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USA Today
03-07-2025
- Business
- USA Today
Don't expect a speedy tax refund in 2026 from an understaffed IRS
The Trump administration's 2025 cost-cutting campaign at the IRS was all too successful, according to an internal watchdog report. As a result, the agency may struggle through the 2026 tax season. And taxpayers may suffer. The IRS lost 26% of its 102,000-person workforce to layoffs and buyouts this year through early June, amid a larger effort by the Trump administration to shrink the federal government. The figure comes in a June 25 report from Erin Collins, the national taxpayer advocate. The 2025 tax season ended as 'one of the most successful filing seasons in recent memory,' Collins said in a statement that accompanied the report. 'But with the IRS workforce reduced by 26%, and significant tax law changes on the horizon, there are risks to next year's filing season. It is critical that the IRS begin to take steps now to prepare.' The IRS processed 138 million returns in the 2025 filing season and issued 86 million refunds, with an average refund of $2,942. Few of the tax agency's critics predicted a successful 2025 tax season. The IRS went through five commissioners in four months, Collins writes in the report, 'and many of its most experienced leaders chose to accept one of the voluntary departure options.' Tax changes in Trump bill could swamp understaffed IRS Now comes a bigger challenge. A mammoth legislative package, approved by the Senate on July 1, includes dozens of tax cuts, tax-cut extensions and other tweaks to the tax code. The tax agency's Information Technology unit will have to reprogram IRS data systems to reflect those changes, if they become law. But that unit has lost 27% of its staff, Collins reports. The Taxpayer Services unit will have to handle the predicted deluge of telephone calls from befuddled taxpayers. That unit has lost 22% of its staff, more than 9,000 employees. To avoid potential chaos, according to a report summary, 'the IRS will need to rapidly hire and train thousands of new Taxpayer Services employees before the 2026 filing season to process returns and deliver timely refunds.' Other taxpayer advocates echoed those concerns. 'You can't make those kinds of deep cuts without harming customer service,' said David Kass, executive director of the nonprofit Americans for Tax Fairness. 'Let's be clear: This is a mistake of the administration's own making.' Taxpayer Advocate: IRS needs fully functional online accounts Collins made her remarks in a 75-page National Taxpayer Advocate Objectives Report to Congress. The report recommends several agency objectives. Among them: The Trump administration set out to cut thousands of jobs at the IRS this year, aided by Elon Musk's Department of Government Efficiency, with an eye to saving money. Buyouts and layoffs, together, thinned the IRS workforce from 102,113 to 75,702, according to the advocate's report. The cuts, alone, would have posed a formidable challenge to the IRS as it ramps up for the 2026 tax season, agency observers say. But now, with the expected passage of Trump's tax bill, the smaller staff may have to cope with an onslaught of taxpayer inquiries about new rules on overtime, tips and car-loan interest. 'Now, maybe the cuts to staffing alone may not have had a huge impact on the filing season if all else held equal,' said Alex Muresianu, a senior policy analyst at the nonprofit Tax Foundation. 'But having the big staffing cuts the same year as a bunch of major tax changes is a dangerous mix.' Is Direct File on the way out? One apparent casualty of the cuts is Direct File, a new IRS program that allowed millions of Americans with uncomplicated taxes to file returns at no cost. Piloted in a dozen states last year, Direct File expanded to 25 states in 2025. But now, the program may be over. The Trump tax bill would empanel a 'task force on the replacement of Direct File.' Perhaps the Direct File staff knew what was coming. In the first half of 2025, according to the advocate's report, the unit shrank from 27 employees to five.
Yahoo
06-02-2025
- Business
- Yahoo
IRS: Some employees can't take buyout until after filing deadline
A letter sent to Internal Revenue Service (IRS) employees said those involved in the 2025 tax season won't be able to accept the buyout President Trump offered federal employees until after the taxpayer filing deadline. The letter said critical filing season positions 'in Taxpayer Services, Information Technology and the Taxpayer Advocate Service' are exempt from the Trump administration's buyout until May 15, The Associated Press reported. Taxpayers have until April 15 to file their taxes unless they're granted an extension. The buyout plan is part of the Trump administration's goal to decrease the number of federal workers quickly. The government had set a Thursday deadline for federal workers to decide if they wanted to take the deal. All they had to do was reply to an email and say 'resign.' But a judge extended the deadline until Monday. Employees who choose to take the deal will stop working but receive a paycheck and benefits through the end of September. The AP noted that it's unclear whether IRS employees who take the deal would only receive five months of pay instead or if they would get the full eight months like other federal employees who choose to leave. In 2023, the IRS received $80 billion as part of the Inflation Reduction Act. Many of the people hired with that budget increase were taxpayer service workers, who helped answer phones and assisted auditors in collecting money from people and businesses that underreport their income. The IRS was expected to hire thousands of people to help get the agency's employment rate back on track. In 2023, its staffing levels were 20 percent lower than they were in 2010. The IRS said it will be relocating workers from other areas to assist with tax filing season as the federal buyouts were expected to impact the workforce. However, former IRS Commissioner Charles Rettig, who served under Trump's first administration, said every facet of the agency's operations will be 'significantly impacted' by the hiring freeze. 'Fortunately, IRS employees are resilient and have considerable experience with hiring freeze operations,' he wrote in a post online. 'IRS employees do their best with the limited resources and support received.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
06-02-2025
- Business
- The Hill
IRS: Some employees can't take buyout until after filing deadline
A letter sent to Internal Revenue Service (IRS) employees said those involved in the 2025 tax season won't be able to accept the buyout offer President Trump offered federal employees until after the taxpayer filing deadline. The letter said critical filing season positions 'in Taxpayer Services, Information Technology and the Taxpayer Advocate Service' are exempt from the Trump administration's buyout until May 15, The Associated Press reported. Taxpayers have until April 15 to file their taxes unless they're granted an extension. The buyout plan is part of the Trump administration's goal to decrease the number of federal workers quickly. The government had set a Thursday deadline for federal workers to decide if they wanted to take the deal. All they had to do was reply to an email and say 'resign.' But a judge extended the deadline until Monday midday Thursday. Employees who choose to take the deal will stop working but receive a paycheck and benefits through the end of September. The AP noted that it's unclear if IRS employees who take the deal would only receive five months of pay instead or if they would get the full eight months like other federal employees who choose to leave. In 2023, the IRS received $80 billion as part of the Inflation Reduction Act. Many of the people hired with that budget increase were taxpayer service workers, who helped answer phones and assisted auditors in collecting money from people and businesses that underreport their income. The IRS was expected to hire thousands of people and help get the agency's employment rate back on track. In 2023, its staffing levels were 20 percent lower than they were in 2010. The IRS said it will be relocating workers from other areas to assist with tax filing season as the federal buyouts were expected to impact the workforce. However, former IRS Commissioner Charles Rettig, who served under Trump's first administration, said every facet of the agency's operations will be 'significantly impacted' by the hiring freeze. 'Fortunately, IRS employees are resilient and have considerable experience with hiring freeze operations,' he wrote in a post online. 'IRS employees do their best with the limited resources and support received.'
Associated Press
05-02-2025
- Business
- Associated Press
IRS workers involved in 2025 tax season can't take ‘buyout' offer until May
WASHINGTON (AP) — IRS employees involved in the 2025 tax season will not be allowed to accept a buyout offer from the Trump administration until May 15th, according to a letter sent Wednesday to IRS employees. The letter says that 'critical filing season positions in Taxpayer Services, Information Technology and the Taxpayer Advocate Service are exempt' from the administration's buyout plan until May 15, 2025. The news comes after President Donald Trump announced a plan to offer buyouts to federal employees through a 'deferred resignation program' to quickly reduce the government workforce. The program deadline is Feb. 6. The buyouts, sent to roughly 2.3 million workers, are for all full-time federal employees with some exemptions, including military personnel, employees of the U.S. Postal Service and positions related to immigration enforcement. They would get about eight months of salary if they accept. The federal government employed more than 3 million people as of November, accounting for nearly 1.9% of the nation's entire civilian workforce, according to the Pew Research Center. Union leaders that represent workers across the federal government have criticized the proposal. Doreen Greenwald, president of the National Treasury Employees Union, has advised all federal workers not to accept the offer, which she says is dubious. 'This is not a good deal for them,' Greenwald told The Associated Press. 'If you sign this document and then later change your mind, you are left without any power to fight back.' She added: 'I do not recommend people sign the document. They need to have control of their own career, and this document does not give it to them.' The NTEU union represents roughly 150,000 employees in 37 departments and agencies. 'This country needs skilled, experienced federal employees. And so we are urging people not to take this deal because it will damage the services to the American people and it will harm the federal employees who have dedicated themselves and their career to serving.' Jan. 27 is the official start date of the 2025 tax season and the IRS expects more than 140 million tax returns to be filed by the April 15 deadline. 'What most people don't realize is that 85% of the federal workforce works outside of D.C.,' she said. 'They're your neighbors, your family, your friends. And they deliver key services for the American people.'
