IRS Suspends Layoffs and Prepares to Rehire Workers Ahead of Tax Season

IRS Suspends Layoffs and Prepares to Rehire Workers Ahead of Tax Season

As taxpayers prepare for the upcoming filing deadline, the Internal Revenue Service (IRS) has made a significant operational shift: halting layoffs and initiating a rehiring push to reinforce its capabilities.

This crucial decision aims to ensure smoother operations, quicker refunds, and stronger support for taxpayers across the U.S. In the face of recent mass staffing reductions, this reversal marks a critical step toward stabilizing the agency.

Drastic Staff Reductions and Looming Filing Challenges

Workforce Downturn and Tax Season Risks

  • The IRS workforce has contracted sharply by approximately 26%, from about 102,113 employees to around 75,702. Over 17,500 staff took buyouts and departed.
  • This contraction has particularly impacted the Taxpayer Services, small business/self-employed divisions, and IT units, raising concerns about the IRS’s readiness for the 2026 filing season.

Deferred Resignation and Early Layoff Fallout

  • Earlier, around 7,000 probationary employees were laid off mid-tax season, heightening fears of delays in refund processing, customer service, and compliance efforts.
  • As a variant of this, deferred resignation programs drew staff exits across agencies, leading to critical knowledge loss.
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Strategic Reversal: Halting Layoffs and Reinstating Staff

Layoff Freeze and Deferred Resignation Reversal

  • In a decisive move, the IRS has halted all planned layoffs and is offering certain staff, particularly those who opted for deferred resignation, the opportunity to rescind their departure and return to active duties.

Targeted Rehiring Effort

  • Approximately 300–400 employees, who have been on paid leave and scheduled to resign by late September, are being contacted and invited back to plug mission-critical gaps.

Leadership and Organizational Stability

  • Amid this turnabout, Scott Bessent, the Treasury Secretary and current acting IRS Commissioner, is steering the agency through these transitions, emphasizing the importance of modernization and the implementation of new legislative directives.
  • The IRS has also experienced rapid leadership turnover, with seven commissioners or acting commissioners in the year alone, further underscoring the need for operational stabilization ahead of tax season.

Broader Implications: Why This Measure Matters

Ensuring Effective Tax Filing and Support

  • With such steep declines in staffing, the risk of delayed refunds, dropped customer service calls, and overwhelmed IT systems loomed large. Reversing layoffs is critical to mitigating these risks.
  • Agencies across the federal government are similarly reversing cuts or recalling workers to maintain essential services.

Institutional Memory and Expertise

  • The rehiring of previously departed staff—especially those in leadership and compliance roles—helps preserve institutional knowledge, which is vital for processing changes in tax law from recent legislation often referred to as the “big, beautiful bill”.

Restoring Confidence and Stabilizing Agency Operations

  • Taxpayer trust hinges on the IRS delivering timely refunds, functional customer support, and dependable tax compliance enforcement. This operational pivot reinforces those pillars at a critical juncture.
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Data at a Glance: IRS Staffing and Rehiring Overview

CategoryFigure/Detail
Workforce reduction~ 26% reduction (from 102,113 to 75,702 employees)
Buyouts and departuresOver 17,500 staff left via buyouts or resignations
Probationary layoffsApproximately 7,000 probationary employees laid off mid-season
Deferred resignation rehiringIRS is reaching out to those on deferred resignations to rescind and return
Employees targeted for rehiringAbout 300–400 on paid leave, slated to resign by Sept 2025
Leadership transitionsSeven IRS commissioners/acting commissioners this year
Staffing impacts on divisionsTaxpayer Services, IT, Small Biz/S-E divisions most affected

Looking Ahead: Operational Readiness for Tax Season

Rapid Rehiring and Training Needs

  • The IRS must rapidly re-onboard returning workers and potentially hire additional staff to ensure readiness for the 2026 tax filing season, given the scale of recent legislative changes.

Stabilizing Leadership and Workflow

  • Restoring a consistent leadership structure under Acting Commissioner Bessent can help streamline decisions and rebuild institutional stability following months of upheaval.

Improving Taxpayer Experience

  • Acting now to reverse staffing losses should help reinstate reasonable refund timelines, improve contact center responsiveness, and preserve the IRS’s ability to enact new policies effectively.

The IRS’s decision to halt planned layoffs and reach out to former staff for rehiring marks a critical turning point.

After suffering a striking 26% workforce reduction, the agency is now returning to stabilization mode—an essential move to meet the demands of the upcoming tax season.

This pivot is expected to enhance operational capability, refund velocity, and taxpayer support.

Maintaining staffing levels, preserving leadership continuity, and upholding institutional knowledge will be central to the IRS’s success in the year ahead.

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Frequently Asked Questions

Why did the IRS reverse its layoff plans?

The IRS reversed the plans due to severe staffing shortages that threatened the agency’s ability to process returns, issue refunds promptly, and provide taxpayer support effectively for the upcoming tax season.

How many employees is the IRS planning to bring back?

Approximately 300–400 employees—those on paid leave and scheduled to resign by September—are being contacted with offers to remain in their positions.

Who is leading the IRS during this transition?

Treasury Secretary Scott Bessent is currently serving as the acting IRS Commissioner, guiding the agency through these staffing reversals and preparing for the next tax filing season.

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