The Trump administration’s slashing of jobs at the IRS has gotten some people to consider taking more risks this tax filing season, according to a new survey from Intuit Credit Karma.
Disruptions at the IRS have some taxpayers, especially millennials, thinking about cutting corners on their taxes, while some are contemplating forgoing filing altogether. Of the 1,003 Americans surveyed earlier this month, about a quarter (24%) say they’re less concerned about making mistakes on their tax return, rising to nearly one-third of millennials (31%). In addition, one in six (17%) millennials admit they’re considering not filing their taxes because they believe there’s a lesser chance of being audited because of the smaller workforce at the IRS.
“Americans are grappling with an overwhelming news cycle, and recent developments regarding the IRS have not been helping with their tax anxieties,” Courtney Alev, consumer financial advocate at Intuit Credit Karma, said in a statement. “We’re also seeing this could drive irresponsible behaviors among some misinformed consumers who think they can use recent disruptions at the IRS as a reason to ignore their tax filing responsibilities. There are steep consequences that can come from not filing your taxes, and I urge people to not lose sight of their civic duty to do so. If you haven’t filed, do so as soon as you can, and if you need an extension to file, you can easily request one from the IRS before April 15. However, if you owe taxes, you’ll still need to pay by the April 15 deadline to avoid penalties and interest.”
According to the IRS, the failure-to-file penalty is usually 5% of the tax owed for each month your return is overdue, up to 25% of the bill. If your return is more than 60 days late, the minimum penalty is $510 or the entire amount of tax owed, whichever is smaller. The late-filing penalty maxes out after five months of your return being late, but other penalties and interest may continue to accrue.
The survey, which was conducted by Qualtrics on behalf of Intuit Credit Karma from March 10 to March 12, also found that 57% of Americans surveyed claim they were aware of the layoffs at the IRS, causing 47% of taxpayers to say they aren’t confident in the agency’s capacity to enforce tax compliance effectively.
Some respondents are worried that the job cuts at the IRS will delay tax refunds from being sent. Among those who have already filed their taxes, but have yet to get their refund, 46% are worried they’ll receive their refund later than usual, while 43% of those who have yet to file their taxes share the same concern about accessing their refund later than in previous years, Intuit Credit Karma said.
Federal officials are preparing for a possible $500 billion decline in collected tax revenue this year due to ongoing staff cuts and shifts in taxpayer behavior. The loss would represent a 10% drop in revenue collected over last year, according to a Washington Post report. Last year, the IRS collected approximately $5.1 trillion in tax revenue.
The officials say the projected losses are tied to President Donald Trump’s efforts to reduce staff at the IRS. Since taking office, the Trump administration has moved to fire 20,000 IRS employees. An estimated 11,000 cuts have already been made; however, ongoing lawsuits may change the employment status of some of those workers.
Many of the cuts made involved new hires in the taxpayer services and enforcement divisions, according to the Washington Post. Agency employees say the IRS has already dropped investigations that were focused on high-value corporations and taxpayers.
The number of tax returns that have been filed with the IRS is down 1.7% compared to this time last year, the IRS said last week. As of March 14, the IRS has received nearly 70.4 million tax returns compared to the 71.6 million returns that had been filed with the agency as of March 15, 2024.
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