Endless phone applies. Slower reimbursements. Larger budget deficits.
That is just a part of what could be in store for Americans if the Trump administration continues with the plans that it is said to be considering reducing the workforce of the Internal Revenue Service in two, according to tax experts.
The move would not only reverse recent efforts to rest and modernize the IRS, but threatens to fundamentally paralyze an agency that is responsible for processing around 270 million tax returns of individuals and companies every year, both democratic and Republican former officials told Yahoo Finance.
“Even with recent technological improvements, every internal and external IRS function will be in danger,” said Charles Rettig, who served the Handpicked IRS commissioner of Donald Trump during his first term, in an e -mail to Yahoo Finance. “The agency will probably have difficulty meet the basic levels of services and compliance.”
The IRS has already fired around 7,000 probation staff as part of Trump’s broader effort to lower federal bureaucracy, so that concern could influence the service during this year’s submission season. But as the New York Times and Associated Press revealed this week, the leaders of the agency are now considering cutting back another 50% on his around 90,000-copy workforce. The IRS did not respond to requests for comments.
Such a reduction would leave the IRS with less manpower than at any time since the 1950s.
David Kamin, a professor in NYU Tax Law who served as an economic adviser to former President Joe Biden, said it was difficult to imagine how the agency would even work with that level of resources.
“We didn’t have IRS who is so in modern times, with the economy we have today and the tax code we have today,” he said. “But it cannot function in any way the way we have seen it function.”
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During the BIDEN administration, Democrats tried to rebuild the IRS after a decade in which cutbacks on the budget had reported its staff to levels from the 1970s and the audit rates on individual returns with more than half fell. The party included $ 80 billion in the Inflation Reduction Act to modernize the customer service and processing systems of the agency and maintain the agency’s enforcement, with the aim of collecting more of the approximately $ 600 billion Americans paying taxes every year.
That money helped the IRS to solve many of the service problems that popped up during the pandemic when the telephone lines were overwhelmed and many returns were delayed. Among other things, the agency hired more representatives from customer service, who – at least due to the main measure – reduced waiting times during telephone calls during the submission season from 28 minutes to 3 minutes and made an attempt to reduce its notorious backlogs by digitizing more paper returns. It also started to hire tens of thousands of more employees, with the aim of considerably increasing the audits of the rich and large companies against the tax year 2026.
The contracting of the workforce with half would put that work back and something, said Danny Werfel, who served as IRS Commissioner under Biden.
“Taxpayers must expect that comparable performance levels are similar or worse than what happened during the COVID-19-Pandemie-1 answered in the 10 calls, 30 minutes waiting times or more, towering piles of paper reports delayed in the processing fray line, and therefore months-long delay in an e-mail in-e-mail.
Most experts believe that cutting the ranks of IRS agents would probably cost the government more than it would save because of its ability to catch tax dodgers. Last year, the government delivered $ 98.7 billion through enforcement actions, and the IRS has estimated that every extra dollar it spends on audits yields $ 6 extra income. Economists have discovered that audits from taxpayers with a higher income have a return closer to $ 12-to-$ 1.
“It is difficult to estimate how important the agency will suffer if the IRS is staffed at low levels that are no longer seen since the post-world war II era,” said Natasha Sarin, a former tax policy adviser at the Biden Treasury department. “But very conservative, we are talking about hundreds of billions of dollars in increased avoidance.”
A possible problem: if people are less likely to be caught on their taxes, they can also become less likely to pay them voluntarily, which threatens a downward spiral in compliance. Americans are nowadays pretty good at paying what they owe to the government compared to Europeans, who have made tax evasion a way of life in countries such as Italy. But that can change.
Even before Trump’s fired, it was generally expected that the Republicans would reduce IRS’s workforce. Gop -legislers fiercely oppose the infusion of cash of the Biden administration in the agency and managed to return $ 20 billion during budget negotiations. Thanks to an assignment error in last year’s continuous resolution that the government kept active, the agency could lose another $ 20 billion this year.
But some experts in the field of conservative tax policy told Yahoo Finance that it would be misled to significantly reduce IRS employees without first simplifying the tax code, which would reduce the need for enormous customer service and complex enforcement efforts.
“If the Republicans dramatically simplify the tax code, as they considered in the 90s with a flat tax, you could cut the IRS in two,” said Christopher Edwards, a tax policy expert at the Libertarian Cato Institute. “But we have a president who wants to make the tax code more complicated.”
As an example, he pointed to Trump’s proposal to eliminate taxes on tips.
“That requires a lot of administration and extra auditing, because you create many incentives for regular employees to relocate their wages in tips,” said Edwards.
Mark Everson, who served as IRS Commissioner under George W. Bush, said he supported the efforts to streamline the IRS. But he argued that the agency should wait until it has finished modernizing his IT and customer service systems before he decides how many employees can afford to cut.
“I am in favor of efficiency and accountability, including the IRS,” he said. “It would be best if they could find a way if they do cuts that they look at the right positions and keep the right people. This very blunt instrument that they use does not allow them to do that. “
Cutting the IRS to the bone can also change its enforcement priorities. The agency would probably spend less on its reduced means to investigate the taxes of rich households and companies, for which considerable manpower requires, and checking more time of contractors, which is easier because employers report the majority of their income on W2S.
During the first Trump administration, the IRS placed much of its emphasis on checking taxpayers who applied for the income tax credit earned that the income for families with a low income and working class increases.
“The areas where you might continue to see enforcement are places where it is easiest to connect the dots,” said Kamin van Nyu.
Jordan Weissmann is a senior reporter at Yahoo Finance.
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