IRS Reverses Course on Layoffs, Seeks Return of Staff After 26,000 Departures

The Internal Revenue Service (IRS) has announced a significant reversal in its workforce reduction strategy, halting planned layoffs and actively seeking the return of some former employees. This decision marks a major departure from the agency's previous trajectory, which saw approximately 26,000 workers leave primarily through voluntary incentives. The shift comes as the IRS grapples with critical staffing shortages, as initially reported by Eric Katz on social media.

The earlier reductions were part of a broader federal initiative to shrink government size, aiming to bring the IRS workforce below 60,000 from a peak of over 100,000. However, these cuts created substantial gaps in "mission-critical expertise," impacting the agency's operational capacity. An internal email to IRS managers, obtained by Government Executive, confirmed the agency's intent to "utilize all available tools" to address these staffing deficiencies.

As a direct consequence of this policy change, the IRS is rescinding previously issued Reduction in Force (RIF) notices. This includes notices sent to the Office of Civil Rights and Compliance, where nearly 80% of staff had been targeted, and employees within the Taxpayer Experience Office. IRS Commissioner Billy Long, in an August 1 memo, explicitly stated, "This memorandum serves as cancellation of your prior RIF notice of separation," superseding earlier directives.

The National Treasury Employees Union (NTEU) had been actively challenging the IRS's prior stance, particularly its refusal to allow employees to withdraw their resignations. The extensive staffing cuts had already raised significant concerns among tax professionals and advocates regarding potential delays in taxpayer services and the agency's ability to process returns efficiently. The previous loss of staff also complicated the IRS's ambitious modernization goals.

To mitigate the ongoing operational challenges, the IRS is now actively seeking to re-engage individuals who were previously fired or accepted "deferred resignation" offers. The agency's fiscal 2026 budget request underscored the severity of the staffing deficit, indicating a need to hire 11,000 additional call center representatives to merely maintain current service levels. This strategic pivot highlights the urgent need for a robust workforce to ensure effective tax administration and support for American taxpayers.