The latest report from the IRS Advisory Council released Jan. 14 offers a stark assessment of how repeated funding and staffing cuts are undermining the agency’s ability to function effectively, even as expectations placed on it continue to grow.

The report frames the Inflation Reduction Act’s original $80 billion funding infusion as a rare moment of optimism, noting that it allowed the IRS to begin modernizing technology, improving service levels, and hiring skilled staff after years of underinvestment. That momentum, however, was short-lived.

According to the council, more than half of that funding has since been rescinded, including nearly all enforcement resources, forcing the IRS to pause or abandon major elements of its Strategic Operating Plan.

The report states that “cumulative effect of these rescissions has significantly impacted the IRS’ ability to conduct many of the improvements” envisioned under the plan. Workforce reductions have compounded the problem, with the IRS losing more than 25% of its staff, including over 2,000 IT workers since 2025. 

At the same time, the agency faces mounting demands, including implementing more than 100 tax law changes under recently passed legislation.

The report highlights persistent service issues experienced by practitioners, including long wait times on the Practitioner Priority Service, and strongly recommends modernized tools such as live chat to relieve pressure on call centers.

Overall, the council’s message is that without stable funding and staffing, modernization efforts will continue to stall, and taxpayer will remain strained despite rising expectations.