The changes from the federal government are coming fast and furious. In little more than a month, Elon Musk’s Department of Government Efficiency (DOGE) has gutted the Consumer Financial Protection Bureau (CFPB), commandeered the U.S. Digital Service (USDS), and eliminated USAID.

We’re bringing you the latest on DOGE’s federal cuts, what they mean, and how HR leaders can respond to the bureaucratic blitzkrieg from Washington.

With tax season upon us (40 days until Tax Day!), this week, we’re focusing on the IRS.

DOGE has fired 7,000 workers at the IRS, and late Tuesday, The New York Times reported that the Trump administration plans to cut the IRS headcount by 50%.

The current layoffs primarily affect probationary employees—those who’ve been at their position in the agency for a year or less. A probationary period begins when a worker starts a new role, meaning longtime IRS workers who were recently promoted to a new position were also vulnerable to the cuts.

Five thousand of the now-fired workers came from the enforcement and collections section of the IRS, where they were responsible for auditing wealthy individuals and enforcing tax rules for businesses.

But DOGE may not be done yet—prior to the most recent layoffs, the IRS currently employed approximately 100,000 workers. If the planned 50% reduction goes through, it would cut roughly 50,000 IRS workers.

There is debate among experts about what the IRS firings could mean for individuals and businesses. Some argue that refunds will be delayed, while others believe that the IRS’ automated system should prevent any tax refund delays.

It’s currently unclear when the proposed 50% reduction-in-force would take place, though there’s some indication that the Trump administration will wait until tax season is over. However, if the 50% reduction in headcount takes effect before then, taxpayers should expect delays in receiving their tax refunds.

Taxpayers have protections in the event that refunds are delayed. Ari Glowgower, a professor of law at Northwestern University, explains that the IRS has to issue the tax refund within 45 days of the tax return date. If they don’t, taxpayers may be entitled to interest on late payments.

Other Potential Impacts:

• Audit Delays. According to the law firm Fox Rothschild, if an auditor is laid off, those being audited might face longer review periods as a new auditor is assigned. This could be more expensive for businesses or individuals being audited.
• More Notices of Deficiency. With fewer people on staff, Fox Rothschild posits, the IRS might be forced to issue more Notices of Deficiency. A Notice of Deficiency is a legal claim stating that the taxpayer owes additional income tax. If the IRS issues more Notices, rather than letting taxpayers resolve disputes through the IRS Independent Office of Appeals, more taxpayer challenges would have to go to the U.S. Tax Court. Going to court could be expensive, tedious, and complicated.
• Slower Customer Service. The IRS’s customer service, specifically its call center, improved after an injection of funds as part of the 2021 Inflation Reduction Act. The agency has been answering more calls, more quickly. These cuts will likely impact the customer service wing of the IRS, meaning longer wait times for taxpayers seeking guidance.
• Inconsistent Audit Practices. Georgetown Law professor, Dorothy Brown, told The Washington Post that fewer IRS workers in enforcement and collections could cause a return to the racist auditing practices of the past which saw low-income Black Americans audited more frequently than non-Black workers in the same income bracket. “You need people to audit higher-income taxpayers [with] more sophisticated tax returns. So if those people are being fired, then we would expect to go back to the old ways where Black taxpayers are three to five times more likely to be audited or even worse,” Brown said.

Given all this, how can HR leaders ensure their business is protected and their employees feel supported?

Stay Organized

• Send reminders to employees encouraging them to file their taxes on time.
• If contacted by the IRS, keep records of all communications.
• Read and respond to any IRS communications in a timely fashion.

Communicate Effectively

When reminding employees to file their taxes, update them on how the latest changes could impact them. Help employees manage their expectations by letting them know about the potential delays they might face during this unusual tax year.

While HRs are not tax experts, you can encourage employees to seek the help of a CPA who could answer their questions and provide guidance on tax-related issues.

In times of uncertainty, open communication lets employees know they’re supported and you’re a trustworthy partner in navigating confusion.

As the federal government changes and shrinks under the Trump administration, it’s more important than ever to stay informed. We’ll be covering DOGE, Executive Orders, and more in this bi-weekly newsletter.

The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.