Like much else under the new Trump presidency, the country’s tax landscape is shifting and reshaping beneath our feet.
Thousands of federal jobs have been slashed, including a large swath at the IRS. This, coupled with an IRS hiring freeze, will reduce the IRS’ ability to pursue tax debt collection and slow down audits, collections, and legal actions. The Department of Government Efficiency’s (DOGE) access the IRS’s Integrated Data Retrieval System, will accelerate a swing toward AI-driven fraud detection and enforcement, and could increase scrutiny on delinquent taxpayers and open the door to a wave of litigation in defense of data privacy. Lastly, the Tax Cuts and Jobs Act (TCJA) of 2017, set to expire by the end of 2025, which has kept tax rates low, key deductions and credits in place, and favorable tax breaks available, may or may not be renewed.
These potential changes have tax professionals worried about taxpayer health and the IRS’s capacity to enforce tax law and resolve tax controversy issues. Will scrutiny on delinquent taxpayers increase or weaken in 2025? Will there be sufficient IRS staff available to address delinquencies for tax debtors who want to resolve their obligations? What is the recalcitrant taxpayer to do in these tumultuous times?
What are taxpayers thinking
Taxpayers who are in arrears may wonder if it is the right time to come clean and resolve their outstanding tax issues, or to continue to cruise, hoping that IRS disarray will stand in their favor.
According to statistics generated by the Professional Managers Association, the IRS workforce stands at more than 100,000 total employees, of whom approximately 28,000 have been onboarded within the past year, and with about 30,000 employees with less than three years of service. The IRS, as of February 19, 2025, reports that it plans to layoff of approximately 6,000 first-year probationary employees, despite the hiring freeze recently imposed by President Trump. These layoffs will disproportionately affect IRS employees in enforcement because they represent a large share of new employees.
While it’s true that the disorder in federal functioning may translate into diminished scrutiny, the dearth in staffing means that there won’t be agents and reps available to address taxpayers’ issues when necessary. If a taxpayer is at the “Final Notice” stage, automated notices will continue to be released, and a levy will automatically be imposed. However, there likely won’t be enough IRS agents to review appeals, release levies, arrange payment plans, or offer compromises for petitioners. We recommend that the delinquent taxpayer move to resolve his tax debt before he gets caught up in the IRS’ machinery and finds he has no recourse for his debt.
What we’ve seen at the IRS
Our tax controversy team communicates with IRS representatives daily and has found that auditors, tax reps and agents share taxpayers’ state of confusion. They are stressed and anxious in the face of DOGE’s aggressive layoffs, wondering if or where the hatchet will fall next. Many are considering retirement to get out of the line of fire. New employee training has been frozen mid-stream, leaving longstanding agents worried about the extra burden they will shoulder to compensate for insufficient staff. Their state of limbo does nothing to enhance operations. As one auditor told us, “Sorry if I sound muddled; it’s because I am.”
What You Should Do
Compliance is always the answer. File your taxes on time to avoid additional penalties. If you are in arrears, consider setting up a payment plan now, before IRS processing delays get worse. Stay abreast of policy changes; if TCJA provisions expire, your tax bill will change. Finally, if you are out of your depth, seek the help of an accounting professional.
This material has been prepared for informational purposes only, and is not intended to provide or be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.
