What's Happening?
The Internal Revenue Service Advisory Council has issued a report criticizing the ongoing defunding and staffing cuts at the IRS. The report highlights the challenges faced by the agency, including a significant reduction in workforce and budget cuts that
have impacted its ability to implement new tax law changes. The council noted that the IRS has lost over 25% of its workforce, including more than 2,000 IT workers, since January 2025. The report also emphasized the need for better funding to support IRS operations and suggested improvements in public education about the IRS mission, updating IRS websites, and simplifying online tax services.
Why It's Important?
The defunding and staffing cuts at the IRS have significant implications for tax administration in the U.S. The agency's ability to process tax returns efficiently and provide timely services to taxpayers is at risk, potentially leading to delays and increased frustration among taxpayers and tax professionals. The cuts also threaten the implementation of new tax laws, which require guidance and system updates. The situation underscores the need for adequate funding to ensure the IRS can fulfill its mission and support the U.S. tax system effectively.
What's Next?
The IRS faces a challenging 2026 tax season, with further budget cuts under consideration. The agency will need to navigate these challenges while implementing provisions of the One Big Beautiful Bill Act, which includes over 100 tax law changes. The IRS will need to issue guidance, prepare its workforce, and update technology systems to accommodate these changes. The report recommends continued advocacy for better funding and modernization efforts to improve IRS operations and taxpayer services.
