The Inland Revenue Department plans to cut up to 250 jobs throughout the country.
Inland Revenue Commissioner Robert Russell said on Wednesday that the department is consulting unions about a proposal to call for voluntary redundancies.
Mr Russell said the department is having to tighten its belt due to the economic downturn and review its resources as big projects such as KiwiSaver wind down.
But the Public Service Association says the department's workload is actually increasing as it carries out duties including processing thousands of new KiwiSaver members and implementing recent tax cuts.
The union said Inland Revenue's move is part of staff cuts across the public service, which the Government is making as it reviews its departments' budgets.
It is concerned that Inland Revenue's plans to offer voluntary redundancies will not save the jobs of people who want to continue working.
Institute of Chartered Accountants tax director Craig Macalister says if the department has excess staff it should move them to front-office jobs, which may solve delays in getting through to the department's call centre.
The IRD plans to begin offering voluntary redundancy to staff in early May.