IRS Tax Refunds Warning Issued Over Cuts: ‘Profound Effects’

A group of Democratic lawmakers have penned a letter warning that personnel cuts at the Internal Revenue Service (IRS) could have “profound effects” on the delivery of tax refunds and other services.

Newsweek has contacted the IRS via email for more information on the staffing reduction.

Why It Matters

President Donald Trump’s administration is pushing ahead with significant federal government staff cuts, which have already impacted thousands of workers across multiple agencies.

The Associated Press reported this week that half the IRS’s workforce could be let go, through a mixture of incentivized buyouts, attrition and layoffs. Roughly 7,000 probationary employees of the federal agency were let go in February.

What To Know

The joint letter, signed by 130 Democratic lawmakers, has denounced the planned staffing cuts at the IRS.

“This abrupt reduction in workforce could exacerbate existing challenges faced by an already overburdened agency and threatens to undermine the IRS’ capacity to serve the American people effectively, including ensuring that taxpayers receive timely services and refunds,” the letter to Heather M. Hill, the acting inspector general for tax administration, says.

Some of the most notable signatories include Massachusetts Senator Elizabeth Warren.

The Democrats are not the only ones sounding the alarm. John Koskinen, a former IRS commissioner, told AP that a reduction of tens of thousands of employees could render the IRS “dysfunctional.”

He and six other former IRS commissioners wrote in The New York Times earlier this month: “Aggressive reductions in the IRS’s resources will only render our government less effective and less efficient in collecting the taxes Congress has imposed.”

In the 2023 fiscal year, the IRS employed 82,990 workers full time. There are also some part time workers, making the total number of employees around 90,000, according to the Associated Press.

Trump, the Department of Government Efficiency (DOGE)—an unofficial government agency headed by Elon Musk—and their supporters say these cuts are necessary to reduce waste, fraud and abuse from the federal government.

However, some Republican lawmakers have criticized the mass layoffs.

What People Are Saying

Democratic lawmakers in the letter: “Reducing IRS staff will have profound effects, hindering the agency’s ability to process the more than 140 million individual tax returns it expects to receive for tax year 2024, potentially causing delays for taxpayers waiting for refunds, and inhibiting the agency’s ability to conduct audits to catch wealthy tax cheats who avoid paying their fair share.”

Clay Hodges, director of national tax at professional services firm Moss Adams, told Newsweek: “While the IRS has made progress in modernization, reduced staffing could slow the processing of returns, leading to potential refund delays for some taxpayers. I anticipate these delays could create a cascading effect—as more returns pile up, it will become increasingly difficult for the IRS to keep pace, further straining its ability to process refunds in a timely manner.”

What Happens Next

It is unclear at this time exactly how many layoffs will be made from the IRS.