The Future of the IRS in the Age of DOGE

The IRS has undergone significant workforce cuts while trying to maintain effective tax enforcement. In early 2025, the agency laid off 7,000 employees, which is only about 8% of its workforce, as part of the broader federal cost-cutting initiative. Reports suggest that nearly half of its 90,000-person workforce could be reduced through layoffs and buyouts.  However, with the announcement by President Trump that the secretaries are to do more of the cutting and use a scalpel, I expect this number to be reduced.   There are concerns about the timing of these cuts regarding delayed refunds, reduced customer service, and weakened tax enforcement.

After the departure of Elon Musk and several strategic realignments, the future looks interesting.  It will be harder to get through to the IRS and the people on the other end of the phone may not be committed to helping the taxpayer.  The need for an experienced tax professional such as Steve Perry, EA from Books, Taxes & More is more critical than ever.

With fewer agents, audits may decline, potentially increasing tax evasion. The IRS may shift toward automation and AI-driven audit selection.  This will require considerable upgrades and some fundamental shifts in how the service enforces tax collection.

To adapt, the IRS may expand digital self-service tools, increase reliance on data analytics, and prioritize specialized hiring. The long-term impact of these cuts could shape the future of tax enforcement, and interactions with the public.  

All indicators are that AI driven automation is the future, but as old as the systems at the IRS are, this will take time.  The IRS will pivot in that direction, but, like turning an aircraft carrier, it will be a slow process.  This includes audit selection aimed at high-yield cases and digital assets.

Crypto taxation will be confusing for some time to come.  Fortunately, Steve Perry, EA is watching the indicators.

The use of AI brings up and aggravates the issue of privacy and data security.  Trust by the public is very low and will need to be rebuilt by the service if voluntary compliance is to continue.

The biggest change will be how we negotiate with the IRS.  Now more than ever, taxpayers with tax issues need professional representation to minimize the pain of becoming compliant with the law once again.

Visit us at www.bookstaxesatl.com or www.taxdeleteUSA.com for more information on how we can help.