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How DOGE’s Cuts to the IRS Threaten to Cost More Than DOGE Will Ever Save

  

Category:  News & Politics

Via:  hallux  •  one month ago  •  14 comments

By:   Andy Kroll - ProPublica

How DOGE’s Cuts to the IRS Threaten to Cost More Than DOGE Will Ever Save
“When you hamstring the IRS, it’s just a tax cut for tax cheats.”

S E E D E D   C O N T E N T


The Trump administration claims gutting federal agencies will save money, but cutting the IRS means the government collects less taxes. “If you’re interested in the deficit and curbing it, why would you cut back on the revenue side?” one expert asks.


Dave Nershi was finalizing a report he’d worked on for months when an ominous email appeared in his inbox.

Nershi had worked as a general engineer for the Internal Revenue Service for about nine months. He was one of hundreds of specialists inside the IRS who used their technical expertise — Nershi’s background is in chemical and nuclear engineering — to audit byzantine tax returns filed by large corporations and wealthy individuals. Until recently, the IRS had a shortage of these experts, and many complex tax returns went unscrutinized. With the help of people like Nershi, the IRS could recoup millions and sometimes more than a billion dollars on a single tax return.

But on Feb. 20, three months shy of finishing his probationary period and becoming a full-time employee, the IRS fired him. As a Navy veteran, Nershi loved working in public service and had hoped he might be spared from any mass firings. The unsigned email said he’d been fired for performance, even though he had received high marks from his manager.

As for the report he was finalizing, it would have probably recouped many times more than the low-six-figure salary he earned. The report would now go unfinished.

Nershi agreed that the federal government could be more lean and efficient, but he was befuddled by the decision to fire scores of highly skilled IRS specialists like him who, even by the logic of Elon Musk’s Department of Government Efficiency initiative, were an asset to the government. “By firing us, you’re going to cut down on how much revenue the country brings in,” Nershi said in an interview. “This was not about saving money.”

Since taking office, President Donald Trump and his billionaire top adviser Musk have launched an all-out blitz to cut costs and shrink the federal government. Trump, Musk and other administration leaders not only say the U.S. government is bloated and inefficient, but they also see it as a bastion of political opposition, calling it the “deep state.”

The strategy used by the Trump administration to reduce the size of government has been indiscriminate and far-reaching, meant to oust civil servants as fast as possible in as many agencies as possible while demoralizing the workers that remain on the job. As Russell Vought, director of the Trump White House’s Office of Management and Budget and an architect of Project 2025, put it in a speech   first reported   by ProPublica and Documented: “We want the bureaucrats to be traumatically affected. When they wake up in the morning, we want them to not want to go to work because they are increasingly viewed as the villains.”

One tactic used by the administration is to target probationary workers who are easier to fire because they have fewer civil service protections. Probationary, in this context, means only that the employees are new to their roles, not that they’re newbies or underperformers. ProPublica found that the latest IRS firings swept up highly skilled and experienced probationary workers who had recently joined the government or had moved to a new position from a different agency.

In late February, the Trump administration began firing more than 6,000 IRS employees. The agency has been hit especially hard, current and former employees said, because it spent 2023 preparing to hire thousands of new enforcement and customer service personnel and had only started hiring and training those workers at any scale in 2024, meaning many of those new employees were still in their probationary period. Nershi was hired as part of this wave, in the spring of last year. The boost came after Congress   had underfunded the agency   for much of the past decade, which led to chronic staffing shortages, dismal customer service and plummeting audit rates, especially for taxpayers who earned $500,000 or more a year.

The administration doesn’t appear to want to stop there. It is drafting plans   to cut its entire workforce in half , according to reports.

Unlike with other federal agencies, cutting the IRS means the government collects less money and finds fewer tax abuses.   Economic studies   have shown that for every dollar spent by the IRS, the agency returns between $5 and $12, depending on how much income the taxpayer declared. A 2024 report by the nonpartisan Government Accountability Office found that the IRS found savings of $13,000 for every additional hour spent auditing the tax returns of very wealthy taxpayers — a return on investment that “would leave Wall Street hedge fund managers drooling,” in the words of the   Institute on Taxation and Economic Policy .

John Koskinen, who led the IRS from 2013 to 2017, said in an interview that the widespread cuts to the IRS make no sense if Trump and Musk genuinely care about fiscal responsibility and rooting out waste, fraud and abuse. “What I’ve never understood is if you’re interested in the deficit and curbing it, why would you cut back on the revenue side?” Koskinen said.

Neither the IRS nor the White House responded to requests for comment. Last month,   Musk asked his followers   on X, the platform he owns, whether they would “like @DOGE to audit the IRS,” referring to the U.S. DOGE Service team of lawyers and engineers led by him. DOGE employees have sought to   gain access   to IRS taxpayer data in an attempt to “shine a light on the fraud,” according to a White House spokesman.

For this story, ProPublica interviewed more than a dozen current and former IRS employees. Most of those people worked in the agency’s Large Business and International (LB&I) division, which audits companies with more than $10 million in assets and high-income individuals. Within the IRS, the LB&I division has the highest return on investment, and the widespread cuts there put in stark relief the human and financial cost of the Trump administration’s approach to slashing government functions in the name of saving money and combating waste and fraud.

According to current and former LB&I employees, the taxpayers they audited included pharmaceutical companies, oil and gas companies, construction firms and major technology corporations, as well as more obscure private corporations and high-net-worth individuals. None of the IRS employees who spoke to ProPublica would disclose specific taxpayer information, citing privacy laws.

With the recent influx in funding, employees said, the leadership of LB&I had pushed to hire not only more revenue agents and appraisers but also specialized employees such as petroleum engineers, computer scientists and experts in corporate partnerships. These employees, usually known internally as general engineers, consulted on complicated tax returns and helped determine whether taxpayers properly claimed certain credits or other tax breaks.

This work happened in cases where major companies claimed a hefty research tax credit, which is a legitimate avenue for seeking tax relief but can also be improperly used. Highly skilled appraisers have also recouped huge savings in cases involving notorious tax schemes, such as what’s known as   a syndicated conservation easement   — a break abused so often that both congressional Democrats and Republicans have criticized it, while the IRS has included it on its list of the   “Dirty Dozen”   tax scams.

“These are cases where revenue agents don't have the technical expertise,” said one IRS engineer who is still employed at the agency and who, like other IRS employees, wasn’t authorized to speak to the media. “That’s what we do. We are working on things where expertise is absolutely necessary.”

Current and former IRS employees told ProPublica that the agency had expended a huge amount of resources to recruit and train new specialists in recent years. Vanessa Rollins, an engineer in the IRS’ Chicago office who was recently fired, said probationary employees in LB&I outnumbered full-time staffers in her office. Much of her team’s work centered on training and mentorship for the waves of new employees — most of whom were recently fired. “The entire office had been oriented around bringing us in and getting us trained,” Rollins said.

These specialists said they earned higher salaries compared with many other IRS employees. But the money these specialists recouped as a result of their work was orders of magnitude greater than what they cost. The current engineer told ProPublica that they estimated their team of less than 10 people had brought in $5 billion in adjusted tax returns over the past four years. (By contrast, a   Wall Street Journal analysis   published on Feb. 22 found that DOGE had found savings of $2.6 billion over the next year, far less than the $55 billion claimed by DOGE itself.)

A former LB&I revenue agent added that their work didn’t always lead to the IRS recouping money from a taxpayer; sometimes, they audited a return only to find that the taxpayer was owed more money than they had expected.

“The IRS’ mission is to treat taxpayers fairly so they pay the tax they legally owe, including making sure they’re not paying any more than legally required,” the former revenue agent said.

Notwithstanding its return on investment and the sense of duty espoused by its employees, LB&I was hit especially hard by the most recent wave of firings, employees said. According to the current IRS engineer, the Trump administration appears to have eliminated the jobs of about 120 LB&I engineers out of a total of roughly 260. The person said they had heard more terminations were expected soon. The acting IRS chief and a longtime agency leader, Doug O’Donnell, announced his retirement amid the firings.

Several LB&I employees told ProPublica that the mass layoffs had been ordered from a very high level and that several layers of managers had no idea they were coming or what to expect. The cuts, employees said, did not appear to distinguish between employees with certain specialties or performance levels, but instead focused solely on whether they were on probationary status. “It didn't matter the skill set. If they were under a year, they got cut,” another current LB&I employee told ProPublica.

The current and former IRS employees said the firings and the administration’s deferred resignation offer led to situations that have wiped out decades of experience and institutional knowledge that can’t easily be replaced. Jack McCumber was an LB&I senior appraiser in Seattle who got fired about six weeks before the end of his probationary status. He said not only did he lose his job, but the veteran appraiser who was his mentor took early retirement. McCumber and his mentor often worked on syndicated conservative easement cases that could recoup tens and even hundreds of millions of dollars. “They’re pushing out the experienced people, and they’re pushing out people like me,” McCumber said. “It’s a double whammy.”

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.”


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Hallux
Professor Principal
1  seeder  Hallux    one month ago

To those taxed at source ... screw you!

 
 
 
devangelical
Professor Principal
1.1  devangelical  replied to  Hallux @1    one month ago

tax cuts for the rich, the easy way. no congress votes required ...

 
 
 
Trout Giggles
Professor Principal
2  Trout Giggles    one month ago

Notice who they fired...the ones audting big corps and very wealthy people.

Now....if I were a conspiracy theorist I would say that trmp and elon are going after the people who targeted their buddies (and themselves)

 
 
 
Jeremy Retired in NC
Professor Expert
2.1  Jeremy Retired in NC  replied to  Trout Giggles @2    one month ago
Notice who they fired...the ones audting big corps and very wealthy people

You mean all the probationary IRS agents.  At least try to be honest.

 
 
 
Tacos!
Professor Guide
2.1.1  Tacos!  replied to  Jeremy Retired in NC @2.1    one month ago

The word “probationary” only tells us they were hired more recently to their position. It tells us nothing about the specific work they were doing. Very often, the probationary employee has actually been working there for many years, but was recently promoted to a new position. So, probationary does not necessarily mean some new grad or intern with no experience.

 
 
 
Just Jim NC TttH
Professor Principal
2.1.2  Just Jim NC TttH  replied to  Tacos! @2.1.1    one month ago

But, in some cases, many actually truth be known, yes it does.........

 
 
 
Tacos!
Professor Guide
2.1.3  Tacos!  replied to  Just Jim NC TttH @2.1.2    one month ago

My point is you don’t know, but you comment as if you do.

But since you persist, I will point out something else. Some of the new hires may well have been fresh, young faces. These are important too, because they do the grunt work so experienced auditors or managers don’t have to. All of this allows the IRS to more efficiently and effectively collect the revenue that it should.

The government collected more money than it spent on these workers because of the work they were doing. If you really want to balance the government’s books, why would you oppose that?

 
 
 
Greg Jones
Professor Participates
2.1.4  Greg Jones  replied to  Tacos! @2.1.1    one month ago

Probationary usually means a new hire, not someone being promoted or transferred.

 
 
 
Igknorantzruls
Sophomore Quiet
2.1.5  Igknorantzruls  replied to  Greg Jones @2.1.4    one month ago

not in the example he used

 
 
 
Greg Jones
Professor Participates
3  Greg Jones    one month ago

."....wiped out decades of experience and institutional knowledge that can’t easily be replaced. Jack McCumber was an LB&I senior appraiser in Seattle who got fired about six weeks before the end of his probationary status."

So who handles the complex cases? Probies or experienced agents? Also, perhaps if the IRS would lay off nickel and diming the average taxpayer for every last dollar, and go after the high earners, they would probably have enough senior appraisers to do the job

 
 
 
Tacos!
Professor Guide
3.1  Tacos!  replied to  Greg Jones @3    one month ago
So who handles the complex cases? Probies or experienced agents?

Probies and experienced agents are often the same person. Getting promoted puts employees into a probationary status in their new position. But even if they are totally new, they will be doing filing or data entry work so that the experienced agents can process more cases and bring in more revenue.

Also, perhaps if the IRS would lay off nickel and diming the average taxpayer for every last dollar, and go after the high earners

These people were hired for the express purpose of going after the high earners because they are a bigger source of unpaid taxes (whether by fraud or honest mistake).

 
 
 
Just Jim NC TttH
Professor Principal
4  Just Jim NC TttH    one month ago
With the help of people like Nershi, the IRS could recoup millions and sometimes more than a billion dollars on a single tax return.

WTF have they been waiting for? Seems with all of those people, they should have been doing this all along. Easier to sit and do enough...........

 
 
 
Igknorantzruls
Sophomore Quiet
4.1  Igknorantzruls  replied to  Just Jim NC TttH @4    one month ago
should have been doing this all along. Easier to sit and do enough...........

WTF are you talking about ? 

How does that change them attempting to do it now, from a good thing to a bad thing ?

This is exact opposite of cost cutting and efficiency. The tchrump change saved, could have been recouped possibly times a mill8ion or so. All this does is make damn certain there will be less chance any in the higher income areas, will be less likely audited.  A Say  like Elon and his mandate . 

 
 
 
Just Jim NC TttH
Professor Principal
4.1.1  Just Jim NC TttH  replied to  Igknorantzruls @4.1    one month ago

Point is, that you evidently missed, they should have been doing this all along...............Like at least 6 years and probably more..............

 
 

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