Big news just dropped — the Internal Revenue Service (IRS) is reportedly planning to lay off nearly half of its workforce, according to two anonymous sources who spoke with the Associated Press (AP) on Tuesday.
The potential massive layoff would affect up to 45,000 IRS employees, primarily through layoffs, buyouts, and natural attrition. This move is reportedly part of Donald Trump’s administration’s plan to shrink the federal government workforce under the newly formed Department of Government Efficiency, led by billionaire Elon Musk.
Sounds crazy, right? Well, here’s everything you need to know about this massive workforce reduction at the IRS.
Why Is the IRS Laying Off Employees?
According to two people familiar with the situation, the Trump administration is aggressively pursuing a plan to cut down the federal government workforce, and the IRS is one of the primary targets.
The plan includes:
- Mass layoffs of probationary employees (those with less than a year of service).
- Buyouts through a “deferred resignation program” that would incentivize almost all federal employees to voluntarily leave.
- Department restructuring to shift IRS workers to other government departments, like the Department of Homeland Security (DHS).
The goal? Reduce the size of the federal workforce drastically and implement cost-cutting measures across the government.
How Many Employees Could Lose Their Jobs?
According to the latest IRS data, the organization employs around 90,000 workers across the U.S.
The current plan aims to cut as much as 50% of the workforce, which means:
- Around 45,000 employees could face layoffs, buyouts, or job transfers.
- In February 2025, 7,000 probationary employees with less than 1 year of service were already laid off.
- The remaining layoffs would gradually happen over the next few months.
This could leave the IRS with only 45,000 employees — significantly impacting the agency’s ability to efficiently collect taxes or handle tax returns.
#breakingnews IRS plans to cut up to 45,000 workers from its roughly 90,000-person workforce as part of DOGE plan
The IRS is drafting plans to cut its workforce by as much as half.
The layoffs are part of Prwsident Trumps plan to reduce the size of the federal government.… pic.twitter.com/F1slOWYOgM
— Christina Aguayo (@ChristinaNewstv) March 5, 2025Also Read: Wall Street Watch: How the Jobs Report, Fed Chair Powell, and Trump’s Bitcoin Move Impact Stocks
What Is the “Deferred Resignation Program”?
One of the most shocking parts of this plan is the “Deferred Resignation Program”.
Here’s how it works:
- The government offers employees a large buyout package to voluntarily resign from their jobs.
- Employees who accept the buyout get severance pay, benefits, and extended healthcare for up to 12 months.
- However, the buyout comes with a condition — the employee must resign within a specified period of time.
The goal is to encourage as many IRS employees as possible to voluntarily leave, rather than forcing mass layoffs.
However, IRS employees working on the 2025 tax season were not allowed to accept the buyout until after the tax filing deadline in mid-May. This move was reportedly aimed at avoiding a major disruption during tax season.
Why Is Elon Musk Involved in This?
Now, this part sounds like something out of a movie — Elon Musk is reportedly heading the newly created Department of Government Efficiency.
His mission? Cut down unnecessary government spending and streamline federal agencies.
According to reports, Musk’s department is:
- Closing down several low-efficiency government agencies.
- Pushing for mass layoffs in major federal organizations like the IRS.
- Relocating some IRS workers to departments like Homeland Security to assist in immigration enforcement.
This has created major controversy, with critics saying that cutting the IRS workforce by half will make the tax collection process dysfunctional.
@CREWCrew @POGOwatchdog
The IRS is drafting plans to cut as much as half of its 90,000-person workforce, sources sayhttps://t.co/JyxIDTIDwf https://t.co/qXxLahiqVY
— Accountability2024 (@ProtectWorkers_) March 6, 2025How Will This Impact Taxpayers?
Now, you might be wondering — how does this affect you as a taxpayer?
Well, if the IRS workforce is cut in half, here’s what might happen:
1. Slower Tax Refund Processing
With 45,000 fewer employees, processing your tax refunds or resolving tax-related issues may take much longer.
2. Limited Customer Service
Currently, getting a human representative on the IRS helpline is already tough. With half the workforce gone, it could become almost impossible to get tax help over the phone.
3. Delayed Audit Responses
If you’re ever audited by the IRS, the process may take months or even years due to workforce shortages.
4. Increased Tax Errors
With fewer workers processing tax returns, the chance of errors or incorrect tax calculations may significantly increase.
Why Is This Move So Controversial?
There’s a major controversy brewing around this decision, and here’s why:
1. Impact on Minorities and Women
According to IRS data:
- 56% of the workforce consists of people of color.
- 65% of the workforce consists of women.
The massive layoffs could disproportionately affect minority communities, leading to higher unemployment rates among Black, Hispanic, and female workers.
2. Former IRS Commissioners Are Furious
John Koskinen, a former IRS Commissioner, criticized the layoffs, saying:
“Aggressive reductions in the IRS’s workforce will render the agency completely dysfunctional.”
In fact, six former IRS Commissioners wrote a joint letter to The New York Times, warning that:
- The tax collection process will collapse.
- The government could lose billions in tax revenue.
- The economy could face long-term damage.
3. Shift to Immigration Enforcement
Perhaps the most unexpected part of this plan is that thousands of IRS employees will be shifted to Homeland Security to assist with immigration enforcement.
In February 2025, DHS Secretary Kristi Noem wrote a letter to the Treasury Secretary requesting thousands of IRS employees to be transferred for:
- Border control.
- Immigration paperwork processing.
- Deportation assistance.
This move has drawn heavy backlash, as critics argue that tax professionals shouldn’t be handling immigration enforcement.
Will the Layoffs Actually Happen?
As of now, nothing is confirmed.
The White House has ordered all federal agencies (including the IRS) to submit a workforce reduction plan by March 13, 2025. However, it is still unclear if:
- The White House will approve the IRS plan.
- The layoffs will be implemented all at once or gradually.
- Some employees may be rehired after the initial layoffs.
Final Thoughts
This is HUGE news. If the plan is fully implemented, we could see:
- 45,000+ IRS employees losing their jobs.
- Longer tax refund wait times for Americans.
- Massive disruption in the tax collection process.
Many critics believe that this move is a political strategy to reduce the size of the federal government. Others argue that cutting the IRS in half could lead to significant economic damage.
Either way — the future of the IRS and its workforce now hangs in the balance.
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