
IRS lost 31% of tax auditors in DOGE downsizing, watchdog finds
The IRS downsizing is due to a series of moves, spurred by Elon Musk’s Department of Government Efficiency, to cut the agency’s workforce.
The IRS downsizing is due to a series of moves, spurred by Elon Musk’s Department of Government Efficiency, to cut the agency’s workforce.
The program developed during Joe Biden’s presidency was credited by some with making tax filing easy, fast and economical, while others said it was frequently difficult to use.
Acting IRS commissioner Melanie Krause—the tax agency’s third leader since President Donald Trump’s inauguration—will participate in the deferred resignation program the Trump administration offered to agency employees in recent days, sources said.
The Taxpayer Advocate Service is part of the IRS but operates independently as its internal watchdog. It identifies major problems facing taxpayers, recommends fixes and assists people with individual problems.
The layoffs are part of the Trump administration’s efforts to shrink the size of the federal workforce through billionaire Elon Musk’s Department of Government Efficiency.
The news comes as roughly 150 million taxpayers prepare to file returns by the April 15 deadline.
Daniel Werfel early departure will be unusual, since IRS commissioners’ terms typically extend from one presidential administration into another.
The IRS is distributing about $2.4 billion to taxpayers who didn’t receive their COVID stimulus payments. By the end of January, about 1 million taxpayers will receive special payments of up to $1,400 from the IRS.
IRS Commissioner Daniel Werfel said the agency is seeing higher numbers of theft victims overall since before the pandemic, in part because scammers are increasingly moving to online schemes.
The Internal Revenue Service detailed the increases in its annual inflation adjustments announced Tuesday.
Businesses have filed at least 3.6 million claims for the Employee Retention Credit since the program’s debut. It has distributed at least $232 billion, far exceeding Congress’s initial expectations.
The IRS confirmed to The Washington Post that 80,000 people and businesses have been affected by the leak. IRS officials, pushed by a lawsuit filed by Citadel CEO Kenneth Griffin, apologized to him and the other taxpayers through a news release last week.
The Employee Retention Credit was designed to help businesses retain employees during pandemic-era shutdowns, but it quickly became a magnet for fraud.
The guidance and ruling being announced Monday includes plans to essentially stop “partnership basis shifting”—a process by which a business or person can move assets among a series of related parties to avoid paying taxes.
The IRS is warning taxpayers that they might be leaving more than $1 billion in unclaimed refunds on the table.
The audits will focus on aircraft used by large corporations and high-income taxpayers and whether the tax purpose of the jet use is being properly allocated, the IRS says.
Nearly 5 million people, businesses and tax-exempt organizations—most making under $400,000 per year—will be eligible for the relief starting this week.
That figure, which Microsoft disputes, stems from a long-running IRS probe into how Microsoft allocated its profits among countries and jurisdictions in the years 2004 to 2013.
The IRS has received 3.6 million claims for the credit over the course of the program. It said hundreds of criminal cases have been started and thousands of claims have been referred for audit.
IRS Commissioner Daniel Werfel said that with a boost in federal funding and the help of artificial intelligence tools, the agency has new means of targeting wealthy people who have “cut corners” on their taxes.