
President Donald Trump’s executive order—which he signed on his Jan. 20 inauguration day—imposed a federal hiring freeze that has created uncertainty for the Internal Revenue Service (IRS), particularly as the agency prepares for the demanding 2025 tax season.
As reported by Accounting Today, the freeze prevents the hiring new federal employees and creating new positions except for national security and public safety roles. However, it explicitly extends the hiring freeze for the IRS until further notice, potentially hindering the agency’s ability to meet its obligations. The executive order on the hiring freeze applies more generally than the IRS at first, but could possibly go on much longer to halt hiring at the IRS.
The freeze contradicts recent efforts to revitalize the IRS following years of underfunding. As the National Treasury Employees Union (NTEU) noted, the IRS budget was drastically reduced over a decade, limiting its ability to modernize, enhance customer service and address its staffing shortfalls. Funding from the Inflation Reduction Act (IRA) of 2022 provided resources for rebuilding the agency, including hiring workers to handle rising workloads and improve taxpayer support. This progress is now at risk.
According to a Treasury Inspector General for Tax Administration report, the IRS initially got roughly $79.4 billion in supplemental funding when then President Joe Biden signed the IRA into law in August 2022. Congress then took back about $21.6 billion in IRA funding reducing the available IRA funding to about $57.8 billion. This supplemental funding is available until Sept.30, 2031.
Critics of the freeze have highlighted its likely impact on the tax filing process. During the tax season, the IRS traditionally hires thousands of temporary employees to process returns and assist taxpayers. Without new hires, the agency may face delays in processing refunds, responding to inquiries and implementing new technology. NTEU has also countered misconceptions surrounding the so-called “88,000 armed agents,” clarifying that the hiring plans under the IRA were aimed at replacing retiring employees and bolstering customer service.
The executive order directs federal agencies, including the IRS, to reallocate existing personnel and priorities essential services. However, these measures may not be sufficient to handle the workload. With the freeze likely to continue indefinitely for the IRS, taxpayers and professionals should prepare for potential disruptions and delays during the filing season.