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How IRS layoffs could impact tax filings and refunds this season

by Investor News Today
February 21, 2025
in Personal Finance
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How IRS layoffs could impact tax filings and refunds this season
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Vithun Khamsong | Second | Getty Pictures

Hundreds of IRS staff are expected to lose their jobs as Elon Musk’s Department of Government Efficiency, or DOGE, continues widespread cuts to federal spending. 

The transfer comes roughly three weeks for the reason that opening of tax season and will impression hundreds of thousands of taxpayers who will file earlier than the April 15 deadline, consultants say.

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IRS funding has been focused by Republican lawmakers since former President Joe Biden approved $80 billion for the company through the Inflation Discount Act, or IRA, in 2022.

The IRS layoffs have focused probationary staff with lower than one 12 months of service — or longer in some instances. There have been an estimated 15,000 probationary employees on the company, many who have been employed through IRA funds, in keeping with a lawsuit filed by the Nationwide Treasury Staff Union and others on Feb. 12.

An estimated 6,000 to 7,000 IRS staff could also be impacted, in keeping with reporting from CBS News and the Associated Press.

The U.S. Division of the Treasury did not reply to CNBC’s request to verify these numbers.

These mid-season staffing cuts might considerably impression filers, consultants warn. So, with main IRS adjustments underway, listed below are some key issues to know.

‘You could not discover a change’

Senate Finance Committee Democrats on Tuesday warned that IRS staffing cuts would trigger a “tax refund prepare wreck.” Tax consultants, nevertheless, say submitting an correct, digital return ought to keep away from any such points. 

“When you’ve got an excellent submission, it’s possible you’ll not discover any change,” stated Tom O’Saben, an enrolled agent and director of tax content material and authorities relations on the Nationwide Affiliation of Tax Professionals.

Sometimes, it takes 21 days for the IRS to course of an e-filed tax return. However that timeline could possibly be longer for “corrections or further evaluate,” in keeping with the company.

Lowered staffing might make processing longer if there’s a difficulty together with your return, consultants say.

The IRS system might flag your return for incorrect private particulars or missing information, which might require contact with the company for help, O’Saben stated.

“We’ve not seen any service delays but,” he stated. “However we will. It is simply going to be a actuality with much less folks.”   

File quickly when you’re anticipating a refund

In the event you anticipate a tax refund and have all the proper kinds, “get that return in as rapidly as attainable,” stated San Diego-based tax lawyer Adam Brewer.

“Even when the staffing cuts do not impression course of, there’s the potential for a government shutdown subsequent month” as lawmakers debate spending negotiations, he stated. “That may compound issues.”

Error-free, electronically filed returns will not be impacted by a authorities shutdown. However there could possibly be additional delays if there’s a difficulty together with your submitting, consultants say.

Sometimes, one of the best ways to hurry up your refund is by submitting electronically and selecting direct deposit to your cost, in keeping with the IRS.

You’ll be able to test the status of your refund through the company’s “Where’s My Refund?” software or the IRS2Go app.

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