Taxpayers needing customer service; enforcement of tax compliance; Direct File program users
What This Program Does
The Internal Revenue Service collects federal taxes, processes tax returns, enforces tax law compliance, and provides customer service to taxpayers. It also recently launched the Direct File program, a free online tool allowing eligible taxpayers to file their returns directly with the IRS at no cost. The IRS has existed since 1862 and received a major funding boost through the 2022 Inflation Reduction Act.
Who Would Be Affected
The proposed $1.4 billion cut (approximately 11%) would affect the roughly 150 million individual taxpayers who interact with the IRS each year, particularly those who rely on customer service phone lines and in-person assistance centers. Users of the Direct File program, which served hundreds of thousands of taxpayers in its 2024 pilot, would lose access to free government-run tax filing. Reduced enforcement staffing would also affect efforts to ensure tax compliance, particularly among high-income filers and corporations.
What This Cut Would Mean
The budget reduction would reverse Inflation Reduction Act funding increases, reduce the number of enforcement staff, and shut down the Direct File free tax-filing program. Taxpayers would likely experience longer wait times for customer service and would need to use commercial tax preparation software or paid preparers instead of Direct File. Independent analysts, including the Congressional Budget Office, have estimated that IRS enforcement spending generally returns significantly more in revenue than it costs, suggesting that reduced enforcement funding could increase the federal deficit by decreasing tax collections. The administration argues the cuts reverse an unnecessary expansion of IRS authority and funding.
Administration's Stated Rationale
“Reverses Inflation Reduction Act IRS funding; reduces enforcement staffing; closes Direct File free tax program.”