What to Watch in July
July continues the rapid pace of change affecting the federal workforce. During the past month, new guidance from the Office of Personnel Management (OPM), Executive Branch workforce initiatives, congressional oversight, and ongoing implementation of civil service reforms have continued to reshape the federal workplace.
Many of these developments extend across government, but they have significant implications for IRS managers and management officials—including workforce planning, hiring, employee accountability, organizational restructuring, and the agency's ability to deliver on its mission while serving taxpayers effectively.
Policy/Career Executive Order.
The Administration has begun converting approximately 8,000 federal positions into this new excepted service schedule for positions determined to have significant policy influence. OPM guidance indicates agencies will continue reviewing positions annually to determine whether additional positions should be designated.
July continues the rapid pace of change affecting the federal workforce. During the past month, new guidance from the Office of Personnel Management (OPM), Executive Branch workforce initiatives, congressional oversight, and ongoing implementation of civil service reforms have continued to reshape the federal workplace.
Many of these developments extend across government, but they have significant implications for IRS managers and management officials—including workforce planning, hiring, employee accountability, organizational restructuring, and the agency's ability to deliver on its mission while serving taxpayers effectively.
Schedule Policy/Career Implementation
The most significant federal workforce development during June was implementation of the new Schedule Policy/Career Executive Order.
Within the IRS, positions that could potentially be reviewed include:
· Program Managers
· Senior Advisors
· Human Resources Specialists
· Supervisory HR Specialists
· Attorney Advisors
· Executives and senior management officials
· Other positions involved in policy development, interpretation, implementation, or agency direction
Employees converted to Schedule Policy/Career remain career federal employees; however, OPM guidance states that employees generally may not appeal their designation into the new schedule to the Merit Systems Protection Board (MSPB).
PMA Position
PMA supports strong leadership accountability while maintaining that IRS managers already operate under rigorous performance standards and statutory oversight. Any changes affecting career protections should preserve the merit-based civil service, provide transparency, ensure due process, and avoid discouraging experienced leaders from pursuing or remaining in management positions.
Judicial Challenges on the Horizon
Several organizations representing federal employees are expected to challenge implementation of Schedule Policy/Career in federal court.
The anticipated legal questions include:
· Whether the Executive Branch exceeded its statutory authority.
· Whether affected employees were improperly removed from civil service protections.
· Whether agencies appropriately identified covered positions.
Court decisions over the coming months could delay, modify, or uphold implementation. PMA will continue monitoring litigation and provide updates as significant rulings occur.
IRS Workforce and Staffing
Recent oversight reports continue to highlight the operational challenges facing the IRS.
Reports issued during June note that staffing reductions, delayed hiring, and employee departures have increased pressure on remaining employees and managers.
Experienced personnel continue leaving the agency, creating concerns regarding institutional knowledge, leadership succession, training capacity, and continuity of operations.
Although improvements have been made in certain processing functions, customer service challenges remain due to limited staffing and shifting workload priorities.
PMA Perspective
IRS managers continue delivering exceptional results while balancing competing priorities, workforce shortages, increasing workloads, and ongoing organizational change. Continued investment in staffing, training, leadership development, and succession planning remains essential.
PMA Advocacy
PMA remains engaged with Treasury, IRS leadership, OPM, congressional stakeholders, and partner organizations to ensure the voices of federal managers are heard during this period of significant change. We will continue to provide members with timely information, practical resources, and advocacy on issues affecting leadership, workforce policy, employee protections, and the future of federal service.
As always, PMA encourages members to share concerns, questions, and feedback regarding workforce changes through our advocacy channels so that we can effectively represent the interests of managers across the IRS.
FY 2027 Budget Outlook
Congress has begun consideration of the FY 2027 federal budget.
Current budget proposals include a reduction in IRS funding compared to FY 2026 levels.
Potential impacts include:
· Reduced hiring
· Increased workloads
· Delayed modernization initiatives
· Pressure on taxpayer service
· Increased supervisory responsibilities
· Greater reliance on experienced managers
Budget negotiations will continue throughout the summer and into early fall.
PMA Position
Stable and predictable funding allows IRS managers to successfully implement modernization initiatives while maintaining taxpayer service, employee engagement, and operational excellence.
Reduction in Force (RIF) Regulations
OPM has proposed revisions to federal Reduction in Force regulations that could significantly affect future reorganizations.
Although no immediate IRS actions have been announced, the proposed changes may influence:
· Competitive areas
· Employee retention standing
· Organizational restructuring
· Workforce reshaping
· Future downsizing initiatives
PMA Priority
Any workforce restructuring should be transparent, equitable, mission-focused, and preserve experienced leadership whenever possible.
Voluntary Retirement and Separation Programs
Congress continues evaluating proposals that would expand agency authority to use:
· Voluntary Early Retirement Authority (VERA)
· Voluntary Separation Incentive Payments (VSIP)
Should these authorities be expanded, agencies may have greater flexibility to reshape their workforces through voluntary departures rather than involuntary reductions.
PMA will continue monitoring legislative developments in this area.
Federal Pay and Manager Pay Compression
Federal employee pay remains a significant issue.
Legislation has been introduced proposing an average 4.1 percent federal pay increase for 2027, although congressional approval remains uncertain.
Equally important is the continuing issue of manager pay compression.
Across the IRS, many first-line managers supervise employees who receive:
· Overtime
· Premium pay
· Special salary rates
· Recruitment incentives
· Retention incentives
As a result, many employees earn salaries comparable to—or greater than—the managers who supervise them.
PMA Priority
PMA continues advocating for meaningful supervisory pay differentials that recognize the increased responsibility, accountability, and leadership expected of IRS managers.
Performance Management and Accountability
OPM finalized new regulations strengthening agencies' ability to address serious employee misconduct while reinforcing continuous vetting and suitability standards.
Managers should anticipate additional guidance regarding:
· Performance management
· Accountability expectations
· Employee conduct
· Documentation requirements
· Supervisory responsibilities
PMA Position
PMA supports fair accountability systems that include clear standards, consistent application, appropriate training, and due process protections.
Congressional Oversight of the IRS
Congress is expected to continue oversight hearings addressing:
· IRS modernization
· Taxpayer service
· Artificial Intelligence
· Cybersecurity
· Identity theft
· Enforcement priorities
· Workforce reductions
· Technology modernization
These hearings frequently influence future appropriations and legislative proposals affecting IRS operations and management.
PMA Legislative Priorities
PMA continues advocating for policies that strengthen both IRS leadership and the federal civil service.
Our priorities include:
· Protecting merit-based civil service principles
· Preserving due process and fairness
· Supporting transparent workforce reforms
· Improving manager pay and reducing pay compression
· Providing adequate IRS staffing and funding
· Investing in leadership development and succession planning
· Supporting effective telework and workplace flexibility where mission requirements permit
· Ensuring reorganizations are transparent, equitable, and mission-driven
· Strengthening recruitment and retention of experienced managers and management officials
Looking Ahead
PMA will closely monitor several significant developments expected during the coming months:
· Court rulings involving Schedule Policy/Career implementation
· FY 2027 appropriations and IRS funding decisions
· Congressional action on the proposed 2027 federal pay raise
· Additional OPM guidance on workforce restructuring and performance management
· IRS announcements affecting organizational changes, staffing, and leadership positions
As these developments unfold, PMA will continue providing timely, objective information and advocate for policies that support IRS managers, management officials, and the employees they lead.
Together, we remain committed to strengthening leadership, protecting the merit-based civil service, and ensuring the IRS workforce has the resources, support, and stability necessary to serve the American taxpayer effectively.
Resources & References
· OPM – Schedule Policy/Career Resource Center
· Executive Order 14410 – Implementing Schedule Policy/Career
· OPM – Federal HR 2.0 Governmentwide HR Platform Announcement
· OPM details changes for federal employees in Schedule Policy/Career
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