As tax season gears up in 2025, the Internal Revenue Service (IRS) has made a controversial move to relieve 7,000 employees of their duties in Washington, D.C., and across the country. These layoffs come as part of the newly established Department of Government Efficiency’s ambitious plan to reduce the deficit by $1 trillion, sparking confusion among federal employees and setting the stage for potential legal battles.
The former IRS Commissioner Charles Rettig, who served during President Donald Trump’s first term, has assured the public that the cuts will not significantly impact the current filing season operations. However, experts like Michael Kaercher, Deputy Director of the Tax Law Center at NYU Law, warn of potential disruptions.
Here are some ways the IRS layoffs can affect taxpayers during this year’s tax season and beyond:
- Delays in tax refunds
- Decreased availability of customer service assistance
- Technical issues may take longer to resolve due to reduced staff
- Removal of sections in the Internal Revenue Manual may complicate tax compliance for taxpayers
Kaercher highlights the long-term repercussions of these cuts, emphasizing that revenue collection could suffer, leading to an increase in the budget deficit. This could potentially encourage tax evasion among high-income individuals and corporations. The layoffs primarily impacted tax compliance roles, which play a crucial role in preventing tax fraud and maximizing revenue for the government.
Ed Oswald, a partner at Orrick Law Firm and former attorney-advisor for the U.S. Treasury Department, advises taxpayers to stay proactive in light of these changes. He recommends maintaining close communication with tax professionals, documenting all relevant information diligently, and demonstrating willingness to cooperate with the IRS despite the challenges posed by reduced staffing.
In conclusion, the IRS layoffs have raised concerns about the efficiency and effectiveness of tax administration. Taxpayers are urged to stay informed, proactive, and compliant in the face of potential disruptions and uncertainty. The ramifications of these cuts could extend beyond the current tax season, affecting revenue collection and overall compliance in the years to come.
