| As Americans file their 1040s and the myriad additional schedules and forms that can often be required, the IRS is increasingly unable to cope with the workload. Bloomberg Businessweek editor at large Wes Kosova explains. Plus a visit to San Francisco’s hottest startup accelerator. If this email was forwarded to you, click here to sign up. It’s Tax Day in the US, and employees at the Internal Revenue Service are already churning through many of the 160 million individual tax returns that flood in each year. (If you’re one of the millions of procrastinators who haven’t filed yet and you’re freaking out, click here, pronto.) All told, the IRS is responsible for collecting about $5 trillion in taxes—money that pays for almost everything the federal government does. That massive job has become even more difficult this year. President Donald Trump and Elon Musk’s so-called Department of Government Efficiency have moved to fire thousands of IRS employees, many of them hired in the last year or two specifically to identify people and businesses that cheat on their taxes. Tax experts and former IRS commissioners have warned the cuts will result in fewer dollars flowing into the US Treasury. That hasn’t deterred the president. One of the first executive orders Trump signed on the day he returned to the Oval Office in January was a 90-day freeze on federal hiring. It instructed his administration to come up with a plan to reduce the size of the government’s workforce. Once that plan is in place, the order said, the freeze will expire for all federal agencies. All, that is, except for one: the IRS. The same order said hiring at the US tax collector will remain frozen until the administration decides unfreezing it is “in the national interest.”  The IRS building in Washington. Photographer: Annabelle Gordon/Getty Images Trump didn’t elaborate on why he singled out the IRS for special punishment. But the politics were clear enough. For years, some Republicans have pushed false claims that President Joe Biden had created an army of gun-wielding IRS enforcers empowered to wrest money from hardworking Americans. “Are they going to have a strike force that goes in with AK-15s already loaded, ready to shoot some small-business person in Iowa with these?” Senator Chuck Grassley, an Iowa Republican, asked on Fox News in 2022. A Trump campaign ad last year depicted a swarm of Men in Black-style IRS operatives raiding a terrified woman’s house and searching for coins in her couch cushions. “And they just may be coming to your house next,” the narrator warned. The reality couldn’t be more different. From 2010-20, under Democratic and Republican presidents, the least-loved federal agency was starved of funds and the enforcement of tax laws atrophied. The “tax gap”—money owed but not collected due to errors and cheating—has now swelled to more than $600 billion a year. The IRS was just starting to turn things around with an $80 billion infusion passed under Biden, aimed at hiring more workers over several years to improve technology and customer service and collect unpaid taxes from the wealthiest filers. Musk dismissed almost all those new hires and many others, leaving the IRS short-staffed just as filing season got underway. Professional tax preparers started hearing from clients asking if the turmoil at the IRS this year meant they could get away with skipping paying their taxes. Recently there was a quiet sign the White House may have realized the cuts went too far. After a federal court in March ordered it to temporarily reinstate fired IRS employees, the administration put most on administrative leave rather than let them back in. But then, at the start of April, a notice went out to many of those workers: Be prepared to return to “full duty”—if only temporarily—by April 14, it said. Just in time for Tax Day. | 
