The IRS is in trouble — here’s how it can survive

As one of the few people to serve in the Congress and as a social worker, I have a unique perspective on the issues that matter to everyday Americans. Throughout my time in both the House and Senate, I gained insight into the essential, albeit often disliked, role that the Internal Revenue Service plays in our country. 

As a senator, I had a front-row seat on the countless challenges facing the IRS, many of which stem from staff reductions. Those challenges are about to grow. Last month, the IRS sent layoff notices to nearly 1,400 employees. This comes on top of a 26 percent reduction in the size of the IRS, from 102,000 to 76,000, just this year, with most of the cuts to IT and enforcement. 

Many of the barbs directed at the IRS are not the agency’s fault — it doesn’t have the staffing to meet its mandate. Congress and the administration can share the blame; Congress has not given the IRS the funding it needs to update its antiquated technology to process individual taxpayer account data. How antiquated is it? It dates to the 1960s. and it won’t be replaced until 2030, according to a report by the Government Accountability Office. The agency has had to invest hundreds of millions of dollars in updates just to keep the system functioning. 

For many Americans, and particularly for those with low incomes, filing a tax return is mind-numbingly complicated. That’s not the IRS’s fault — it only enforces the tax laws. The complexity acts as a hidden tax. It forces people to hire tax professionals or prepare their returns on their own and risk making a mistake that could cost them thousands of dollars.  

But the IRS can take steps that will make the agency more efficient — and benefit American taxpayers in the process. 

First, it should focus on initiatives that deliver the greatest return on investment. For example, every dollar spent on IRS enforcement brings in at least four dollars in recovered revenue. Targeted enforcement against sophisticated evasion, not ordinary filers, will maintain fairness and trust. And using data analytics can prioritize cases with the highest yield.  

Second, it should focus on modernization and fraud prevention. The IRS should leverage artificial intelligence and automation for call routing, data cross-checking and error correction — not to replace staff, but to let human employees focus on complex taxpayer issues. Similarly, the agency should build on successful modernization efforts like paperless processing and digitized refund tracking, which reduce manual workload and speed service delivery. 

Third, it should double down on taxpayer service. This means everything from processing refunds quickly to minimizing hold times for telephone calls. It also means expanding partnerships with community organizations and state tax agencies for outreach and taxpayer education. The agency should use feedback loops and satisfaction surveys to show improvement and accountability. 

Another important step to bolstering the IRS’s efficiency and overall success will be prioritizing initiatives that have strong bipartisan support and a record of success — and scrapping those that don’t. An example in the latter category has been the Direct File program, a government-run tax preparation and filing platform that was nominally free for consumers to use. In reality, it cost taxpayers dearly: more than $114 million was allocated to it in fiscal 2024 alone. 

Direct File was launched during the Biden years, but it was unpopular. Just recently, the IRS announced Direct File won’t return next year. That’s good, as it was riddled with shortcomings. Of roughly 30 million eligible taxpayers, only 140,000 used it. The inspector general found many opted out of it because they found it confusing or unreliable. Treasury’s inspector general also found Direct File failed to process key tax credits — notably the American Opportunity Tax Credit, worth up to $2,500 per student.

Direct File also duplicated services already offered through the Free File Alliance, a popular partnership between the IRS and commercial tax software providers that offers free filing to eligible low-income taxpayers. It was never clear why a second free service was needed, particularly given the agency’s limited resources. It should not try to do the job that’s already being done by the agency and by private industry.

During my time in the Senate, I was reminded day after day that the IRS is one of America’s most important agencies. That’s because the revenue it collects is what funds the operations of the federal government, and pays the salaries of everyone from soldiers to social workers.  

The IRS needs to win back popular support, and in order to do that, it’s going to be even more important for the agency to refocus on what it does best: collecting revenue fairly, protecting against fraud, and giving Americans confidence that everyone pays their fair share. 

Kyrsten Sinema served as a U.S. senator from Arizona from 2019 to 2025. She served on the Committee on Financial Services and its Subcommittee on Consumer Protection and Financial Institutions