The Internal Revenue Service is scrambling to bring back workers it once pushed out.
After months of buyouts, early retirements, and firings, the agency is now trying to reverse course as tax season approaches and critical staffing gaps remain.
The IRS lost nearly 26% of its workforce this year, shrinking from about 102,000 employees to fewer than 76,000.
That includes nearly 25,700 employees, roughly a quarter of the agency, who exited through buyouts, resignations, and firings.
More than 4,500 employees took the first round of buyouts, and an additional 17,800 Treasury workers left in a second round, according to the agency’s watchdog.
Many of those who left accepted deferred resignation deals or early retirement offers.
Some of these workers remain on the payroll but have been sitting idle for months.
In other cases, probationary employees were fired for so-called performance issues, even though many had no performance ratings or were well rated.
Rehiring Efforts Spread Across Government
The Treasury Inspector General for Tax Administration found that several of those workers had mission-critical skills.
An internal email obtained by multiple outlets told workers, “IRS has identified critical vacancies that need to be filled and is exercising its discretion to offer you the opportunity to rescind your Deferred Resignation Program/Treasury Deferred Resignation Program (DRP/TDRP) agreement.”
Fifty employees in the IRS Taxpayer Experience Office who were about to be laid off were also told this week that their terminations had been canceled, a worker confirmed to Axios.
The reversal follows similar moves by other agencies that took part in the early months of what some have called a hasty federal workforce reduction effort.
The Department of Agriculture, the FDA, and the Nuclear Security Administration have all rehired workers with specialized skills after facing operational challenges.
Max Stier, president of the nonprofit Partnership for Public Service, said the federal government is waking up to the consequences of its downsizing: “They realize that they’re getting rid of people that they actually really need.”
The shake-up comes amid rapid turnover in IRS leadership. Former Missouri congressman Billy Long resigned after only two months on the job.
Treasury Secretary Scott Bessent has now stepped in as acting commissioner, the seventh person to lead the agency this year.
Bessent recently removed three senior IRS executives who oversaw online tax services and tax-exempt organization audits.
Tax Season Pressures
The timing couldn’t be more urgent. The IRS is about to enter tax season while implementing major changes from President Donald Trump’s new tax legislation, dubbed the “One Big Beautiful Bill.”
In a statement to Axios, the Treasury Department said, “We are committed to ensuring the agency is staffed appropriately to serve the American people effectively and efficiently.”
The National Treasury Employees Union, which represents IRS workers, welcomed the pivot.
“We are pleased that the administration now realizes it cannot afford to lose more of these trained, nonpartisan professionals,” said union president Doreen Greenwald.
Audits Pay Off, But Funding Drops
The shift in staffing also comes amid mounting evidence that cutting IRS resources has real fiscal costs.
A recent study by economists from the Treasury, Harvard, and the University of Sydney found that auditing the top 10% of earners yields up to $12 in revenue for every $1 spent.
Auditing the top 0.1% of taxpayers, while expensive, brings in an average of $95,491 per audit, according to the research.
Plus, once audited, high earners are more likely to pay their taxes in future years, a ripple effect that triples the return over time.
Despite that, audits have plummeted. The rate for those earning over $10 million dropped from nearly 14% in 2012 to under 2% by 2020.
Budget cuts, driven largely by Republican opposition to expanding the IRS, shrank the agency’s funding by over 20% in the last decade.
Amy Hanauer, executive director of the Institute on Taxation and Economic Policy, said the fallout hurts average Americans.
“It just means that low and moderate income families have to pick up a bigger share of our overall cost of government,” she told Business Insider.
“We have less revenue to pay for healthcare and education and higher education, and infrastructure.”
A Federal Pattern
The IRS isn’t alone. Across the federal government, agencies are trying to fix the consequences of what experts now see as rushed and poorly planned layoffs.
Many of the workers initially dismissed remain on payroll, idle but still receiving salaries. Now, they’re being asked to return, sometimes without penalty.
The IRS has yet to confirm exactly how many workers it hopes to bring back, but the move is clear: after months of pushing people out, the agency needs them again. And fast.