WASHINGTON, D.C. – Tuesday April 15th is Tax Day. It’s the deadline for most people to file their tax returns. The Trump Administration is looking to make changes to the IRS, which could impact future tax seasons. According to reports, the IRS could cut as many as 20-thousand staffers. It’s all part of the Administration’s efforts to reduce the size of the federal workforce and bureaucracy.
The AP reports a spokesperson on the condition of anonymity, said the Treasury Department is looking at staffing reductions as part of a larger process for improvements and tech innovations that will allow the IRS to operate more effectively.
“I think this tax season is going to be less affected,” said Alex Muresianu, a senior policy analyst with the Tax Foundation. The Tax Foundation is a nonpartisan tax policy nonprofit. Muresianu believes any impacts from staffing cuts to the agency will show up a few years down the road.
“It’s very difficult to estimate the impact of IRS funding on enforcement and tax revenue collections because if taxes aren’t being collected its hard to develop very good data on the taxes that aren’t being paid,” said Muresianu. “But you can expect, would reasonably expect some less tax revenue being collected and in the future also lower quality of service, lower responsiveness rates and more common delays on refunds and return processing especially if we encounter a crisis like COVID where there was suddenly there was this big demand for IRS services and the IRS was already struggling before COVID. The new policies made things more complicated.”
Muresianu adds you could theoretically justify reducing the IRS headcount if you simplify the tax code and make it dramatically easier to administrate.
“The US tax code is pretty complex, and you need people to handle collecting revenue,” said Muresianu. “At the end of the day the IRS is an enforcement agency and a service agency but the people responsible for your tax laws are Congress. So, I think there’s a misdirected frustration, not to say the IRS is perfect, but there’s a lot of misdirected frustration that really belongs at the halls of Congress.”
Congressional Republicans are looking to make the 2017 Tax Cuts and Jobs Act permanent. The Tax Foundation said this legislation overhauled the federal tax code by reforming individual and business taxes. Muresianu said legislation did make things more simpler for people, like increasing the standard deduction and reducing some itemized deductions. He said there is a chance lawmakers could alter the tax code during the Reconciliation process. Muresianu usually any change to the tax code means people will be looking for guidance from the IRS on those changes.
