President Trump’s federal hiring freeze raises concerns about IRS efficiency and tax refund delays, prompting taxpayers to consider strategic adjustments.
At a Glance
- Trump’s federal hiring freeze affects IRS operations, canceling job offers after February 8, 2025
- IRS plans to reallocate workers to manage 140 million expected tax returns
- Experts advise taxpayers to adjust withholding and track deductions to minimize reliance on refunds
- Additional $80 billion funding from Inflation Reduction Act may help mitigate impact
- Separate order ending remote work could lead to IRS staff retirements
Trump’s Hiring Freeze and Its Impact on the IRS
President Donald Trump’s recent Executive Order implementing a federal hiring freeze has sparked concerns about the Internal Revenue Service’s ability to efficiently process tax returns and issue refunds during the peak filing season. While the IRS is exempt from the 90-day freeze, the agency announced that job offers with start dates after February 8, 2025, will be revoked, potentially affecting its operational capacity.
The IRS faces a significant challenge as it expects to process approximately 140 million individual tax returns during the current tax season, which runs until April 15. To address potential staffing shortages, the agency plans to reallocate workers from other areas to manage the filing season processing needs. Additionally, seasonal employees have already been hired and trained to work from January through May, providing some relief to the staffing concerns.
Expert Opinions on the Freeze’s Effects
The American Institute of Certified Public Accountants (AICPA) is closely monitoring the potential impact of the hiring freeze on IRS operations. Melanie Lauridsen of the AICPA expressed cautious optimism about the agency’s ability to adapt:
“We are greatly sensitive to the filing season service challenges for members and taxpayers, While the AICPA acknowledges some concerns regarding the impact that the hiring freeze will have on administration, the IRS has said they will ‘reallocate workers from other areas to help cover filing season processing’ to meet the needs of this filing season,” Melanie Lauridsen said.
Former IRS Commissioner Charles Rettig offered a more sobering assessment of the situation, highlighting the resilience of IRS employees while acknowledging the significant challenges ahead:
“Every facet of IRS operations will be significantly impacted by the current hiring freeze. Fortunately, IRS employees are resilient and have considerable experience with hiring freeze operations, IRS employees do their best with the limited resources and support received,” Rettig said.
Potential Mitigating Factors
Despite the challenges posed by the hiring freeze, some experts believe that recent developments may help soften its impact. Dr. Steven Hamilton pointed out that the IRS is in a stronger position due to recent funding increases:
“The IRS will function much better today and in the upcoming filing season with this hiring freeze than they would have, say, four years ago,” Hamilton said.
This optimism stems from the Inflation Reduction Act, which provided an additional $80 billion in funding to the IRS, potentially improving its current and future operations. However, a separate executive order ending remote work for federal employees could lead to retirements among IRS staff, potentially offsetting some of these gains and affecting filing season operations.
Strategies for Taxpayers
Given the uncertainty surrounding the IRS’s operational capacity, taxpayers are advised to take proactive steps to minimize their reliance on tax refunds. Some recommended strategies include adjusting withholding allowances, increasing retirement contributions, considering quarterly estimated payments, and meticulously tracking business expenses.
By implementing these strategies, taxpayers can potentially reduce their tax liability throughout the year, lessening the impact of any potential delays in refund processing. This approach not only helps individuals navigate potential bureaucratic disruptions but also promotes greater financial self-reliance.
