Today - Part 2 of a discussion with Garrett Gregory, who spent a dozen years as an IRS attorney in its Office of Chief Counsel before founding Dallas-based Gregory Law Group, focused solely on tax law and IRS enforcement actions.
What’s The Current State of the IRS and What Can Be Done About It?
Bruce Willey: It feels like the IRS has been under siege over the past few years. Let’s start with how you see what the IRS is up against here in 2026.
Garrett Gregory: The biggest challenge for the IRS, and it's probably always been the case, is keeping up with technology and the pace of the world. The real world, not the bureaucratic world. The IRS is woefully behind on all of it. They're catching up, but I mean, the fact that they still can't communicate via email is kind of outrageous. All the things you think about when you think about inefficient bureaucracy? Sadly, a lot of them are actually true with the IRS.
Bruce Willey: My perception as a tax practitioner was always that we could work with the IRS, and our goal was to solve problems. But now, it's like you don't know who to turn to – your clients are left in an administrative lurch.
Garrett Gregory: Especially once COVID hit. You know, up to COVID, I could timeline out a client’s whole case within a week or two and be accurate. But once COVID hit, that was the first gut punch to the IRS and just sent them reeling. And then you had the first Trump Administration, and that sent them reeling. Then Trump 2 and the recent shutdown. In the current state, they're an absolute mess.
Bruce Willey: Just last month the internal IRS watchdog folks said they’ve lost 19,000 employees. There's going to be a lot of limbo for high-income earners, because there won’t be enough bodies to scrutinize their returns.
So they're focusing less, honestly, on servicing the taxpayer, regardless of what they say. They're going to collect their money, because they got bills to pay. And then, for better or for worse, they're leaning more and more heavily on AI. That's going to be a bumpy road. It may get to a place where it really hums along and takes a lot of the mundane tasks off the backs of the staff over there, but for now, I'm getting nonsensical letters for clients that have numbers that don't make sense.
Garrett Gregory: Yep
Bruce Willey: What's the fix? How does the IRS get back to just serving the taxpayer on a day-to-day basis?
Garrett Gregory: It's going to be tough. Even when I was still in the IRS 13 years ago, they were worried about the aging of their experienced personnel and the potential loss of their real knowledge base. The quickest fix would be for them to go out and try to hire people with experience, but the problem is they can't. They can't pay enough, and the job does not look enticing. Just talking to my former colleagues – morale is just horrible. It’s like everybody's upset to be there.
Bruce Willey: There’s also the issue right now that the IRS has experienced huge leadership turnover -- six different commissioners last year. Can a good IRS commissioner – or the new CEO as he’s currently called - come in and clean it up?
Garrett Gregory: I think they can do a lot. But the IRS is so big. There's the IRS umbrella and all these subgroups under it – Examination, Collections, Appeals, and so on. It’s always been this kind of fiefdom system. So the IRS Examination office in Dallas may operate very differently than the IRS Examination office in Orlando. That's really not supposed to be how it works. I mean, whether you get audited in Orlando, or Seattle, or Tempe, it should pretty much go the same way.
And it doesn't -- it very much doesn't. I think the new CEO could come in at the top and say “We want to make sure that everybody's getting the same treatment, and everybody's experience touching or being touched by the IRS is the same, no matter what location you're in, no matter what issues you have.”
Bruce Willey: Yes! So, if you were to be the new IRS commissioner, what would be the first thing you would do?
Garrett Gregory: Oh god. There's a lot. I would probably start with Collections. It’s the most jumbled up, and it's the thing the IRS is really there to do, collect taxes.
Bruce Willey: Right.
Garrett Gregory: I mean, the last stats I saw were up to about 20 million taxpayers that owe the IRS at least $50,000. That number before COVID was always 9 or 10, maybe up to 12 million. But during COVID, it almost doubled to more than 20 million taxpayers with at least that size tab, and now it hasn't come down very much.
And that's not the economy or anything else, it's the inefficiency of the organization. I can't tell you how many times I've had people call me and say, “I tried to work this out myself, and I've been messing around for 6 or 12 months, but I can't get the IRS to answer the phone. I don't know where to send money and I now have to hire you to help me pay the IRS.”
I mean, that's kind of outrageous. So, I would really overhaul that whole system, because it's just nuts.
