IRS Violated Rules in Terminating 7,315 Employees, Watchdog Finds

The IRS violated its own policies when terminating contracts of over 7,000 employees in February and March. The agency failed to follow required notice procedures and did not consider individual performance before issuing pink slips. The terminations unfolded amid a broader push to shrink the federal workforce and redirect the IRS. The IRS reinstated all affected employees in May.

In February and March 2023, the Internal Revenue Service (IRS) terminated contracts of over 7,000 probationary employees, sparking significant controversy. The agency violated its own policies by failing to follow required notice procedures and not considering individual performance before issuing pink slips. This occurred amid a broader push to shrink the federal workforce and redirect the IRS.

The Treasury Inspector General for Tax Administration (TIGTA) released a report in July 2023 revealing that 51% of the 7,315 probationary employees who received termination notices had no performance rating of record, while the remaining 49% had ratings of "fully successful" or better [1]. This indicates that the IRS did not consider individual employee performance when terminating probationary employees, despite citing performance as a reason for termination.

In May 2023, leadership at the IRS and Treasury decided to reverse course and reinstate all probationary staffers to full work status. However, the Supreme Court approved the administration's plans to move forward with agency reductions-in-force in July 2023. The future of these employees remains uncertain, as they could be vulnerable to future reductions in force.

The terminations occurred as the IRS was undergoing a broader push to modernize its operations and technology. A separate TIGTA report released in July 2024 detailed the agency's advancements in 2024, including modernizing tax account processing, implementing new technology solutions, and enhancing data security [2]. However, the agency still faces challenges, such as completing multifactor authentication and enterprise data platform projects.

The IRS's actions highlight the importance of adhering to established policies and procedures, particularly in high-stakes situations like workforce reductions. As the agency continues to modernize and adapt, it must ensure that it does not compromise its integrity or the well-being of its employees.

References:
[1] https://fedscoop.com/irs-cuts-probationary-employees-performance-reviews/
[2] https://fedscoop.com/irs-cuts-probationary-employees-performance-reviews/