The nation’s tens of thousands of tax officials were offered psychological counselling on Thursday as they were told of fresh budget cuts, redundancies and greater workloads for those left behind.

The ATO has appointed senior bureaucrat Jane King to manage the mass-redundancy process, with the initial task of finding an extra 2100 job cuts in five months, with another 1700 to follow in the next four years.

There will also be cuts to IT and travel budgets and a warning from Ms King, the former boss of ATO call centres, that more tax offices around the country might close.

The only good news the Brisbane-based executive had for staff in Thursday’s internal online briefing was that hundreds of disappointed applicants for the last round of voluntary departures may get another shot at a golden handshake.

The ATO’s government appropriation for 2014–15 has been reduced by around $112 million to $3.2 billion and the office must also carry the extra work of collecting the new taxes contained in Treasurer Joe Hockey’s first budget.

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It has also been told to shed 2100 workers by October 1, on top of the 900 job losses that were already underway.

“In terms of staffing we need to reduce our headcount by 3000 people by the end of October 2014,” Ms King wrote.

“In response to the funding cuts we also have to look at reducing operating costs across the board, including non-staffing costs such as property, travel and IT.”

Ms King said the Taxation office wanted all departures to be voluntary but conceded that tax officials might be forced from their jobs if not enough volunteers could be found.

“Our clear preference is voluntary redundancies which we will manage a further voluntary redundancy expression of interest round," Ms King wrote.

“If we are unable to achieve the reductions through voluntary redundancies then involuntary redundancies would be considered.”

Simply shedding casuals and contractors would not help the ATO meet its job-cutting quotas, Ms King said, but those workers might still fall victim to cuts to other areas of the agency’s budget.

“Casuals and contractors will not count towards the required reduction, but how the ATO uses this workforce will also be reviewed as we review all of our business processes in line with budget reductions,” she wrote.

Public Service Minister Eric Abetz has already imposed tough conditions departments offering pay rises as part of this year’s wage talks across the bureaucracy and Ms King indicated that Tuesday’s budget had made it more difficult for the ATO to offer its workers more money.

“(The budget) ultimately determines the affordability of all aspects of the ATO’s operations, including pay rises and other conditions under the Enterprise Agreement,” Ms King wrote.

“In addition, the Australian Government Public Sector Workplace Bargaining Policy says that improvements to pay and conditions must be funded from within existing agency budget allocations for the life of an EA or other workplace arrangement.”

Ms King encouraged tax officials who were feeling the strain to seek psychological counselling through the ATO’s workplace support services.

“We are acutely aware of the potential impact this announcement has on individuals across the ATO and the anxiety some people may be feeling,” she wrote.

Correction: An earlier version of this story contained incorrect numbers for job losses over the forward estimates period.