Impacts of Potential IRS Layoffs and The Future of Tax Filing
Much has been written recently about layoffs for federal workers across various departments of the federal government. Some are speculating that the IRS could lay off a large amount of their workforce, possibly during the middle of the 2025 tax season.
How Could This Immediately Affect Taxpayers and Tax Professionals?
The IRS is already under significant pressure during tax season, with millions of returns to process, refunds to issue, and inquiries to handle. The sudden reduction in staff—especially probationary employees who often support frontline operations—could have several immediate and long-term consequences:
Delays in Processing Tax Returns
Fewer employees mean fewer hands available to process returns efficiently. This could lead to delays in refunds, particularly for those who rely on them for financial stability.
Longer Wait Times for Customer Service
The IRS has struggled with customer service issues for years, and this reduction in workforce is likely to exacerbate the problem. Taxpayers needing assistance may face extended wait times or even fewer available representatives to handle their concerns.
What Could This Mean for the Future of Tax Filing?
The potential layoffs raise broader concerns about the future of tax administration in the U.S. If the IRS continues to experience workforce reductions, it could result in:
A Shift Toward More Automation: With fewer human resources, the IRS may accelerate the adoption of automated systems, artificial intelligence, and online self-service tools to handle routine inquiries and tax processing.
A Greater Burden on Taxpayers: As customer service options dwindle, taxpayers may find themselves relying more on third-party tax professionals to navigate increasingly complex tax matters.
Potential Policy and Legislative Responses: If these staffing reductions cause widespread disruptions, there may be political and legislative efforts to either reinstate positions or rethink the structure of tax administration in the country.
What Should Taxpayers and Businesses Do?
Given the uncertainty surrounding the IRS workforce and its potential impact, taxpayers and businesses should take proactive steps to mitigate potential issues:
Leverage Online IRS Tools
The IRS offers various online tools for tracking refunds, obtaining tax transcripts, and answering common questions. These assets can often help taxpayers resolve common issues without needing direct human assistance.
Seek Professional Advice
Given the possible disruptions, working with an experienced tax advisor could help navigate any complexities arising from IRS staffing shortages. Leveraging a tax professional can ensure compliance and prevent costly errors.
Consult CSH
If the IRS were to lay off a large amount of their workforce it would mark a significant shift in the landscape of tax administration. While the full impact remains to be seen, these potential cuts could create immediate challenges for taxpayers, while also shaping the future of tax filing and compliance. Consulting with a CSH tax professional will be crucial in adapting to these changes.
