In the ongoing debate about government efficiency, some argue that reducing IRS staff would cut costs and streamline operations. However, the reality is quite the opposite—especially during tax season, when the demand for IRS services is at its peak. Instead of downsizing, the IRS should look at successful tax administration models from other countries to enhance efficiency and improve taxpayer compliance.
The True Cost of Cutting IRS Staff
1. More Errors, More Delays
With fewer agents available to process returns, taxpayers face longer wait times for refunds and increased delays in resolving issues. A lack of personnel means a backlog of audits, appeals, and taxpayer inquiries, creating inefficiencies rather than solving them.
2. Reduced Taxpayer Assistance
Many businesses and individuals rely on the IRS for guidance on tax compliance, deductions, and credits. Cutting staff limits access to this essential support, forcing taxpayers to navigate complex regulations without expert help—leading to more mistakes and compliance risks.
3. Increased Tax Gap and Fraud
The IRS plays a critical role in detecting tax fraud and ensuring compliance. Underfunding the agency weakens enforcement, allowing more tax evasion and increasing the federal deficit. Every dollar invested in IRS enforcement has historically yielded a high return in recovered revenue, meaning cuts actually cost the government money.
4. Strain on Small Businesses and Individuals
Large corporations have teams of accountants and tax attorneys, but small businesses and individuals depend on IRS resources to comply with tax laws. A reduced workforce makes it harder for them to get timely responses, increasing stress and uncertainty.
Learning from Global Best Practices to Improve the IRS
While the U.S. tax system faces its own unique challenges, other countries offer valuable lessons in tax administration efficiency. Instead of reducing staff, strategic investments and reforms can significantly enhance IRS operations.
1. Estonia – Digitalization for Efficiency
Estonia is a global leader in tax administration due to its fully digital tax system. Nearly all tax filings are completed online, with pre-filled forms and automatic calculations reducing errors and processing times. The IRS could enhance its digital infrastructure to streamline tax filings and reduce the burden on staff.
➡ Lesson: Invest in automation and digital services to reduce manual processing.
2. Ireland – A Competitive Yet Effective Tax System
Ireland has built an efficient and transparent tax system by keeping its tax policies clear and simple. Its well-staffed tax authority ensures prompt processing of filings and audits, while targeted incentives encourage compliance. The IRS could explore ways to simplify tax rules and improve customer service.
➡ Lesson: Prioritize tax simplification and better taxpayer engagement.
3. Denmark – Comprehensive Taxpayer Support
Denmark’s tax administration emphasizes education and proactive support for taxpayers. By investing in guidance services and making compliance easier, Denmark maintains one of the highest tax compliance rates globally.
➡ Lesson: Expand IRS taxpayer support services to reduce errors and increase voluntary compliance.
Strategic Investments for a More Efficient IRS
Rather than cutting staff, the IRS should adopt a modernized approach that includes:
✅ Enhanced digital tax filing systems to reduce processing times and administrative burdens.
✅ Simplified tax codes to make compliance easier for businesses and individuals.
✅ Change the IRS culture from an FBI-style enforcement agency that focuses on chasing tax fraud to a Small Business Administration-style organization that helps taxpayers—especially small businesses—navigate compliance.
✅ Engage CPAs in tax audits and peer review audits to enhance accuracy, reduce IRS workload, and improve trust in the system.
A well-funded, properly staffed IRS ensures that tax season runs smoothly, revenue is collected efficiently, and compliance remains high.
At Inter CPA LLC, we believe in financial sustainability, and that includes ensuring a tax system that works for everyone. If you need help navigating tax season, reach out to us—we’re here to help.
📩 Contact us at Inter CPA LLC at info@inter.cpa for expert tax planning and compliance support.
References
- Organisation for Economic Co-operation and Development. (2024). Tax Administration 2024. Retrieved from OECD
- Tax Foundation. (2023). International Tax Competitiveness Index 2023. Retrieved from Tax Foundation
- Reuters. (2024, October 8). Ireland spins global tax mess into $28 bln of gold. Retrieved from Reuters
- Wall Street Journal. (2025, February 20). IRS Begins to Fire 6,000 Workers, Threatening Tax-Season Delays.
- Image from 123RF #162380519
