The Internal Revenue Service (IRS) is bracing for seismic changes in the coming years. Cutting thousands more jobs are on the horizon because of changing taxpayer habits and previous automatic cuts instigated by former President Donald Trump. New reporting by the Washington Post uncovers a startling alternative. This would lead to an avoidable loss of more than $500 billion in tax revenue to the federal government. Just as alarming is that officials are expecting tax receipts to fall off a cliff—more than a 10% drop by April 15 over last year.
This dire forecast is due in part to shifting sentiments among taxpayers. Both individuals and businesses are reportedly considering not filing taxes or attempting to avoid paying owed balances to the IRS. This shift in behavior has been partially attributed to increased discussions online, where some individuals express intentions to make aggressive claims they aren't eligible for, hoping to evade audits.
The Washington Post's report, based on information from three anonymous sources familiar with the situation, highlights growing concerns within the IRS. According to sources, the expected revenue decrease is directly due to the impact of President Donald Trump’s earlier IRS budget cuts. These cuts have, as GAO put it, left the agency “hamstrung” when it comes to enforcing tax compliance.
The report has already faced pushback from the Treasury Department. Second, the department countered with an emphatic statement to the Washington Post, labeling the story “sensational and baseless.” They called on readers to not take the testimony of the anonymous sources at all. IRS officials remain optimistic in the face of doubt. They see the increasing confusion and the possibility of billions of dollars in uncollected tax liabilities this season.
The IRS has been tracking activity on discussion boards, blogs and social media platforms where sharing of new tax evasion strategies have started to escalate. This new audit betting taxpayer-funded spike in chatter demonstrates that they’re mostly just creating a dangerous game of audit roulette. This trend would result in a significant decrease in anticipated tax revenues.