Do I Still Need to Pay My Taxes?
Updated: Sep 21
In recent months, the IRS has experienced unprecedented change. Since January, 7,000 employees have been axed and over 100 Taxpayer Assistance Centers shuttered. The tax collection agency is looking distinctly leaner these days. Many of these layoffs affected staff hired during a recent surge meant to improve service and modernize technology—with about 5,000 cuts coming directly from the enforcement and collections departments. This follows a decade of chronic underfunding where the IRS budget was slashed by $2.7 billion in real terms between 2010 and 2021, while staffing fell 22% even as tax filers increased by 14%. In addition, the IRS is currently drafting plans to further cut its workforce by as much as half through a mix of layoffs, attrition and incentivized buyouts. With the nation's tax collector running on fumes, one might wonder if the tax man still cometh.
Adding fuel to the speculation fire, the President himself has floated the idea of eliminating the income tax entirely. With such dramatic changes and proposals swirling about, it's reasonable to ask: do you still need to pay your taxes? The short, legally accurate answer is: absolutely yes. The Internal Revenue Code remains unchanged, and Section 6012 still requires individuals with gross income above certain thresholds to file returns. Section 6151 further mandates that any tax shown on those returns "shall be paid" when filing. No presidential suggestion or agency downsizing has altered these fundamental legal obligations.
But let's be honest—what you're really wondering is: "Will I get caught if I don't pay?" With enforcement staff gutted, your odds of facing an audit have certainly decreased. The agency will struggle to process the expected 140+ million individual tax returns for tax year 2024, potentially causing refund delays and hampering its ability to catch wealthy tax dodgers. The math is simple: fewer auditors equal fewer audits. However, before you start planning how to spend your unpaid tax dollars, consider this sobering reality: if you do get flagged, you're entering a special circle of bureaucratic hell.
In the good old days, receiving an IRS notice meant you could call, speak with a human being, and work out a reasonable solution. With today's skeletal staff, expect endless holds, disconnections, and automated responses that lead nowhere. That payment plan you hoped to negotiate? That reasonable settlement offer? Good luck getting anyone on the phone to discuss it. The IRS might be wounded, but when it does bite, the experience is now far more painful than before.
And don't forget about the states. Although suffering from their own understaffing issues, they are not intentionally or proactively being gutted. Their marching orders are not, as it seems to be federally, to reduce collections or enforcement. To the contrary, with reductions in federal funding to the states, the states will likely be keener than ever to collect every last tax dollar owed. While the IRS generally stops pursuing debts after 10 years, many states can chase you indefinitely. Several states won't settle for reduced payments even in cases of serious hardship, unlike the IRS with its "offer in compromise" program. Take New York, for example, where filing late incurs a 5% penalty for each month overdue (up to 25%), with a minimum penalty of $100 or the total amount due if your return is more than 60 days late. In Connecticut, the penalty for late payment or underpayment of tax due is 10% of the amount due on all returns. So while you might temporarily fly under the federal radar, your state tax authority is likely watching with eagle eyes and a much smaller caseload. The question isn't really "Do I need to pay my taxes?" but rather "Am I willing to gamble with increasingly painful consequences if I don't?"
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