The IRS Is Burning Through Cash It Doesn't Have. And Your Clients Will Pay for It.

Here's a number that should concern every CPA: the IRS spent $4.8 billion in Inflation Reduction Act funds last year just to survive filing season.

Not to modernize. Not to improve service. Just to not collapse.

That's the finding from TIGTA, the IRS's watchdog. The agency needed the supplemental IRA money because its regular $12.3 billion annual budget wasn't enough to cover operations. Think about that - the IRS, responsible for collecting the country's taxes, couldn't even run filing season on its own appropriation.

The IRA was supposed to fix this. $79.4 billion in supplemental funding. Instead, Congress has already clawed back $53.5 billion of it. Most of the cuts came from enforcement - the exact thing the money was supposed to boost.

Meanwhile, the workforce is down 25%. That's 25,000 fewer people processing returns, answering phones, auditing returns.

The result? Longer delays. Slower processing. Less enforcement. Your clients who have issues with their returns - they're going to wait longer and get less help.

The 2026 and 2027 filing seasons are going to be rough. Start managing those expectations now.

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Speaking of the IRS - did you know they barely collect the penalties they assess against bad tax preparers?

A new investigation by the Center for Taxpayer Rights sent mystery shoppers into tax preparer offices across six states. What they found is exactly what you'd expect: uncredentialed preparers fabricating deductions, underreporting cash income, and generally making a mess of simple returns.

Here's the stat that should make your blood boil: uncredentialed preparers account for 94% of dollar adjustments in EITC claims. 94%. That's not a rounding error. That's a systemic problem.

There are 684,000 registered tax preparers in this country. More than half - 56% - have no credential at all. No CPA. No EA. No attorney. Just a PTIN and a pulse.

The IRS assessed $75 million in civil preparer penalties last year. They collected $12.5 million. That's 19%.

The IRS has identified 87,000 high-risk return preparers since 2005 and mostly just... lets them keep going.

Congress is considering a bill - the TAS Act - that would let the IRS actually deny, suspend, or revoke preparer IDs. It has bipartisan support.

This is the story that makes clients ask: should I fire my preparer? And the answer for a lot of them is going to be yes.

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One more thing - if your clients own real estate, you need to talk to them about cost segregation. Now.

The One Big Beautiful Bill made 100% bonus depreciation permanent for property placed in service after January 19, 2025. IRS Notice 2026-11 clarified how it works. And the industry is seeing a surge in demand.

Here's the play: cost segregation breaks your client's building into components - shorter depreciation schedules for the stuff that wears out fast. Pair that with 100% bonus depreciation and you're front-loading deductions in a way that wasn't possible under the old phased-down bonus depreciation schedule.

IRS notice clarifies the rules. Cost segregation companies are slammed with demand. Engineering-based studies have longer turnaround times than usual.

The advisory community is moving earlier in the acquisition cycle - coordinated tax planning with qualified CPAs validating assumptions and interpreting the new rules.

If your clients have rental property, commercial buildings, or are considering acquisitions - this conversation is relevant right now. Don't wait until they've already signed.

Precision matters. Depreciation recapture on sale is real. But the front-loading opportunity is real too.

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That's Wednesday. The IRS is broke and getting broker. Uncredentialed preparers are running wild. And 100% bonus depreciation is the planning opportunity of the year.

Let's get to work.

- Emily

*Source:* [Journal of Accountancy](https://www.journalofaccountancy.com/news/2026/apr/irs-tapped-inflation-reduction-act-funds-to-cover-2025-filing-season-watchdog-says/) | [Journal of Accountancy](https://www.journalofaccountancy.com/news/2026/apr/uncredentialed-tax-preparer-errors-included-fictitious-deductions-review-shows/) | [Breaking AC](https://breakingac.com/news/2026/apr/17/with-100-bonus-depreciation-now-permanent-cost-segregation-demand-surges-in-2026/)