IRS Cancels Union Contract

On February 27, 2026, the IRS announced that it canceled its collective bargaining agreement with the National Treasury Employees Union (“NTEU”) following the Ninth Circuit Court of Appeals’ decision to remove the injunction preventing two Presidential Executive Orders from going into effect. (Jory Heckman, Federal News Network). The two executive orders state that certain federal agencies, such as the IRS, did not have a right to labor unions because it put national security at risk. Id. This article will discuss the reasoning behind the executive orders that pushed the IRS to cancel its union contract and how enforcing the orders effects federal employees.

Many of the agencies identified in the executive orders are complying with the Office of Personnel Management’s (“OPM”) instructions to follow the executive orders and terminate its union contracts, but the unions are resisting. (Drew Friedman, Federal News Network). The administration claims the executive orders ensure that federal agencies function without delay to protect national security; however, the termination of collective bargaining agreements leaves employees particularly vulnerable. (Erin Schilling, Bloomberg Tax).

In March and August of 2025, President Trump signed Executive Orders 14251 and 14343 aimed at ending collective bargaining agreements between unions and federal agencies, based on claims that unions interfere with agency management and cause delays that risk national security. (Jory Heckman, Federal News Network); (The White House). The law protects employees’ right to collective bargaining because “the public interest demands the highest standard of employee performance… and the efficient accomplishment of the operations of the Government.” 5 U.S.C. § 7101(a)(2).

The first of the Presidential Executive Orders, Exclusions from the Federal Labor-Management Relations Programs, identified agencies that no longer have the right to collectively bargain. (The White House). The second executive order, Further Exclusions from the Federal Labor-Management Relations Programs, identified additional agencies that no longer have the right to collectively bargain. (The White House).

The orders cited a provision of the 1978 Civil Service Reform Act that grants the President authority to exclude agencies from collective bargaining when he determines that their core mission involves “intelligence, counterintelligence, investigative or national security work,” and applying that law to such an agency would be “[in]consistent with national security requirements and considerations.” 5 U.S.C. § 7103(b)(1); (The White House).

The National Treasury Employees Union (“NTEU”) has been fighting back against the administration to preserve “the system that Congress designed.” (Erin Schilling, Bloomberg Tax). The union insists that its’ contract with the IRS is still valid and that it will continue to pursue legal action. (Drew Friedman, Federal News Network). When the executive orders were signed in 2025, the NTEU and other unions brought actions against the administration questioning the constitutionality of the orders. Id. The court issued an injunction preventing the orders from going into effect while these cases were being litigated. Id. However, the Ninth Circuit recently decided to remove the injunction, allowing the OPM to continue enforcing the executive orders while the cases are being litigated. (Jory Heckman, Federal News Network).

Canceling union contracts only heightens concerns surrounding this tax season because the unions provided valuable protection for employees, many of whom are now doing jobs for which they have no training. While the IRS is not the first or only agency to rescind its union contract, the decision notably comes at a pivotal time in a difficult tax filing season. (Jory Heckman, Federal News Network). The IRS has faced significant staffing shortages since the start of the Trump administration and is now utilizing workers with no direct tax experience to attempt the keep this tax season running smoothly. (Eric Katz, GovExec). However, filling these positions with untrained personnel means that many Americans will likely experience slow service and delayed returns. Id.

In response, the OPM is instructing agencies to comply with the two 2025 executive orders by excluding union representatives from formal discussions and ignoring union requests for information. (Erin Schilling, Bloomberg Tax). In addition to enforcing the executive orders, the OPM also proposed a rule to move the terminations appeals process from the Merit System Protection Board (“MSPB”) to its own office. (NTEU). The MSPB was created to be an independent reviewal system, and moving the appeals process to the OPM defeats the system’s purpose because it puts the process into the hands of an organization that is highly sensitive to political changes. (MSPB); (NTEU). The NTEU, along with other unions, filled comments opposing the OPM’s proposed rule. (NTEU). The unions assert that the rule would remove the separation between policy creation and adjudication of said policy, creating a conflict of interests. Id.

The overarching concern for unions and supports is that the administration continues to weaken job protections, making it easier to terminate employees who flag illegal activity, effectively increasing “political power over tax administration.” (Erin Schilling, Bloomberg Tax). While the OPM claims that employees’ due process rights will be protected, the NTEU points out that the “assurances… are devoid of analysis, case-law citations, or any explanation at all.” (NTEU). Only time will tell whether the OPM will hold true to its word and protect employees’ rights, or if it will take the opportunity to cut more jobs, yet without union protection, many federal employees face an uncertain future.