IRS lays off another 1,400 employees

The IRS is shrinking yet again.

Last week, the agency notified nearly 1,400 more workers they were being laid off, according to the Journal of Accountancy, which cited recent court documents. The reduction affected employees in exam and collections, information services, and shared services and support, the news outlet reported.

The IRS has already let go of about one-quarter of its workforce, CFO Brew previously reported. The IRS had approximately 103,000 employees as of February, and nearly 25,400 had left or took a buyout offer by May, according to a July report from the Treasury Inspector General for Tax Administration (TIGTA). The reduction impacted about 27% of the agency’s tax examiners, who review tax returns for accuracy, and 26% of its revenue agents, who conduct audits on both individuals and businesses, the report noted.

Funding is also a challenge at the beleaguered agency. The IRS was set to receive $80 billion through the Inflation Reduction Act, but Congress reduced that funding to $37.6 billion, according to an October TIGTA report. The IRS had spent about 37% of its IRA funding by March. Various 2026 federal budget proposals would further reduce IRS annual funding by around 20%, according to the report.

“Completing IT modernization projects, providing quality service to taxpayers, and enforcing tax laws with a reduced workforce and budget will be challenging for the IRS,” TIGTA noted in the October report.

Organizations are already seeing the fallout of these layoffs. Tax professionals recently shared stories with us of unanswered phone calls, audit cases falling into limbo, and companies putting plans on hold while they await resolution on pending returns.