Thinking will not overcome fear but action will.” – W. Clement Stone
If you’ve seen the recent headlines about massive IRS layoffs, you probably had a moment of…
“Wait … what does that mean for my taxes?”
“Do I still need to file?”
“Will my refund get lost in the void?”
And these questions are valid – around 6,000 IRS employees are being laid off this tax season. That’s roughly 7 percent of the IRS’s workforce.
When the IRS is in limbo, it’s somewhat nerve-wracking – because in a domino-effect kind of way, you might wonder if your financial well-being is in limbo too. So, I want to answer that question and walk you through the real impacts that these staffing cuts could have on you.
Because a slimmer IRS doesn’t mean you need to give up your peace of mind regarding your taxes.
The 2025 IRS layoffs mean: You’ll learn the virtue of patience.
Even if you filed your tax return correctly and early this year (virtual high-five for that), your return (and with it, your refund) might take longer to process. Especially if it includes credits that need extra scrutiny.
Now, I will say that many of my clients have already received their refunds this year, and in normal time. Many of my colleagues are experiencing similar timelines. So this may not be an issue for you.
Since the IRS already struggles with processing delays (especially for paper-filed returns, amended returns, and returns with identity verification flags or refundable credit issues), fewer hands at the IRS *might* mean even longer timelines.
If you aren’t in the early-filer club, and you’re filing for an extension, the processing for that will also probably be delayed. But (as you’re likely tired of hearing me say by now) – that does NOT mean you get to delay paying. April 15th is still your deadline for that.
And with the IRS under strain, there may be an increase in automated notices and errors. If you get a notice or have a return issue and need to call the IRS, expect to spend hours on hold (and you still might not get through).
So, what should you do?
CALL US. If we prepared your returns, we will handle any letters or examination requests that come your way.
Make your payments by the 15th, and if you filed for an extension, gather the documentation you’ll need for that. Because if you procrastinate there, there’s no extending your extension.
If we e-filed your extension, or your tax return, and you get a letter, responding to it is part of our services that we provide.
Stay proactive about your tax strategy. Don’t let the IRS’s delays slow you down – because optimizing your tax savings for next year starts right now. (I’m happy to talk you through what strategies to start implementing…212-247-9090.)
And if you need to get in touch with the IRS about an issue, your best bet is to let my team and I help you. For 3 reasons: 1) We can speak on your behalf, 2) we have a more direct line to Uncle Sam through the Practitioner Priority Service (PPS) line, and 3) we know how to navigate the internal IRS maze – all of which can help you get the response you need faster.
The 2025 IRS layoffs mean: Audit resolution will go from slow to slower.
If you’re currently in the middle of the audit-resolution process, here’s what you should expect now:
– A longer timeline. If your assigned examiner is part of the layoffs happening, it’s very possible your audit could stall by months or even over a year, depending on complexity. Any appeals or Tax Court proceedings you’re preparing for could also be pushed back, since these processes depend on the outcome of the initial audit.
– Potential open audit repercussions. An unresolved audit means your tax year remains “open,” which can leave any deductions or credits you claimed vulnerable to disallowance.
Just like I say about practically every other tax topic, you need to keep thorough documentation – in this case, an audit file. This should include supporting records for every deduction, credit, and expense you claimed on your return, records of all IRS correspondence, and records of each step of the audit process.
You’ll also want to track your Statute of Limitations (SOL) – because three years after you filed your return or from the original due date (whichever is later), the IRS can’t make any more adjustments to your return or collect more taxes for that year.
Unless…
- You understate your income by more than 25 percent. The SOL then becomes six years.
- You file with a fraudulent intent to evade taxes – then there’s no SOL at all.
- You fail to file your tax return. In that case, the SOL never starts.
- You file an amended return. Generally, if you amend within 60 days before the SOL expires, the IRS has an extra 60 days to make assessments.
- The IRS asks you to extend the SOL (typically to allow more time for an audit or negotiation). You can refuse, but doing so might prompt the IRS to act quickly to assess additional tax.
The 2025 IRS layoffs mean: You might see the IRS in court.
If so, CALL US.
Because of the staffing limitations, the IRS is starting to skip the Independent Office of Appeals and move straight to issuing Notices of Deficiency if you owe them money.
Which shifts more of the burden to you. If you receive one of these notices, you have to file a petition with the U.S. Tax Court within 90 days, pay legal fees, respond to court summons, and (potentially) attend proceedings.
So, make sure to watch your snail mail carefully. Any Notice of Deficiency starts the 90-day clock immediately – no extensions. If you miss the deadline, you lose your right to challenge the IRS’s findings before they move to collection.
You still have rights here, including the right to petition the U.S. Tax Court without paying the disputed amount upfront. But your window to act is short, and the paperwork must be exact. So if you get one of these notices, keep me in the loop. I can help you understand exactly what it means (and hopefully, help you avoid unnecessary legal battles).
If you CALL US, we will handle this for you. If we have prepared your return, then you have already paid for it.
Ideally, with all of this, update us on any tax problems you’re experiencing – whether you’re frustrated about how long your refund is taking, being summoned to court, or experiencing any other ripple effect of these IRS layoffs. We can help you understand what’s really going on and what your next best move is. We are ready to be on your team. In fact, when we prepare your returns, we already are:
