Trump IRS Workforce Cuts Pose Risks to Taxpayers in 2025

image of IRS sign with red traffic light in the foreground

(Image credit: Getty Images)

published 11 February 2025

President Donald Trump’s attempt to hollow out the IRS workforce revealed a major flaw. Who’s going to process millions of tax returns in their absence?

The IRS notified workers essential to the 2025 tax filing season they must work until May 15 even if they accepted the Trump administration’s controversial federal employee buyout offer, the deadline of which was put on hold temporarily by a federal judge.

Federal employees exempt from the buyout through the tax filing season include people in Taxpayer Services, Information Technology, and the Taxpayer Advocate Service. These are teams comprised of professionals responsible for operations support, direct customer assistance, accounts management, and run compliance checks, to name a few functions.

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They also manage tax returns across the seven processing centers — Andover, Atlanta, Austin, Cincinnati, Fresno, Kansas City, and Ogden. The IRS expects more than 140 million individual tax returns for tax year 2024.

Not to mention: the IRS headcount consists of just over 100,000 workers, and half of them belong to those critical groups.

Here’s what downsizing the tax agency can mean for you and your taxes, based on problem areas the IRS has been working to improve.

Continued delays in IRS in ERC claims processing

If you’re still waiting on your ERC refunds, you won’t want to hear this.

As of last fall, the IRS still faced a backlog of about 1.2 million Employee Retention Credit (ERC) claims, with many pending for more than a year.

The ERC is a pandemic-era refundable credit enacted to encourage businesses to keep their employees on payroll during the COVID-19 crisis. As previously reported by Kiplinger, abusive promoters advertised the ability to claim the ERC to unsuspecting employers, leading to a surplus of ERC fraud and erroneous claims.

The IRS restarted processing ERC claims following a one-year pause, but it’s been slow to reduce its backlog. At one point, the agency encouraged taxpayers to participate in a temporary Voluntary Disclosure Program to self-correct improper ERC claims at a discount.

The IRS claim withdrawal remains open. So far, there’s no clarity on whether pending cases will be resolved soon.

To say the least, some outstanding businesses aren’t happy. The tax agency was sued for millions over prolonged delays back in October 2024, and more lawsuits may pile up.

If the Trump administration gets enough IRS employees to voluntarily resign or issues furloughs in the future, there’s no telling when people will get their ERC claims resolved.

For more information see: IRS Sued for Millions Over Employee Retention Credit (ERC) Delays.

Identity theft delays may worsen

A judge recently blocked Tesla and SpaceX CEO Elon Musk from accessing the U.S. Treasury Department’s payment system. Musk had gained temporary access to the department’s sensitive information system, raising alarm bells of fraud risk.

The tech billionaire is Trump’s appointed head of the newly created Department of Government Efficiency (DOGE), which aims to cut government spending and reshape the federal workforce.

The Treasury Department has information containing your name, address, Social Security number, and government payments including your Social Security check. So if there’s a breach, will the IRS be able to handle it?

The IRS closed the door on more identity theft cases last year, but the average time to reach a resolution and process refunds to affected victims was nearly two years.

At the end of 2024, the IRS had a total inventory of over 470,000 Identity Theft Victim Assistance (IDTVA) cases to triage, according to the National Taxpayer Advocate (NTA).

The delays were once again due to staffing shortages. Last year, the IRS temporarily reassigned staffers from IDTVA processing to answer phone calls in Taxpayer Services during tax season to achieve better customer service response times.

This year, the IRS again made the business call to siphon IDTVA employees from identity theft casework to answering phones during the 2024 filing season.

In total, the IRS lost 552 IDTVA employees to attrition in FY 2023 and 2024
During the same time, it hired 663 new employees

If you’re a victim of tax-related identity theft, Trump’s plan to reduce the workforce could mean you may have to wait even longer to resolve your case. It may also mean that your calls to the IRS customer service will go unanswered.

General processing delays

Reducing the IRS workforce may negatively impact customer service toll lines and processing of paper returns.

66% of taxpayer mail was delayed and considered late by the end of 2024
It took 20 days, instead of 13 days to process paper returns last year
Manual reviews could take as long as 180 days

According to the Taxpayer Advocate, only 32% of callers reached an IRS employee last year during tax season, and 29% of callers reached an employee during the full year. That was better than in previous years, but it still required reassigning employees from other departments to answer phone calls.

The Trump administration’s hiring freeze on the federal government doesn’t help. Not to mention, the hiring pause on the IRS is indefinite.

Bottom line on Trump IRS plans

The IRS has struggled to overcome staffing shortages for decades, and the Trump administration’s goal to shave down the federal workforce may crumble its progress.

The tax agency has faced continued challenges in employee recruitment, hiring, training, and retention, according to an analysis by the Taxpayer Advocate. For many key areas within the IRS, the clock is ticking.

An estimated 63% of the current IRS workforce is eligible to retire within the next six years, according to the 2024 NTA annual report to Congress. Over the past two years alone, at least 16% to 36% of employees have left Taxpayer Services, depending on the job position.

Separately, the IRS just lost another $20 billion in key funding which may impact the agency's capability to audit certain groups, mainly wealthy individuals. Republicans have also pushed the idea of abolishing the IRS.

All of these changes may impact taxpayers like you as you wait for your tax returns to be filed and processed in upcoming years. So stay tuned.

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Gabriella Cruz-Martínez is a seasoned finance journalist with 8 years of experience covering consumer debt, economic policy, and tax. Before joining Kiplinger as a tax writer, her in-depth reporting and analysis were featured in Yahoo Finance. She contributed to national dialogues on fiscal responsibility, market trends and economic reforms involving family tax credits, housing accessibility, banking regulations, student loan debt, and inflation.

Gabriella’s work has also appeared in Money Magazine, The Hyde Park Herald, and the Journal Gazette & Times-Courier. As a reporter and journalist, she enjoys writing stories that empower people from diverse backgrounds about their finances no matter their stage in life.