Do IRS Cuts Mean You Can Make Mistakes With Your Taxes In 2025? Some Taxpayers Think So
With IRS budget cuts and staffing reductions in 2025, some taxpayers believe they can make mistakes on their tax returns without facing consequences.
Many taxpayers feel less concerned about errors on their taxes this year, given the cuts at the IRS and the overall perception of a disorganized federal workforce. Normally, making mistakes on a tax return would be risky, as it could lead to an audit. But this year, under a new administration, the IRS has undergone significant changes. The Trump administration, in its effort to reduce the size of the federal government, is cutting the IRS workforce.
In a March survey conducted by Intuit Credit Karma, about 25% of respondents said they are less worried about errors on their returns because of the IRS workforce reductions. Nearly half expressed a lack of confidence in the agency’s ability to enforce tax laws. Some even said they were considering not filing their taxes at all.
Among those who have already filed and are expecting a refund, nearly half are concerned that it will arrive later than usual, according to the survey of 1,003 Americans.
Has The IRS Been Left Shorthanded?
The full impact of the IRS overhaul is still unclear. According to Reuters, the agency plans to reduce its 100,000-person workforce by 20% to 25% by mid-May. This includes around 5,000 workers who accepted buyouts and approximately 7,000 probationary employees who were let go. These probationary workers were later reinstated due to court rulings but have been placed on paid leave, as reported by the Federal News Network. In addition, the IRS recently asked many employees to return to their offices, but a lack of available desks has caused confusion.
Tax professionals are warning taxpayers to file early this year to avoid delays in receiving refunds or getting assistance from IRS agents.
David Kass, executive director of Americans for Tax Fairness, noted, “It’s hard to imagine that laying off 7,000 people during tax season wouldn’t have an impact.”
In March, congressional Democrats sent a letter to acting IRS Commissioner Melanie Krause, expressing concerns that the cuts might encourage tax evasion.
Is Your Refund On Its Way?
Despite these challenges, it’s difficult to gauge the IRS’s true state of disarray based on its own statistics. As of mid-March, the IRS had received 70.4 million tax returns, just shy of the 71.6 million filed at the same time in 2024. Of those, nearly 70 million have already been processed.
For taxpayers concerned about their refunds, the IRS has issued about 50 million refunds so far—an increase from last year. These refunds total around $163 billion, compared to $153 billion at this point in 2024, with the average refund at $3,271 (up from $3,109 last year).
Mark Gallegos, a CPA in Chicago, said, “It’s been smooth sailing. No problems at all.”
However, he noted that while the IRS’s processing system appears to be running well, getting a customer service agent on the phone can be time-consuming, and receiving a response to mailed correspondence can take a while. But these delays are not new, as Gallegos pointed out that wait times were similar last year, even when the IRS had a larger workforce under the Biden administration.
What Happens If You Make Mistakes On Your Tax Return?
Despite the ongoing staff reductions, experts caution taxpayers not to take risks with their returns.
Gallegos advises against cutting corners, stating, “The IRS has a robust system to detect discrepancies.”
The agency uses automated systems to compare your tax return with information from third-party sources, such as W-2s and 1099s. If there’s a mismatch, an automated letter can be sent, and the IRS may notify you of any taxes owed. For example, if you forget to report income from a 1099 or accidentally omit a W-2, the IRS is likely to catch it.
“It will always catch up to you,” warned Jennifer Hill, a compliance manager at IRIS Software Group.
Tips To Avoid An Audit
To reduce the chances of an audit, experts recommend following these simple tips during tax season:
- Gather All Tax Documents: Make sure you report all income, including W-2s, 1099s, and other forms.
- Verify Your Numbers: Double-check that all the information on your forms is accurate. The IRS looks for discrepancies.
- File Online: Using tax software can help avoid math errors and catch mistakes before submission.
- Be Cautious With Expenses: If you operate a small business, avoid claiming exaggerated deductions. For example, home-office expenses apply only to self-employed individuals, not regular employees working from home.
- Don’t Overstate Charitable Contributions: A person earning $30,000 is unlikely to donate $15,000 to charity.
- Avoid Large Income Discrepancies: The IRS focuses more on high earners since the stakes are higher.
By taking these precautions, taxpayers can help ensure their returns are accurate and avoid drawing unwanted attention from the IRS.
Source: USA Today
