later filing dates interact with the agency, he said.
In the longer term, August will be key for gauging the effects of workforce reductions, Reck said. Customer service and rulemaking will both be areas to watch for long-term effects, particularly whether service and rules are being provided in a timely fashion, he said.
“That’s the next thing to keep an eye on, I think, is how the preparation for the next tax season plays out, whether preparers get the guidance that the IRS usually issues for any new rules or changes in regulations that come out for the next filing season,” Reck said.
The layoffs of probationary employees, buyouts of legacy employees and planned retirements of other employees will also have an impact on the agency’s workforce that goes beyond leaving fewer employees to keep operations running smoothly.
The probationary employees were going to bring “younger, new people into the organization that hopefully would have a longer shelf life or career,” said Hansen Rada, CEO of Tax Guard, a provider of IRS tax data services.
Source: IRS Likely To Feel Strain Of Layoffs Now Filing Season’s Over
