IRS Advisory Council report defends workers, criticizes budget and staff cuts

The IRS Advisory Council’s (IRSAC’s) annual report included a strong defense of the agency and its employees and criticism of budget and staff cuts amidst passage of a massive bill with more than 100 tax law changes.

“After an extraordinarily difficult year with a host of personnel reductions, budget rescissions, projects placed on hold, and changing leadership, most of the IRS employees who remain perform their jobs diligently and comply with their own personal tax responsibilities,” the report said. “IRS employees do difficult and often thankless work, and they deserve a voice that will stand up for them and remind the public and lawmakers of the important role they serve in funding our nation.”

IRSAC, which had 37 members in 2025, advises the IRS commissioner and recommends administrative and policy changes for the agency. Its most recent report concentrates on upheaval at the IRS, which includes multiple leadership changes, including the role of IRS commissioner, a position now filled by Treasury Secretary Scott Bessent.

The Inflation Reduction Act of 2022, P.L. 117-169, called for $80 billion to be allocated to the IRS over 10 years, but more than half of that has been rescinded, the report said. And on Wednesday, the House approved a two-year budget for some federal agencies, including $11.2 billion for the IRS, a 9% cut from its 2025 budget, according to Bloomberg and other media outlets.

Improvements from Inflation Reduction Act funding provided IRS employees “with a morale boost that comes from working for an employer that was investing in the secure, modern framework of a world-class financial institution,” the report said. “The new face of the IRS helped to attract a new set of highly skilled workers that were better able to deliver services to taxpayers.”

The IRS was then told to dismiss the newest workers in their probationary period, and several workforce reduction programs were implemented, causing the IRS to lose about 25% of its staff, the report said.

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The IRS, which collects about 96% of federal government revenues, is criticized despite its efficiency, the report said. For example, during fiscal year 2024, the agency collected $5.1 trillion in revenue with an appropriated budget of $12.3 billion. That equates to an ROI of 415:1, a figure National Taxpayer Advocate Erin Collins has described as remarkable.

Much of the criticism results from the IRS’s role in the U.S. government as tax collector and enforcer, and misunderstanding of the different role played by the IRS in taxation compared to those of Treasury and Congress.   

“For example, if people feel that they are paying too much in taxes, it is very easy to blame the IRS rather than Congress, despite the fact that Congress is responsible for passing the Internal Revenue tax laws that [set] the tax rates,” the report said.

Pressure because of changes to tax provisions

Adding to pressure on the IRS is H.R. 1, P.L. 119-21, commonly known as the One Big Beautiful Bill Act, the report said. “Almost all changes to the tax code require the IRS to issue guidance, prepare its workforce, and modify its technology systems and processes to accommodate the changes,” it said. “All of this must be done in an era of budget cuts, suspended investments in planned technology due to rescissions, and a massive loss of workers, including the departure of more than 2,000 IT workers since January 2025.”

With the initial Inflation Reduction Act money, the IRS did have some successes, the report said, including enhanced assistance on telephone lines, including new callback options; development of online accounts for individuals and businesses; and use of artificial intelligence for data extraction.

“The 2025 filing season was hailed as a success, as the IRS answered more calls, with shortened wait times, while processing a record number of returns …,” the report said. “Tax practitioners noted the shorter wait times on the Practitioner Priority Line and found the responses they received to be more helpful than in prior years. As the [AICPA] noted in a written statement to Congress earlier this year: ‘Congress should determine the appropriate level of service and compliance they want the IRS to provide and then dedicate necessary resources for the agency to meet those goals.’”

Tax professionals’ experience

In the report, tax professionals reported prolonged wait times and service delays when contacting the IRS, particularly during peak filing seasons. An IRSAC survey of over 115 tax professionals found that over 60% wait more than 30 minutes to speak with an agent during the season.

“These delays not only reduce practitioner efficiency but also increase the likelihood of abandoned or disconnected calls, ultimately compromising client service [and] resolution timelines and producing frustration on behalf of the tax professional, and ultimately also their clients,” the report said.

The report makes recommendations on dozens of issues, including updating IRS websites and simplifying online tax services.

IRS CEO Frank Bisignano, who also serves as commissioner of the Social Security Administration, thanked the committee for its work.

“IRSAC members have devoted significant time and expertise to analyzing complex tax administration and the transformation work underway across the IRS,” he said in a news release. “We appreciate their thoughtful recommendations, and we look forward to reviewing the insights provided in the 2025 report.”

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.