IRS Resignation Threat: What It Means for Tax Administration and Trust

IRS Resignation Threat: What It Means for Tax Administration and Trust

Twenty thousand IRS employees are poised to accept a “deferred resignation” deal as the Trump administration orchestrates a historic 40% workforce reduction at the tax agency, signaling a major reversal of Biden-era staffing expansions.

At a Glance

  • Approximately 20,000 IRS workers (20% of the agency) have signed up for Trump’s “deferred resignation” program, allowing them to receive pay and benefits until September 30 while quitting by February’s end
  • The IRS plans to cut its workforce from 102,000 to between 60,000-70,000 employees through bi-weekly Reduction in Force notices beginning after tax season
  • Acting IRS Commissioner Melanie Krause and other officials are resigning partly due to concerns about sharing taxpayer information with Immigration and Customs Enforcement
  • Federal employee unions have filed lawsuits challenging the legality of the “deferred resignation” program, citing potential violations of federal law
  • The agency has already abandoned some audits due to staffing shortages, raising concerns about tax collection capabilities and federal revenue

Trump’s “Deferred Resignation” Program Draws Massive IRS Response

The federal government’s tax collection agency faces an unprecedented exodus as approximately one-fifth of IRS employees have expressed interest in the Trump administration’s controversial “deferred resignation” program. Under this arrangement, employees receive full pay and benefits through September 2025 without work requirements, provided they permanently resign by the end of February. This dramatic workforce reduction directly reverses the roughly 20,000-employee expansion implemented during the Biden administration through the Inflation Reduction Act’s increased IRS funding.


The Treasury Department has confirmed the substantial interest in the program, with a spokesperson stating the number of employees taking the offer is “approximately the same” as reported by sources familiar with the matter. While defending the workforce reduction, the department maintains that “the roll back of wasteful Biden-era hiring surges, and consolidation of critical support functions are vital to improve both efficiency and quality of service.” The spokesperson added that Treasury Secretary Dennis McGinnis “is committed to ensuring that efficiency is realized while providing the collections, privacy, and customer service the American people deserve.”

Ambitious 40% Staffing Cut Planned After Tax Season

According to internal memos, the IRS has developed a phased approach to reducing its workforce from the current 102,000 employees to between 60,000 and 70,000 workers. The plan involves issuing bi-weekly Reduction in Force (RIF) notices beginning immediately after the current tax filing season concludes. The first phase will target several newer offices created during the Biden administration, including the Taxpayer Experience Office, Transformation Strategy Office, Online Services Office, and Office of Civil Rights, with these units facing what internal documents describe as “high” staffing cuts.

“While the AICPA acknowledges some concerns regarding the impact that the hiring freeze will have on tax administration, the IRS has said they will ‘reallocate workers from other areas to help cover filing season processing’ to meet the needs of this filing season.” – Melanie Lauridsen

Following the initial staff reductions, the agency plans to “evaluate impact on operations post-Phase 1” before proceeding with further cuts. Internal documents acknowledge that both “taxpayer services and compliance will need to be trimmed” to achieve the targeted workforce reductions. This coincides with an ongoing hiring freeze that has already forced the IRS to rescind job offers with start dates after February 8, affecting recruitment across “every facet of IRS operations” according to former Commissioner Charles Rettig.

Leadership Exodus and Operational Concerns

Beyond rank-and-file employees, the IRS faces a leadership crisis as Acting Commissioner Melanie Krause and other senior officials have resigned. Reports indicate these departures stem partly from disagreements over a directive to share taxpayer information with Immigration and Customs Enforcement, raising serious concerns about taxpayer confidentiality protections. Meanwhile, the agency has already abandoned some audit proceedings due to staffing shortages, prompting questions about the government’s ability to enforce tax compliance and collect revenue.

“Under a hiring freeze, there is no way to compensate for normal attrition and make sure that retirees are replaced with the next generation of public servants trained to help Americans file their taxes and catch those trying to cheat the system.” – Doreen Greenwald

Federal employee unions have challenged the legality of the “deferred resignation” program through lawsuits citing violations of the Administrative Procedures Act. Legal experts have also raised concerns about potential breaches of the Anti-Deficiency Act and congressional appropriations laws, questioning whether the administration can compensate employees who are not performing work. The deadline for employees to accept or reject the program is approaching rapidly, with the General Services Administration informing staff that “the GSA budget, workforce and space portfolio will be drastically reduced, along with the rest of the federal workforce.”

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