By Shannon Najmabadi
The Internal Revenue Service’s burgeoning efforts to more closely inspect the taxes of some of the country’s richest people and most powerful companies are stalling because of layoffs imposed by the Trump administration, current and former IRS employees say.
The IRS terminated about 7 percent of its roughly 100,000-person workforce in February, including at least 5,000 in the enforcement and collections divisions. More layoffs are expected, which would slice staff by almost 20 percent, according to instructions from the U.S. DOGE Service. Meanwhile, tax investigators working on drugs and criminal syndicates may be reassigned to help the Department of Homeland Security.
Current and former employees don’t know who will take on pending audits amid these staff cuts. But some say one demographic stands to benefit.
“The wealthy. One hundred percent,” said Anthony Kim, a longtime IRS attorney now in private practice.
It’s a sharp turnaround from 2022, when Congress gave the IRS $80 billion over a decade under the Inflation Reduction Act, including funds to beef up its auditing of the wealthiest Americans. The agency hired new employees and bulked up units trained to detangle some of the most complicated corporate returns, which can run hundreds or thousands of pages.
It’s not clear how many laid-off employees were specifically auditing big businesses, but tax experts say the cuts undermine the agency’s much-touted effort to crack down on wealthier Americans — who for years have faced slimmer and slimmer odds of being audited and generally have more resources to respond than middle- and low-income taxpayers.
“We do get outgunned. There is no other way to say it,” former IRS commissioner Charles Rettig said in congressional testimony in 2021.
Others say the agency simply can’t do more with less.
“It’s like having shovels” and digging holes, said IRS agent David Carrone, who leads the local Treasury employees’ union in Arkansas and Louisiana. “You have less people to dig the holes now. So there’s only so much the remaining people can dig.”
Critics of the agency, however, say the IRS has a culture of conducting fishing expeditions that hit households or small businesses, or point to watchdog reports that have questioned IRS expenditures and its ability to stay focused on high-income filers.
“Are taxpayers supposed to trust the repeatedly broken assertion that the IRS is only putting the screws to Scrooge McDuck and Rich Uncle Pennybags?” said John Kartch, with anti-tax group Americans for Tax Reform.
The loss of probationary employees — some of whom have specialized experience in valuation, engineering or corporate tax law — comes amid a broader shake-up at the agency that has destabilized day-to-day operations, according to interviews with more than a dozen current and former employees.
Overnight travel has been suspended, limiting revenue agents’ ability to conduct in-person examinations or locate documents for audits, according to seven employees. Employees have been told not to open new business cases, four employees said. Some big-business cases have already been closed, according to a senior manager, who said he has spent the last two years hiring employees from the private sector. And a transformation and strategy office that oversaw new agency initiatives — those funded with the $80 billion appropriation — was recently disbanded, according to a former agency official.
In West Virginia, four of the state’s nine revenue agents were laid off in February, said Matt Kirk, a revenue agent and another union chapter leader. He estimated the laid-off employees had about 40 cases between them, each looking at people making $400,000 or more.
With those losses, “we don’t have the manpower to absorb that volume of cases,” Kirk said.
White House spokeswoman Liz Huston said that Trump is “focused on saving tax dollars, eliminating bloat and increasing the agency’s efficiency,” in contrast to President Joe Biden’s “wildly unpopular plan to hire thousands of additional IRS agents.”
Calling the premise of this story “incorrect,” a Treasury Department spokesperson said the agency is considering “major investments in modernization” to more accurately target suspected tax evaders and is working on other initiatives to improve compliance and taxpayer customer service and to ensure a smooth filing season.
However, no plan has been approved yet, the spokesperson said.