Endless telephone holds. Slower refunds. Bigger budget deficits.
That’s just some of what could be in store for Americans if the Trump administration goes forward with the plans it is reportedly considering to cut the Internal Revenue Service’s workforce in half, according to tax experts.
The move would not just undo recent efforts to restaff and modernize the IRS but threatens to fundamentally cripple an agency responsible for processing around 270 million tax returns from individuals and businesses each year, both Democratic and Republican former officials told Yahoo Finance.
“Even with recent technological enhancements, every internal and external IRS function will be at risk,” Charles Rettig, who served as Donald Trump’s handpicked IRS commissioner during his first term, told Yahoo Finance in an email. “The agency will likely struggle to meet basic levels of service and compliance.”
The IRS has already laid off about 7,000 probationary employees as part of Trump’s broader effort to slash the federal bureaucracy, raising concerns that they could impair service during this year’s filing season. But as the New York Times and Associated Press revealed this week, the agency’s leaders are now considering a further 50% cut to its roughly 90,000-strong workforce. The IRS did not respond to requests for comment.
Such a reduction would leave the IRS with less manpower than at any time since the 1950s.
David Kamin, an NYU tax law professor who served as economic adviser to former President Joe Biden, said it was hard to picture how the agency would even operate with that level of resources.
“We have not had an IRS that is like that in modern times, with the economy we have today and the tax code we have today,” he said. “But it can’t function in any way like we’ve seen it function.”
Read more: Free tax filing: How to file your 2024 return for free
During the Biden administration, Democrats sought to rebuild the IRS after a decade in which budget cuts had knocked its staffing down to 1970s levels and audit rates on individual returns fell by more than half. The party included $80 billion in the Inflation Reduction Act to help modernize the agency’s customer service and processing systems and beef up enforcement, with the aim of collecting more of the roughly $600 billion Americans fail to pay in taxes each year.
That money helped the IRS fix many of the service problems that cropped up during the pandemic when its phone lines were overwhelmed, and many returns were delayed. Among other steps, the agency hired more customer support representatives, which — at least by its main measure — reduced the wait times on phone calls during filing season from 28 minutes to 3 minutes, and launched an effort to reduce its notorious backlogs by digitizing more paper returns. It also began hiring tens of thousands of more staff, with the goal of significantly increasing audits on the wealthy and large corporations by the tax year 2026.
