The IRS is navigating tax season under a federal hiring freeze imposed through an executive order by President Donald Trump on Jan. 20.. The freeze comes alongside rescinded job offers for positions with start dates after Feb. 8.
Trump spoke about his plans to freeze IRS hiring in a rally and parade at the Capital One Arena held after his inauguration, Accounting Today reported. Here he signed several executive orders and said, "I will also issue a temporary hiring freeze to ensure that we are hiring only competent people who are faithful to the American public. and we will pause the hiring of any new IRS agents. We will also require that federal workers must return to the office in person."
Journal of Accountancy reported that "every facet of IRS operations" will be impacted by the hiring freeze, said a LinkedIn post by Charles Rettig, who was IRS commissioner from 2018 to 2022.
The freeze adds to existing challenges for the agency, including over $20 billion in budget cuts that impact the the agency's operations. Together with budget constraints, the freeze could hinder the IRS’ ability to focus on priorities such as audits of large corporations and partnerships, marking a shift in enforcement emphasis under the new administration.
Last year’s tax season ran relatively smoothly, thanks to funding from the Inflation Reduction Act. However, the current freeze could strain IRS resources, particularly as one-third of its workforce nears retirement eligibility. New hires, already difficult to recruit, typically require years of training to become effective at their jobs.
"It takes two years to train them and get them marginally effective. If you kill all that, there will be a tremendous amount of natural attrition at the service, and the attrition is going to be at the most experienced level, which will have a huge impact," stated Bill Smith, managing director of the CBIZ Advisors' National Tax Office, in an interview with Accounting Today.
Acting IRS Commissioner Douglas O’Donnell is leading the agency until former Congressman Billy Long, Trump’s nominee, is confirmed. According to Accounting Today, Long’s qualifications have drawn scrutiny, particularly his promotion of questionable Employee Retention Credit (ERC) claims. ERC processing delays remain a concern, with over 1.2 million backlogged claims as of October 2024. National Taxpayer Advocate Erin Collins highlighted this issue in her recent report to Congress, noting the challenges faced by taxpayers awaiting refunds.