Washington, DC
CNN
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Tax experts, IRS employees and former Treasury Department officials are all warning that the US government could lose hundreds of billions of dollars in revenue because of the Trump administration’s staffing cuts to the tax agency, undercutting claims that the sweeping jobs cuts will save the government money.
The Internal Revenue Service, which began the year with about 103,000 employees, has already shrunk its staff by 24% under President Donald Trump.
Among the hardest hit from the cuts and resignations are IRS employees who bring big money into US government coffers, according to a Treasury Department inspector general report. This includes auditors who uncover tax cheats and revenue officers who hunt down unpaid debts from delinquent taxpayers.
“I brought in three or four times my salary, from people who didn’t pay their taxes,” Bryan, a former IRS revenue officer who agreed to speak to CNN on the condition his full name is not used, said.
Bryan, who worked for seven months at the IRS, was fired in February and then reinstated by a judge several weeks later. He’s now taking the Trump administration’s buyout offer to find a more stable job.
“I more than justified my salary, even as the new kid,” he said. “Seasoned revenue officers bring in tens of millions of dollars. When we talk about DOGE and the whole idea of efficiency, it’s nonsense. Mathematically, accounting-wise, it just doesn’t make sense.”
A current IRS employee who similarly spoke to CNN on the condition of anonymity said staffing cuts to her department, which processes applications from nonprofits for tax-exempt status, will also hurt an incoming revenue stream.
“We make money,” the IRS revenue agent said. “My group brought in millions of dollars just from application fees alone. In addition to all the other people collecting taxes.”
So far, it appears the staffing cuts haven’t cratered tax revenues from 2024, which Trump administration officials have said has risen, through that could attributed to last year’s robust economy and stock market, which boosted taxable income.
But with Republicans in Congress pushing forward sweeping tax legislation that would extend many of Trump’s first-term tax cuts and possibly reduce revenue by trillions more, concerns are rising over the country’s long-term fiscal picture.
There is an estimated $700 billion “tax gap” – money owed but not paid – and any further revenue loss makes it harder for the US to tackle its debt and to fund public services. On Friday, Moody’s downgraded the nation’s debt, citing ballooning US debt levels and Washington’s intransigence over the budget deficit.
“Most everything that’s going on in the IRS now points to a sizeable reduction in revenues,” said Janet Holtzblatt, a former Treasury official and a senior fellow at the Urban-Brookings Tax Policy Center. “I think we lucked out this year, as people were just kind of speculating on what this means to them. But that next year is going to be particularly problematic.”
At a House Appropriations hearing this month, Treasury Secretary Scott Bessent said he expects revenue collection “would continue to be very robust” in future years, in part because of the Trump administration’s ongoing efforts to modernize IRS technology.
Asked about the gloomy revenue predictions, a Treasury spokeswoman declined to provide an alternative assessment but said, “Baseless claims from those who have promoted wasteful spending for years at the IRS should be dismissed outright, as they strive to ensure taxpayer funds continue to be wasted in a sad attempt to stop meaningful reform.”
Though estimates vary, a number of think tanks have put out reports on the impact staffing cuts at the IRS will have on tax revenues.
If Trump’s upcoming IRS cuts reach 50%, it could lead to $909 billion in net revenue losses by 2036, according to a recent analysis from the liberal-leaning Center for American Progress. The nonpartisan Yale Budget Lab estimates that a 50% IRS staffing cut could cause a more modest $350 billion revenue drop in the next decade.
“I have really grave concerns around this,” Clinton-era Treasury Secretary Larry Summers, who is a senior fellow at the Center for American Progress, said at a recent panel event about the group’s report. “We’re on a trajectory to sacrificing large amounts of revenue.”
The 24% reduction that the IRS workforce has already seen is just a start. It is certain to rise as the IRS processes thousands of additional buyouts and with future expected layoff rounds.
The 31% drop in auditors has raised alarms. Most of the so-called tax gap comes from people in the top 10% of filers, who stand to gain the most if there are fewer audits.
Audits can have a major return on investment, according to multiple analyses. A study from a nonpartisan economics journal estimates that every $1 spent auditing the top 1% of earners brings in $4, and that every $1 spent auditing the top 0.1% of earners brings in $6.
“When there’s more auditing, people feel a need to be more careful,” Summers said, adding that tax evasion is “contagious” as more people think they can get away with it.
Bessent told lawmakers he thinks firing “unseasoned” auditors won’t hurt revenue because it was “like sending a junior high school student to try to do a college-level class.”
More than 2,500 customer service representatives are already gone, according to the Treasury watchdog report. Experts say this 10% cut could also hurt revenue because, if customer service deteriorates, taxpayers might give up on the process – and not file their tax returns, or not pay what they owe.
Customer service saw a hiring boom under President Joe Biden after he signed landmark legislation in 2022 that that was supposed to inject $80 billion into the IRS. As a result, wait times dropped significantly on IRS phone lines. But after Republicans returned to power in Washington, that massive cash infusion has since been cut in at least half.
“We are just taking the IRS back to where it was before the (Inflation Reduction Act), substantially bloated the personnel and the infrastructure,” Bessent told lawmakers.
The Trump administration is also eyeing the Taxpayer Advocate Service for major cuts, weakening the independent office within the IRS that helps individuals resolve issues.
“Honest filers will find it harder to get help to understand their tax obligations, due to difficulties in getting service, and fewer people working the phones,” said Greg Leiserson, a Biden-era Treasury official and a senior fellow at New York University’s Tax Law Center.
A bipartisan group of seven former IRS commissioners warned in February that staffing cuts will lead to steep revenue drops. And experts agree that voluntary compliance is likely to fall as perceptions rise that other people are getting away without paying taxes.
The different revenue estimates vary because it’s hard to predict how Trump’s IRS cuts will change the culture of taxpaying. And we still don’t know how deep future staff cuts will be.
It’s not clear how aggressively the Trump administration wants to slim down the IRS, with some reports putting the number of targeted cuts at 40% or even as high as 50%.
“There’s a conservative case for funding the IRS,” said Jessica Riedl, a Manhattan Institute senior fellow and a former tax adviser to GOP lawmakers. “If everybody else is playing by the rules, you become less of a chump to play by the rules, you get better taxpayer services, and ultimately, again, you’re addressing the low-hanging deficit reduction fruit.”
CNN’s Jeanne Sahadi contributed to this report.
