What does the substantial recent reduction in the IRS mean for U.S. taxpayers and expatriates? How will staff reductions affect the agency’s ability to audit and collect taxes owed by U.S. taxpayers around the world? What impact will the newly confirmed IRS Commissioner have on the agency’s future?
According to the most recent IRS “Data Book” (released at the end of May 2025), 2024 had actually brought a reduction in wait times for the 62.2 million U.S. taxpayers who contacted the agency with questions (up 3.2% from 2023). The IRS noted that its toll-free customer service lines helped nearly 20 million taxpayers who called in with questions (an increase of almost 11% from 2023) and 2 million in-person inquiries (a 26% increase from the previous fiscal year).
The IRS 2024 Data Book documents gross receipts and collections of more than $5 trillion, marking the first time in history that tax receipts have exceeded that amount. While the agency reports processing more than 266 million tax returns, the IRS also reported the closure of over 500,000 audits, resulting in an additional $29 billion in tax revenue.
These service gains are likely to be lost due to the substantial recent reduction in the IRS workforce, as the IRS has been forced to reduce its own labor pool by more than 25,000 under the staffing initiatives established under the new Presidential administration. The Reduction in Force (RIF) includes almost 20,000 IRS workers who accepted buyouts under the recent “deferred resignation program.” The number of IRS employees has officially dropped from over 102,000 to around 75,500 as of the first of this month. This is expected to be exacerbated by the passage of H.R. 1, the “One Big Beautiful Bill Act,” which imposes substantial burdens on the agency as it responds to the significant changes to U.S. tax law contained within H.R. 1.
The bill further expects to reduce the IRS budget by one-fifth, resulting in additional RIFs and expected delays in processing newly filed tax returns and associated refunds in 2026. What are the administration’s genuine plans for the agency going forward? Recently confirmed IRS Commissioner (and former U.S. Congress Member Billy Long) co-sponsored proposed legislation four times (2011, 2013, 2015, and 2017) to abolish the IRS while he served in Congress, even though he is neither a tax lawyer nor CPA, and doesn’t even have a college degree, and never served on the House Ways and Means Committee (where tax bills are crafted in the House of Representatives).
It is interesting to note the difference in the customer experience presented in the IRS report when compared with the consistently reported experiences of professionals and tax practitioners in their interactions with the agency. Wait times in these segments have been substantially longer, and the ability to gain access to an IRS agent or auditor to provide information or seek an answer has significantly declined over the past few years. This is expected to continue as the present administration continues its RIF targets within the agency. In any event, the ability of any taxpayer or provider to seek input, guidance, or answers from the IRS now and in the future is expected to continue declining rapidly.
It will be interesting to see how Mr. Long, who has never led an organization or business with anywhere near 75,000 employees, will impact an agency tasked with substantial reform. His term to replace the most recently confirmed IRS Commissioner (D. Werfel) ends Nov 12, 2027. In his address to IRS employees, Mr. Long asked the remaining employees to “help me develop a new culture here. I’m big on culture, and I’m anxious to develop one that makes your lives and the taxpayers’ lives better.”
If you have concerns with IRS, California, or any other state tax filing requirements or audits, We invite you to learn more about the integrated tax, legal, accounting and business consulting services of Allen Barron and contact us or call today to schedule a free consultation at 866-631-3470.