U.S. President Donald Trump reacts at the end of the State of the Union address in the House Chamber of the U.S. Capitol in Washington, D.C., U.S., February 24, 2026. REUTERS KEVIN LAMARQUE
After extending some of the deepest tax cuts in U.S. history, and mounting some of the nation's biggest bills, President Donald Trump’s government is now hard up for cash.
The Wall Street Journal reports the Trump administration now wants to “bulk up its antifraud” push by pursuing tax charges on illicit gains, but that effort “risks running up against its own budget cuts.”
“When fraudsters benefit financially from their crimes, they are required to report their income — whether honestly or fraudulently obtained — to the IRS and pay appropriate income tax,” said Justice Department fraud czar Colin McDonald recently. “Unsurprisingly, most fraudsters do neither.”
McDonald added that his department has identified dozens of cases accusing swindlers of trying to cheat the government out of a combined $490 million.
But like many of Trump’s ambitious policies, Trump’s people appear to be lacking the means for follow-up, say critics — and much of the problem was complicated by Trump’s own policies.
Carolyn Schenck, a partner at law firm Caplin & Drysdale, who served as an IRS official for nearly 20 years, told the WSJ that Trump’s audacious new endeavor runs counter to the economic and staffing reality facing the IRS and Justice Department.
“Criminal tax cases are resource-intensive,” Schenck said. “I think it’s going to be tough.”
The WSJ reports the Internal Revenue Service Criminal Investigation special agent team plays a crucial role in Justice Department tax prosecutions. But the division lost 331 staff members last year, including 101 agents, according to a 2025 enforcement report.
“The Trump administration, which said it is working to unwind a 20,000-person increase in overall IRS staffing under President Joe Biden, has proposed cutting the IRS budget by an additional $1.4 billion in 2027,” the WSJ said. “RS-CI’s ability to fight tax crime has been further eroded by the Trump administration’s immigration and street-crime enforcement pushes. The unit provided labor valued at $37 million, the equivalent to the work of 170 full-time special agents, to such enforcement between May 2025 and March 2026, a U.S. Treasury Inspector General report found. Most of that work is complete, the report said.”
In February of 2025, nearly 7,000 probationary employees at the Internal Revenue Service began receiving an unsigned letter telling them that they had been fired for poor performance. Trump administration lawyers insisted the IRS and other federal agencies acted within their authority when they ordered waves of mass terminations with Trump’s return to office. The evacuation was so extreme that the IRS was soon struggling to shelve firings and rehire individuals during the tax season.
Now, without the staff required for follow-through on McDonald’s tax-fraud enforcement surge, critics say the department would inevitably have to cannibalize personnel from other important divisions. Bringing tax charges in more cases could, for example, divert investigators from more complex corporate-tax cases, warned Sean O’Connell, a partner at law firm Baker Donelson who has prosecuted both tax and fraud cases.
“Those types of cases are not contemplated by this particular memo,” said O’Connell. “This particular memo seems to treat tax cases as, ‘Well, you guys can tag along on pre-existing fraud cases.’”
