Tax Season: The Internal Revenue Service (IRS) began laying off more than 6,000 new and newly promoted employees across the country on Thursday, as part of President Donald Trump’s ongoing plan to reduce the federal workforce. Sources familiar with the decision told media that the timing could disrupt the current tax filing season, potentially leading to delays in refunds, audits, and taxpayer support.
Widespread Layoffs Across Key States
The layoffs, impacting around 6%-7% of the IRS’s 100,000-person workforce, primarily targeted offices outside of Washington, D.C., with heavy job losses in several states:
- Texas — Over 500 terminations
- New York — Over 600
- Georgia — Over 400
- Florida, Tennessee, and Philadelphia — Each facing over 300 layoffs
Layoffs could extend into Friday at certain IRS offices if weather conditions delay employees and managers from reaching their workplaces, according to an internal email obtained by media.
Impact on Tax Season Still Unclear
The layoffs come in the middle of tax season, when millions of Americans are filing returns and expecting refunds. While the IRS attempted to avoid cutting staff with “direct” roles in the filing process, insiders warn the agency could still face bottlenecks.
Affected teams include:
- Small Business/Self-Employed Unit
- Clerical Staff Across Various Departments
- Appeals Team — tasked with resolving taxpayer disputes without litigation
- Taxpayer Advocate Service — supporting taxpayers facing hardships
A former IRS commissioner called the timing “extremely risky”:
“It’s been a rule of thumb for decades—don’t shake things up during tax season. Filing season functions like an assembly line. If you pull key people mid-process, delays are inevitable.”
The commissioner also highlighted the risks to the agency’s logistical support systems, like technology and supply chains, which could impact productivity.
Customer Service Set to Suffer
Vanessa Williamson, senior fellow at the Tax Policy Center, warned of negative effects on taxpayer services:
“We can expect slower refunds, longer hold times, and more dropped calls. It’s going to hit taxpayers hard, especially as tax deadlines approach.”
One probationary employee facing termination said that the layoffs could also “prolong audits,” while another IRS official noted that internal protests among remaining employees could further disrupt operations.
The union representing IRS employees circulated an email urging those affected to print key employment documents before their departure, including:
- Employee Personnel Files
- Recent Pay Stubs and W-2s
- Annual Performance Appraisals
The IRS has yet to comment publicly on the layoffs.
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The Bigger Picture: Tax Gap and Trump’s Broader Plans
The layoffs could also hinder the IRS’s ability to close the country’s significant tax gap—the shortfall between taxes owed and taxes collected. In 2022, the tax gap was estimated at $606 billion.
Sources told media that more layoffs are expected after tax season, with senior officials suggesting that President Trump aims to dismantle the IRS entirely—a move that would require congressional approval.
Commerce Secretary Howard Lutnick reinforced this idea on Fox News:
“His goal is to abolish the Internal Revenue Service and let outsiders pay,” referencing Trump’s proposal for an External Revenue Agency to collect tariffs on foreign imports.
While experts warn that eliminating the IRS would be a massive logistical challenge, Trump continues to push the idea, even suggesting that taxpayers could receive a 20% “dividend” from savings generated by cutting government waste.
“I love it. A 20% dividend for the money we’re saving—it’s a great idea,” Trump said earlier this week.
IRS Cuts Despite Recent Funding Boost
The layoffs come just two years after the IRS received a significant funding boost from the 2022 Inflation Reduction Act, which allowed the agency to hire thousands of customer service representatives, reducing average taxpayer response times from 7 months to 3.5 months.
By the end of fiscal year 2024, the IRS workforce had grown to 100,433 employees, up from about 90,000 the previous year. The current cuts, however, threaten to reverse much of that progress.
Takeaway:
With the IRS downsizing during peak tax season, taxpayers could face delays in refunds, longer hold times, and potential audit backlogs—all while the agency faces mounting pressure from the Trump administration to reduce its size and influence.
