The IRS confirmed that employees in roles deemed “critical” to tax season must continue working until mid-May, even if they took the Trump administration’s buyout offer.
Trump buyout exemption.
According to an email shared with all IRS employees on February 5 and provided to Checkpoint by an agency official, Treasury Secretary Scott Bessent carved out an exemption to the so-called Deferred Resignation Program (DRP), which generally gave government workers a limited window to voluntarily resign with the promise of receiving pay and benefits through September 30, 2025.
Specific positions within the IRS’ taxpayer services and information technology functions necessary to facilitate a smooth tax filing season are required to continue working until May 15, 2025. The exemption also extends to Taxpayer Advocate Service staff.
President Trump has made it a priority for his second term to reduce the size of the overall federal workforce. On January 28, government employees were sent an email describing the administration’s intentions to “reform” organizational structures across federal agencies, an undertaking the email said will be “significant.”
Originally, the DRP gave employees until February 6 to resign, with the caveat that those who opted to remain would not get “full assurance regarding the certainty of” their “position or agency.” But swiftly-filed lawsuits from labor unions raised concerns over the legality of the program. Critics also warn that employees who take a buyout are not guaranteed pay, given that the federal budget’s current funding only lasts until March 14.
On Thursday, U.S. District Judge George O’Toole temporarily blocked the DRP, extending the response time until Monday with the possibility of a longer or permanent block. The federal judge will hear arguments from the plaintiffs of the lawsuits and will decide then what comes next.
As for the exempted tax season staff, those who have already notified the Office of Personnel Management of their resignation must await further instruction on returning to their duties. The IRS declined to provided further information on the number of employees in-scope of the exemption and position specifics.
Staffing challenges and processing delays.
The IRS already struggles with hiring, training, and retaining workers. Workforce expansion efforts using the Inflation Reduction Act (P.L. 117-169) are currently on ice due to hiring freezes after funding clawbacks and a Trump executive order.
National Taxpayer Advocate Erin Collins in her most recent Annual Report to Congress identified hiring as one of the 10 most pressing issues plaguing the IRS. For example, although the agency has made strides in bringing on more customer support representatives, “attrition for this position was 24 percent in fiscal year 2023 and 19 percent in fiscal year 2024, and 63 percent of the IRS workforce is eligible to retire within six years.”
Without a complete and properly equipped roster, taxpayers get “inadequate service, inefficient tax processing, limited access to knowledgeable IRS representatives, and potential errors in tax administration, resulting in potential harm to filing season services and collection of tax dollars,” Collins reported.
In her review of the 2024 filing season, Collins illustrated that the IRS prioritized boosting its Level of Service metric largely based on phone call answer rates and average wait times at the expense of “greater delays in processing correspondence and amended returns.”
One of the legislative proposals submitted to Congress as part of Collins’ “Purple Book” supplementing her annual report included the recommendation to amend Code Sec. 6402 to require the IRS to act on refund and credit claims within three years. Currently, Collins explained, the Code does not obligate the IRS to pay or deny such claims.
“It may simply ignore them,” she wrote.
In December, former IRS Commissioner Larry Gibbs spoke with then-Commissioner Danny Werfel at the University of Texas ahead of tax season and Trump’s second term. Gibbs described the “cautionary tale” that was the IRS’ efforts in 1985 to implement wholesale change at the agency, which lead to rampant refund delays and errors that took “five to 10 years to really work through.”
Gibbs warned the incoming Trump administration at the time that an under-resourced IRS would “run the risk of a bad filing season — you will regret it.”
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