President Trump kicked off his second term with a series of executive orders, including a hiring freeze. The hiring freeze prohibits the IRS from making new hires for 90 days, and has implications for individuals, businesses, and tax professionals alike. Let’s break down how this freeze impacts key areas of taxpayer interaction: customer service, refunds, and audits.
1. Slower Customer Service
The hiring freeze should not affect the use of seasonal employees for the tax filing season Melanie Lauridsen, the AICPA’s vice president of Tax Policy & Advocacy said via a LinkedIn post. “Seasonal 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.” said Lauridsen. However, reallocating staff could result in longer wait times for phone assistance, delayed responses to correspondence, and reduced capacity to resolve issues. Taxpayers may find themselves waiting weeks—or even months—for updates or resolutions to their cases.
2. Delays in Refund Processing
The IRS processed over 163 million tax returns during 2024. However, limited staffing at the IRS may slow down the processing of returns, particularly those flagged for additional review. While electronically filed returns are typically processed faster, even slight anomalies could result in prolonged delays. Paper filers may face even longer wait times, as manual processing capabilities are constrained. The Taxpayer Advocate identified “return processing bottleneck” as the number 2 challenge taxpayers faced in 2024. With only 58% of paper returns scanned electronically in 2024, the backlog remains a significant problem.
3. Reduced Audit Capacity
While fewer audits may sound like good news for taxpayers, this comes with caveats. A reduced audit capacity may lead to inconsistencies in enforcement, allowing non compliant taxpayers to go unchecked while compliant taxpayers face scrutiny due to outdated or inconsistent review practices. Over time, this uneven enforcement could undermine trust in the tax system and contribute to a broader tax gap.
What Taxpayers Can Do
Given these challenges, taxpayers should be proactive to minimize potential disruptions:
E-File and Use Direct Deposit: Electronic filing with direct deposit is the fastest way to receive your refund.
Maintain Accurate Records: Ensure your return is complete and accurate to avoid triggering additional review.
Expect Delays: Be patient with potential processing and customer service delays. Use tools like the IRS Where’s my Refund? tool to check the status of expected refunds (https://www.irs.gov/wheres-my-refund).
The IRS hiring freeze highlights the critical role of adequate staffing in ensuring a functional tax system. As taxpayers adapt to these challenges, understanding the potential bottlenecks can help mitigate the impacts of this policy on their 2025 tax season experience.
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