Washington Post, Tax Revenue Could Drop by 10 Percent Amid Turmoil at IRS:
Staff cuts and disruptions related to the U.S. DOGE Service have officials bracing for a sharp loss of revenue.
Senior tax officials are bracing for a sharp drop in revenue collected this spring, as an increasing number of individuals and businesses spurn filing their taxes or attempt to skip paying balances owed to the Internal Revenue Service, according to three people with knowledge of tax projections.
Treasury Department and IRS officials are predicting a decrease of more than 10 percent in tax receipts by the April 15 deadline compared with 2024, said the people, who spoke on the condition of anonymity to share nonpublic data. That would amount to more than $500 billion in lost federal revenue; the IRS collected $5.1 trillion last year. For context, the U.S. government spent $825 billion on the Defense Department in fiscal 2024.
“The idea of doing that in one year, it’s hard to grapple with how meaningful of a shift that represents,” said Natasha Sarin, president of the Yale Budget Lab and a senior Biden administration tax official.
The reason, officials say, is directly tied to changing taxpayer behavior and President Donald Trump’s rapid demolition of parts of the IRS. Senior tax agency officials issued detailed warnings about those outcomes to the incoming Trump administration before the president took office, according to records obtained by The Washington Post. …
The IRS has noticed an uptick in online chatter from individuals declaring their intention to not pay taxes this year or to aggressively claim credits and deductions for which they are ineligible, three of the people said — wagering that auditors will not examine their accounts. …
Other dynamics could explain some of the projected drop in revenue, experts say. Natural disasters, such as the Los Angeles-area wildfires, could lead taxpayers in wealthy areas to postpone filing until October ….
Tax officials entered filing season expecting to collect more revenue that last year, the people said, because of economic growth and the lack of significant tax law changes.
“There’s no reason to anticipate this based on the economic year we had in 2024,” said Dorothy A. Brown, who studies tax policy and racial disparities at the Georgetown University Law Center. …
Senior IRS officials attempted to warn the Trump transition team about the effects of planned staffing and budget cuts at the agency, according to other records, obtained by The Post through the Freedom of Information Act. On top of the DOGE-driven workforce reductions, congressional Republicans also repealed $20.2 billion in resources for the agency as part of a recent government funding law.
The Independent, IRS Braces for $500 Billion Drop in Revenue as Taxpayers Skip Filings in Wake of DOGE Cuts at Agency
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