Will Trump Put The IRS And Voluntary Tax Compliance At Risk?

President-elect Donald Trump’s personnel choices, public comments by him and his choices for key administration positions, and a second-term agenda laid out by conservative think tanks with deep ties to Trump all point to hard times for the IRS.

But the consequences may go beyond the agency itself. A bigger worry is that labeling the IRS as part of the “deep state” and limiting its ability to administer the revenue code by sharply curtailing its budget could threaten voluntary tax compliance.

What Trump And Allies Say

Eight years ago, as a presidential candidate, Donald Trump said that not paying income tax “makes me smart.”

Trump’s choice for IRS commissioner, former Representative Billy Long, has co-sponsored legislation to abolish the agency while replacing the income tax with a national sales tax called the Fair Tax. Vivek Ramaswamy, who along with Elon Musk co-chairs a group advising Trump in ways to cut government spending, also has called for eliminating the IRS.

Russell Vought, director of the Office of Management and Budget in Trump’s first term and the president-elect’s choice for the same post in the coming administration, has been sharply critical of the IRS. While much public attention has been focused on Musk and Ramaswamy’s Department of Government Efficiency (DOGE), OMB director Vought will be vastly more influential in implementing IRS spending cuts.

Echoing a frequent talking point of Trump allies, Vought alleges the IRS has been “weaponized” and claims “most Americans are facing audits.” In reality, the IRS audited just 0.44 percent of individual income tax returns filed from 2013 through 2021.

Trump and running mate JD Vance have accused the IRS of hiring 87,00 new revenue agents for “coming after and harassing” ordinary taxpayers. In reality, this year the agency expects to hire about 5,000 new revenue agents, with most reviewing returns of high-income households and certain businesses.

A New Commissioner

Trump will force the resignation of or fire IRS Commissioner Daniel Werfel, whose term does not expire until 2027, to bring in Long. Trump’s choice had no tax background before being elected to Congress, did not serve on the tax-writing House Ways & Means Committee, and sponsored few tax bills.

After leaving Congress, Long promoted Employee Retention Tax Credits. That tax break has been highly controversial, with the IRS itself and others alleging it has been rife with fraud. Some supporters insist the IRS has been too slow to approve the credits. And there has been no allegation that the credits Long claimed for his clients were inappropriate.

Trump is also likely to try to replace career IRS employees with loyalists. In his first term, he signed an executive order making it easier to fire civil servants, though it was repealed by President Biden.

Will Trump Make More Political Appointments?

Trump is widely expected to reinstate that order. Project2025, the conservative manifesto for a Trump government, calls for widespread firings of federal employees and hiring of political allies in their place.

Currently, of the 90,000 IRS employees, only the commissioner and the chief counsel are political appointees. Project 2025 calls for at least seven new political IRS hires, including the head of enforcement, currently a career, non-partisan, position.

While Trump disavowed the framework during the campaign, he plans to bring many of the document’s authors, including Vought, into his administration.

Watch What Trump Does

It won’t take long to learn how aggressive Trump will be in remaking the IRS. Among the issues to watch:

· Will Trump replace Werfel in the midst of tax filing season?

· Will the White House move political loyalists into key IRS posts, including enforcement, and how quickly?

· How deeply will congressional Republicans cut the agency’s annual budget, which has been frozen for several years. And how much more will lawmakers slash from the $80 billion in long-term funding Congress approved in 2022? Congress already has cut enforcement funds and temporarily blocked the agency from spending another $20 billion.

· Will Trump reverse Biden-era initiatives to focus audits on partnerships and high-income households?

· Will the agency be permitted to complete its effort to upgrade its computer systems?

· What will happen to the Direct File program that allows some taxpayers to file returns online? Will Musk’s and Ramaswamy’s idea for taxpayers to file with a phone app mean they’ll scrap the IRS’s promising version and start from scratch?

· Trump has promised “retribution” in his second term. What does he mean? Will he use the IRS as a tool to punish enemies and protect friends?

The unanswerable question: How will taxpayers respond when the president and his most senior staffers describe the nation’s tax collector as their enemy? How will those who did not vote for Trump respond to what they may perceive as a political takeover of the IRS?

Some may think attacks on the IRS by Trump and his allies were nothing more than campaign rhetoric. But administration actions based on those words could have significant consequences for the IRS, taxpayers, and the fisc.