Abolishing the IRS would trigger massive, systemic changes, including a collapse in federal tax revenue, potential suspension of public services (schools, infrastructure), and a shift toward alternative funding like a national sales tax. It would likely eliminate income taxes and the IRS's administrative role, resulting in significant tax savings for high-income earners but potentially leading to economic instability, increased debt, and reduced social services like Medicare.
While the IRS could be abolished, many of its functions – tax administration, enforcement, and sending rebate checks – would be shifted to state agencies and SSA, including to some states that do not currently collect sales tax.
No, we do not expect filing deadlines and tax-filing extensions to change during a government shutdown. Nor do we expect the underlying tax law to change. This means that you'll still have to file your tax return by the deadline, even if the government shuts down.
Yes you can fund a government without relying too much on taxation. It had happened before, and it continues to happen in many parts of the world today: it can be done by having government make money, and the government being involved in economic activities directly.
Individual income taxes currently represent almost half of the federal government's total tax revenue. Losing this much revenue would entail either very high spending cuts for federal programs and operations, or the revenue from income taxes would need to be replaced by debt, other taxes, or money printing.
Currently, payroll taxes funding Social Security and Medicare are collected through the same system as income taxes. Abolishing the IRS would require creating new collection mechanisms for these programs or fundamentally restructuring their funding. This represents one of the most complex aspects of the proposal.
If the individual tax cuts expire, taxpayers in all income groups would face higher and more complicated taxes. Machinery and equipment expensing is a key provision that, if allowed to expire, would especially harm capital-intensive industries like manufacturing.
The IRS 7-year rule primarily applies to keeping records for claiming a deduction for bad debts or losses from worthless securities, allowing a longer period to file for a credit or refund, but it's not a universal audit limit; it's often a recommended safe buffer for general record-keeping, with the standard IRS audit period usually being 3 years, extending to 6 years for substantial income omission (over 25%) or foreign income issues, and indefinitely for fraud.
The IRS e-file shutdown 2025 begins on Friday, December 26, 2025, at 11:59 A.M. Eastern Time. During this annual maintenance period, the IRS takes its electronic tax filing system offline to update systems and prepare for the new tax year. The IRS announced it will officially reopen e-file on January 26, 2026.
As you can imagine, these states need to find other ways to fund state and local services. They often do this through sales taxes or property taxes. Keep in mind that a lack of income tax doesn't necessarily mean a lower overall tax burden.
Abolishing the income tax would be a huge windfall for high-income households. Those making between $500,000 and $1 million would, based on recent tax filings, save on average $155,000 every year. The average household with income of $10 million and up would save $7.6 million in income tax annually.
One-time forgiveness, officially known as First-Time Penalty Abatement (FTA), is an IRS program that allows qualified taxpayers to have certain penalties removed from their tax accounts.
The IRS generally has 10 years – from the date your tax was assessed – to collect the tax and any associated penalties and interest from you. This time period is called the Collection Statute Expiration Date (CSED).
High-Income Taxpayers Paid the Majority of Federal Income Taxes. In 2022, the bottom half of taxpayers earned 11.5 percent of total AGI and paid 3 percent of all federal individual income taxes. The top 1 percent earned 22.4 percent of total AGI and paid 40.4 percent of all federal income taxes.
The Congressional Budget Office (CBO) estimated in 2018 that the 2017 law would cost $1.9 trillion over ten years, and recent estimates show that making the law's temporary individual income and estate tax cuts permanent would cost roughly another $4.2 trillion through 2035.
No legislation has been passed in 2025 to forgive IRS tax debt due to Trump's re-election campaign. The IRS continues to operate under its existing tax code and enforcement structure.
Michael Bloomberg, Carl Icahn and George Soros all managed to avoid paying any federal income taxes at some point in recent years, in some cases multiple times. Overall, according to ProPublica data, the 25 wealthiest Americans paid taxes equal to 3.4% of their wealth gain from 2014 to 2018.
Only the tax relief expert and professional tax representative can help you to overcome the problems that may be created by an IRS audit. Tax lawyers, enrolled agents and CPAs can help you in getting a better tax resolution with an IRS audit or an IRS tax debt.