The Internal Revenue Service (IRS) is set to lay off approximately 7,000 employees across the country, including in Washington, starting Thursday, according to an individual with knowledge of the plans. The layoffs will primarily affect probationary employees who have been with the agency for a year or less. These workers are largely in compliance departments, responsible for ensuring that taxpayers follow the tax code, file their returns correctly, and pay their required taxes.
The individual, who spoke anonymously because they were not authorized to discuss the plans publicly, indicated that these terminations are part of a broader effort by the federal government to reduce workforce size. The move aligns with the Trump administration’s push to shrink government agencies by cutting probationary employees who have not yet gained civil service protections.
Government efforts to downsize the federal workforce
The layoffs are part of a wider initiative spearheaded by the Department of Government Efficiency, an agency created to streamline federal operations. The Trump administration has ordered nearly all government agencies to lay off probationary employees as a cost-cutting measure. While this effort is aimed at reducing government expenditures, it has raised concerns about how it may impact federal services, particularly tax collection and enforcement.
Interestingly, this move comes shortly after IRS employees involved in the 2025 tax season were informed that they would not be permitted to accept buyout offers until mid-May, following the tax filing deadline. This restriction has left many IRS workers uncertain about their future, as they now face abrupt job cuts instead of voluntary severance packages.
Potential impact on tax collection and compliance
It remains unclear how these layoffs will affect tax collection efforts and compliance operations. The IRS plays a crucial role in ensuring that taxpayers meet their obligations, and any staff reductions could potentially slow down audits, collections, and customer service operations. The timing is particularly notable, as the IRS has been working to improve its enforcement strategies, especially in targeting high-wealth individuals who evade taxes.
During the Biden administration, the IRS ramped up its compliance efforts, particularly focusing on wealthy tax dodgers. By the end of 2024, the agency had recovered more than $1.3 billion in unpaid taxes from high-income individuals. Critics argue that reducing the compliance workforce could hinder these efforts, making it easier for wealthy individuals to bypass tax obligations, thereby impacting federal revenue collection.
Uncertainty for IRS employees and taxpayers
The layoffs raise questions about the future of operations and whether the agency will be able to maintain its current level of service. For taxpayers, this could mean longer wait times for assistance, slower processing of returns, and potential delays in enforcement actions. For the affected employees, the sudden job loss adds to the uncertainty surrounding the federal job market and the stability of government positions.
While the administration has justified these layoffs as necessary cost-saving measures, the long-term consequences remain to be seen. With the U.S. facing a $36 trillion national debt, every aspect of federal spending is under scrutiny. However, reducing the IRS workforce could have unintended consequences, particularly if it leads to lower tax compliance and revenue collection.
As the layoffs take effect, all eyes will be on the IRS to see how it adapts to the reduced workforce and whether its ability to enforce tax laws will be compromised in the coming months.
