Trump and Musk Are Making It Harder for the IRS to Catch Wealthy Tax Cheats

Conor here: We can add another 50 IT staffers to the layoffs listed in the piece below. Fedscoop reported the following yesterday:

The decision to cut the [50] IT staffers was made by Elon Musk’s Department of Government Efficiency, according to one of the sources, and was carried out by acting IRS Commissioner Melanie Krause…The 50 people were at the senior executive service level, two sources said, and most were associate chief information officers. One of the sources, an IT executive who left the IRS earlier this month, said the 50 staffers include experts working on cybersecurity, modernization, applications, development, contracts, networks, mainframe and data center operations, among other IT-related areas.

Some more context on what that means. First from a ProPublica piece earlier in March:

The result, employees and experts said, will mean corporations and wealthy individuals face far less scrutiny when they file their tax returns, leading to more risk-taking and less money flowing into the U.S. treasury.

“Large businesses and higher-wealth individuals are where you have the most sophisticated taxpayers and the most sophisticated tax preparers and lawyers who are attuned to pushing the envelope as much as they can,” said Koskinen, the former IRS commissioner. “When those audits stop because there isn’t anybody to do them, people will say, ‘Hey, I did that last year, I’ll do it again this year.’”

“When you hamstring the IRS,” Koskinen added. “it’s just a tax cut for tax cheats.”

And the second from the Washington Post from February:

Elon Musk’s U.S. DOGE Service is seeking access to a heavily guarded Internal Revenue Service system that includes detailed financial information about every taxpayer, business and nonprofit in the country, according to three people familiar with the activities, sparking alarm within the tax agency.

Under pressure from the White House, the IRS is considering a memorandum of understanding that would give officials from DOGE — which stands for Department of Government Efficiency — broad access to tax-agency systems, property and datasets. Among them is the Integrated Data Retrieval System, or IDRS, which enables tax agency employees to access IRS accounts — including personal identification numbers — and bank information. It also lets them enter and adjust transaction data and automatically generate notices, collection documents and other records.

According to a draft of the memorandum obtained by The Washington Post, DOGE software engineer Gavin Kliger is set to work at the IRS for 120 days, though the tax agency and the White House can renew his deployment for the same duration. His primary goal at the IRS is to provide engineering assistance and IT modernization consulting.

Maybe the Democrats will get on this once they’re done using SignalGate to cheerlead for more war.

By Chuck Collins, a senior scholar at the Institute for Policy Studies where he co-edits Inequality.org. Cross posted from Common Dreams. 

The Trump administration and Elon Musk’s DOGE have begun dismantling the Internal Revenue Service, or IRS, beginning with 6,700 layoffs. Their stated plan is to cut half of the agency’s workforce.

Their biggest cuts appear to be in the Large Business and International division, which audits wealthy individuals and companies with more than $10 million in assets. These are essentially the workers that make sure billionaires and corporations pay their taxes.

Musk and President Donald Trump claim to be sage businessmen, but it would be hard to find a business owner in America that would dismantle their accounts receivable department when their wealthiest clients still owe them money.

So make no mistake: These cuts will cost taxpayers a lot more than they save.

Gutting the IRS will hurt the middle class by reducing the taxes billionaires and corporations pay for our public services. It passes the bill to working class taxpayers to cover veteran’s services, infrastructure, national parks, and defense.

When it comes to taxes, the wealthy aren’t like you or me. Most wage earners have our state and federal taxes withheld from our monthly paychecks. Ninety percent of taxpayers use the simple standard deduction filing and hope we get a refund.

But billionaires and multimillionaires are different. Their income comes mostly from investments and assets—which they can hide. They hire experts from the “wealth defense industry”—an armada of tax lawyers, accountants, and wealth managers—to minimize their taxes and maximize inheritances for their fortunate children.

They deploy anonymous shell companies, complex trusts, and bank accounts in tax havens like Bermuda, Cayman Islands, and South Dakota to aid their clients in minimizing taxes—tools not available to ordinary taxpayers. According to the Tax Justice Network, over $21 trillion is now hidden in tax havens like these.

A 2021 exposé by ProPublica found that more than half of the 100 wealthiest U.S. billionaires use a complex trust system to avoid estate taxes, which at the current level only kicks in for people with wealth over $13.99 million.

This aggressive tax dodging by the superrich has resulted in an enormous “tax gap” between what they owe and what’s collected. For the last few years, this gap is estimated at $700 billion a year—almost the size of the Pentagon budget.

Working and middle class taxpayers will pick up the slack, or see their services cut. Most likely some of this gap will be added to the $36 trillion national debt, requiring us to pay on an installment plan.

In previous decades, the IRS had the expertise to keep up with the schemes that billionaires and transnational corporations use to dodge their taxes. But over the last two decades, their capacity to catch wealthy crooks and grifters has been decimated by cuts.

Things started to turn around again in 2021, when Congress voted to invest in enforcement. And already, the investment was starting to pay off. A year ago, the IRS announced they’d recovered $482 million from millionaires who hadn’t paid their debts.

Trump and Musk are now reversing these modest gains.

As the agency people love to hate, the IRS was an easy target for Trump’s anti-government attacks. But the real beneficiaries of a weak IRS are billionaires and large global corporations. With an understaffed IRS, their tax shell games can operate without scrutiny—something seven previous IRS commissioners from both parties recently spoke out against.

We may not agree about everything in the federal budget, but most people agree the wealthy should pay their fair share of whatever expenses we share. And it’s hard to catch the criminals if you remove all the cops on the beat.

The billionaires will be popping their champagne bottles. Even with the higher tariffs on European bubbly, they can afford the best.