Recent mass terminations at the Internal Revenue Service (IRS) are threatening to derail ongoing tax audits of wealthy individuals and large corporations, according to current IRS employees. The agency's ability to pursue high-value tax enforcement cases has been severely impacted by staffing cuts.
The IRS's Large Business & International Division (LB&I), responsible for auditing the wealthiest taxpayers, has lost numerous key personnel following last month's termination of over 6,000 IRS staff members. Many of the dismissed employees were specialists with extensive expertise in complex tax law and accounting.
"These cases are going to be closed because there is no one left to work them," said a senior revenue agent from LB&I. "The remaining agents already have full caseloads."
The staff reductions come as a major setback to the agency's enhanced tax enforcement efforts, which received $80 billion in funding through the 2022 Inflation Reduction Act. Congressional Republicans have since cut that funding by half.
Wesley Stanovsek, a recently terminated probationary agent from LB&I's Global High Wealth unit, reported leaving multiple open audits behind. "There will be no one to pass those cases onto," he said. "I don't think they will be seen to completion."
The impact could be substantial, as the U.S. Treasury Department estimated that the top 1% of Americans account for 28% of the "tax gap" - approximately $163 billion annually in uncollected taxes.
The terminations particularly affected probationary employees, many of whom brought specialized knowledge in areas like pass-through entities - complex business structures often used in large-scale tax planning. The loss of this expertise could hamper the IRS's ability to match the sophisticated strategies employed by corporate tax professionals.
Current agents warn that abandoned cases and visible struggles within the agency could embolden aggressive tax avoidance. "These cases will set a terrible precedent," noted one LB&I agent. "When taxpayers see us struggle, they will make sure to make us struggle even more."