IRS Braces for a Big Drop in Tax Revenue

The sweeping changes underway by DOGE within federal agencies are meant to save money. But changes at the IRS may have the opposite effect, and in a big way, reports the Washington Post. The newspaper reports that tax officials are projecting a 10% drop in tax revenue this year, which translates to a whopping $500 billion and might force the government to borrow more money to cover the shortfall, adding to the national debt. The reasons stem from a number of factors, but a big one is the move by the Department of Government Efficiency to fire thousands of IRS employees in the taxpayer services and enforcement divisions. Another is that the IRS is dropping investigations of "high-value corporations and taxpayers," per the newspaper.

What's more, the anonymous IRS officials interviewed say they have seen increased chatter online about people opting not to pay taxes or taking unauthorized deductions, essentially gambling that they won't be audited given all the agency upheaval. A Treasury Department spokesperson calls the Post report "sensational and baseless." It does, however, sync with a previous report at Vox, breaking down how cutbacks at the IRS can backfire. "It turns out that money spent on IRS agents pays for itself many times over, because when there are more people doing tax enforcement, the government takes in more of the revenue it's legally owed under the tax code," writes Nicole Narea. (More IRS stories.)