The IRS began firing employees Thursday as part of the Trump administration’s aggressive effort to downsize the federal workforce.
The tax revenue agency is expected to lay off approximately 6,700 workers in the coming days, mostly recent hires who are still in their probationary periods. The firings Thursday reportedly include roughly 500 workers in Texas, more than 600 in New York and over 300 each in Georgia, Florida, Tennessee and Pennsylvania. Layoffs are being reported across divisions within the IRS, including collections and tax compliance, and arrive just as tax season swings into full gear. Sources told ABC News that another round of layoffs could occur once tax season comes to an end in April.
Commerce Secretary Howard Lutnick said Wednesday that Trump ultimately wants to eliminate the tax agency. “Donald Trump announced the External Revenue Service, and his goal is very simple: to abolish the Internal Revenue Service and let all the outsiders pay,” he told Fox News, referring to Trump’s proposal to create a new agency that would collect tariff and foreign tax revenues.
While tax experts say it would be all but impossible to replace U.S. income taxes with tariffs – the tariff rate would have to be 100% or more, so high that imports would plummet as prices double, eliminating the foundation of the revenue – National Economic Council Director Kevin Hassett defended the idea Thursday, telling reporters at the White House that it is “absolutely” a possibility.
A sharp reversal: The IRS had more than 100,000 full-time employees across the U.S. at the end of 2024, according to agency data highlighted by the Federal News Network. That’s the highest level recorded in nearly 30 years and comes following a long period of decline amid budget cuts. IRS officials have said they are aiming to employ about 102,000 people by 2029.
Former President Joe Biden sought to reinvigorate the agency as part of an effort to crack down on tax cheating by corporations and the rich, and the Inflation Reduction Act of 2022 provided $80 billion over 10 years to help modernize the agency and boost employment. But Republicans have successfully lobbied to reduce that funding, which is now about half of what it was, and they are expected to cut even more.
The IRS and many tax experts warn that funding cuts could backfire and cost far more in lost revenues than they deliver in budgetary savings. In one notable example, the Congressional Budget Office estimated that a $20 billion cut in IRS funding would result in a revenue loss of $65 billion, producing a net increase in the deficit of $45 billion.