More than 11,400 Internal Revenue Service employees have either received termination notices as probationary employees or voluntarily resigned, representing an 11% reduction to the agency’s workforce, according to a report released Monday by the Treasury Inspector General for Tax Administration. 

In February, the IRS had around 103,000 employees, but that number has dropped by about 11% due to a series of executive orders from President Trump since his inauguration in January and the downsizing instigated by the Elon Musk-led Department of Government Efficiency, also known as the U.S. DOGE Service. Specifically, 7,315 probationary employees received termination notices, according to the report, and 4,128 employees were approved to accept the Deferred Resignation Program, a voluntary buyout program offered by the Trump administration, which has been rolled out in phases to IRS employees amid court challenges and appeals. Another 522 employees are pending approval under the program.

Monday’s report was TIGTA’s first on IRS workforce reductions and it focuses on the probationary employees identified for termination and the employees who voluntarily participated in the initial Deferred Resignation Program. TIGTA plans to periodically update the report to highlight further reductions, including the impacts of the second Deferred Resignation Program and Reductions in Force. The DRP allowed federal employees to voluntarily resign with pay through Sept. 30, 2025.  

In conjunction with the reduction in force, the IRS is offering three voluntary separation programs: the Treasury Deferred Resignation Program will mirror the benefits of the first DRP offering; the Voluntary Separation Incentive Payment; and the Voluntary Early Retirement Authority. In April, the IRS extended the TDRP offer to its employees. According to the IRS, over 23,000 employees have applied for the TDRP, and 13,124 were approved as of April 22. 

The report includes a look at the IRS business units affected by the layoffs and voluntary departures. The separations disproportionately impacted employees in certain positions. For example, approximately 31% of revenue agents left the IRS under the program, while 5% of information technology management departed. Revenue agents conduct examinations and audits by reviewing the financial records of individuals and businesses to verify what is reported, and they can work in several IRS business units examining different types of taxpayers. 

The Tax-Exempt/Government Entities division lost 31% of its staff, representing 694 employees, while the Large Business and International division lost 25%, or 1,733 employees. The Small Business/Self-Employed division lost 23% of its staff, or 5,765 employees. In contrast, 7% of the Human Capital Office (207 employees), 5% of IT (450 employees) and 4% of taxpayer services (1,714 employees) were affected.

In March, a federal court ruled that the probationary employees needed to be reinstated. The IRS recalled the terminated employees but put them on paid administrative leave. There have since been various court cases challenging the terminations and reinstatements. “Currently, it is unclear what the final disposition will be for probationary employees who received termination notices.” 

Most of the 7,315 probationary employees who received termination notices had less than one year experience with the IRS, according to the report, and 6,669 employees had one year of service or less, while 615 employees had between one and five years of service, and 31 employees had more than five years of service. 

“The termination of probationary employees will have a greater impact on certain age groups within the IRS workforce,” said the report. The probationary employees who received termination notices tended to be under the age of 40, including 549 probationary employees who were less than 25 years old, representing 14% of all IRS employees in that age group. 

Various estimates have been given of the number of IRS employees who will ultimately be affected by the layoffs, ranging from about 20% to 50%. The budget proposal released last week by the Trump administration would cut $2.5 billion from the IRS budget, following on the heels of clawbacks of about half of the $80 billion in extra funding that was supposed to be provided to the IRS under the Inflation Reduction Act of 2022.

Amid all the turmoil this year, the IRS has also seen a number of high-profile departures, including former commissioner Danny Werfel and former acting commissioners Douglas O’Donnell, Melanie Krause and Gary Shapley.

Some former IRS employees and government accountants may be attractive hires by accounting firms and departments that need to fill their ranks amid the ongoing talent shortage.

“We’re certainly seeing more interest in the hiring of former IRS employees and government accountants in conversations we’re having with clients, and this tracks given the current talent shortage in both the finance and accounting fields,” said Kyle Allen, executive vice president of sales and recruiting for Vaco by Highspring, a recruiting and staffing firm. “These folks bring strong regulatory and audit experience to the table, and their insider knowledge of tax compliance is a big plus for private companies. They can often jump into roles like compliance or advisory work quickly, which is a huge benefit. It’s not a silver bullet for the talent gap, but having more qualified professionals in the mix is definitely a step in the right direction.” 

Eide Bailly, a Top 25 Firm based in Fargo, North Dakota, is expanding its presence in Southern California by adding Hamilton Tharp LLP. a firm headquartered in Solana Beach, its third M&A deal in a week.

Hamilton Tharp dates back over 45 years and provides services such as tax planning, trust and estate consulting, family office solutions and accounting to clients in the biotech, real estate and health care industries.

“Bringing Hamilton Tharp into Eide Bailly is an exciting step forward in our continued growth,” said Eide Bailly managing partner and CEO Jeremy Hauk in a statement Monday. “Their strong client relationships, deep technical expertise, and commitment to personalized service align seamlessly with our values. We’re proud to join forces with a team that shares our passion for helping clients thrive.”

Financial terms of the deal were not disclosed. Eide Bailly ranked d No. 19 on Accounting Today‘s 2025 list of the Top 100 Firms, with $704.98 million in annual revenue, approximately 387 partners and over 3,500 employees. The Hamilton Tharp team includes four partners and 14 staff members. 

“While this is a relatively small acquisition in terms of size, the real significance lies in the strategic value it brings to Eide Bailly,” said a spokesperson. “This move strengthens our presence in California — particularly in the Solana Beach area — and reflects our continued commitment to serving clients throughout the state with a local, personalized approach backed by the resources of a top 25 CPA and advisory firm.”

Hamilton Tharp managing partner Tina Tharp wanted to expand her firm’s services for clients and create provide more growth opportunities for staff while staying true to their culture. “We were intentional about finding the right fit,” Tharp said in a statement. “Eide Bailly brings the scale and expertise we were looking for, but just as importantly, they share our values and people-first approach.” 

Last week, Eide Bailly announced two other M&A deals: with Roycon, a Salesforce consulting  firm based in Austin, Texas, and Volpe Brown & Co., a firm headquartered in North Canton, Ohio. Eide Bailly expanded to Ohio last year by merging in Apple Growth Partners. Last year, Eide Bailly also sold its wealth management practice to Sequoia Financial Group. In 2023, Eide Bailly added Secore & Niedzialek PC in Phoenix, Raimondo Pettit Group in Southern California, Bessolo Haworth in California and Washington State, Spectrum Health Partners in Franklin, Tennessee, and King & Oliason in Seattle. In 2022, it merged in Seim Johnson in Omaha, Nebraska, and in 2021, PWB CPAs & Advisors in Minnesota. In 2020, it added Mukai, Greenlee & Co. in Phoenix, HMWC CPAs in Tustin, California, and Platinum Consulting in Fullerton.

Enjoy complimentary access to top ideas and insights — selected by our editors.

The most important issue is staff recruitment, training, retention and work conditions. While each of these is a separate issue, the whole staff issue is a neglected area when it should be the top area of concern. This has been so since I started practicing, and I am perplexed that meaningful actions are not taken to remedy the situation. I did, and many firms do, and they are much more successful than the others, but too many do not deal realistically with this.

Recruitment: Starting salaries have not kept up with overall business conditions, and I do not believe they have remained competitive when about 15 years ago they were at the top of the curve. This can be easily corrected by firms increasing their starting salaries. Many refer to the added 30 credits as a hindrance, but I don’t believe this is a more important objection than the lower starting salaries being offered. Staff recognize having master’s degrees as an enhancement that makes themselves more valuable and they feel good about it … after they get their degree.

Training: Training is a significant area and is done by many firms, particularly smaller practices, as a cookie cutter obligatory process, not focused on the staff person’s responsibilities and expected work assignments. Firms send staff to available CPE courses when they should be developing customized CPE, either in their firm or in partnership with similar firms or through their state society committees. (I’ve done all of these and it works.) Firms also need to become training organizations using error disclosure as immediate training opportunities and deliberate on-the-job training by everyone in a supervisory position. Firms’ cultures have to be to train and develop. In conjunction with this, all supervisors need to be trained on how to train.

Retention: Turnover is terrible. Two years ago, a Big Four firm had 25% staff turnover. Last year it was 17% (and they were voted one of the Top 100 best places to work both years! Huh?). Many firms neglect “marketing” the benefits of working for them and take the current staff for granted. Retention needs a deliberate effort by every supervisor, manager, partner and owner. It needs work and will pay the best dividends. This effort might not stop a person from leaving, but it could retain them for an extra year or more. An attitude that you want them to stay forever also helps.

Work conditions: Tax season hours are untenable at most firms, while some larger firms maintain tax season conditions after tax season ends or add mini periods of extended hours. In my own informal and unofficial exit polls, most people provide as the primary reason for leaving a lack of work-life balance. I know people from top 10 firms that leave public accounting for reasons that indicate a complete noncompliance by their employers with the stated “favorable work-life and caring atmosphere and culture” in those firms’ recruitment brochures. Firms show a total lack of attention to this.  

Solution: This is an industry problem, but it can only be solved one firm at a time. My solution is to acknowledge the problem at your practice and then make every change necessary to eliminate that problem. You might not be able to do it immediately, but you can start immediately and work on these issues as they come up while starting a serious and meaningful training program. Every change needed can be implemented within a year. Let that year start now!

Do not hesitate to contact me at [email protected] with your practice management questions or about engagements you might not be able to perform.