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TaxBuzz Top 5 - IRS Slashes 6,000 Jobs During Tax Season, Cruise Stocks Tumble Amid Trump Tax Crackdown & More

by
Rebekah Barton
on
2/21/2025
TaxBuzz Top 5 - IRS Slashes 6,000 Jobs During Tax Season, Cruise Stocks Tumble Amid Trump Tax Crackdown & More

Each Friday, TaxBuzz brings you the top five tax and accounting headlines you need to know from the workweek. We know life can get busy and you don't always have time to scroll through your news feed to stay informed.

We weed through all of the week's stories to showcase the most important updates in the tax and accounting world.

1. IRS Cuts 6,000 Jobs Amid Tax Season, Raising Concerns Over Revenue Losses

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Credit: Hisham Ibrahim/Getty Images

The Internal Revenue Service is cutting more than 6,000 jobs right in the middle of this year’s tax season, a move that has drawn sharp criticism from government watchdogs and tax experts. The cuts, part of a broad downsizing initiative spearheaded by Elon Musk’s deputies at the informal “Department of Government Efficiency,” primarily affect probationary workers who have been on the job for only a limited time.

Per NPR, critics worry that these layoffs could hamper the IRS’s ability to field taxpayer inquiries and enforce tax laws, particularly at a time when robust enforcement is crucial for collecting unpaid taxes. “For every $1 that the IRS spends on high-end enforcement activity, the agency collects $12 in uncollected taxes,” said Natasha Sarin, a Yale Law School professor and former advisor on tax policy during the Biden administration.

Some argue that reducing IRS staffing might save money, but tax law expert Kathleen DeLaney Thomas of the University of North Carolina at Chapel Hill told NBC, “Abolishing the IRS or even, say, cutting funding to the IRS doesn’t alter our tax system at all. Only Congress could decide to repeal the many statutes in the Internal Revenue Code that provide the framework for our federal tax system.”

As the IRS faces increased demands during tax season, the long-term impact of these job cuts remains a significant concern for policymakers and taxpayers alike.

2. Colorado Delays State Tax Refunds, Causing Filing Backlog

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Credit: CatLane/Getty Images

The Colorado Department of Revenue has announced another delay in its online tax filing launch, pushing the acceptance of 2024 state tax returns to late February 2025, according to CBS Colorado. Originally slated to go live by early February—and then by February 14—revenue officials now expect the system to be operational later this month.

Accountants are feeling the impact. William Fraser, president of Fraser, Waldrop & Company CPA’s in Denver, told the news outlet, “We typically start February 1. We start rolling in, and most states are ready by that time.” Fraser warned that the delay has nearly cut off his office’s income, putting them weeks behind schedule, and he expects the backlog to delay refunds for many taxpayers.

The setback comes as the department implements 26 major changes to the tax code, including 14 new tax credits, which are likely contributing to the delay. With the filing deadline still set for April 15, taxpayers now face the challenge of either waiting for the online system to launch or filing paper returns by downloading forms from colorado.gov/revenueonline/ and mailing them in.

CBS reporters reached out to the Colorado Department of Revenue on Thursday for further updates. The Department had not returned comment at the time of publication.

3. Commerce Secretary Lutnick’s Tax Comments Send Cruise Stocks Tumbling

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Credit: Nancy Pauwels/Getty Images

Shares of major cruise lines tumbled Thursday after Commerce Secretary Howard Lutnick, speaking on Fox News, warned that the Trump administration would soon crack down on taxes paid by cruise companies. “You ever see a cruise ship with an American flag on the back? None of them pay taxes … every supertanker. None pay taxes … all foreign alcohol. No taxes. This is going to end under Donald Trump,” Lutnick said, sparking immediate market reactions.

The statement, CNBC reported, led to notable declines in stock prices: Carnival shares dropped 5.9%, Royal Caribbean lost 7.6%, Norwegian Cruise Line fell 4.9%, and Viking Holdings weakened by 3%. Analysts at Stifel Financial described the sell-off as a “massive overreaction.” Steven Wieczynski and his team pointed out that similar tax restructuring talks have been floated repeatedly over the past 15 years without substantial change. They noted, “From a tax standpoint the cruise industry is embedded under the cargo industry in the eyes of the IRS. That would mean the entire cargo industry would have to be turned upside down even before they got to the cruise industry, which is just a sliver of that size.”

The industry may respond by relocating corporate headquarters to avoid U.S. tax pressures, which could result in fewer domestic jobs. Meanwhile, the Cruise Lines International Association defended current policies, pointing out that U.S.-collected taxes on cruise operations total nearly $2.5 billion annually, ensuring consistent treatment between foreign and domestic flagged vessels.

4. Minnesota Hospitals Report Varying Community Benefit Spending vs. Tax Breaks

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Credit: Banks Photos/Getty Images

A new report from the Office of the Legislative Auditor (OLA) reveals that Minnesota’s 104 nonprofit general hospitals, while receiving sizable tax breaks, appear to give back more to their communities—though the outcome depends on how “community benefit” is defined. Nonprofit hospitals in Minnesota are exempt from taxes on income, property, and sales under the expectation that they reinvest those savings into community programs, such as charity care, education, research, and community health services.

The OLA report, delivered to state lawmakers on Wednesday, used limited, moderate, and expansive criteria to estimate community benefit spending. For instance, Allina Abbott Northwestern Hospital’s spending per bed in 2023 ranged between $22,000 and $551,000, compared with an estimated $15,000 per bed in tax breaks. In contrast, Mayo Clinic’s flagship hospital in Rochester spent between $45,000 and $188,000 per bed on community benefits while receiving about $285,000 per bed in tax breaks.

According to the SC Times, critics, including the Minnesota Nurses Association, argue that some hospitals operate like profit-driven entities, neglecting essential community services. However, the Minnesota Hospital Association hailed the report’s findings, noting that hospitals are not only fulfilling but often exceeding their charitable missions. Under a moderate definition, the report found hospitals spent a total of $7.4 billion in community benefits from 2019 to 2023, compared with $2 billion in tax benefits, highlighting the complexity of measuring true community impact.

5. Utah Tax Refund Seizures Spark Class-Action Lawsuit Over “Administrative Garnishment”

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Credit: Renphoto/Getty Images

A class-action lawsuit filed by the Quinn family alleges that Utah’s Office of State Debt Collection unlawfully seized their tax refunds without a court order following a 2019 car accident involving a state employee. The Quinns, residents of North Ogden, contend that after an accident in which they were not at fault, the state withheld their $255 tax refund—and again a subsequent $650 refund—to cover a disputed $7,353 debt related to the incident.

Attorney Karra Porter, representing the Quinns, criticized the practice in a Fox 13 report, stating, “A legitimate garnishment is when a court issues an order and then you collect that way, maybe part of somebody’s wages or something. This is just kind of a made-up garnishment – an ‘administrative garnishment,’ where they just decided ‘we’re going to take somebody’s money.’” Porter claims that similar actions have affected “hundreds, if not thousands” of Utahns, yet the Office of State Debt Collection has not provided data on how many tax refunds have been seized without proper legal process.

The lawsuit alleges that Utah’s debt collection agency ignored the Quinns’ appeals for a court hearing before seizing funds and subsequently referred the unresolved balance to a private debt collector. Taxpayers and advocates argue that such practices violate due process rights and call for legislative measures to protect taxpayers from “administrative garnishments” without judicial oversight. The case is poised to raise ongoing questions about fair debt collection and taxpayer rights in Utah.

Which headline this week most interests you?

Feature Image Credit: Zach Gibson/Getty Images

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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