100 Days at the IRS: Rules Pause, Workforce and Leader Shakeup

The first 100 days at the IRS under the Trump administration will set the tone for how his team plans to take aim at the agency, now under threat as his allies look to overhaul the federal workforce and cut the agency’s tens of billions in extra cash.

It also comes as the IRS kicks off tax filing season—a time when every American interacts with the IRS and has opinions about it.

A second time around, the administration is more prepared and while many initiatives will be paused until a new team at Treasury and IRS comes in, change is certain. Here are key areas to watch.

Workforce Under Fire

President Donald Trump signed an executive order Monday requiring all federal employees to come back to the office five days a week. He also signed an order pausing federal hiring. But the freeze will stay in effect for the IRS even after the order expires for all other agencies.

The memorandum will remain in effect for the IRS “until the secretary of the Treasury Department with the director of the Office of Management and Budget and the administrator of the new United States DOGE Service determines that it is in the national interest to lift the freeze,” according to the order he signed Monday.

About 28% of IRS employees work in person full time, while others have some variation of telework options.

The IRS was in the middle of a hiring spree after it got tens of billions of dollars from the Democrats’ 2022 tax-and-climate law. After Congress slashed roughly 20%, that funding is further under threat with the GOP in control of both houses of Congress.

Trump also reinstated the so-called Schedule F, which allows agencies to reclassify certain federal workers in policy-related roles, making them at-will employees and more easily fired.

The IRS employs about 100,000 workers, with about two-thirds represented by the National Treasury Employees Union.

Regulations Hold

Trump froze all pending rules across all agencies in an order Monday, a move typical for incoming administrations during a transition.

Trump is also likely to reintroduce an executive order requiring tax rules to go through another layer of review from the Office of Management and Budget’s Office of Information and Regulatory Affairs.

The first Trump administration imposed such a change if rules likely interfere with actions planned or taken by other federal agencies, raised new legal or policy issues, or had an annual non-revenue economic impact of at least $100 million. The Biden administration in 2023 reversedTrump’s first agreement.

The switch back would provide special interests another avenue to lobby on guidance. During Trump’s first administration, large changes to the regulations were rare.

The extra layer allows for more transparency and accountability, supporters said. Critics of the order said it slowed the release of many regulations and disagreed over how the rules were evaluated.

Leadership Changes

IRS Commissioner Danny Werfel stepped down Monday before his five-year term expired after Trump signaled a desire to shake up agency leadership.

Trump made it official on Monday, nominating former Missouri Republican Rep. Billy Long as IRS commissioner. The former auctioneer and radio host was a member of the House Energy and Commerce Committee, not the tax-writing Ways and Means Committee, and once pushed to abolish the IRS.

Long has come under fire from Senate Finance Democrats who’ve questioned his involvement with the controversy-embroiled employee tax credit. The IRS has aggressively cracked down on the pandemic-era program, after the agency said bad actors flooded the program.

Long publicly promoted the credit, though it is unclear what his exact role was and how much he financially benefited.

Until a new commissioner is confirmed, longtime IRS employee and Deputy Commissioner Douglas O’Donnell will serve in an acting capacity.

IRS Chief Counsel Majorie Rollinson’s last day was also last week, after spending less than a year in the position. Chief counsel is one of two Senate-confirmed IRS positions, leading an office that crafts regulations and other guidance, advises other divisions during audits, and provides general legal services to the agency.

Trump hasn’t said publicly who he plans to nominate and until someone is confirmed, William Paul principal deputy chief counsel, will be acting IRS Chief Counsel.

Both O’Donnell and Paul have served in acting capacities in their respective roles in previous administrations and will likely keep business as usual until someone is confirmed.

ERC Evaluation

A new commissioner is expected to bring a fresh perspective to the employee retention tax credit program, which some tax professionals have said is needed.

The IRS, after seeing an influx of ERC claims and an advertising offensive from many promoters, paused processing new claims, disallowed thousands of credits, and offered relief programs for businesses that wrongly claimed the credit.

This approach also meant many businesses that needed and qualified for the credit would not get it a timely basis. A backlog at the IRS now stands at 1.2 million.

Long, if confirmed, could offer a more generous look at the program.