How Trump’s IRS Initiatives Could Harm Tax Filing Season

Tax filing season opened on January 27. But, as a result of a slew of Trump administration initiatives, the IRS must try to manage what it anticipates will be 140 million individual returns under severe new constraints.

A short-staffed agency may struggle to process returns in a timely way. Taxpayers may find it harder to get advice or filing assistance. And the potential loss of expertise in information technology and cybersecurity could put both agency efficiency and taxpayer information at risk.

To start, the IRS is operating with a temporary acting commissioner. Former agency chief Daniel Werfel resigned on inauguration day, two years before his term was due to expire, after President Trump announced he would replace him with his own appointee.

Trump’s nominee is former Republican congressperson Billy Long, but the Senate has not yet scheduled a confirmation hearing for him. When in Congress, Long introduced legislation to abolish the IRS, as part of a measure to replace the income tax with a national sales tax.

Pushing Resignations

In addition, the agency may be hit hard by an administration initiative to encourage federal employees to resign or retire. Although many details of the initiative remain unclear, it appears that workers who agree to leave by February 6 would continue to receive full pay and benefits, though most would not be required to work.

Beyond this buyout plan, the pressure to resign was increased by a separate White House initiative to make it easier to fire federal workers.

The timing of both initiatives puts IRS at particular risk. Mass resignations now, in the midst of filing season, could be enormously disruptive to the agency and to filers. Laying off IRS staff in February is akin to firing teachers on the first day of school.

Targeting The IRS

Even before the new administration took steps to reduce staff, the IRS warned that current funding will be insufficient to maintain recent improvements in taxpayer service. For example, while it expected to answer about 85% of taxpayer phone calls this year, it warned its response rate would drop to only 30% in 2026. Deep staff reductions now would only accelerate that decline into the current tax season.

Adding to the uncertainty, on January 21, Trump ordered a 90-day hiring freeze at all federal agencies, except for the IRS. The tax collector, uniquely, was subject to an indefinite freeze until the administration determines it is “in the national interest” to resume hiring.

Separately, Trump threatened to either fire or “transfer to the border” IRS staffers hired as a result of added funding in the 2022 Inflation Reduction Act. Though Trump and others repeatedly claim those new hires are enforcement agents who target ordinary taxpayers, most were taxpayer service staff. In 2023, the IRS hired about 5,000 new workers, mostly to answer taxpayer phone calls.

The agency also is at risk because many staffers are in situations that make them likely to accept generous buyouts, including new hires and long-time employees nearing retirement. In addition, the agency’s IT and cybersecurity experts, critical to its ability to manage its troubled computer systems, have in-demand skills that would make it easy to find new jobs after taking the buyout.

Taxpayer Assistance At Risk

Finally, there is enormous uncertainty about the fate of federal grants, including those for taxpayer assistance.

One program at risk: IRS grant funding for its Volunteer Income Tax Assistance and Tax Counseling for the Elderly that offer free tax preparation for filers who generally make $67,000 or less, are living with disabilities, or who are limited English-speakers. In 2024, these two programs helped 2.7 million filers and the IRS awarded $53 million for this year’s filing season.

They are especially important for low-income families who rely on early refunds as well as assistance to help them with the complexities of claiming benefits such as the Child Tax Credit.

Low-income taxpayers also were helped by the IRS Direct File program, which allows them to file simple returns electronically without having to pay a preparer. The pilot program, used by 140,000 filers in 12 states last year, will be available in 25 states for the current filing season. But it, too, needs experienced staff to operate smoothly.

Resignations and a gap in senior leadership could slow the agency’s ability to assist taxpayers and process returns. Filers can help themselves this year by filing early and electronically. But that won’t halt the long-term damage that deep IRS staff cuts could do to the nation’s tax system.