The Internal Revenue Service (IRS) is undergoing both leadership changes and workforce reductions as Acting Commissioner Douglas O’Donnell prepares to step down.
His retirement, effective February 28, follows a four-decade tenure with the agency. The announcement comes amid a round of layoffs affecting thousands of IRS employees.
Douglas O’Donnell took over as Acting Commissioner in January 2025, following the resignation of former Commissioner Daniel Werfel. Werfel, who had served as Commissioner since 2023, left the position on January 20, 2025.
O’Donnell’s departure will make way for Melanie Krause, currently the IRS’s Chief Operating Officer, who will assume leadership in an interim capacity. Krause has been with the agency since 2021 and previously worked at the Department of Veterans Affairs Office of Inspector General.
Meanwhile, President Donald Trump has nominated Billy Long, a former U.S. Representative from Missouri, to serve as the next IRS Commissioner. Long’s confirmation is pending before the Senate.
Alongside the leadership transition, the IRS has confirmed that approximately 7,000 employees, primarily within the compliance department, have been laid off. These employees were reportedly probationary workers with less than one year of service.
The National Treasury Employees Union (NTEU) has issued a statement objecting to the layoffs, while the Trump administration maintains that the reductions align with broader federal workforce restructuring initiatives and executive orders.
The workforce reductions at the IRS are part of a broader set of federal agency staffing changes that have also affected departments such as the Consumer Financial Protection Bureau, Department of Agriculture, and Department of Health and Human Services.
The Department of Government Efficiency (DOGE), led by Elon Musk, has been instrumental in these efforts, aiming to reduce government spending by targeting potential areas of waste and inefficiency.
The IRS had previously expanded its workforce to over 100,000 employees by the end of fiscal year 2024, marking its highest staffing level since 1997. The agency had hired thousands of new personnel following major spending initiatives by the Biden administration.
In addition to staffing changes, the IRS recently disclosed that a former contractor leaked private data affecting more than 400,000 taxpayers. The individual responsible, Charles Littlejohn, was sentenced to five years in prison in 2024. The IRS has since been notifying affected taxpayers and conducting further investigations into the breach.
As the agency moves forward, it remains under interim leadership while awaiting Senate confirmation of a permanent commissioner during this tax season.