This is the first installment of “Auditing the IRS," a series of dialogues focusing on the IRS, its mission, and its challenges and opportunities. Host Bruce Willey is a CPA, attorney, and CEO of American Tax & Business Planning. He regularly observes and analyzes IRS news for Real Clear Markets.
Today’s guest:
David Ransom, Washington DC-based attorney and Shareholder at the powerful law and lobbying firm Brownstein, Farber, Hyatt, Schreck. Ransom is one of Brownstein’s top advisors to tax services industry clients, giving him unique insight into the state of the IRS.
This discussion took place on December 24, 2025 and is edited for length and clarity.
BRUCE WILLEY:
The IRS is coming off several difficult years, with accusations from both sides of the ideological spectrum that it has become politicized and ineffective. It’s also having significant technology problems and what’s reported to be a broken organizational culture, especially after Elon Musk and DOGE took aim at the IRS last spring.
Between layoffs and employee departures, the IRS lost more than 26,000 employees, which is about a quarter of its former workforce – in one year. With that as background, I’d like to welcome distinguished attorney and advocate David Ransom to “Auditing the IRS.”
David, can the IRS perform its essential functions coming into 2026? And what’s your overall perception of where the IRS is right now?
DAVID RANSOM:
What’s going to happen come the end of January is the big question, isn’t it? Is the tax season going to open on time? Between the number of IRS Commissioners and Acting Commissioners last year, and a quarter of the workforce being either fired or taking early retirement, and then the President's “One Big Beautiful Bill” bringing a range of significant tax law changes, it’s fair to ask if the IRS is going to be able to implement all this.
But I have to say here at the end of the year that I fortunately don’t think they're just in survival mode anymore.
The IRS was struggling badly back in the April-May-June period. And it’s almost a cliché but with any institution you're going to have some bad apples and some people who are incompetent. But my personal experience has been that the great majority of the people I've I've dealt with at the IRS actually are pretty competent and hard-working and want to do the right thing.
Even acknowledging all the challenges, I expect tax season to open on time at the end of January. And I predict the IRS will pull off 2026 without significant problems.
BRUCE WILLEY:
I’m a little less confident. There was a time when a tax practitioner would have a Rolodex of people at the IRS that if you had a problem you could call and they could work with you to resolve an issue.
Now we’re in this “send a letter in and maybe somebody will look at it” mode, and then they’ll send you a response that says they need 60 or 90 days. You get no human interaction on a matter unless it's a compliance audit or a special audit.
So that really makes me wonder if the IRS can still perform those essential functions. Between their budget cuts and their manpower cuts and their technology being dated, and then Congress candidly is heaping additional burdens on them…I'm worried.
And then as you mention all the new tax law changes being implemented at the same time the IRS is badly depleted. You think they can overcome all that?
DAVID RANSOM:
Yes I believe they can. With (U.S.Treasury) Secretary (Scott) Bessent in the Acting Commissioner role, and with Frank Bisignano sitting as the first-ever CEO of the IRS, there seems to be strong leadership in place.
And the other reason I think that is -- and this is self-evident -- the Trump Administration and Republicans in Congress have a lot of incentive in an election year to not mess this up.
There is a lot going on. From no tax on tips, no tax on overtime, no tax on car loan interest, and all the other changes, and the new Trump accounts… But I think they have a real laser focus on making sure that this tax season is pulled off relatively smoothly.
BRUCE WILLEY:
Well I’m skeptical but I hope you’re right.
I’m trying to figure out what the beginning of the decline of that sense of competence with the IRS was. I’ve been doing tax work since 1985 and in the past you always felt the IRS had things under control, that it knew what was going on. For clients, you could be confident you could solve their IRS problems with a phone call. But it seems like the access and transparency are gone now, and you don't know who the people working behind the curtain are anymore.
So I’ve been wondering – did COVID kill the IRS? Because it felt like these giant PPP (Paycheck Protection Program) and then ERC (Employee Retention Credit) programs were unfairly pushed by Congress onto the IRS, and it didn’t seem like it was prepared or capable of handling them, and that the struggles then cascaded into the recent difficulties and political controversies.
DAVID RANSOM:
That’s a good question. I don't think it did, but it added a tremendous amount of work for the IRS, right? They pushed the filing deadline back four months in 2020, so yes the IRS was digging out of a big backlog.
And that fed into a sense, particularly among some of my Republican friends on the Hill, that they harbor some…animosities is maybe too strong a word for it, but let's just say a deep, deep suspicion and skepticism about the IRS to this day.
And then the tumbling out by an IRS contractor of some of (President Trump’s) partial tax returns, and other wealthy Americans’ returns added to the bad taste that some Republicans already had. And in fact I think that manifested itself as “We’re clawing back a significant portion the $80 billion new IRS enforcement funds from the Inflation Reduction Act. And by the way we're going to cut your annual appropriation now.”
It's unlikely those cuts will all happen at the end of the day, but Republicans usually stake out a position that cuts IRS funding by a billion or two.
We're about to see how it goes for the new tax season. But I’m still confident they're going to meet the challenge this year.
BRUCE WILLEY:
Do you have similar confidence about the technology side of the equation at the IRS? There was a lot of discussion during 2024 about AI being used for audits but we’re hearing far less of that now.
DAVID RANSOM:
Well I’m not an expert on this part, but I know they’ve had a lot of people leave who were involved in the tech function. I know that some advanced contractors like Palantir are involved in some of the technological effort they're trying to put in place for this coming tax filing season.
I think for the average taxpayer their filing process will flow largely like it has in the past. But I do think the audit function has been diminished through these staff cuts, so there's going to be probably fewer audits. So for large partnerships and individuals involved in more sophisticated business relationships and transactions, with more complicated filings…that’s going to be a big challenge for the IRS.
BRUCE WILLEY:
David, looking forward, what are the things that need to happen for the IRS to recover its image of effectiveness? I don't want to use the word fix, because that implies the IRS is broken, but I mean public perception is hey, they’re slow, they’re not transparent, and they’re hard to deal with.
So what’s on your laundry list of things that would help restore the IRS’s reputation in the year ahead?
DAVID RANSOM:
Well look, I spent ten years working for former US Representative Steny Hoyer (D-MD) and so I say this based on at least some level of insight: The IRS Commissioner, however that shakes out, has got to reach out to Congressional Republicans in particular. So if I was advising the new Commissioner or the new CEO, I would say look, it really is going to strengthen this agency to get up there and develop the personal relationships with legislators.
Ask the Republicans what makes them angry. Ask them what they can support. The Democrats appropriated $80 billion to try to bring the agency up to speed so they’re probably already there.
I can call my bank or my credit card company and in one call get most issues resolved quickly and relatively painlessly. But I can't get that done with the IRS.
Now in fairness, the IRS is not alone in the federal bureaucracy in having issues like this. But creating that level of responsiveness would go a long way to building support for the agency.
BRUCE WILLEY:
That’s a great insight. And for markets and businesses and maybe voters, that credibility question probably matters just as much as tax policy itself.
