The Internal Revenue Service is preparing to shed as much as 50 percent of its staff, according to four people familiar with the matter, a significant cut that could jeopardize the agency’s ability to complete its basic mission of collecting taxes.
Additionally:
Leadership of the I.R.S. has been in turmoil, with two leaders stepping down under Mr. Trump. The current acting commissioner, Melanie Krause, put the chief human capital officer at the I.R.S. on administrative leave this week, according to two people familiar with the matter.
NYT did not have specifics on from where any potential cuts would come. This next part is important as you read headlines that say “Trump wants to cut the IRS Workforce by half” (NYT’s headline was “Trump Administration Pushes to Slash I.R.S. Work Force in Half”) — the NYT article noted that the 50% reduction in force includes attrition. “Those cuts, as well as normal attrition, are expected to count toward the Trump administration’s goal of halving the number of people who work at the I.R.S., two of the people said,” NYT said. According to the National Taxpayer Advocate’s 2024 report to Congress, attrition of customer service representatives at the IRS was 24 percent in 2023 and 19 percent in 2024. 63 percent of the entire IRS workforce is eligible to retire within six years.
The Internal Revenue Service (IRS) is struggling to hire a workforce commensurate with the super-sized budget expansion that it recently received. According to a report from the Treasury Department, qualified candidates just aren’t jumping forward to work for the tax cops. It’s yet another example of how the IRS’s budget boost was hastily implemented, poorly designed, and dangerous for taxpayers.
From that TIGTA report [PDF] dated March 11, 2024:
In 2022, the IRS was losing about 10,000 employees per year, most of whom were retiring. They’d gotten up to 100,000 full-time employees as of early January 2025, up from 96,000 the year prior and the highest headcount they’ve had in 30 years.
Now ex-commish but commish at the time Danny Werfel warned at the end of last year that cuts to the Inflation Reduction Act funding it was granted — something GOP members in Congress were pushing hard for — could potentially lead to layoffs. “I firmly believe the agency is on the right path, and the agency is well positioned for continued modernization efforts, including those from the incoming administration,” he said at the time, naively. Supposedly $60 billion of the $80 billion from the ironically named Inflation Reduction Act was to go toward modernization of the IRS’s ancient IT systems. The Tax Policy Center did a write-up on the IRS’s 20th century technology here to give you an idea how badly those systems need to be modernized, though I suspect many of you are already painfully aware:
In the early 1960s, the IRS operationalized its first computer—an IBM 7074—to centralize data collection. Although, like the rest of the world, the IRS has substantially expanded and modernized its technological infrastructure since then, some legacy systems remain.
For example, the Individual Master File (IMF) was established in 1970 to process individual taxpayer account data. The IMF is integral to processing tax returns during the filing season, including generating refunds. The system, however, still uses Assembly Language Code (ALC) and COBOL. Among the challenges of using those methods is finding computer programmers in the 21st century who are trained in ALC and COBOL. Legacy systems also make it more difficult to respond to changes in the tax code, to view taxpayers’ accounts in real time, and to ensure data security.
COBOL was developed in the 1950s, just FYI.
Since 2000, the IRS has attempted to replace the IMF with a more advanced system—first, the Customer Account Data Engine (CADE), and then, when that effort failed, CADE 2. But the development of CADE 2 has been slowed—in part, because of cuts in the IRS budget and the growing demands on the IRS to implement new tax provisions.
I’ve focused on the technical side of the IRS for the second half of this article because I’m hoping the Trump administration will support the IRS in continuing its modernization effort. It’s clearly long overdue. Is that as naive as Danny Werfel thinking the incoming administration would be cool with a $60 billion bill for IT upgrades the IRS has been unable to implement for 25 years? Yeah maybe.
Trump Administration Pushes to Slash I.R.S. Work Force in Half [NYT]
