Accounting
IRS faces steep budget cuts without congressional action
The Treasury Department is warning Congress that it needs lawmakers to unlock $20 billion in funding for the Internal Revenue Service that could be rescinded due to duplicative legislative language.
The $20 billion is targeted at IRS enforcement and is separate from the more than $20 billion that has already been clawed back from the Inflation Reduction Act’s extra $80 billion in funding for the IRS over a decade. If Congress doesn’t act during the appropriations process before the end of President Biden’s term, the $20 billion may be rescinded, putting at risk the IRS’s ability to hire more employees and carry out its duties next tax season.
“The IRS is going to potentially have to make dramatic decisions about stopping hiring and starting to budget for a world [in] which they don’t have $20 billion, which will stop a lot of their progress,” Treasury Deputy Secretary Wally Adeyemo said during a call with reporters Tuesday, according to the
The IRS received an extra $80 billion in funding over 10 years for enforcement, taxpayer service and technology upgrades as part of the Inflation Reduction Act of 2022. But as part of a deal to raise the debt ceiling in 2023, the funding was reduced by $1.4 billion, and later as part of another agreement last year an additional $20 billion of the tax enforcement money was distributed to other federal agencies for nondefense spending. That $20 billion cut was mistakenly duplicated in the legislative language, so the IRS faces another steep budget cut unless Congress acts to amend the language during its year-end appropriations process.
The budget cuts could also exacerbate the deficit as the extra money for tax enforcement was expected to generate tax revenue. The Treasury estimated the national debt could grow by $140 billion without the extra funding for tax enforcement.
The incoming Trump administration is already expected to slash IRS enforcement funding once President-elect Trump takes office. Republican lawmakers have been calling for cuts in the IRS budget, including the
Despite opposition among many Republicans in Congress to the Direct File program, Direct File may have the support of Tesla CEO Elon Musk, who has been assigned by President Trump to head a new Department of Government Efficiency with former GOP presidential candidate Vivek Ramaswamy with the goal of cutting waste and inefficiency in the federal government. On the recently created X account for DOGE, they
“In 1955, there were less than 1.5 million words in the U.S. Tax Code,” said the DOGE account. “Today, there are more than 16 million words. Because of this complexity, Americans collectively spend 6.5 billion hours preparing and filing their taxes each year. This must be simplified.”
However, that doesn’t necessarily mean the Trump administration will preserve the IRS Direct File program after next tax season.
“I would anticipate that it goes forward this coming year, in other words, for the 2024 filing season,” said former Intuit CEO Bill Harris, who developed TurboTax when he was president of ChipSoft, which Intuit acquired in 1993. “I’m sure it’s already all baked. The following year, it could just go away. I would bet more that it just withers on the vine. But I think that’s too bad too because one of the things that the IRS really needs to do is take a customer-focused view.”
He acknowledged, however, that Intuit and other tax software companies have been fighting to end the Direct File program.
“Some people, for instance, at the tax preparation software companies, are against it because they perceive it to be competition,” said Harris, who is now founding CEO of Evergreen Money, a development-stage financial services company. “I really don’t think that that’s the proper view. I think the proper view is that for the kinds of simple returns that they’re capable of handling, I think that’s great, and people should have a free mechanism to do that. And it’s also clear that the government will never be in a position to build something that’s terribly sophisticated. And so even for people with moderately complex taxes, they’re going to need something like professionally and privately built tax software. I see this as an opportunity for an excellent private-public partnership, so I hope the IRS continues with it, and I hope that the private companies embrace it.”
After leaving Intuit in 1999, Harris was co-founding CEO of PayPal, which merged Elon Musk’s X.com with Peter Thiel’s Confinity. Accounting Today asked Harris what he thought of the prospects for Musk’s DOGE to find enough savings from cutting government waste to make up for the lost tax revenue from the extension of the Tax Cuts and Jobs Act and the various tax exemptions proposed by Trump on tip income, overtime pay, Social Security benefits and more.
“Nothing to do with Elon Musk, although I know he’s obviously going to be a part of this, but absent any personalities, it’s remarkably hard even for a Republican administration to rein in costs,” Harris replied. “Certainly the initial Trump administration did not do that. They expanded expenditures. There was a big runup in the debt, particularly as the party has moved from traditional Republican notions of fiscal conservatism to essentially populism.”
Cutting the IRS enforcement budget could contribute to the national debt, as the Treasury Department warned, and could have a spillover effect leading to slowdowns in taxpayer service and technology improvements as well.
“You could see monies being taken away from enforcement, but probably continuing the customer service modernization portion of the IRS,” said Tax Guard CEO Hansen Rada. “The IRS requires a lot of people because the Tax Code is so complicated, and that’s really Congress’s fault. It’s not the IRS’s fault. It’s almost like yelling at the policeman when he pulls you over for speeding. If you want the speed limit raised, you go to your local representatives, you don’t yell at the policemen, and the IRS is just the enforcement arm. Barring any sort of drastic change to simplification of the Code, it’s going to require people, because of deductions and all the other considerations in order to execute that. The vast majority of returns are simple returns, W-2’s, and so this Direct File, or this app that Elon hinted at would be a modernization effort to help the majority of returns, but not the complicated ones, and that still would require people.”
Big Four firm PwC announced new agentic AI capacities, including a model that proactively identifies areas of value leakage and acts inside the tools teams already use to fix them itself.
The new solution,
The software, which is supported by PwC’s recently released
The system connects directly into ERP environments, continuously monitors key metrics, and acts inside the tools teams already use. For example, a supply chain agent might detect rising shipping costs and automatically reroute deliveries to reduce spend. Finance agents can spot and correct billing errors before they reach the customer. Clients typically see measurable efficiency gains in the first quarter, with continued improvements over time as the system learns and adapts.
“Too many transformations still rely on one-off pilots and stale data, stretching the gap from insight to impact and suffocating ROI,” said Saurabh Sarbaliya, PwC’s principal for enterprise strategy and value. “Agent Powered Performance flips the economics by distilling PwC’s industry transformation playbooks into AI agents that turn static insights into compounding gains, without rebooting each time.”
Agent Powered Performance is platform-agnostic and built on an open architecture so it can work across different LLMs based on client preferences and task-specific needs. It works with major enterprise platforms including Oracle, SAP, Workday and Guidewire.
Agent OS Model Context Protocol
PwC also
By integrating this standard, agent systems registered as MCP servers can be used by any authorized AI agent. This reduces redundant integration work and the overhead of writing custom logic for each new use case. By standardizing how agents invoke tools and handle responses, MCP also simplifies the interface between agents and enterprise systems, which will serve to reduce development time, lower testing complexity, and cut deployment risk. Finally, any interaction between an agent and an MCP server is authenticated, authorized and logged, and access policies are enforced at the protocol level, which means that compliance and control are native to the system—not layered on after the fact.
This means that agents are no longer siloed. Instead, they can operate as part of a coordinated, governed system that can grow as needs evolve, as MCP support provides the interface to external tools and systems. This enables organizations to move beyond isolated pilots toward integrated systems where agents don’t just reason, but act inside real business workflows. It marks a shift from experimentation to adoption, from isolated tools to scalable, governed intelligence.
Research Composer
Finally, a PwC spokesperson said the firm has also launched a new internal tool for its professionals called Research Composer, a patent-pending AI research agent embedded in the firm’s ChatPwC suite, designed to accelerate insight generation by combining web data with PwC-uploaded content.
Professionals will use the Research Composer to produce in-depth, citation-backed reports for either the firm or its clients. The solution is intended to enhance the quality of client work by equipping teams with research and strategic analysis capabilities.
The AI agent prompts users through a step-by-step research workflow, allowing them to shape how reports are packaged—tailoring the output to meet strategic needs. For example, a manager in advisory services might use Research Composer to evaluate white space opportunities across industries or geographies, drawing from internal reports and up-to-date market data.
Eide Bailly, a Top 25 Firm based in Fargo, North Dakota, is growing its presence in the Pacific Northwest by adding Traner Smith, based in Edmonds, Washington, effective June 2, 2025.
Traner Smith’s team includes two partners and 16 staff members and specializes in tax compliance and advisory services. Financial terms of the deal were not disclosed. Eide Bailly ranked No. 19 on
Eide Bailly already has offices in Seattle, but hopes to grow further in the Pacific Northwest. “We’re pleased to welcome the talented team at Traner Smith to Eide Bailly,” said Eide Bailly managing partner and CEO Jeremy Hauk in a statement Monday. “Their expertise with high-net-worth individuals, real estate and privately held businesses aligns well with our strengths, and their client-centric approach is a perfect cultural fit. Having an office in Edmonds, Washington, is a great complement to our existing presence in Seattle. Together, we’re poised to deliver even greater value to families and businesses in the Seattle metro area.”
“Joining Eide Bailly is a natural next step for us — it provides access to deeper technical resources in areas like state and local tax, national tax, succession planning and international tax while allowing us to continue the personalized service our clients value,” said Kevin Smith, a partner at Traner Smith, in a statement.
“With this expanded support and platform, we’re excited to grow our reach, elevate what we do best, and help more clients than ever before,” said Shane Summer, another partner at Traner Smith, in a statement.
Eide Bailly has announced several other mergers in recent weeks. Earlier this month, it added
In 2023, Eide Bailly added
Top 100 firm
“We began working with Knuula in Spring 2024 to streamline our engagement letter process,” said Don Murphy, Managing Member of BMSS. “It quickly became clear that Knuula was not only a strong solution for us, but also an ideal partner in advancing industry-wide automation.”
While the specific terms of the deal were not disclosed, a spokesperson with Knuula said that, after this investment, BMSS and a collection of 21 of their partners now own 13% of the company. The investment represents not some passive revenue deal but an active collaboration between the two companies, with the spokesperson saying they will be working closely together on things like product development, new features, improvements, and networking.
The deal comes about a year after Knuula integrated with QuickFee, a receivables management platform for professional service providers, which allowed users to have engagement letters directly connecting to their QuickFee billing platform, tying the execution of the letter directly to the billing process.
“We’ve long sought to partner with a firm focused on strategic innovation in the accounting space,” said Jamie Peebles, founder of Knuula. “To develop a perfect solution for large firms, it is ideal to have a partner that is willing to work closely together and iterate quickly. This requires constant feedback between our two teams. The IT team from BMSS worked with our development team constantly and helped us iterate rapidly. We also had consistent input from partners, manager, and administrative staff to help us make valuable changes to Knuula. BMSS was a perfect partner for us.”
PwC AI agent acts proactively to preserve value
Eide Bailly merges in Traner Smith
BMSS announces investment, collaboration with Knuula
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
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