The Internal Revenue Service (IRS) is facing a massive funding shortfall that could reach $20 billion by 2025, potentially affecting millions of taxpayers. With budget cuts impacting everything from customer service to refund processing and tax law enforcement, experts warn that tax season could be more frustrating than ever.
How Did the IRS End Up in a Funding Crisis?
Back in 2022, the IRS was granted $80 billion under the Inflation Reduction Act, meant to improve technology, enforcement, and taxpayer services. However, Congress has since slashed this funding, cutting it in half and freezing an additional $20 billion, leaving the agency scrambling to maintain operations.
IRS officials had planned to use this money to hire more workers, upgrade outdated systems, and improve customer service. But with these deep budget cuts, those improvements are now at risk—and taxpayers could feel the impact as early as this year.
How Will This Affect Taxpayers in 2025?
Here’s what the IRS funding crisis could mean for you:
Longer Wait Times for Customer Service – The IRS has been struggling with long phone wait times, and this budget cut could make it even harder to get help with tax questions.
Slower Tax Refunds – If you depend on your tax refund each year, you may have to wait longer to receive it, as the IRS may not have the staff to process returns quickly.
Fewer Tax Audits – But More Errors Could Slip Through – With less money for enforcement, some high-income earners may face fewer audits, but at the same time, mistakes and fraud could increase, causing problems for honest taxpayers.
Delays in IRS Modernization – The IRS had planned to upgrade its outdated technology, allowing for faster, more efficient service. But with a smaller budget, these plans could be put on hold, meaning taxpayers will have to deal with the same old IRS frustrations for years to come.
What IRS Officials Are Saying
IRS Commissioner Daniel Werfel has acknowledged the challenges, saying that the agency will have to adjust its plans to deal with reduced funding. He warned that without proper resources, the IRS may struggle to provide the level of service taxpayers expect.
Meanwhile, Congress is still debating whether to restore some of the funding or make even deeper cuts. If additional reductions happen, taxpayers could face even bigger headaches during the next few tax seasons.
What Can You Do to Avoid Delays?
If you want to get ahead of potential IRS slowdowns, here’s how you can stay on top of your taxes:
File Early – The sooner you file, the better chance you have of getting your refund quickly before processing delays pile up.
Use E-Filing & Direct Deposit – The IRS processes electronic returns much faster than paper ones, and direct deposit is the fastest way to receive your refund.
Double-Check Your Tax Return – Errors can cause delays and with fewer IRS employees available to correct mistakes, make sure your return is accurate before you submit it.
Stay Informed – Keep an eye on IRS updates to avoid surprises and know what to expect when filing your taxes.
Final Thoughts
The IRS funding crisis is shaping up to be a major issue for taxpayers in 2025, with refund delays, poor customer service, and enforcement issues on the horizon.
With Congress still debating how much more funding to cut or restore, tax season could become a major headache for millions of Americans. The best way to protect yourself? File early, stay informed, and take advantage of e-filing options to speed up the process.
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