IRS braces for historic revenue drop as taxpayers avoid filing

In March 2025, the Internal Revenue Service (IRS) in the United States projected a significant drop in tax revenue, estimating a decrease of over $500 billion as some taxpayers consider skipping their filings. This decrease is reportedly influenced by precedents set during Donald Trump’s presidency, which favored aggressive federal budget cuts through a plan referred to as DOGE. The IRS has noted a surge in discussions on social platforms where individuals express intentions to forgo tax payments, citing perceived reduced oversight and audits due to DOGE's planned downsizing of IRS personnel. The upcoming tax filing deadlines are expected to see more than a ten percent decline in receipts in comparison to filings from the previous year, creating a situation where the agency may scramble to maintain its effectiveness with diminished resources. Apart from taxpayer behavior, external factors such as natural disasters like the Los Angeles wildfires could also affect filing patterns as affluent individuals in impacted areas may postpone their submissions to a later date in 2025. However, experts assert that these natural events are insufficient to fully explain the staggering forecast of revenue loss, attributing the bulk of it to changes in taxpayer sentiment towards compliance. Meanwhile, conflicting viewpoints exist regarding the necessity of IRS staff cuts, with former IRS commissioners advocating for maintaining personnel levels to ensure proper collection and enforcement capabilities, warning that reductions could ultimately harm governmental efficacy in tax collection. Concurrently, political discussions surrounding Social Security have intensified, with Democrats focusing on potential cuts in benefits administration as a result of budgetary measures associated with DOGE, adding another layer to the circumstances enveloping the IRS's operational capabilities during this critical season for tax filings.