Doug O’Donnell, the acting commissioner of the Internal Revenue Service (I.R.S.), is expected to announce his retirement, marking another departure amid significant agency changes due to pressure from Elon Musk’s team and mass layoffs. O’Donnell, who recently took over the agency, will be succeeded by COO Melanie Krause. Under pressure from former President Trump, the I.R.S. laid off over 6,700 staff, which tax experts warn may hinder revenue collection efforts. As the I.R.S. navigates its busiest filing season, concerns grow about delays and errors in tax refunds, amidst ongoing political controversy surrounding its leadership and funding.
The acting commissioner of the Internal Revenue Service is anticipated to announce his retirement on Tuesday, according to sources familiar with the situation. This follows the trend of agency heads leaving amidst pressure from Elon Musk’s team for access to sensitive information and significant layoffs.
Doug O’Donnell, who has dedicated nearly 40 years to the I.R.S., assumed leadership of the agency last month after the previous commissioner resigned at the onset of President Trump’s administration. It is expected that Melanie Krause, the chief operating officer at the I.R.S., will step in as the new acting leader when Mr. O’Donnell departs on Friday, as per sources who wish to remain anonymous due to the sensitivity of the information.
Mr. O’Donnell’s exit occurs during a tumultuous period for the I.R.S., with Mr. Trump targeting the agency—a long-standing political adversary for Republicans—for substantial layoffs, including over 6,700 employees dismissed last week. Mr. Musk has proposed the abolition of the I.R.S. and has sent a member from his Department of Government Efficiency into the agency, with more personnel expected to follow.
With approximately 100,000 employees prior to the layoffs, the I.R.S. is tasked with collecting over $5 trillion in revenue annually. Former President Joseph R. Biden Jr. had allocated billions in new funding to the agency to modernize outdated technology and enhance its capability to pursue companies and affluent individuals who evade their tax responsibilities.
Mr. Trump is swiftly undoing these initiatives, and tax experts caution that these actions could exacerbate the deficit by facilitating tax avoidance.
The I.R.S. is currently navigating its annual filing season, the busiest time of the year when millions of Americans file their tax returns. Democrats have raised concerns that the job cuts could lead to delays and inaccuracies for taxpayers awaiting refunds. A spokeswoman from the Treasury Department did not provide any comments on this matter.
Breaking from the precedent of treating the I.R.S. leadership role as a nonpartisan position, Mr. Trump has put forward Billy Long, a former Republican congressman, for the commissioner position. Mr. Long previously supported legislation aimed at abolishing the I.R.S. and aggressively promoted a tax credit after leaving Congress, despite warnings from the I.R.S. about its potential for fraud. The Senate has yet to address Mr. Long’s nomination.
Mr. O’Donnell had been contemplating retirement prior to Mr. Trump’s administration and the subsequent job cuts at the agency, according to two sources close to his departure.
Last week, I.R.S. officials pushed back against requests from Mr. Musk’s team for extensive access to the agency’s data, which includes sensitive details about Americans’ incomes and households.
The agency ultimately established an agreement preventing Gavin Kliger, a young software engineer associated with Mr. Musk’s team, from accessing individual taxpayer information during his tenure at the I.R.S.