The IRS is planning to reorganize its tech workforce, since nearly a quarter of its IT employees have left the agency under the Trump administration.

Acting Chief Information Officer Kaschit Pandya told staff in an email last Friday that the agency needs to “reset and reassess” in part because more than 2,000 IT employees have separated from the IRS since January.

It’s not clear how many of these employees left the agency voluntarily, or how many were laid off through a reduction-in-force. The IRS had about 8,500 IT employees at the start of fiscal 2025.

About 4,000 IRS employees left the agency under the governmentwide “deferred resignation” offer in February. More than 23,000 employees applied for the second deferred resignation program, but Bloomberg Tax reports the agency only accepted about 18,000 of those resignations.

The IRS fired more than 7,000 probationary employees in February, but they were put on paid administrative leave amid ongoing federal court proceedings. Bloomberg Tax reports the IRS brought fired probationary employees back to work on May 23.

Federal News Network first reported the IRS plans to cut its total workforce by up to 40%. The IRS grew to more than 100,000 employees under the Biden administration — its highest level of staffing in nearly 30 years.

Pandya told employees that many of these changes are “already underway.” But the Treasury Department and nearly two dozen other agencies, under a federal judge’s preliminary injunction, are indefinitely barred from implementing President Donald Trump’s executive order directing agencies to carry out reductions-in-force (RIFs) and agency reorganization plans.

“As a matter of process, I cannot request any formal changes to the IT organization structure at this time due to the reduction in force efforts that have already been put in motion. However, I am taking steps to position IRS IT to deliver with the resources we have on board,” Pandya wrote in an email obtained by Federal News Network.

The all-staff email states that upcoming changes are “not yet” a formal reorganization of the agency’s IT operations.

“These are early shifts in how we operate. Formal personnel actions and system changes are not permitted at this time,” the email states.

Under a new “notional IT resource structure,” the IRS plans to regroup remaining IT staff into several mission areas — taxpayer services and experiences, tax processing, compliance, filing season and legislative delivery. A “responsible engineer” and “coordinating director” will oversee each of these areas.

Responsible engineers will make technical decisions and coordinating directors will oversee operational changes. Reorganization documents shared with employees state there are no changes to reporting structures below the senior management level.

“If you don’t see your area listed specifically by name, it doesn’t mean your work isn’t included. At this point, the model is meant to reset coordination points. At this time, there are no changes to reporting structures below the senior manager level,” the documents state.

The IRS is pursuing further cuts to IT staffing and spending. Its fiscal 2026 budget request proposes a nearly 60% cut to IRS technology and operations support staffing, and a nearly 40% cut to its spending.

“We are moving toward a leaner operating model with a greater focus on technical leadership, which aligns with Treasury’s priorities,” Pandya told employees.

Reorganization documents shared with IRS IT employees state the agency is in an “active transition period,” and that details of the plan may change as the agency evaluates its operational needs and receives feedback.

“These changes are not formalized in HR systems, and no Personnel Action Requests (PARs) have been submitted at this time. Part of this process includes validating that the new structure will actually work,” the documents state.

Treasury Secretary Scott Bessent told members of the House Ways and Means Committee on Wednesday that the department completed its most successful tax filing season in years — “and we did so while improving efficiencies and cutting costs at the IRS.”

Bessent said the IRS is seeing year-over-year increases in revenue collections, and that the agency has cut $2 billion in “waste and planned IT spending.”

The Treasury Department, however, wrote in its fiscal 2026 budget proposal that the IRS needs to hire more than 11,000 call center representatives to “maintain” its current level of phone service to taxpayers.

The agency is asking for $852 million to make these hires, and to roll out automation tools to further assist customers.

The IRS answered about 87% of the nearly 9 million calls it received during this year’s filing season. Callers waited on hold for an average of three minutes.

Without these requested funds, the IRS said it will only be able to answer 16% of calls during next year’s tax filing season, and only 11% of all calls in fiscal 2026.

The Treasury Inspector General for Tax Administration found recent IRS staffing cuts did not have an impact on this year’s filing season. But TIGTA reported on Tuesday that the IRS expects to lose 1,850 employees who process incoming tax returns, as part of the deferred resignation program.

IRS managers told TIGTA they “anticipate the losses will impact their processing times” for next year’s filing season.

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