IRS Commissioner Danny Werfel said Friday that without its current staffing levels, agency performance could suffer in several areas.

IRS Commissioner Danny Werfel said Friday that without its current staffing levels, agency performance could suffer in several areas. Kevin Dietsch / Getty Images

IRS chief predicts agency 'performance will backslide' if funds and staffing are cut

The agency says it is fully prepared for filing season in the near term but backlogs could return if the Trump administration pulls back resources.

The Internal Revenue Service’s “indicator lights are green” as it opens the 2024 tax filing season, the agency chief said on Friday, even as he cautioned that lawmakers and the incoming Trump administration could force drastic rollbacks of agency services in the longer term. 

IRS is planning to boost its taxpayer assistance center hours, increase rural outreach and add offerings for tax counseling, Commissioner Danny Werfel said, and will double the number of states where taxpayers can take advantage of a new, free program that allows them to file directly through the agency. The agency has improved its capabilities and performance after receiving an unprecedented infusion of cash from the Inflation Reduction Act, but those funds now hang in the balance as Republicans take power on the promise to rescind them. 

Of the $80 billion originally allocated in the IRA, more than $20 billion has been revoked and another $20 billion is frozen pending the outcome of fiscal 2025 appropriations. Werfel acknowledged that his vision to modernize the agency, sustain an improved customer service level and continue a hiring spree that has both reduced backlogs and increased enforcement now faces an uncertain future.

“We've had to curtail our overall modernization blueprint because the funding has been rescinded over the past three years in certain amounts,” Werfel said. “But where we stand today, if we can retain that $20 billion, it is a modernization plan that we can all be proud of.” 

If Republicans in Congress follow through on their threat to pull the remaining funds, Werfel said it would undo much of the work he has overseen. The commissioner himself will likely not be present to continue that work, as President-elect Trump has said he will nominate former Rep. Billy Long, R-Mo., to take over the agency. That is despite Werfel’s term not expiring until 2027. 

The commissioner on Friday declined to state whether he will step aside or force Trump to fire him, saying only that he is “laser focused” on filing season. 

If Trump and Long, with congressional support, reverse his efforts to better equip IRS to handle all the incoming and outgoing calls, correspondences, refunds and actions the agency must tackle each day, Werfel said the agency will go back to long wait times and limited enforcement. 

“The first thing this new money did was enable us to staff up across all of these dimensions, and we were quickly in almost all cases…able to eliminate the delays, eliminate the backlogs and get that system back to moving to historic levels of performance,” he said. 

If the funding disappears, he said, the workforce will contract while the level of work will remain the same. The IRS workforce eclipsed 100,000 employees in fiscal 2024, according to the National Taxpayer Advocate, up from 80,000 as the start of the Biden administration. 

“If we don't have the right staffing levels, the performance will backslide and we will see, inevitably, slower processing delays and potential backlogs,” Werfel said. 

In the interim, the commissioner said he and his team will work with the incoming administration and lawmakers to convince them not to walk back his progress. Even if the status quo remains, IRS will have to make difficult workforce decisions in the next year or two as IRA funds dwindle. 

“We have to roll up sleeves and work with Congress and new Treasury leadership to explain what the implications are of these budget constraints and have a good, robust dialogue,” he said.