What IRS Funding Cuts Could Mean for You

At Kamish & Associates, we’re closely following a recent Treasury Inspector General for Tax Administration (TIGTA) report that highlights growing concerns over IRS enforcement. Despite an $80 billion boost from the 2022 Inflation Reduction Act for better enforcement, service, and tech, Congress has since reclaimed much of that funding. This reversal has eroded the IRS’s ability to tackle the tax gap effectively.

Here’s what the report reveals:

• Funding pulled back — Much of the IRA’s targeted investment in enforcement has been clawed back by Congress. This makes it unclear whether the IRS can sustain its compliance gains.

• Staffing squeezed — Cuts in funding mean fewer hires, threatening the IRS’s capacity to manage audits, collections, and criminal tax investigations.

• Compliance efforts at risk — TIGTA warns that without sustained resources, the early progress in reducing the tax gap could stall. Future reviews will assess whether reductions in funding and staff, along with broader government cost-cutting, have weakened enforcement.

No formal recommendations were made, and the IRS hasn’t publicly responded yet.

🔍 What this means for you

• Audit risk may shift – With fewer staff and resources, the IRS may prioritize simpler, smaller-scale audits.

• Enforcement inconsistent – Cuts could limit the IRS’s ability to pursue large or complex noncompliance cases.

• Tech modernization stalls – Without funding, ongoing efforts to use tech for smarter, faster enforcement may slow down.

  
  

Bottom line for Kamish & Associates: This situation underscores the importance of proactive tax planning and compliance. As IRS enforcement capabilities shift, maintaining clear and accurate filings helps minimize audit risk, even as the system recalibrates.