Anyone who follows President Trump at all knows that he does not have a love affair with the IRS.  Importantly, Trump also seems to have a long memory when it comes to individuals and institutions who he perceives have slighted or hindered him.  It remains to be seen how much the executive order will impact the IRS.  We think that this article from Thomson Reuters provides a timely update:

Impact of IRS Hiring Freeze on Tax Season, Workforce Goals

By Tim Shaw, Checkpoint

President Trump's executive order implementing a hiring freeze across all federal agencies raised questions about the agency’s readiness for the upcoming tax filing season, but a tax policy expert says taxpayers have nothing to fear – beyond tax season, however, may be a different story.

Issued Monday following his inauguration, Trump ordered an immediate pause on the hiring of federal civilian employees "throughout the executive branch." Agencies cannot fill vacant positions nor create new ones.

The freeze will remain in place until the Office of Management and Budget (OMB) submits a plan to reduce the size of the federal workforce, due 90 days from January 20. But the order contains a special carveout for the IRS. In order for the IRS to begin hiring again, the next Treasury secretary and the OMB director must first give the OK.

Trump's Treasury secretary nominee, billionaire investor Scott Bessent, cleared the Senate Finance Committee on Tuesday by a vote of 16-11. Bessent's confirmation next goes to the full Senate for approval.

Meanwhile, the IRS is also undergoing a changing of the guard. Danny Werfel resigned as IRS commissioner when Trump retook office following the new administration's announcement that it wants to install former House Representative Billy Long atop the agency Long previously sought to abolish.

January 27 marks the beginning of tax season. With the hiring freeze in place, taxpayers and practitioners are left to wonder if this year will be another bumpy ride like in recent years when the IRS was marred by staff shortages and resource strain. National Taxpayer Advocate Erin Collins in her recent Annual Report to Congress on last tax season gave the IRS the highest marks on its performance since before the COVID-19 pandemic.

According to a social media post by Melanie Lauridsen, vice president of tax policy and advocacy at the American Institute of Certified Public Accountants, there is "NO CONCERN" for this filing season. (emphasis in original)  First, there "already was a hiring freeze in place," therefore the executive order "is not a change from where the IRS was" at before the start of Trump's second term. This is due to the additional $20 billion clawed back from the IRS' once-$80 billion, 10-year funding allocation from the Inflation Reduction Act.

Pursuant to previous agreements between former President Joe Biden and Republican lawmakers amid government funding and debt ceiling negotiations, the IRS was set to lose $10 billion from the Inflation Reduction Act bucket for two consecutive years. Later, Biden and Congress agreed to accelerate the claw backs.

The full $20 billion was rescinded on January 1. Biden Treasury officials warned that should that agreement stand, the IRS would halt workforce expansion efforts laid out in the Strategic Operating Plan (SOP) for spending the Inflation Reduction Act funding.

Lauridsen added that seasonal IRS employees "should have already been hired and received training to begin working from January through May. The IRS will also reallocate workers from other areas to help cover filing season processing."

The future of IRS funds from the Inflation Reduction Act and normal annual appropriations hang in the balance under a Republican trifecta that has made its intentions to reduce the size of the agency clear. But during Werfel's time at the helm, the IRS planned to continue growing in all sectors, from customer service to revenue agents and IT professionals.

According to the SOP, the IRS had a road map for modernizing its hiring and training processes, with a focus on data-driven benchmarks. "Given historical budget and staffing constraints, the IRS has not had enough staff to meet taxpayers' service needs or its enforcement goals," read the SOP, released nearly two years ago.

"As the IRS grows its workforce to realize the vision the IRA makes possible, increasing and aligning talent to needs will be critical in fulfilling the business strategy," the IRS said. "Developing a strategic workforce planning approach that brings aboard the talent needed will be an important step in how we meet the future talent needs of the IRS while improving the taxpayer experience."

Lauridsen also noted that executive orders "must be reviewed" by Treasury "prior to implementation."