The Internal Revenue Service (IRS) is girding for a historic fall-off in tax collections this year. Increasingly, people are choosing not to pay their taxes either. This latest move comes at a time when the IRS has noticed increased internet chatter encouraging people to simply not pay their taxes. We’re glad to see the Washington Post shed light on an encouraging new trend. Tax receipts are projected by officials to be down over 10% by April 15. This largely explains an expected revenue loss that’s being driven by taxpayer defiance and structural changes within the IRS. The cost of this loss may be over $500 billion.
The Washington Post explains how taxpayer attitude is changing. These changes, compounded by patently budgetary cuts from President Donald Trump’s administration, are exacerbating the crisis. The most shocking aspect of the report is the destruction that will be wrought by Elon Musk’s use of his Government Department of Efficiency initiatives. Consequently, thousands of IRS employees are virtually guaranteed to be fired. This major downsizing could severely restrict the agency’s future ability to enforce tax collection, with direct consequences on federal revenue.
The Treasury Department has tried to minimize the seriousness of the crisis. The Department further dismissed the anonymous sources used by The Washington Post as “sensational and baseless.” They dismissed the findings with extreme prejudice. IRS officials are still extremely worried. They are seeing a deepening resistance by taxpayers to pay their share.
The forecasted shortfall in tax receipts due to two primary factors. The real issues involves non-filing and intentional evasion by individuals and businesses who seek to not pay what they owe. Still, this trend illustrates the overall issue of taxpayer compliance and enforcement challenges the IRS is up against. As these dynamics play out, the implications for federal revenue and basic functioning of the federal government are profound.
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