The shrinking of the IRS by 26% this year will likely make next year’s filing season a lot more onerous. But its impact is already being felt by tax professionals and the clients who rely on them.

And in the long run, it could cost the US billions. The IRS is conducting far fewer audits, which have a much greater ROI than taxpayer service. It’s lost many experienced auditors with specialized skills, who can conduct the examinations of corporations and high-net-worth taxpayers that bring in markedly more revenue than audits of lower-income people.

What’s more, the news that the IRS has been hampered could reduce compliance.

“The direct effect” of the job cuts “is that there’s fewer people auditing your tax return,” Elena Patel, co-director of the Urban-Brookings Tax Policy Center, told CFO Brew. “But we also worry about indirect effects.” Compliance might be affected if taxpayers assume the IRS isn’t auditing “as carefully or frequently” as usual, she said.

The Yale Budget Lab, making the assumption that IRS layoffs will result in less compliance, estimates that staff losses like the ones seen this year will significantly increase the size of the “tax gap,” or the difference between what taxpayers owe and what the IRS actually collects. Layoffs of 22,000 IRS personnel, it posits, will add an additional $160 billion to the tax gap—which currently sits at $700 billion—by 2026. (The IRS is set to lose around 26,000 staffers this year.)

Will a reduced IRS be able to keep up with audits?—CV

While it can seem as if artificial intelligence has all the answers, especially when given the right prompt, many providers are finding it difficult to find the right pricing models for their AI products in a rapidly evolving landscape.

Guy Marion, the chief marketing officer at Chargebee, a commerce platform for subscription and recurring revenue businesses, told IT Brew that companies building and iterating the latest AI products are experiencing market changes as much as every six months.

“The industry is moving at a faster pace than we’ve ever seen before, and the markets are bigger than they used to be,” Marion added.

In response, he said that some companies are choosing to charge customers on a subscription basis for using AI tools and services. While it could seem as if such fast industry development promotes competition and choice within the market, some see it as burdensome for consumers.

Chargebee, in a recent survey, reported that companies that combine subscription, usage, and outcome models (or the issuance of a flat fee) doubled their probability for increased profit margins in comparison to those with just a usage-based model.

Keep reading IT Brew’s story on what AI will cost your company.—CN

As global CFO for delivery at Uber Eats, Michiel Boere helped take the company from losing a billion dollars a year to being profitable. In 2023, he became CFO at another company with a global footprint: HR software startup Remote. Clients can use Remote to recruit, hire, and pay employees and contractors across borders.

Boere spoke with CFO Brew about how, in both those roles, he had to navigate a complex multinational compliance landscape.

This interview has been edited for clarity and length.

You’re the first CFO at Remote. What changes did you make when you started?

As a CFO, I have a three-to-five-year roadmap in my head of all the things that we need to do within finance to get the company ready for the next phase, and that includes things like proper cash management, a good global tax structure, understanding the unit economics of the company, making sure that our collections process works really well…And then it’s about getting the right people in place and giving them the right amount of support to go on a journey from startup to scale up to eventually a public company.

It’s got to be challenging to keep up with the compliance requirements in all those different countries. How does Remote handle that?

Number one, we have actually developed AI ourselves to alert us and customers of changes in regulations globally. The second is that we have implemented what I would call a continuous audit process, where we continuously audit our operations in all countries around the world…essentially a full screening of all the requirements that are there in a country.

For more on managing global audits, click here.—CV

The agenda is live—and it’s stacked with insight. From risk strategy to data privacy to regulatory trends, Sept. 16 in NYC is shaping up to be a can’t-miss morning. Check out what’s in store, plan your seat-hopping accordingly, and join us in person or virtually—tickets are available now. Register here.

Skip the noise and cut to the jobs that matter. CollabWORK curates openings from top employers and shares them directly in trusted spaces like CFO Brew—click here to see the full list for readers like you.

• Finance Manager, AWS Applied AI Solutions Finance at Amazon (in person)
• Senior Tax Accountant at Lavallee & Company, Inc. (in person)
• Accounting & Audit Expert at Mercor (remote)
• Financial Planning and Analysis Manager at Gotion Inc. (in person)
• Chief Financial Officer at a biotech organization (in person)