Defunding the IRS Empowers Tax Cheats, Leaving Honest Citizens to Pay the Price

Zewdi Tsegay, a Maryland tax preparer, allegedly turned trust into a weapon. Her business, Taxes R Us LLC, later rebranded as Taxes 4 You LLC, is accused of filing false returns for clients from 2018 to 2024, fabricating business losses to secure undeserved refunds. In one chilling instance, an IRS undercover agent caught Tsegay flipping a legitimate return into a fraudulent one, conjuring a fictitious loss to claim a refund. Worse, she allegedly failed to file her own returns for years. This isn’t just a story of one rogue operator; it’s a window into a broader crisis eroding the foundation of our public good.

Tax fraud, like the kind Tsegay is charged with, isn’t a victimless crime. It siphons off billions, leaving gaping holes in the budgets for schools, hospitals, and infrastructure. The annual tax gap, the difference between what’s owed and what’s paid, now exceeds $1 trillion. That’s money that could rebuild crumbling bridges or expand healthcare access. When preparers exploit their role, they don’t just cheat the system; they rob communities of resources needed to thrive.

This case, unsealed on April 14, 2025, in Greenbelt, Maryland, underscores a painful truth: our tax system’s integrity hinges on enforcement. Without it, the honest majority who dutifully file their returns bear an unfair burden. The IRS’s ability to catch fraudsters like Tsegay is a lifeline for fairness, yet it’s under constant threat from those who’d rather slash budgets than face accountability.

For every family scraping by, every teacher buying classroom supplies out of pocket, tax fraud is personal. It’s not abstract numbers on a ledger; it’s the difference between a funded future and a neglected one. Tsegay’s alleged actions remind us why we can’t afford to look away.

The numbers are staggering. In 2024, the U.S. collected $5.1 trillion in taxes, but the tax gap swallowed nearly 20% of potential revenue. Multinational corporations dodge $249 billion annually, while wealthy individuals evade another $150 billion. These losses don’t just strain budgets; they deepen inequality, shifting the tax load onto working families. When someone like Tsegay allegedly manipulates returns, it’s not just a single refund—it’s a ripple effect that starves public programs.

Consider what’s at stake. A $500 billion shortfall projected for 2025 could gut funding for education, Medicaid, or climate initiatives. Every dollar lost to fraud is a dollar not spent on universal pre-K or renewable energy. The IRS’s Criminal Investigation Division, which nabbed Tsegay, maintains a 90% conviction rate, but budget cuts have slashed its capacity. Fewer agents mean fewer stings, letting more fraud slip through the cracks.

Some argue tax enforcement is too aggressive, claiming it burdens small businesses or honest preparers. But this ignores reality. The IRS’s undercover operations, like the one that exposed Tsegay, target deliberate fraud, not innocent errors. Weakening enforcement doesn’t protect the little guy; it emboldens the greedy, letting them exploit loopholes while regular taxpayers foot the bill.

History backs this up. In the 1930s, the IRS’s pursuit of Al Capone for tax evasion showed enforcement’s power to hold even the untouchable accountable. Today’s fraudsters may not be mobsters, but their impact is just as corrosive. Letting them off the hook betrays the public trust.

Tax preparers hold immense power. Clients, often unfamiliar with tax code complexities, rely on their expertise. When preparers like Tsegay allegedly betray that trust, it’s the vulnerable who suffer most. Low-income families, chasing promised refunds, can face audits or penalties for returns they didn’t know were false. The IRS flagged 1.9 million returns for identity fraud in 2025, suspending $16.5 billion in refunds. Behind those numbers are real people, caught in a system that’s supposed to protect them.

Strengthening oversight of preparers is non-negotiable. Licensing requirements and penalties have tightened, but more is needed. The IRS’s “Dirty Dozen” list of scams highlights how unscrupulous preparers exploit tax season’s chaos. Public awareness campaigns and stricter regulations could shield taxpayers from fraud, ensuring preparers act as allies, not predators.

Opponents of regulation often cry overreach, arguing it stifles small businesses. But this dodge ignores the harm caused by unchecked fraud. A New York preparer’s recent indictment for filing false returns without clients’ consent shows what happens when oversight lags. Protecting taxpayers means holding preparers to the same standard we demand of auditors or doctors—competence and integrity.

Tsegay’s case is a wake-up call. If convicted, she faces up to three years per count of filing false returns and one year per count of failing to file her own. The U.S. Sentencing Guidelines, refined since 1987, ensure penalties reflect the crime’s scale—$358,827 is the median loss in tax fraud cases. But punishment alone isn’t enough. We need a system that prevents fraud before it starts, with robust IRS funding and international cooperation to close loopholes like offshore havens.

The fight against tax fraud is a fight for justice. It’s about ensuring the wealthy and well-connected pay their share, not just the working class. It’s about funding schools, roads, and hospitals instead of letting billions vanish into fraudulent refunds or hidden accounts. The IRS’s work, from blockchain analytics to undercover stings, proves we have the tools to win this fight. What we need now is the will.

Some will always push to defund the IRS, claiming it’s bloated or intrusive. But their arguments crumble under scrutiny. A weakened IRS doesn’t save taxpayers; it hands a free pass to cheats, leaving the rest of us to clean up the mess. We can’t let that happen. The stakes are too high, the losses too real.