IRS overtime rose 12% in 2025 while workforce dropped, TIGTA says

IRS overtime rose 12% in 2025 with most additional hours worked by employees who answer phones and correspondence and handle other tasks helping taxpayers, a report by the Treasury Inspector General for Tax Administration (TIGTA) said. The increase occurred as the IRS lost roughly a quarter of its workforce and struggled with growing backlogs and a prolonged government shutdown, the report said.

Overtime costs increased by about $27 million, rising from $198 million in January–September 2024 to $225 million in the same period in 2025, TIGTA said in the report, dated May 15. Regular work hours fell 14% as employees left through resignation programs, retirements, and terminations.

“We believe that additional overtime costs were needed since the IRS had to balance increasing workforce demands with the impact of Service-wide workforce reductions,” the report said.

IRS employees were offered several resignation programs in 2025, resulting in a decrease of about 25% in the agency’s workforce, TIGTA said. Two of those programs included administrative leave until the employees’ official separation began. For those two programs, the report showed that administrative leave increased from 569 hours to more than 1.9 million hours.

Taxpayer Services logged most overtime

The Taxpayer Services division accounted for 87% of all overtime hours in 2025, with contact representatives and tax examiners reporting 82% of the total, or 4.3 million hours, the report said. Those positions had been reduced by nearly 6,000 (23%) and 4,000 (27%), respectively.

These employees answer phones and correspondence, help taxpayers resolve tax-related issues, and perform work related to processing tax returns. They also manage accounts, collect taxes, obtain tax returns, and compute or verify tax, penalties, and interest.

Questionable claims flagged

TIGTA identified 476 questionable overtime claims submitted by about 300 employees. Claims were flagged when employees reported more than six hours of overtime and exceeded 12 workable hours in a day. The national agreement between the IRS and the National Treasury Employees Union limits bargaining unit employees to 12 workable hours per day.

Fourteen employees reported working 20 or more hours in a single day. TIGTA said 71% of those cases came from Taxpayer Services.

Backlogs and the shutdown

Key tax processing inventories increased 33%, from 1.5 million to 2 million, between December 2024 and December 2025. A 43-day government shutdown that ended in November 2025 further slowed the agency’s ability to reduce backlogs, the report said.

Overtime oversight

The IRS does not have a centralized mechanism to track overtime procedures, TIGTA said. Each business unit sets its own documentation and approval processes, though IRS-wide guidance requires overtime to be officially ordered or approved in writing. It also has no limit on overtime hours, the report said.

The report was prepared for informational purposes only and included no recommendations. TIGTA said it plans to assess IRS controls over premium pay and mandatory overtime during the 2026 filing season and will refer the names of employees with questionable overtime claims to the agency.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.