The Internal Revenue Service is reversing course on its workforce strategy, halting planned layoffs and initiating efforts to rehire employees who were previously let go or encouraged to resign. The decision comes in light of critical staffing shortages and concerns over gaps in expertise that could jeopardize the agency’s ability to fulfill its responsibilities effectively.
The Layoffs
Earlier this year, the IRS embarked on a series of workforce reductions to streamline operations and cut costs. These layoffs were part of a broader restructuring initiative, which included deferred resignation offers and reductions in force (RIFs), as part of the Trump administration’s agenda to downsize the federal workforce. Over the first half of 2025, the agency reduced its force from 100,000 to 60,000 employees. However, the agency soon realized that these measures had unintended consequences, including significantly depleting skilled personnel in key areas such as IT, tax processing and customer service.
Reasons for the Reversal
The decision to halt layoffs and rehire staff is driven by several factors, including staffing shortages in areas essential to its operations, concerns over potential disruptions in the upcoming tax season, delays to taxpayer services and reduced support for taxpayers (even before the layoffs, in 2024, less than one-third of calls to the IRS were answered). The layoffs reportedly also inadvertently created gaps in expertise vital for the agency’s ability to enforce tax laws, manage audits and ensure compliance.
The agency also faced scrutiny from lawmakers and the public, who raised concerns about the impact of workforce reductions on the IRS’s ability to serve taxpayers effectively, such as potentially undermining enforcement, particularly against high-income and corporate tax evaders.
Rehiring Efforts
To address these challenges, the IRS has begun reaching out to former employees who were laid off or pushed out during the restructuring process. The agency is rescinding hundreds of deferred resignation offers and inviting skilled workers to return to their positions. According to an Aug. 22 email obtained from the Treasury viewed by Tax Notes, some IRS employees who opted to resign with pay continuing until Sept. 30 are being offered the chance to rescind their resignations.
In addition to the rehiring efforts, the IRS has received permission from Treasury to begin hiring seasonal contact representatives across the country in preparation for the 2026 filing season. The IRS has posted notices for 4,500 jobs. These “contact representatives” were a big focus of the cuts at the agency earlier this year.
IRS leadership has been riddled with turnover, with over 15 roles either vacant or filled in an acting capacity. President Trump removed Billy Long from his position as Commissioner after less than two months.
Looking Ahead
The IRS’s decision to reverse its layoff plans underscores the importance of maintaining a skilled and adequately staffed workforce. As the agency prepares for the upcoming tax season, its focus will be on rebuilding its workforce, addressing operational challenges and restoring public confidence in its ability to serve taxpayers efficiently. This development highlights the delicate balance between cost-cutting measures and operational effectiveness, signaling that the Trump administration was overzealous in its workforce reduction goals for the IRS.
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