FEDS September 2025 Newsletter

 

Acting Chief Information Officer of the Internal Revenue Service (IRS) Kaschit Pandya has called for the agency to "reset and reassess” in response to the more than 2,000 employees the agency has lost from their IT department since the start of 2025. The IRS as a whole has seen a significant decline in employment numbers in 2025, largely due to the offering of the Deferred Resignation Program (DRP), as well as the increase in reduction-in-force (RIF) actions. Over 4,000 IRS employees opted to resign via the first DRP and of the more than 23,000 applicants for the second DRP, only 18,000 resignations were accepted. These employment changes will be felt throughout the agency by employees in all positions.

 

Even with the current injunctions that bar the agency from implementing formal reorganizations, CIO Pandya has said that many changes are already underway. Some proposed changes include further cuts to IT staffing and spending. The IRS’s fiscal 2026 budget request proposes a nearly 60% cut to IRS technology and operations support staffing, and a nearly 40% cut to its spending.  In response to these changes, Pandya has proposed what he is calling "shifts in how we operate” within the IT department. As a federal manager, enacting major changes within an agency can be met with pushback from employees, including allegations of mismanagement, creating a hostile work environment, and other claims that can impact your career. A FEDS Protection professional liability insurance (PLI) policy can protect federal managers if they are subject to allegations of misconduct and wrongdoing during times of transition at their agency.

 

 

The new shifts will be reflected through the regrouping of remaining IT staff into several mission areas. These areas include taxpayer services and experiences, tax processing, compliance, filing season and legislative delivery. Under this new structure, a "responsible engineer” will make technical decisions, while a "coordinating director” will oversee operational changes within each of the specified areas. The goal of these changes is to facilitate productivity and efficiency within the IRS IT department, especially now that a large percentage of IRS IT employees have left, leaving the remaining employees to pick up the slack. 

 

Federal managers within the IRS IT department will be tasked with not only executing the regrouping of the department, but also ensuring their employees maintain an acceptable production rate with fewer employees, and the overall success of the department in implementing these new processes. The introduction of additional stress due to the regrouping in addition to the declining employment rates will cause fatigue among IT employees and they will be looking to their managers for relief and answers.

 

 

With recent proposed structure changes coupled with the declining number of IRS IT employees, managers and supervisors face uncertainty and pressure on multiple fronts. Many are concerned that the response time for next year’s tax returns will suffer from the loss of IT employees, but there is hope that the restructuring will allow the agency to maintain efficiency and pick up the slack. This volume of changes leaves managers and supervisors at higher risk of making decisions and mistakes that lead to allegations of wrongdoing.

 

If mistakes are made, managers could be subject to investigations into their actions taken and instructions given based on the evolving policies. Allegations and investigations can lead to disciplinary actions, which can lead to suspensions and terminations, or even personal capacity lawsuits against you. If an allegation is made against you, it is a necessity, not luxury, to have knowledgeable and effective counsel advocating on your behalf.

 

 

As the professional liability insurance (PLI) provider endorsed by the leading federal manager associations, FEDS Protection offers federal employee PLI policies with $1 million, $2 million, or $3 million in civil liability protection for attorney’s fees and indemnity costs in the event you are sued in your civil capacity.  The FEDS policy also includes $200,000 of legal representation coverage for administrative actions and $100,000 of coverage for criminal defense costs.  

 

Annual premiums for FEDS Protection PLI start at $290.  Additionally, federal managers, supervisors, and law enforcement officers are eligible for a reimbursement of up to 50% the cost of their PLI policy through their agency. To learn more about how a FEDS PLI policy can protect you and your career, visit www.fedsprotection.com or call (866) 955-FEDS, Monday-Friday, 8:30am-6pm EST to speak directly to a representative.

 

*This article is provided for informational purposes only and does not constitute legal advice.

 

 

If yes, consider FEDS Protection for your government contracting insurance needs. At FEDS Protection, we also support Federal Contractors by providing insurance coverage specifically tailored to meet the unique needs of today's federal contractors, including Professional Liability, Defense Base Act Insurance, and Foreign Liability coverage.  In our experience, many small businesses need assistance in navigating the insurance portion of a government RFP.

 

The federal government is our specific focus and area of expertise. If you are looking to review your current or upcoming insurance needs, including the unique insurance requirements of any contract involving civilian employees overseas (requiring DBA Insurance and Foreign Liability coverage) please contact us at 866-955-FEDS (3337) or dmoylan@fedsprotection.com.

 

 

This September marks nearly 250 years since Congress created the Department of Treasury, which includes the Internal Revenue Service (IRS), the U.S. Mint, and the Bureau of Engraving and Printing (BEP), among other agencies. FEDS appreciates the responsibility that comes with a Treasury position, has proudly insured these federal employees for nearly two decades, and looks forward to defending them for years to come.  

 

"As a retired IRS Program Manager and former EEO supervisor, I saw firsthand how the decisions managers make can lead to intense scrutiny, allegations, and even personal legal exposure. The agency cannot always protect you—and many managers have found true solace in their professional liability insurance (PLI) when facing charges such as EEO complaints or "failure to take action.”

 

Don't let time pass before you get protection. PLI doesn’t protect past issues. Once you secure your insurance, it provides expert legal defense and resources when you need them most—and it continues to protect you for up to three years after leaving your position. That peace of mind allows managers to lead confidently, knowing their careers, reputations, and personal assets are safeguarded.

 

For IRS managers, PLI isn’t optional — it’s essential."

- Kelly Reyes, Professional Managers Association (PMA) Executive Director

 

 

Contact us if you or your agency are interested in a webinar or brochures that provide federal employees with best practices on how to protect themselves with a federal employee professional liability insurance policy like those offered by FEDS Protection. FEDS Protection webinars are a valuable resource for learning more about the specific professional exposures of federal employees, PLI in general, and the FEDS Protection program. Check out our library via the link below to access content that speaks to your position in the federal government.