Recent headlines about the IRS don’t make it clear that tax season is upon us.
More than 12,000 IRS workers have been laid off this year or have resigned. Tens of thousands could be let go in the near future.
What does this mean for you, as a taxpayer? Some social media influencers claim that the IRS downsizing is an excuse to avoid paying taxes.
Do not take their word as gospel! The IRS may have been reduced in size, but that doesn’t change the rules for filing taxes.
Recent Changes at the IRS
In 2024, the IRS was on a positive trajectory. For the first time since 1997, the IRS had more than 100,000 employees. Agents were able to recover billions of dollars worth of taxes, thanks to the Inflation Reduction Act(IRA).
The IRS website states that the new funding allowed the agency “to launch more digital tools than in the previous 20-year period.” Here are a few ways they were used:
- The agency needs to modernize its “65-year-old foundational technology.”
- Replace some of the rapidly aging workforce of the agency, of which 63% are eligible to retire in 2029.
- Opening or reopening of more than 50 Taxpayer Assistance Centers across the U.S.
In 2025, things began to change dramatically. Donald Trump announced in January that he would terminate the entire IRS workforce, or have employees work at the border. What will he replace the IRS with? He proposes an External Revenue Service, which he claims will replace tax revenues with money raised by tariffs.
Over 7,000 IRS employees have been laid-off, with the majority being auditors and collection staff. Another 5,000 employees have accepted a leave of absence through a plan called “deferred resigning” that keeps them on the payroll through September, but not reporting to work.
Take a look at some of the important events that have taken place since the start of the year.
- The new Homeland Security secretary asked for workers to be borrowed from the IRS Criminal Investigation Unit in order to assist with immigration enforcement.
- The union representing IRS workers has asked a court to stop the IRS job cuts.
- The U.S. General Services Administration has outlined a proposal to close at minimum 110 of the approximately 360 taxpayer assistance centres.
- An IRS software engineer aged 25 was given read-only access by DOGE to the “anonymized” data systems of the IRS that contained Social Security numbers, bank details and other information about nearly everyone in the U.S.
- Reports from several news outlets indicate that the IRS plans to reduce its 100,000-person workforce by half.
What this Means to Taxpayers
Longer Wait Times for Assistance:
After receiving funding from the Inflation Act, the IRS significantly reduced call wait times. They went from an average of 28 minutes to only 3 minutes in 2022 filing season.Now the taxpayers should be prepared for the reverse of this progress with staffing reductions.
Delays in audits:
Taxpayers who are under audit may be subjected to longer review periods if an auditor is terminated, which can increase both uncertainty and costs.
More Notices of Deficiency & Tax Court Cases:
A shortage of staff could force the IRS to issue a greater number of Notices of Deficiency, rather than allowing disputes be resolved directly through the IRS Independent Office of Appeals. It would also force more taxpayers into challenging assessments at the U.S. Tax Court. This would add complexity, delay, and legal costs.
Business Transactions Challenges:
It can be difficult for businesses to get IRS documents such as those that verify S corporation elections. This can delay or even halt business sales that need to be able to prove their tax election in a timely manner.
Need expert help navigating the IRS maze? Contact us today for reliable tax filing services that keep you compliant and stress-free.
Our Recommendations
- Do it Early – the earlier you file your claim, the greater chance you will have to avoid delays.
- Double-check to ensure accuracy – To minimize mistakes that could lead to additional IRS scrutiny, double-check your tax return.
- Consider E-Filing– Electronic filing is faster than mailing paper returns.
- Use Direct Deposit- Refunds are processed faster via direct deposit than by mailed checks.
- Work with a tax professional-This can help you navigate the changes in tax laws and possible IRS delays. Professionals can assist you in filing correctly and will advocate for you if there are any issues.
How We Can Assist
Parr & Ibarra specializes in helping business owners and individuals navigate the IRS’s tax complexities. We ensure you are prepared for any IRS updates. Our team can help with:
Tax Planning and Preparation
- We can help you to file your tax returns early and accurately, so that there are no delays.
IRS Representation
- We can represent on your behalf for any IRS audit, appeal or notice.
Tax Resolution Services
- We will work with you to determine the best resolution strategy for any outstanding IRS or tax debt issues.
Financial Planning
- We offer guidance on how to structure your finances in order to minimize tax liabilities and maximize savings.
If you need assistance filing your taxes or resolving an IRS issue, schedule a consultation today–do not wait until the backlogs grow worse.
