IRS Prepares Layoffs in Middle of Tax Season as Democrats Try to Stop DOGE From Obtaining Sensitive Data

The Internal Revenue Service (IRS) is among the federal agencies set to cut thousands of workers on probationary status, as part of the reductions in force ordered by President Trump. 

For the IRS, the cuts come right in the middle of tax season, and it could mean delays in processing and refunds.

It’s unclear how many workers will be cut, although the Associated Press and ABC News report the number could be as high as 15,000. Most of the affected positions are believed to be workers in taxpayer service, phone centers, and junior audit positions who are on probationary status and lack civil service protections. 

Earlier, the Trump Administration told IRS workers involved in the 2025 tax season that they would be exempt from the deferred resignation offer. About 4,500 IRS employees accepted the offer before being told that.

The news has accountants warning that the 2025 tax season could be a nightmare when it comes to service.

“IRS service levels and modernization efforts have seen progress since the COVID-19 pandemic and we are committed to seeing those efforts continue,” said American Institute of CPAs (AICPA) President and CEO Mark Koziel. “Americans deserve a fully functioning agency that can be respected by taxpayers and their preparers, thereby allowing them to comply with their tax obligations.”

Koziel added that the AICPA is in close coordination with IRS officials to “understand and mitigate the impact of these changes on IRS services.”

This comes as Republicans have so far succeeded in clawing back $40 billion out of the $80 billion originally allocated to the IRS, in the Inflation Reduction Act of 2022. 

DOGE Targets Data Access

Meanwhile, the Elon Musk-led Department of Government Efficiency (DOGE) is reportedly seeking access to troves of sensitive government data at the IRS located in the Integrated Data Retrieval System. Such data includes taxpayer information, bank records, and other sensitive info. 

According to the White House, “waste, fraud, and abuse have been deeply entrenched in our broken system for far too long. It takes direct access to the system to identify and fix it.”

However, attorneys general from 14 states have sued to stop DOGE from getting the data, claiming Musk’s actions can only be taken by a nominated and Senate-confirmed official. 

And Democratic Senators Ron Wyden (D-OR) and Elizabeth Warren (D-MA), ranking Democrats on the Finance and Banking Committees respectively, sent a letter to acting IRS Commissioner Douglas O’Donnell demanding clarification. 

“We demand that the IRS immediately clarify the extent to which DOGE team members may have inspected or be seeking to inspect the private tax return information of millions of Americans and whether taxpayer privacy laws are being enforced to prevent unauthorized disclosure and intrusions,” wrote the Senators.

They also warned that meddling with IRS systems during tax season could “cause breakdowns that may delay the issuance of tax refunds indefinitely.”