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We keep you up-to-date on the latest tax changes and news in the industry.
IRS Cuts Could Slow Refunds, But Not Audits: What You Need to Know
Let’s just say it:
When the IRS sneezes, taxpayers tend to catch a cold.
And right now?
It’s more like the IRS is battling the flu.
Mass layoffs — thousands of staffers gone — are already rippling through the system. If you’ve filed a return or need a refund this season, you’re probably wondering: Am I going to be caught in the mess?
Short answer: Maybe.
Longer answer: It depends on how prepared you are and whether you have someone in your corner if the IRS comes knocking.
What's Actually Happening at the IRS?
The federal government’s recent budget shifts hit the IRS hard. Auditors, call center reps, and processing agents have all been let go in the latest round of cuts.
And it’s not just a staffing chart problem.
This is about real-world consequences for taxpayers like you.
Refund delays are likely to stretch beyond the typical 21 days — even for e-filers.
Phone support wait times (already not great) could make your last trip to the DMV feel like a luxury spa visit.
Audit processes are expected to get… let’s call it “bumpier.” The IRS will be leaning more heavily on automated flags and correspondence audits — think scary letters, less personal nuance.
In other words, fewer people behind the desks. But the same level of compliance enforcement. Maybe even more, because the machines don’t sleep.
What Does It Mean for You?
If you're expecting a refund:
File as early as possible (if you haven't already) and double-check that everything on your return is spotless. Small mistakes — even honest typos — could slow things down.
If you receive an IRS notice:
Don't panic. Seriously. Notices are often the starting point for issues that can be easily fixed... but when IRS staffing is this thin, resolution can drag out painfully if you don’t handle it right from the jump.
But here’s where it gets even more important this year:
The IRS Matching System: Where the Robots Take Over
Behind the scenes, the IRS runs a massive, high-speed data-matching program.
They pull information from dozens of third-party sources — think employers, banks, brokers, even payment apps — and cross-check it against the numbers you report.
Here’s what the system is specifically looking for (and what will trigger an automatic flag):
W-2 income mismatches: If your employer reports $75,000 of income but you only report $70,000? Flagged.
1099 income mismatches: Freelancers and side hustlers, listen up — even if a 1099 looks “small” or you didn’t get one because it was under $600, the IRS often still knows. Miss one, and you could get a notice.
Missing investment income: Brokers file 1099-B forms for stock sales. Miss a few trades? The machine will find them.
Gig economy income gaps: Payment platforms (Venmo, PayPal, Etsy, DoorDash) are filing more reports than ever. If your earnings don’t match what’s reported? Another flag.
Bank interest: Earned $10 in interest on a dusty old savings account you forgot about? Yup. Reported. Flagged if missing.
Early retirement account withdrawals: Cashed out a 401(k) early? If the IRS sees a 1099-R and no penalty explanation, that’s a quick audit trigger.
Large charitable deductions: If your donation amount looks “too big” compared to your income, it can be flagged for review.
Home office deductions and self-employed expenses: Legitimate write-offs are fine, but the IRS has statistical models that “score” returns for risk. If you overdo it, expect a second look.
In short:
It’s not just whether you made a big mistake.
It’s whether the algorithm thinks you made one — and once it flags you, a real person (if available) might eventually be pulled in to investigate.
And with fewer people available?
The letters might come faster… even if it takes longer to fix them.
The Big Lesson:
This isn't the year to "DIY" your way through tax problems.
If you get a notice.
If you get a scary letter.
If you even think the IRS is about to wave a red flag at you...
Call our office.
We’ll help you cut through the noise, keep things from snowballing, and make sure you’re protected.
Because navigating a hollowed-out IRS on your own?
That’s a game nobody wins.
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