Labor & Employment Law Daily Wrap Up, AGENCY NEWS—IRS overlooked individual performance in terminating more than 7,300 probationary employees, (Aug 21, 2025)

By Patricia K. Ruiz, J.D.

Despite being told they were terminated for performance issues, nearly all impacted employees either did not have a performance rating or were highly rated.

In early 2025, the IRS terminated 7,315 probationary employees for performance reasons, despite the employees having no documented performance issues, according to a report by the Treasury Inspector General for Tax Administration (TIGTA). TIGTA, which received letters from members of Congress requesting review of the dismissals, focused its investigation on the actions and processes the IRS followed when it sent termination notices to those probationary employees to determine whether the dismissals complied with agency policies and whether individual performance was considered.

Directives to IRS. Following the Trump administration’s executive orders to reduce the size of the federal government’s workforce, the Office of Personnel Management (OPM) issued its Guidance on Probationary Periods, Administrative Leave and Details to all agency heads, noting that “generally, employees in the competitive service (1) with less than one year of service, and (2) in the excepted service with less than two years of service, can be terminated without triggering Merit Systems Protection Board appeal rights.” OPM asked agencies to identify all probationary employees who served less than a year in a competitive service appointment or who have served less than two years in an excepted service appointment. The Treasury Department further requested that the IRS retain only employees who were deemed critical for tax filing season.

Identification, termination of probationary employees. The IRS identified more than 16,000 employees still in their probationary period and, after exempting employees deemed essential personnel for tax filing season, had appeal rights, were involved in law enforcement, or were military spouses, the IRS issued termination letters to 7,315 of those probationary employees. TIGTA determined that the time between identifying the employees and issuing termination notices was 29 days. All of the impacted employees received the same letter, which cited performance as a reason for termination. TIGTA confirmed through its investigation that nearly all of the terminated probationary employees either did not have a performance rating on record (51 percent) or were rated as Fully Successful or better. Thus, TIGTA concluded the IRS did not consider individual employee performance when terminating probationary employees. TIGTA further found that senior IRS officials refused to sign the termination notices and raised concerns that many of the employees did not have documented performance issues.

In July 2025, the U.S. Supreme Court stayed the federal court’s prohibition on covered agencies implementation of Agency Reduction in Force and Reorganization Plans and issuing or executing reduction in force notices. At the time TIGTA published its report, it was unclear whether any probationary employees would remain reinstated or be terminated in a future large-scale reduction in force.

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