By Fatima Hussein
WASHINGTON (AP) — The budget bill defended by President Donald Trump could complicate next year’s tax return season after the IRS lost a quarter of its employees through staffing, the independent Watchdog reported Wednesday.
IRS workers have fallen from 102,113 workers to 75,702 in the past year, from 102,113 workers, according to the latest national taxpayer advocacy report to Congress. Wednesday’s report provided the first official number of IRS unemployment related to Elon Musk’s government efficiency.
Most of the employees received an offer to resign from Doge, “fork on the road” rather than waiting for a layoff.
Some of the findings from the report:
Taxpayers may see the impact of staffing reductions
The Trump administration’s efforts to reduce the size of federal officials have yet to gain civil service protections and have resulted in a massive departure of probation employees who were offered acquisitions through the “deferred resignation program.” More than 17,500 IRS workers took the route. The biggest cuts were taxpayer services, small business/self-employed offices, and information technology.
The report noted that the Republican administration’s proposed budget includes a 20% cut in IRS funds next year. This is a 37% reduction when considering supplemental funding for the Biden-era Inflation Reduction Act, which Republicans previously stripped away.
“The scale reductions can affect taxpayers and potentially affect revenues collected,” writes Erin M. Collins, who heads an organization assigned to protect taxpayers’ rights.
The 2026 tax season is unstable
Collins said the 2025 filing season was “one of the most successful filing seasons in recent memory,” but warned that the 2026 season could be Rocky.
“As the IRS workforce drops by 26% and the major changes in tax laws on the horizon, there will be risks in next year’s filing season,” Collins wrote. “It’s important that the IRS start taking steps to prepare.”
She said mid-year there were concerns that the IRS had not yet taken any important preparatory measures, such as hiring and training seasonal and permanent employees.
Trump packages may add a layer of new issues
The report warned of the possibility that new provisions could be controlled from Trump’s legislative package if Trump’s legislative package was enacted.
“Some provisions will affect millions of taxpayers as they will retroactively impact the 2025 tax year, requiring the IRS to promptly update taxes and programming for the 2025 filing season,” the report states.
Specifically, the House bill retroactively prohibits the IRS from allowing or paying employees’ retained credit claims filed after January 31, 2024.
The report says that the IRS has received historically many calls over the years following major tax law changes, and additional employees and digital tools may be needed to maintain service levels.
Identity theft cases are still piling up
The IRS deals with delays in solving self-reported identity theft victim support cases.
At the end of the 2025 filing season, the IRS had handled roughly 387,000 of these cases.
This is a small improvement from over 22 months that took it to resolve an identity theft case, as mentioned in a report last year.
“The cycle times remain unacceptably long,” Collins said. “I will continue to urge agencies to focus on dramatically reducing time,” and to resolve identity theft cases, it does not force victims, especially those who rely on tax refunds, to wait for them to receive their money. ”
Original issue: June 25th, 2025 10:28am EDT
