Tax Preparation Services NAICS 541213

May 19, 2025 - IRS Slashes Agency Auditor Jobs

• The Internal Revenue Services (IRS) cut more than 30% of its auditors in early 2025 due to buyouts and layoffs from the Department of Government Efficiency. The cuts disproportionately affected revenue agents - those conducting audits and going after possible tax cheats - with the IRS shedding 3,600 of those jobs and significantly impacting the government’s ability to collect tax revenue. A report from the Treasury Inspector General for Tax Administration found that auditors found about $32 billion worth of additional tax revenue in 2023. Auditors make the agency about $6 for every $1 spent on high-income taxpayer audits, per the National Bureau of Economic Research. So many auditors being cut loose risks revenue losses for the government if tax evaders know they are not being scrutinized as before. The Yale Budget Lab forecast a loss of $159 billion over 10 years if staff cuts reach 18,000 IRS employees.
• Accounting practices face a staffing shortage heading into the 2025 tax season. Several years of attrition through retirements and middle-aged CPA burnout has left the accounting industry about 300,000 workers short with not enough fresh recruits to replace them. The shortage is likely to affect accounting pros, CPAs and taxpayers alike in the coming year. Tax professionals are overloaded with work - which makes them prone to mistakes and filing errors - leaving many without the bandwidth to take on new clients. Those lost clients then can potentially make their own mistakes doing taxes themselves, creating a domino effect of accounting headaches. The problem could be compounded by the IRS itself, which is already lacking enough accountants to efficiently process returns and now faces a government-wide hiring freeze in January 2025.

• In 2023, starting salaries for new CPAs increased over 2022 and bested inflation, but industry insiders suggest CPA firms need to do more to compete with other industries for top talent, according to the Journal of Accountancy. CPA employers increased 2023 starting salaries by 7%, three points higher than the inflation rate, according to the National Association of Colleges and Employers. Class of 2023 CPA starting salaries were $65,086 compared to $60,698 for Class of 2022. However, starting salaries for computer and information science positions in 2023 were $91,411. In addition to uncompetitive starting salaries, work overload and burnout hinder recruiting and retention. In recent flash polls of the top 500 firms outside the Big Four by the Association of International Certified Public Accountants (AICPA), 88% of firms said they increased starting pay in the last 12 months, and 57% said they plan to address workload balance.
• For the tax year 2023, about 2.3 million tax returns utilized the Energy Efficient Home Improvement credit (25C tax credit) under the Inflation Reduction Act (IRA) of 2022, according to the Internal Revenue Service’s (IRS) most recent clean energy tax credit statistics. The 25C tax credits, which are based on 30% of the improvement’s cost, help homeowners pay for qualifying energy-efficiency improvements to their primary or secondary residences. The credits include a total annual credit of $1,200 for insulation and air-sealing home-improvement projects. The credits are available until 2032, and the combined annual maximum credit is capped at $3,200. In the 2023 tax year, insulation and air-sealing materials and systems were the most popular improvements, accounting for nearly 30% of all returns that claimed a 24C credit.