April 14th, 2025
Most government agencies, including the IRS, have seen significant changes as the Trump administration gets started on its goals. In the first few months of 2025, there have been widespread resignations and layoffs in the agency amid an active 2025 filing season. In this article, we’ll cover notable changes in the IRS and their potential impact on tax practitioners.
On Friday, January 17, IRS Commissioner Danny Werfel announced his resignation. Between 2023 and 2025, Mr. Werfel made many notable contributions to the IRS, including enhancing digital offerings by leveraging current technologies. Deputy Commissioner Doug O’Donnell stepped in starting on January 20, 2025.
By mid-February 2025, Mr. O’Donnell announced his retirement. The baton was passed to IRS Chief Operating Officer Melanie Krause. Ms. Krause will serve as the Interim Commissioner until the Senate confirms President Trump’s nominee, Billy Long. It is unclear when Mr. Long might assume duties as IRS Commissioner because the Senate has taken no action on his nomination beyond referring it to the Committee on Finance.
On April 9, acting IRS Commissioner Krause resigned, less than one week before the filing deadline for individuals. Reports circulated that Ms. Krause was concerned about an agreement that was reached to provide some tax data for migrant workers to the Department of Homeland Security. Later in the day, the chief privacy officer for the IRS, Kathleen Walters, the agency’s chief financial officer, Teresa Hunter, and its chief risk officer, Mike Wetklow, also announced their departures from the agency. The Wall Street Journal reported that the Treasury Department and the Department of Homeland Security had spent some weeks negotiating this data sharing to comply with taxpayer-privacy requirements.
The Trump administration has made it clear it wants to increase the federal government’s efficiency, even if reducing the federal workforce is required. To kickstart this initiative, government employees, including IRS workers, could take a deferred resignation offer, paying them through September 30, 2025. Although the final numbers are unknown, an estimated 4,000 to 5,000 IRS workers accepted this deferred resignation offer in early February.
Unlike other federal government employees whose resignation period started immediately, the deferred resignation period would not start until May for IRS workers. While buyouts and deferred resignation windows were taking place, the Trump administration instituted a hiring freeze. All job offers with a start date after February 8 were rescinded.
While voluntary resignations occurred, the IRS fired between 6,000 and 7,000 probationary employees. Probationary employees were those in their roles for less than two years. However, these layoffs were short-lived, with a Maryland federal district court judge ordering the reinstatement of these employees. Even with the Trump administration appealing this decision, these probationary employees had not returned to work as of early April.
On Tuesday, April 8, a California judge’s order that the Trump administration reinstate 16,000 probationary federal employees was stayed by the U.S. Supreme Court. The California judge’s order covered nine departments, including the Department of the Treasury, so it is unclear how many of these employees had worked for the IRS. Nevertheless, Justice Kagan issued the stay, and presumably, the entire Supreme Court will hear the issue. Until then, however, those federal employees are unemployed. Notably, the Justice’s order denied standing to nine nonprofit organizations that brought the action, including several unions.
The IRS and the Trump administration are just getting started with layoffs and resignations. In early April, the IRS initiated a new round of layoffs in the Office of Civil Rights and Compliance, which was formerly called the Office of Equity, Diversity, and Inclusion. Around 75% of office staff will be reduced through a Reduction in Force (RIF). Terminated employees will be given 30-60 days’ notice.
Similarly, a new deferred resignation period has opened. Eligible IRS staff can accept a deferred resignation agreement between April 7 and April 14. This wave of deferred resignation applies to most permanent and term employees, with employees in probationary and trial periods also being eligible. In this next round of layoffs and resignations, the IRS looks to reduce its workforce by 25%.
Recent employment changes in the IRS will impact tax practitioners. For one, fewer support staff could mean longer correspondence times. From long waits on phone lines to delays in processing notice responses, amended forms, and other inquiries, tax practitioners need to be prepared for communication delays.
Additionally, the reduction in IRS workers doesn’t necessarily mean that audit risk is lower. Most IRS audits are already flagged by technology and automatic matching algorithms. Consequently, tax practitioners should expect extended processing times, delayed refunds, and lagging audits. It’s important to note that certain departments remain unchanged. The IRS has stated that staff directly working to process returns will not be impacted by layoffs and resignations.
When the IRS released IR-2025-43 on April 9, it reminded taxpayers and their practitioners that online accounts have been enhanced. The IRS online accounts now make the following forms available for download.
The full extent of IRS layoffs and resignations is still unknown, especially with ongoing legal challenges related to probationary employees. Staying current on the latest changes and informing clients about extended processing times are great ways to stay proactive amid IRS changes. Although wait times on the IRS’s Practitioner Priority Line may increase, more information is available using its online accounts.
Disclaimer: This article covers rapidly developing events, with court decisions and political maneuvers likely to impact the outcomes discussed at any time.
By Rachel Szeklinski, CPA
Sources
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