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IRS Faces Major Overhaul as 22,000 Employees Accept Buyout Offers

The agency is bracing for a workforce reduction of up to 40%, with leadership resignations and operational challenges raising concerns about tax enforcement and revenue collection.

A view of the Internal Revenue Service (IRS) building in Washington, D.C., U.S., April 11, 2025. REUTERS/Jonathan Ernst/File Photo
Image
A US flag flutters outside the Internal Revenue Service (IRS) building in Washington, DC, in February.

Overview

  • More than 22,000 IRS employees have accepted deferred resignation buyout offers, reducing the agency's workforce by approximately 25% as of mid-April 2025.
  • The IRS's workforce is projected to shrink from around 100,000 employees to between 60,000 and 70,000, marking a potential 40% reduction in staff.
  • Key leadership figures, including CIO Rajiv Uppal and acting Commissioner Melanie Krause, have announced their resignations, with Uppal set to depart on April 28, 2025.
  • Experts warn that diminished staffing could lead to slower tax processing, reduced enforcement of tax compliance, and long-term revenue losses estimated at up to $159 billion over the next decade.
  • The workforce reductions are part of broader cost-cutting efforts led by the Trump administration and Elon Musk's Department of Government Efficiency, which aim to streamline federal operations but have sparked concerns over service reliability and data privacy.