11,000 IRS Layoffs 2025: What This Means for Your Taxes, Refunds, and Customer Service

The IRS is laying off thousands of its workers. Over 11 percent of its entire workforce is gone, including nearly a third of their revenue agents.

These are the IRS employees tasked with auditing people like you and me.

And yes, this is happening after the agency received 80 billion dollars in funding, now slashed down to just 40 billion.

So what's going on here?

Is this smart government reform?

Or the start of a tax nightmare that could delay your refund, burden small businesses, and even cost the government billions in lost revenue?

Let’s break down what’s really happening inside the IRS and what it means for you as a taxpayer.

What’s Happening at the IRS?

Back in 2022, the IRS was allocated nearly 80 billion dollars over a decade through the Inflation Reduction Act.

This included hiring 87,000 new IRS employees over 10 years.

The aim was to modernize the tax agency, enhance taxpayer services, and strengthen enforcement efforts.

However, in 2024, Congress rescinded 41.8 billion of that funding, reducing the total to approximately 38.2 billion.

Then came DOGE, the Department of Government Efficiency, spearheaded by Elon Musk.

DOGE initiated aggressive cost-cutting measures across federal agencies, including the IRS.

According to recent reports, the IRS has lost 31 percent of its auditors, 18 percent of its revenue officers, and over 10 percent of its tax examiners.

These reductions are part of a broader downsizing effort that has led to over 11,000 employee separations, including terminations and voluntary resignations.

What Does This Mean for You?

According to the Treasury Inspector General for Tax Administration, the IRS layoffs haven't been random. They’ve hit key operational roles.

Auditors or Revenue Agents: Roughly 31 percent of these professionals are now gone. These are the people who review or audit complex tax returns, especially from high earners and businesses.

Revenue Officers: About 18 percent were let go. Their job is collections. They chase down unpaid taxes, issue liens and levies, and help resolve serious delinquencies.

Tax Examiners: Around 10 percent have also been cut. These frontline employees review returns, correct errors, and ensure taxpayer compliance.

What makes this even more significant is that many of these workers were recently hired under the previous administration’s plan to rebuild the IRS.

So now we’re seeing a reversal, removing the very people who were meant to improve enforcement and taxpayer services.

But what do you think? Are these IRS layoffs long overdue cuts? Are we setting ourselves up for a mess for taxpayers? Let me know in the comments on the YouTube video.

The IRS Is Banking on AI

Here’s where it gets interesting.

At a recent oversight hearing, Treasury Secretary Scott Bacent made it clear.

Despite all these layoffs, the IRS doesn’t expect enforcement or collections to slow down.

Why?

Because of AI. Artificial Intelligence.

We're just taking the IRS back to where it was before the Inflation Reduction Act bill substantially bloated the personnel and the infrastructure, the director said.

Many staff accepted early retirement, but instead of hiring replacements, the IRS is betting big on technology.

They plan to use AI and automation to fill the gap.

In fact, the acting director testified that AI will help the IRS enhance collections even with a smaller team. Think about that.

Fewer human agents, but smarter software.

The agency is banking on AI to spot errors, flag suspicious returns, and keep tax revenue flowing, possibly even more efficiently than before.

But Here’s the Catch

If the IRS is automating audits and collections, that means less human judgment and more reliance on algorithms.

That could mean more mistakes and less flexibility if you end up in their system.

If you think calling the IRS now is frustrating, just wait until AI runs their phone lines.

How This Affects Regular Taxpayers

These layoffs aren’t just numbers on a spreadsheet. They’re going to affect you.

Whether you’re a W2 employee, self-employed with a side hustle, or running a small business.

Customer Service Will Get Worse:
With fewer agents on staff, hold times will increase. Getting help or a refund from a real person at the IRS is going to become even more difficult, especially during tax season.

Refunds Will Be Delayed:
Fewer tax examiners mean slower tax refund processing. If you file a paper return, amend a return, or have an issue with your tax refund, it’s going to take longer to resolve, and it'll be more difficult. That’s just a fact.

Audits Might Decrease:
Yes, audit rates should fall overall. But here’s the reality. The IRS won’t have the resources to go after the ultra-wealthy like they’d planned. And I don’t expect much change in audits for regular middle-class taxpayers. For small business owners, freelancers, and 1099 workers, they’re easier targets, so that’s likely where they’ll focus.

Tax Errors and Confusion Will Increase:
With fewer eyes reviewing returns, more mistakes will slip through. That means more incorrect notices, more confusion, and more frustrated taxpayers trying to fix issues with an agency that’s understaffed and overwhelmed.

These effects are already happening, and they’re only going to get worse as additional cuts roll out.

What Should You Do Now?

As a CPA, here’s what I’d recommend doing right now.

1. File Early.
The earlier you file your return, the faster you’ll get your refund and the better chance you have of avoiding errors and delays.

2. Double-Check Your Return.
Even if you’re using tax software, check your numbers and documentation. Typos or missing info could get flagged by the IRS and delay your refund.

3. Respond Promptly to Any IRS Notices.
If you get a letter from the IRS, don’t ignore it. Delayed responses could lead to penalties or missed deadlines, especially now that the IRS has fewer agents handling cases.

4. Consider Working with a Tax Pro.
With all these IRS changes and the increased reliance on AI, having a tax professional can help you avoid mistakes and get the best outcome possible.

5. Keep Good Records.
If you’re self-employed or have any sort of side income, keep clean records. With fewer IRS staff, you may not get audited, but if you do, you’ll want to be ready.

We’re in for a turbulent few years when it comes to taxes and the IRS.

If you have thoughts or questions, go drop them in the YouTube video comments; I’d love to hear what you think. And stay tuned for more tips to help you stay ahead of the IRS changes.

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