INSIDE COMPLIANCE

As part of the Trump administration’s broad efforts to downsize the federal government, it reportedly plans to cut more than 20% of the Internal Revenue Service (“IRS”) workforce by mid-May 2025. This planned reduction in staff follows the nearly 6,700 probationary IRS employees already fired by the administration and the 4,700 employees who left the IRS after accepting the administration’s “voluntary buyout” offer. In total, reports indicate that the Trump administration could reduce the IRS workforce by nearly half its current size. Downsizing of this magnitude could greatly impact the amount of tax revenue collected by the IRS as there may no longer be adequate staffing to conduct large audits and complete other tax collection efforts. In fact, these cuts have led Treasury Department and IRS officials to project a decrease of up to 10% in federal tax collection compared to 2024, representing over $500 billion in lost revenue for the federal government. This level of reduced tax collection would primarily benefit the wealthiest Americans, while low- and middle-income individuals would be the most impacted by the likely continuation of offsetting funding cuts to public welfare and services.