We don’t think it’s too much to ask to have an IRS that is equipped to collect the taxes that Americans owe and to help working people file their returns without undue burden. It’s a pity that the Trump administration disagrees.
The last time we discussed the IRS, Republicans and a handful of Senate Democrats were busy gutting the last $20 billion in enforcement funding that the agency received through the 2022 Inflation Reduction Act. Over the last few weeks, there have been some major changes at the agency and, unfortunately, none of them have been good. For this week’s Closer Look, we’d like to share these developments with you. We’ll start with what’s happened with IRS staffing levels and then spotlight the one change that will arguably have the most harmful effect on working people’s future tax-filing experiences.
Reports last week revealed that the IRS is on course to lose a third of its staff this year, thanks to DOGE-induced layoffs and buyouts. Roughly 5,000 IRS employees have resigned and 7,000 more have been illegally fired since Trump took office. Now, an additional 22,000 employees have accepted the administration’s latest buyout offer. Tax experts haven’t wasted time in sounding the alarm over the drastic dip in revenue that these cuts will cause. Fewer agents will, by definition, mean fewer audits and reviews, especially for wealthy taxpayers like us with varied sources of income and oftentimes complicated returns that require special and experienced auditors. Taxpayers will also feel emboldened to avoid taxes if they feel the IRS doesn’t have the ability or resources to catch them. We fear high-income taxpayers will feel less hesitant to misvalue assets or abuse tax shelters.
The drop-off in revenue is seemingly already here, as the IRS announced last week that it had received 1.7% fewer total tax returns compared to this time last year. In all, the Yale Budget Lab estimates that DOGE’s staffing cuts to the IRS could lead to a $159 billion revenue loss over the next decade—or as much as $1.6 trillion if non-compliance is high.
It’s worth noting that one department at the IRS is experiencing some of the deepest cuts: the Taxpayer Advocate Service. This branch of the IRS operates as the agency’s internal watchdog by identifying common problems facing taxpayers and assisting individual filers struggling with financial difficulties, identity theft, and more. Reporting last month revealed that the Trump administration plans to cut 25% of the department’s 1,970 employees, which will undoubtedly affect its ability to ensure the IRS is functioning smoothly and helping taxpayers in need.
This is an appropriate place to pause and reiterate that if Trump and company actually cared about “government efficiency,” they would bend over backwards to properly fund and staff all departments at the IRS. As should be obvious, when you make cuts to your accounts receivable department, you ultimately end up with less revenue—especially from high earners like us. But we digress.
Aside from cuts to the rank and file, the other major news about the IRS workforce pertains to its top officials. While Trump installed his fifth acting IRS commissioner in three months—you read that right—his pick to permanently lead the IRS, former GOP Rep. Billy Long, has attracted some cringy headlines. News broke last week that, in less than three weeks after Trump selected him to lead the IRS, Long had $130,000 in personal debt paid off by donors whose firms have significant business before the IRS. This isn’t the first time we’ve seen eyebrow-raising financial entanglements among conservative officials—remember all the bombshell ProPublica reports about billionaires with business before the Supreme Court wining and dining some of the Justices? Regardless of the situation, it is still cause for concern, especially at an agency as crippled as the IRS.
Now let’s get to arguably the biggest shift at the agency that will negatively impact working people.
Last Thursday, the Associated Press reported that the Trump administration is planning to end Direct File. Direct File is a program that allows taxpayers to file their taxes online for free, directly with the IRS. It was developed from funds allocated to the IRS through the Democrats’ 2022 Inflation Reduction Act. It began as a pilot program in twelve states in 2024. This year, it was made permanent and eligibility expanded to roughly 30 million filers in 25 states.
Since its launch, Direct File has received overwhelmingly positive reviews from users. In one survey, 98% of users were “satisfied” or “very satisfied” with their filing experience under Direct File. Further, research found that Direct File could save the average user $160 annually in filing fees and time costs and could also help eligible working families receive up to $12 billion in additional federal tax credits. It’s no wonder then that 73% of adults—irrespective of age, income, educational attainment, or race—have expressed interest in using Direct File to file their taxes.
At this point, you might rightfully be wondering: if Direct File is so good and popular, why is the Trump administration ending it? It’s simple: follow the money—and by that we mean the money from the tax-preparation industry.
Ultra-profitable tax-prep companies like Intuit, the parent company of TurboTax, lobbied hard to kill Direct File, which posed an existential threat to their business model. In the first quarter of 2025, Intuit spent no less than $240,000 lobbying Congress on tax-related issues (translation: Direct File) and donated $1 million to Trump’s inaugural committee. Along with other Direct File opponents, Intuit also contributed $1.8 million to the campaigns of 29 House Republicans who publicly urged President Trump to end Direct File on his first day back in office. With last week’s announcement, it’s clear that their efforts have paid off.
Intuit and other tax-prep companies argue that Direct File is a waste of taxpayer money because they already sponsor online free-filing programs themselves. What they’re not telling you, though, is that they’ve deliberately used deceptive designs and tricks in an effort to make their free-file options difficult to find. The end result? They rake in billions every year from millions of Americans who could otherwise have filed their taxes for free. In 2022, Intuit was actually forced to pay a $141 million settlement to 4.4 million customers for this reason.
As for tax-prep companies’ claims that Direct File is too costly, it’s worth noting that Intuit receives research tax breaks larger than the entire cost of Direct File. We think that should pretty much speak for itself.
Tax-prep companies are working around the clock to try to convince people that there’s no other way for people to effectively file their taxes besides paying them hundreds, sometimes thousands, of dollars for their services. But Direct File’s two-year success story proved them wrong—not to mention, the examples of other countries like Japan, the Netherlands, and New Zealand that actually send their citizens estimated tax filings directly, which they can approve in a matter of minutes.
Earlier this week, the Patriotic Millionaires endorsed a letter to Treasury Secretary Scott Bessent and Acting IRS Commissioner Michael Faulkender, led by Massachusetts Senator Elizabeth Warren and signed by over 175 members of Congress, urging the Trump administration to reverse course on Direct File and preserve and expand the program. But if they fail to do so, Congress must take up the mantle on behalf of the American people and sign a bill into law to save Direct File.
Lawmakers can disagree on every point of tax policy without batting an eye. That’s to be expected. But there should be no controversy whatsoever when it comes to ensuring that tax filing is free and easy for working people. 60% of the country is already living paycheck to paycheck, and paying taxes is already a burden for them. They shouldn’t have to give even more of the precious little they have just to fulfill a civic duty.
The same goes for protecting the IRS from further funding and staffing cuts. We can disagree from dusk to dawn about what our tax code should look like. But there should be no disagreement whatsoever that the IRS should have the resources it needs to ensure that people actually pay the taxes that are on the books. This is especially the case for any politicians that believe in upholding “law and order.”
It’s a pity that the Trump administration disagrees with us. But if there’s any silver lining to what they’ve done at the IRS, it’s this: they’re showing us ever more clearly whose interests they are seeking to protect. They’re not looking out for the millions of working people that delivered for Trump in droves at the polls in November. Instead, they’re showing up for the millionaires and billionaires who want to evade the taxes they already owe.
We’ve seen what we need to see. All that’s left to do is call on lawmakers to use their powers to stop Trump, Musk, and the rest of the executive branch circus from completely reducing the IRS to rubble.