IRS Pleads for Continued Funding as 2025 Tax Season Nears
The Internal Revenue Service (IRS) announced that the 2025 tax season will officially start on Monday, January 27, 2025, with over 140 million individual tax returns expected to be filed for tax year 2024.
This year’s tax season comes at an uncertain time for the agency with President-elect Trump about to take office.
Further complicating matters in IRS modernization, is the fact that out of the $80 billion allocated to the agency in the Inflation Reduction Act, $20 billion was officially clawed back and another $20 billion is frozen pending outcomes of the appropriations process.
In any event, the agency says it’s full steam ahead for the 2025 tax season.
Among the improvements filers can expect to see this year:
More access to tax account information from text and virtual voice assistants
Expanded features on the IRS Individual Online Account
More access to tax forms through phones and tablets
Expanded fraud alerts
Boosted taxpayer assistance
More outreach in rural areas
There will also be expanded features in the Direct File program which allows taxpayers to file for free directly through the agency. Direct File was piloted in 12 states last year and will be expanded to an additional 13 states this year.
New features on Direct File include tools to import data from an IRS account straight onto a tax form, a new chat bot, live chat, and additional authentication options.
Also updated: more taxpayers such as those claiming the Child and Dependent Care Credit and the Premium Tax Credit, can now use Direct File.
Modernization Plan and Funding Fight
Looming is the cloud of funding uncertainty and how it will impact the agency’s modernization strategy.
Current IRS Commissioner Danny Werfel said continued funding is essential, urging Congress to unlock the frozen $20 billion.
“We've had to curtail our overall modernization blueprint because the funding has been rescinded over the past three years in certain amounts,” said Commissioner Werfel. “But where we stand today, if we can retain that $20 billion, it is a modernization plan that we can all be proud of.”
Commissioner Werfel himself is expected to either resign or be fired by President Trump, as the president-elect said he will nominate former Congressman Billy Long (R-MO) to lead the IRS.
The commissioner said significant clawbacks in funding could lead to a return of the days of less tax enforcement and long wait times for customer service, and a shrinking workforce.
“If we don't have the right staffing levels, the performance will backslide and we will see, inevitably, slower processing delays and potential backlogs,” said the commissioner.
As for everyday IRS managers, there is anxiety, but an overwhelming commitment to getting the job done for the American taxpayer.
“I think there’s always a little bit of anxiety with the managers because of the change that comes down,” said Kelly Reyes, executive director of the Professional Managers Association (PMA), on Bloomberg’s Talking Tax. “We’ll adopt changes as they come down the pipeline and we’re hoping that we’ll have a peaceful tax season.”
