The Treasury Department is preparing to issue layoff notices as part of a restructuring effort targeting the Office of Financial Research (OFR). The office, established in the wake of the 2008 financial crisis to monitor economic stability, is facing significant staffing reductions, according to a recently obtained email.
In a March 10 email, Michael Wenzler, Treasury’s Associate Chief Human Capital Officer, informed OFR employees that "a significant number of positions will be abolished and impacted employees will be placed, demoted, and/or separated" no later than May 15. The reductions stem from what Wenzler described as a reorganization aimed at improving efficiency and effectiveness.
"This is a general notice that the reorganization and impending RIF may impact you", Wenzler wrote. Employees who receive a reduction-in-force (RIF) notice will be eligible for assistance programs, including the Career Transition Assistance Plan, which gives them priority for positions within Treasury that are not being eliminated. Wenzler also encouraged affected employees to seek other open positions within the department.
The restructuring comes as the Trump administration’s fiscal year 2026 budget proposal pushes to cut OFR staffing by more than 60%, reducing its workforce from nearly 200 full-time employees to just 72. Additionally, Treasury proposed slashing the office’s $110 million budget by almost 23%. While the House previously considered a provision in the One Big Beautiful Bill Act that would have further restricted OFR funding, it ultimately did not make it into the final legislation.
Employees impacted by the pending cuts were given a March 23 deadline to accept voluntary separation offers or early retirement through the Deferred Resignation Program. Those who opt to remain will also have the option to register for the Reemployment Priority List, which provides priority consideration for rehire within Treasury.
IRS IT Rebuilding After Workforce Exodus
In parallel to Treasury’s layoffs, the IRS is working to rebuild its IT workforce after a period of significant disruption. During a March 23 all-hands meeting, IRS Chief Information Officer Kaschit Pandya announced plans to hire up to 175 additional technical employees. The goal, according to an internal memo, is to address "skill gaps in cloud, data, AI, and infrastructure to support strategic initiatives."
The IRS IT department faced unprecedented staffing losses last year, with the departure of 40% of its workforce and nearly 80% of its leadership positions. This came as part of broader agency-wide attrition that saw the IRS lose more than a quarter of its total workforce due to voluntary separations and retirements. The IT office was particularly hard hit, with approximately 1,200 employees permanently reassigned in December 2025.
Many of these reassigned employees have been placed on 120-day temporary details to assist with frontline taxpayer services during filing season. However, some employees have expressed uncertainty about their long-term roles within the agency. According to one former IT employee working on a temporary detail, they are currently undergoing training for GS-5 customer service representative duties – a significant downgrade from their previous responsibilities.
"This whole experience has been so gut-wrenching. We honestly don’t think they will stop at four months – because what’s the point of training someone for four months to not have them do the work they were trained for", said the employee, who spoke anonymously to avoid retaliation.
Another individual familiar with the details of the reassignment reported that employees in these temporary roles are required to attend eight hours of daily virtual training sessions, with strict instructions to remain on camera throughout. If cameras are turned off, employees receive messages to turn them back on.
These disruptions have also raised concerns about the IRS’s ability to leverage artificial intelligence. The Government Accountability Office (GAO) recently reported that the agency’s Research, Applied Analytics, and Statistics (RAAS) unit, a major user of AI, lost over 60 employees working on AI initiatives last year. The RAAS office, which spent $28 million on AI-related projects in fiscal 2025 and planned to allocate $32 million in the current fiscal year, may no longer deploy certain AI models due to a lack of resources.
During the March 23 meeting, Pandya also warned employees not to expect the same performance evaluation grades as in previous years. According to attendees, Pandya said many employees may receive a rating of three out of five or lower. The memo summarizing the meeting stated that Pandya "clarified changes in performance management" and emphasized "the need for outcome-based, measurable commitments."
The twin developments highlight the challenges facing both Treasury and the IRS as they navigate staffing changes amidst budgetary restrictions. While Treasury’s restructuring aims to streamline operations, the IRS is attempting to rebuild after significant workforce losses that have strained its ability to meet strategic goals.
