The National Taxpayer Advocate has released her Fiscal Year 2026 Objectives Report to Congress, a statutorily-required annual report outlining the objectives of the Office of the Taxpayer Advocate for the upcoming fiscal year. While covering many topics, the report helpfully provides updated data regarding the status of the dwindling IRS workforce. Most critically, the Taxpayer Advocate reports that between Inauguration Day in January, and June 4, 2025, the number of IRS employees has been reduced from 102,113 to 75,702, a reduction of more than 25 percent. The bulk of this reduction was achieved through what the Taxpayer Advocate refers to as “employee departure incentives,” rather than layoffs. As we have previously covered, these incentive programs encourage IRS employees to voluntarily resign but continue receiving pay and benefits for a limited period of time.
The Taxpayer Advocate’s report contains the following chart showing IRS personnel losses broken down by job function:
A number of IRS job functions relevant to tax enforcement have suffered significant losses. For example, the Office of Chief Counsel, which serves as the principal legal advisor to the IRS and represents the agency in Tax Court litigation, has been reduced by nearly 13 percent. IRS-Criminal Investigation, which is responsible for investigating potential tax crimes, has been cut by more than 10 percent. Two of the IRS departments responsible for conducting taxpayer audits have seen their staffing reduced dramatically, with the Large Business and International Division down more than 20 percent and the Small Business/Self-Employed Division down by over 35 percent. The Independent Office of Appeals has seen its workforce reduced by over 28 percent. Even the Taxpayer Advocate Service, which is dedicated to assisting taxpayers in resolving problems with the IRS and ensuring that taxpayers are treated fairly, has seen its personnel reduced by nearly one quarter. Finally, the staff of the IRS Whistleblower Office, which is responsible for receiving, evaluating, and processing information provided by individuals who report potential violations of the tax laws, has been cut by over 26 percent.
In a significant understatement, the Taxpayer Advocate’s report observes that “[t]he magnitude of these workforce reductions has presented significant challenges,” and paints a picture of a government agency facing significant headwinds. In addition to the workforce reductions, the Taxpayer Advocate’s report notes two other major issues that have hindered the IRS in its mission. First, the Taxpayer Advocate states that the IRS has suffered from an “absence of consistent leadership,” noting that the agency “had five commissioners or acting commissioners during the first four months of the year, and many of its most experienced leaders chose to accept one of the voluntary departure options,” leaving the agency with “both fewer frontline employees and managers and fewer experienced leaders to carry out its mission.” Second, the Taxpayer Advocate addresses the proposed substantial cuts to the IRS budget for FY2026 (which we covered here), noting that “[a] reduction of that magnitude is likely to impact taxpayers and potentially the revenue collected.” Newly-confirmed IRS Commissioner Billy Long will undoubtedly have his hands full of challenges as he takes the IRS helm.
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