The Internal Revenue Service is no longer planning to pursue layoffs as it seeks to rebuild parts of its workforce. The tax agency is now working to plug staffing holes with hiring, reassignments and rescinding the administration’s deferred resignation offer for some employees upon finding mission-critical staffing gaps.
The decision to forgo layoffs, confirmed by two sources briefed on the matter, marks a significant reversal for an agency that has shed about a quarter of its staff and had earlier this year planned to issue widespread reductions in force.
As of June, IRS was still planning to use layoffs to bring its workforce below 60,000 employees after the Biden administration grew that total to more than 100,000. It has to date engaged in only limited layoffs, leaning primarily on voluntary incentives to shed 26,000 workers.
IRS will use additional tools to regrow its workforce in places that it had previously cut, citing shortages in mission-critical areas.
“IRS has identified areas where staffing reductions created a potential gap in mission critical expertise,” the agency’s acting human capital officer and acting deputy human capital officer said in an email to IRS managers on Wednesday that was obtained by Government Executive.
“As a result, IRS will utilize all available tools—including details, reassignments, DRP/TDRP rescissions, and external hiring—to identify resources to fulfill the mission critical skill sets,” they continued, referring to the two versions of the “deferred resignation program” that enabled employees to sit on paid leave for several months before leaving government.
The announcement from the agency’s HR team—which will give employees who took DRP the option to rejoin the agency but not punish them in any way if they decide not to—comes as the tax agency has lost over 26,000 employees between January and May. The Treasury Department did not provide a comment in time for publication of this story.
The National Taxpayer Advocate warned earlier this summer that staffing cuts could put next year’s filing season in jeopardy. Staffing cuts within its technology workforce have imperiled leadership’s modernization plans.
Some IRS employees are already being affected by the tax agency’s efforts to address staffing problems.
About 50 staff from the IRS Taxpayer Experience Office were told Thursday that the reduction in force they’d been given notice for in April is no longer happening, according to an affected employee.
That layoff, which the notice had said was going to happen in late June, had been held up by a lawsuit, so these employees are still on the IRS payroll. Their office is not coming back, though, so they are being sent work at various places across the IRS.
And last week, IRS informed many employees on its IT team that they were being reassigned to report to the chief operating officer. The reassignments were mandatory and will take effect Aug. 24.
Employees were told the change was necessary to “support key business-driven priorities.” Supervisors were not informed of the transfers until employees told them that they received a notice, according to one impacted worker. IRS targeted non-technical staff for the moves, another said.
IRS is also shifting management staff to deploy “into the field” as revenue agents. Leadership at the agency told the supervisors there were too many managers relative to the agents they managed, though the reassignments follow IRS shedding more than 3,000 revenue agents—or 26% of that workforce—between January and May of this year.
The hiring at IRS also marks a significant departure from the agency’s posture since President Trump took office. When Trump first signed his order issuing a governmentwide hiring freeze, he carved out IRS to say the agency’s moratorium would likely continue beyond others. The governmentwide freeze remains in effect, however, while IRS has begun posting openings to the USAJOBS portal. The email to managers on Wednesday suggested more hiring is forthcoming.
While the Trump administration has successfully ushered around 150,000 employees out of government since January, IRS is just the latest example of an agency seeking to unwind some of that work. The departments of Health and Human Services and Labor have also rescinded layoffs to fill staffing needs, while the Agriculture Department, Justice Department, Social Security Administration and other agencies have similarly moved employees around to ensure continuity of critical functions.
All this is happening as the tax agency continues to see leadership shakeups.
Three senior IRS executives were ousted late last week, according to the The Washington Post, including the director for online services, and the head of the agency left earlier this month after only two months in the job. Treasury Secretary Scott Bessent is leading the IRS on an acting basis, the sixth person over the tax agency since Trump took office.
