Approximately 22,000 employees at the Internal Revenue Service (IRS) have opted for the Trump administration’s recent “deferred resignation” proposal, according to sources familiar with the situation. This wave of departures, combined with prior resignations and layoffs, may significantly impair the agency’s tax collection capabilities during this period of unprecedented workforce reductions.
In January, the IRS had a staff of around 100,000 when President Trump started his term. Since then, about 5,000 employees have resigned, and approximately 7,000 probationary employees were laid off, although these terminations have faced legal challenges. If all workforce reductions proceed, the agency could see a reduction of about one-third of its personnel this year alone.
Under the “deferred resignation” offer, employees accepting the deal will be on paid administrative leave until September before officially exiting their federal roles. Some employees who initially agreed to the offer still have the opportunity to retract their resignations.
The Federal News Network indicates that the IRS intends to cut its workforce by up to 40% by the completion of its reduction efforts, potentially bringing the agency’s total personnel down to between 60,000 and 70,000. An internal memo, obtained by news outlets, details the agency’s plans for substantial downsizing.
The reduction will occur in two phases, initially targeting specific departments such as the Taxpayer Experience Office, Transformation Strategy Office, Online Services Office, and Office of Civil Rights. The second phase will see significant cuts in the taxpayer services and compliance divisions.
These workforce reductions coincide with the completion of the 2025 tax filing season. The timing of the announcement, aligning with the April 15 tax deadline, has raised concerns among tax experts regarding the IRS’s ability to effectively process returns and collect revenue.
The buyouts and layoffs are part of the Trump administration’s broader goal to reduce federal government size. The White House anticipated about 10% of eligible federal workers would accept resignation offers, but the IRS’s response rate has been notably higher.
A Treasury Department spokesperson defended the reductions, stating that the number of IRS employees leaving under Trump is “approximately the same” as those added during the Biden administration. The spokesperson added that the rollback of “wasteful Biden-era hiring surges” and the integration of critical support functions are crucial to enhancing efficiency and service quality.
“These staffing reductions are part of larger process improvements and tech innovations that will allow the IRS to operate more effectively and serve the public more efficiently,” the Treasury spokesperson said.
However, fiscal oversight groups have warned that the swift workforce reduction could hinder the agency’s ability to process tax returns and collect revenue, potentially depriving the federal government of substantial income. Some tax experts have suggested the Treasury could lose hundreds of billions in tax receipts due to diminished enforcement capabilities.
The IRS has also seen high-level departures at the leadership level. Acting IRS Commissioner Melanie Krause resigned in March after only two months in the role. Several other senior officials, including the chief financial officer, privacy officer, risk officer, and chief of staff, have also left the agency in recent months.
The workforce reductions at the IRS are being implemented in conjunction with the Department of Government Efficiency, led by tech billionaire Elon Musk, which aims to significantly reduce the cost and size of the federal bureaucracy across various agencies.
Federal employees receiving reduction-in-force notices must be given at least 60 days’ notice before termination. As of mid-April, reports indicate that only one IRS office had received such notices, suggesting that the full implementation of the workforce reduction plan is still in its initial stages.
In addition to personnel changes, the IRS is also dealing with potential disruptions from other initiatives, including a cryptocurrency project that could affect the agency’s modernization efforts. These combined factors have created a period of considerable transition and uncertainty for one of the government’s key revenue-generating agencies.
The immediate and long-term impacts of these workforce reductions on tax collection, enforcement, and taxpayer services remain to be seen as the IRS navigates this period of significant organizational change.