IRS Reportedly Considering Massive Workforce Cuts

The IRS is reportedly preparing to slash up to half of its 90,000-person workforce as part of the Trump administration’s efforts to shrink the federal government, potentially transforming how Americans interact with the tax agency.

Key Takeaways

AP sources indicate the IRS plans to reduce its workforce by up to 45,000 employees through layoffs, attrition, and incentivized buyouts.
The layoffs are reportedly driven by Elon Musk’s Department of Government Efficiency as part of broader federal workforce reductions.
Former IRS Commissioner John Koskinen argues such cuts would make the agency “dysfunctional.”
Some IRS employees may be redirected to assist the Department of Homeland Security with immigration enforcement.
Federal agencies must submit reduction plans by March 13, though the timeline for implementation remains unclear.

Major IRS Workforce Reduction Reportedly Planned

According to AP sources, the Internal Revenue Service is drafting plans that could reduce its workforce by as much as half. The 90,000-person agency is considering various methods to achieve this reduction, including layoffs, natural attrition, and incentivized retirement packages. This dramatic shrinking reportedly comes as part of the Trump administration’s broader efforts to reduce the size of the federal government, spearheaded by Elon Musk’s Department of Government Efficiency (DOGE).

Approximately 7,000 probationary IRS employees were already laid off in February. Reports indicate that an additional 6,000 employees may face layoffs in the middle of the current tax season. However, IRS employees directly involved in processing 2025 tax returns reportedly cannot accept buyout offers until after the mid-May filing deadline, potentially creating a staggered reduction approach.

While agencies have not directly confirmed these reports, Fox News Digital spoke to a Treasury spokesperson, who stated the Treasury Department is looking at a “wide range” of options to streamline the IRS. The spokesperson said that changes will be “aimed at improving taxpayer customer service and ensuring a smooth and successful filing season.” However, they said nothing has been approved yet.

BREAKING: The IRS is drafting plans to cut as much as half of its 90,000-person workforce, AP sources say. https://t.co/GXuSJrSy9s

— The Associated Press (@AP) March 4, 2025

Criticism from Former Commissioners

While cuts like these are being pushed as a way to streamline processes and increase efficiency, not everyone is excited. Former IRS officials have raised concerns about the proposed cuts. John Koskinen, who served as IRS Commissioner from 2013 to 2017, has been particularly vocal, arguing that significant downsizing could cause the IRS to become “dysfunctional.” Koskinen and six other former IRS Commissioners also previously issued a warning about the impact major reductions could have on the agency’s ability to fulfill its mission of tax collection and enforcement.

Redeployment to Border Security

The Trump administration has also reportedly looked into moving some IRS workers to the Department of Homeland Security to assist with immigration enforcement efforts. A letter from DHS Secretary Kristi Noem reportedly requested IRS workers to help with border security initiatives, signaling a significant shift in how federal employees might be utilized across departments. This redeployment could further strain the IRS’s ability to manage its core tax functions.

Timeline and Approval Process

While the reduction plans are being drafted, their implementation timeline remains uncertain. All federal agencies have been directed to report their workforce reduction plans by March 13, but the approval process for the IRS plan is still undefined.