Trump's plans to slash IRS staff could derail agency amid tax season

The IRS is preparing to get rid of half of its workforce, according to two media reports – part of a blitz by the Trump administration to reduce the size and scope of the federal government during its first hundred days in office.

The potential staffing reduction represents a 180-degree course correction for the national tax collector from the substantial funding boost and operational overhaul the agency began to implement during the Biden administration.

It would likely contribute to a longer-term trend at the agency of diminished audit rates, minimal tax enforcement for the most sophisticated taxpayers, and the use of outdated technologies that’s been going on for decades.

However, administrative experts caution that the hiring downgrade may result more from allowing the existing IRS workforce to age out and retire — a process known as attrition — than from firings and buyouts.

“This could be a stretched-out process as opposed to an immediate reduction,” Janet Holtzblatt, a former tax policy official in the Treasury Department and senior fellow at the Tax Policy Center, told The Hill.

“Going into this decade, 60 percent of the IRS workforce was reaching retirement age in the next six years. They could stretch this out over time and have a hiring freeze,” she said.

The Hill reached out to the White House, the Treasury Department, the IRS, the National Taxpayer Advocate, and the National Treasury Employees Union (NTEU) for more information.

A Treasury spokesperson told The Hill that the department is “considering a wide range of possible streamlining initiatives” and that “no plan has been approved to date.”

“Modernization is necessary to keep up with the process by which Americans file their taxes, including the reality that over 90 percent of individual tax returns are filed electronically,” the spokesperson said.

The IRS already got rid of nearly 7,000 trial employees as part of cost-cutting initiatives on the part of the Trump administration. About 5,000 of those were employees doing work on tax compliance and enforcement, a government official told NewsNation, the sister television network of The Hill, in a statement.

IRS employees have been holding rallies and fighting against the firings, expressing dismay following the hiring surge that resulted from the $80 billion funding boost for the agency supplied by the 2022 Inflation Reduction Act (IRA).

“We’re meeting with congressmen, senators, representatives to fight on behalf of everything that’s happening in the Internal Revenue Service and all of our agencies across the United States,” Shannon Ellis, president of the NTEU’s Chapter 66, said in a video posted to social media on Wednesday.

While the time frame of the staffing reductions at the IRS isn’t known, they are being announced during the height of the 2025 tax filing season and could potentially have an effect on tax collections and federal revenues.

“Aggressive reductions in the IRS’s resources will only render our government less effective and less efficient in collecting the taxes Congress has imposed,” former IRS Commissioners Lawrence Gibbs, Fred Goldberg, Charles Rossotti, and four others wrote in a New York Times opinion piece last month.

In a separate opinion piece for Bloomberg Tax, Trump-appointed former IRS Commissioner Charles Rettig cautioned the administration from dismissing IRS workers at random.

“Randomly terminating large numbers of taxpayer service representatives will hurt the efforts of tens of millions of Americans to receive important, congressionally authorized refundable credits and tax refunds,” he wrote Wednesday.

The IRS fails to collect about $700 billion in taxes every year, an amount called the “tax gap.” Rettig told Congress in 2022 that the tax gap could be as large as $1 trillion annually, worth nearly 4 percent of total U.S. economic output.

Reduced tax collections as a result of lower IRS service levels could have an effect on the ability of the U.S. to pay off its debts, as required by law.

This could move up the effective default date from mid-summer to May, House Ways and Means Committee Chairman Rep. Jason Smith (R-Mo.) warned Wednesday.

Republicans are seeking to increase the debt limit by $4 trillion in their tax cut and spending bill. House and Senate Republicans are currently trying to hash out their differences on a budget resolution before sending the framework to various committees for individual spending cuts and tax breaks.

In recent years, audit rates have fallen across the board for both high earners and low, but audit rates have dropped the most for taxpayers with incomes of $200,000 or more — mostly as a result of staffing decreases, according to the Government Accountability Office (GAO).

“IRS officials said audit rates declined due to staffing decreases and because it takes more staff time and expertise to handle complex higher-income audits,” GAO analysts concluded in a 2022 report.

Holtzblatt told The Hill that the staffing reductions at the IRS send a louder message than pertains simply to government personnel, one that implicates the functioning of the tax code and U.S. law more broadly.

“This signals a message about the functioning of the tax code,” she said.

A reduced functionality of the U.S. tax code — which spans more than 5 million words and 10,000 written pages excluding case law — echoes other recent pushes by the Trump administration to reduce the enforcement of U.S. laws.

The Trump administration announced recently that it would cease to enforce the Corporate Transparency Act and the Foreign Corrupt Practices Act, dismissing enforcement investigations and cases against nearly 90 corporations.

According to a tally by advocacy group Public Citizen, these dismissals include 42 cases at the Consumer Financial Protection Bureau; at least 20 investigations and cases under the Foreign Corrupt Practices Act; at least 15 cases brought by the Civil Rights and Environment and Natural Resource divisions at the Department of Justice; and at least seven cases at the Securities and Exchange Commission against cryptocurrency firms.

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