Cape News

President Trump has issued an executive order to halt the hiring of federal employees, with a particular focus on the Internal Revenue Service (IRS). This decision aims to address concerns about the potential increase in IRS audits following the Democrats' Inflation Reduction Act. The act called for hiring tens of thousands of new IRS agents.

Ways and Means Chairman Jason Smith supported this move, stating: "President Trump’s cease-and-desist order to the IRS is a crucial first step to helping middle-class Americans and small businesses living in fear of 87,000 new IRS agents targeting them with new audits and monitoring their personal transactions."

Smith criticized Democrats for allegedly planning to increase audits on Americans annually. He claimed that returning to "historical audit levels" would result in 600,000 more families earning less than $75,000 facing IRS audits. According to Smith, the Treasury Inspector General for Tax Administration found no safeguards in place for low- and middle-income taxpayers against audits.

Smith also accused the IRS of political bias by delaying an unpopular 1099-K reporting scheme and leaking sensitive data about political opponents. He mentioned that Congress had fought against new funding for auditors at the IRS as part of the Fiscal Responsibility Act.

The executive order signed by President Trump mandates a plan within 90 days from various government bodies to reduce the federal workforce through efficiency improvements and attrition. However, this freeze will remain effective for the IRS until deemed otherwise by relevant authorities.

In October 2024, it was reported that the IRS delayed implementing a 1099-K reporting scheme initially scheduled for 2023. This scheme targeted gig workers with over 90% of its tax burden falling on those earning less than $200,000. The agency later announced a phased approach with a $5,000 threshold.

House Republicans passed Chairman Smith's Taxpayer Data Privacy Act in September 2024; however, Senate Democrats did not advance it. Earlier actions included rescinding funding intended for new auditors at the IRS as part of efforts to control spending.