Yes, it’s tax season, but that’s not the only reason the IRS is in the news. The Department of Government Efficiency has announced plans to trim the workforce by as much as 20% by May 15, a month after Tax Day.
Here are the receipts on the IRS:
The Internal Revenue Service is part of the Treasury Department, a cabinet-level agency that oversees the nation’s financial security. The Treasury is the second-oldest executive branch department and advises the president on economic matters, manages federal finances, produces currency, and, of course, collects taxes through the IRS.
Taxes are the primary way we fund the government. In 2024, $2.4 trillion of the nation’s $4.9 trillion in revenue came from individual income taxes. Another $1.7 trillion was from payroll taxes, and $530 billion was from corporate income taxes.
But what about running the IRS? How much money do we spend to collect money? In 2023, the IRS collected nearly $4.7 trillion overall in taxes, interest, and penalties, while its total operating costs were $16.15 billion. Every $100 collected costs the IRS 34 cents. |
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The IRS’s budget has remained about the same since the 1990s despite processing more returns annually. However, the 2022 Inflation Reduction Act allocated $80 billion to expand the agency, more than half of which was for increasing its capacity to audit individual and corporate tax returns. |
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This allocation didn’t all make it out the door. The Fiscal Responsibility Act of 2023 and the Further Consolidated Appropriations Act of 2024 cut this funding to approximately $57.8 billion. The 2025 American Relief Act froze another $20.2 billion in IRA enforcement funds.
Increasing enforcement would also require more employees. While the data doesn’t say if these hirings were in direct response to the Inflation Reduction Act, IRS employment did grow by 5,447 from 2022 to 2023.
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As of last September, 99,001 people worked for the IRS. What do these workers do? Here’s a sampling of IRS roles from 2023 data:
- Customer service representatives: 16,931
- Tax examiners: 8,333
- Revenue agents: 7,853
- Revenue officers: 2,698
- Attorneys: 1,695
- Appeals officers: 941
- Tax technicians: 803
The IRS projected it would spend about $600 million on real estate costs in fiscal year 2024. That included 516 office buildings with 22.3 million square feet. The DOGE website currently lists 10 IRS locations under “lease terminations,” potentially totaling $9.66 million in annual costs.
For context, in September 2024, the federal government owned more than 420 million square feet of office space, costing about $2 billion annually to operate and maintain. It also spent $6 billion annually to lease additional office space.
We’ll see you next Friday.
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