Accounting and tax interest groups are scrambling to make sense of what’s actually going on inside the IRS, and are worried that the chaos could mean poor levels of service just in time for the agency’s busy season.
To summarize: Recent media reports indicate the IRS plans to shed up to half its 90,000-person workforce. The tax collector already fired 7,000 people just last month. Trump administration officials also want some IRS agents to assist in its immigration crackdown efforts. Looming over all this is the specter that lawmakers may claw back more IRS funding or even make more wholesale changes to the agency.
An official with the AICPA, which represents 597,000 finance and accounting professionals globally, said the group is monitoring what’s going on with the IRS to determine both short- and long-term consequences. The group is also talking with the IRS “to clarify” what are sometimes conflicting reports.
“With the volatility of the present environment and rapidly changing events, it is important to reconcile fact from fiction for taxpayers and their advisors,” Mark Koziel, president and CEO of the AICPA, said in a statement emailed to CFO Brew. “Despite inconsistent reports, we know that the IRS is making every effort to maintain this tax season’s service levels comparable with that of recent years.”
“A modern, functioning IRS is essential for Americans to meet their tax obligations and to our country’s financial health,” Koziel added.
Anyone home? A halving of the IRS workforce will worsen taxpayer service at the agency, Alex Muresianu, a senior policy analyst at the Tax Foundation, told CFO Brew.
“If you had dramatic tax simplification of a revolutionary nature, you could maybe justify this,” Muresianu said. “But it’s putting the cart before the horse even if you had dramatic simplification.” He added that some legislation, such as the 2017 Tax Cuts and Jobs Act, has helped simplify the tax code, but not anywhere near the levels needed to justify halving the IRS workforce.
Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, warned in a blog post just after the start of tax season—weeks before the massive rift was reported—that “a short-staffed agency may struggle to process returns in a timely way” and taxpayers may find it difficult to get help from the IRS.
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Funding fight. Services levels were “in the doldrums” throughout the 2010s and the Covid pandemic with “very low response rates and long wait times for feedback,” according to Muresianu.
But things appeared to be improving in recent years, thanks to an $80 billion injection from the Inflation Reduction Act in 2022—although Republicans in Congress later clawed back $20 billion and froze another $20 billion.
The IRS announced after last year’s tax season that it improved service levels in key areas such as calls answered, response times, and in-person help. Then-Commissioner Danny Werfel at the time credited the IRA funding for these improvements, according to CPA Practice Advisor. Werfel also warned that further clawbacks of IRS funding would roll back the progress the IRS has made on improved service, Government Executive reported in January, just days before the commissioner resigned.
As CFO Brew previously reported, if Republican lawmakers made more IRS funding changes in 2025, the AICPA would prefer that the money be reallocated rather than taken away entirely. Enforcement money could instead be used to improve service and technology, Melanie Lauridsen, VP of tax policy and advocacy at AICPA, previously told CFO Brew.
“The ability of the IRS to maintain service levels for taxpayers and their preparers is critically important to the AICPA,” Koziel said in his March 7 statement. “IRS services in combination with modernization efforts, which include technology advancements, have been the bedrock of AICPA’s recommendations for many years.”
Border warriors. And speaking of resource allocation, the Department of Homeland Security in February asked the Treasury Department if it could use some IRS investigators to “assist in immigration enforcement,” the Wall Street Journal reported.
Tax Policy Center senior fellow Elaine Maag and senior research associate Diana Guelespe wrote in a Feb. 26 blog post that IRS criminal investigators would need additional training to help with deportations. They would also be taken away from “other activities with proven benefits,” including investigations of human-trafficking networks.
Maag and Guelespe wrote that the agency’s “limited resources would be best used to do what [the] IRS does best: ensuring taxpayers comply with the tax law.”