The Treasury Inspector General for Tax Administration (TIGTA) reviewed details of workforce reduction efforts taken by the IRS thus far, with more downsizing at the agency expected now that the tax filing season has concluded. (Report No. 2025-IE-R017)
TIGTA, a Treasury watchdog agency, released a report May 2 providing a snapshot of IRS positions affected by the Trump administration’s series of executive orders and Office of Personnel Management (OPM) relating to reductions in force (RIFs) and its deferred resignation program (DRP).
The report, current as of March, incorporates data provided by the IRS Human Capital Office (HCO). TIGTA noted that it did not “independently validate” the data but hashed out discrepancies with IRS management. Senate Democrats had requested TIGTA investigate the administration’s decisions and their effect on the IRS, especially during its busiest time of the year.
Initial resignations and terminations.
President Trump shortly after beginning his second term in January rolled out the “fork-in-the-road” DRP offering federal employees full pay and benefits through September 30 in exchange for their resignation. IRS employees deemed critical for facilitating tax season could accept the buyout but must remain in their post until May 15.
According to TIGTA, 4,128 employees accepted and were approved for the DRP as of February. As of March, an additional 522 applications were eligible pending final approval. Almost half (47%) of approved applicants were older than age 55. Over half of DRP takers were placed on administrative leave.
Also in January, OPM issued a memorandum for federal agencies to identify their respective rosters of probationary employees, meaning those “who have served less than one year in a competitive service appointment, or who have served less than two years in an excepted service appointment,” the report explained. The memo stated that probationary employees could be terminated “without triggering Merit Systems Protection Board appeal rights.”
Mass terminations of probationary employees were challenged in federal courts in Maryland and California. As proceedings continued over the ensuing months, agencies were ordered at the district court level to reinstate fired probationary workers.
TIGTA reported that 7,315 IRS probationary employees received termination notices. The vast majority of probationary employees had served for one year or less. They “tended to be under the age of 40” and included 14% of all IRS employees under age 25.
However, due to a Supreme Court pause on the rehiring effort, “it is unclear whether any probationary employees will remain reinstated or be terminated in a large-scale” RIF, said the watchdog.
Combined with the IRS employees who accepted the fork-in-the-road offer, the IRS’ workforce of 103,000 was reduced by 11%. Based on the IRS internal SharePoint website, the most impacted IRS business units were the HCO itself, Information Technology (IT), Large Business and International (LB&I), Small Business/Self Employed (SB/SE), Tax Exempt & Government Entities (TE/GE), and Taxpayer Services.
Some units saw larger percentages of their employees resign or receive termination notices, notably TE/GE (31%), LB&I (25%), and SB/SE (23%). Additionally, some job titles were “disproportionately impacted” than others. “For example, the number of revenue agents declined by approximately 31 percent,” TIGTA reported.
These separations were felt nationwide, but to varying degrees from state to state. “Iowa, Colorado, Mississippi, and Idaho had the highest percentage of employee separations compared to the IRS workforce in those states,” according to the report.
More reduction efforts underway.
TIGTA also said the IRS offered “three voluntary separation programs” on top of the RIF, chief among them the Treasury Deferred Resignation Program (TDRP), which “will mirror the benefits of the first DRP offering.”
The IRS offered the TDRP to all employees in April. As of April 22, 23,000 employees applied and over 13,000 have been approved. TIGTA indicated it will provide subsequent reports on the TDRP and the additional actions, such as the Voluntary Separation Incentive Payment and the Voluntary Early Retirement Authority programs.
In March, the IRS also placed 48 senior IT employees on administrative leave, 27 of which TIGTA learned “were either in key management positions or were individuals recruited for their expertise related to the IRS’s restructuring efforts.”
TIGTA also confirmed the internal IRS announcements throughout April indicating more cuts are coming.
“As part of the announcement, the IRS notified its workforce that it initiated a RIF for the Office of Civil Rights and Compliance (formerly the Office of Equity, Diversity & Inclusion),” read the report. “The communication indicated that approximately 5 percent of this office left through the DRP and attrition, with an additional 75 percent of the office to be reduced through a RIF.”
Another RIF focuses on the Taxpayer Experience Office and the Office of Equity, Diversity & Inclusion in Taxpayer Services.
Tax community reacts.
“Alongside these staffing cuts, the administration also signaled intentions to reduce the IRS’ budget,” according to a May 1 article by Skadden, Arps, Slate, Meagher & Flom LLP rounding up Trump’s first 100 days.
“The consequences of these changes is difficult to predict, as the specific staff and areas of the IRS affected by cuts has not been announced,” read the article. “However, this may weaken or delay the IRS’ audit and enforcement efforts. In addition to enforcement, these constraints could also impact the IRS’ ability to provide timely and effective taxpayer services.”
Sam Berger and Jacob Leibenluft of the Center on Budget and Policy Priorities in a May 2 report called the administration’s government-wide reduction initiative “illegal.” They said the “haphazard, slapdash nature of the layoffs does not reflect an effort to deliver services more efficiently or perform government functions more effectively. Instead, it appears to be a means of preventing those services or functions from being provided in the first place.”
On April 24, the Partnership for Public Service (PPS), a nonprofit organization, released results of a survey conducted to gauge the public’s reception to the workforce and spending cuts spearheaded by Trump and the Department of Government Efficiency. The survey polled 1,000 Americans from March 13 to March 16.
“As some experienced and specialized federal workers are being laid off, almost two-thirds of the respondents (64%) said they are concerned about the loss of ‘experience and knowledge’ from the workforce,” PPS found. “That includes 85% of Democrats, 63% of independents and 44% of Republicans.”
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