“The Internal Revenue Service is no longer planning to pursue layoffs as it seeks to rebuild parts of its workforce. The tax agency is now working to plug staffing holes with hiring, reassignments and rescinding the administration’s deferred resignation offer for some employees upon finding mission-critical staffing gaps,” reports Government Executive:
The decision to forgo layoffs marks a significant reversal for an agency that has shed about a quarter of its staff and had earlier this year planned to issue widespread reductions in force.
As of June, IRS was still planning to use layoffs to bring its workforce below 60,000 employees after the Biden administration grew that total to more than 100,000. It has to date engaged in only limited layoffs, leaning primarily on voluntary incentives to shed 26,000 workers.
IRS will use additional tools to regrow its workforce in places that it had previously cut, citing shortages in mission-critical areas.
“IRS has identified areas where staffing reductions created a potential gap in mission critical expertise,” the agency’s acting human capital officer and acting deputy human capital officer said in an email to IRS managers…“As a result, IRS will utilize all available tools—including details, reassignments, DRP/TDRP rescissions, and external hiring—to identify resources to fulfill the mission critical skill sets,” they continued, referring to the “deferred resignation program” that enabled employees to sit on paid leave for several months before leaving government.
The announcement from the agency’s HR team—which will give employees who took DRP the option to rejoin the agency —comes as the tax agency has lost over 26,000 employees between January and May….The National Taxpayer Advocate warned earlier this summer that staffing cuts could put next year’s filing season in jeopardy. Staffing cuts within its technology workforce have imperiled leadership’s modernization plans.
Cuts to the IRS have resulted in billions of dollars in lost tax revenue by making it easier for tax cheats to cheat on their taxes.
The Washington Post cited Yale Budget Lab claims “cuts at the IRS will cost us all $500 billion in lost tax income, or about 10% of federal tax revenues. That’s primarily because of staff and other tech cuts, as well as the reorientation of some organizational progress to data-sharing instead of enforcement for tax cheats.”
$500 billion is probably an overestimate. Trump administration officials dispute that $500 billion revenue loss, saying the loss will be much smaller. But the loss in tax revenue could easily reach $100 billion, which is far more money than DOGE ever saved through its budget cuts.
Even Republican tax experts say mass firings of IRS employees are a bad idea that will result in more people cheating on their taxes and the budget deficit increasing. The man President Trump picked to head the IRS in 2018, who served as the IRS commissioner until 2022, said IRS layoffs are a bad idea:
Former IRS Commissioner Chuck Rettig — who ran the agency during President Donald Trump’s first term — criticized the planned layoffs.
“An underfunded IRS significantly benefits unidentified, noncompliant taxpayers at the direct expense of compliant taxpayers,” he said, writing on LinkedIn.
Similarly, an economist at the conservative Manhattan Institute notes that “Laying off thousands of IRS agents will worsen budget deficits.”
As a news story notes, “Forecasters generally agree that beefing up tax enforcement is a money maker for the Treasury because auditors bring in far more cash than it costs to employ them.” The Congressional Budget Office has estimated that tax collections would rise by at least $207 billion if $80 billion more were spent over a decade in expanding the IRS’s enforcement staff. Others have estimated that tax collections would rise by $560 billion if $80 billion more were spent on tax enforcement over a ten-year period.
