If the IRS were abolished tomorrow, your legal duty to pay federal taxes would not go away, but almost everything that makes the tax system function would. The agency collected more than $5.1 trillion in gross taxes and processed over 266 million returns in fiscal year 2024.1Internal Revenue Service. About the IRS Data Book Take away the agency and you take away the plumbing: the place payments go, the system that issues refunds, the program that delivers tax credits to working families, the audits that keep voluntary compliance honest, and the data pipeline that state governments and foreign banks depend on.
Your Obligation to Pay Federal Taxes Would Remain
The IRS is an agency, not a constitutional institution. Congress’s power to tax rests on Article I, Section 8 of the Constitution, which grants the “Power To lay and collect Taxes, Duties, Imposts and Excises,”2Congress.gov. Article 1 Section 8 Clause 1 – Constitution Annotated and on the 16th Amendment, ratified in 1913, which authorizes taxes on incomes “from whatever source derived, without apportionment among the several States.”3National Archives. 16th Amendment to the U.S. Constitution: Federal Income Tax (1913)
Every tax statute in the Internal Revenue Code (Title 26 of the U.S. Code) would stay on the books unless Congress separately repealed it. Employers would still be legally required to withhold. Individuals would still legally owe income tax. What would change is that the enforcement arm authorized under 26 U.S.C. § 7801 to administer that code would no longer exist.4Office of the Law Revision Counsel. United States Code Title 26 – Section 7801
Refunds and Tax Credits Would Stop Reaching People
The IRS doesn’t only take money in. It also pays it out. In fiscal year 2024, the agency issued nearly $490.6 billion in tax refunds.1Internal Revenue Service. About the IRS Data Book For most households that refund is not a windfall. It is money already overpaid through payroll withholding. Without the IRS, there is no mechanism to calculate what you overpaid or return it to you.
Refundable credits work the same way, and the stakes are higher for the families that rely on them. Roughly 24 million workers and families receive about $70 billion a year through the Earned Income Tax Credit.5Internal Revenue Service. Statistics for Tax Returns with the Earned Income Tax Credit (EITC) The Child Tax Credit delivered about $118 billion in 2022, reaching around 90% of taxpayers with children.6Congress.gov. The Child Tax Credit: How It Works and Who Receives It These credits are paid even to people who owe no tax, and they are delivered entirely through the tax-return process. No agency, no payment.
The same is true for health insurance subsidies. If you receive advance Premium Tax Credits to help pay for a Marketplace plan under the Affordable Care Act, you have to file a return so the IRS can reconcile the advance amount against what you actually qualified for.7Internal Revenue Service. Questions and Answers on the Premium Tax Credit Without the reconciliation process, the subsidy program can’t function as designed.
There Would Be Nowhere to Send Federal Tax Payments
Consider how the money actually moves. Under 26 U.S.C. § 3402, every employer withholds federal income tax from wages and remits it to the government, along with Social Security and Medicare taxes.8Office of the Law Revision Counsel. 26 US Code 3402 – Income Tax Collected at Source All of it flows through IRS forms, IRS processing centers, and IRS databases that match employer reports against employee filings. Freelancers and small businesses send quarterly estimated payments through the same pipeline.
Remove the agency and the payments have no recipient, no account to be credited to, and no system to reconcile them. The IRS estimates a voluntary compliance rate of about 85%, meaning roughly 85 cents of every dollar owed gets paid without enforcement action. Even willing taxpayers would have no functioning way to comply.
Enforcement Would Effectively End
U.S. tax compliance rests on the mix of voluntary filing and credible enforcement. The IRS closed nearly 583,000 audits in fiscal year 2023, recommending $31.9 billion in additional tax.9Internal Revenue Service. The Agency, Its Mission and Statutory Authority The system behind that number is broad: automated document matching, civil penalties like the 20% accuracy-related penalty under 26 U.S.C. § 6662,10Office of the Law Revision Counsel. 26 US Code 6662 – Imposition of Accuracy-Related Penalty on Underpayments and a criminal investigation division that refers fraud and evasion cases for prosecution.
The penalty and criminal statutes would still be on the books, but no one would remain to run audits, flag discrepancies, assess penalties, place liens, levy accounts, or garnish wages. Paying federal taxes would become functionally voluntary, not because the law changed, but because no one would be enforcing it.
State Tax Systems Would Lose Their Foundation
More than 35 states and the District of Columbia use federal adjusted gross income or federal taxable income as the starting point for calculating state income tax. When you file a state return, you begin with a number produced inside the federal system.
Without a functioning federal return, states lose that anchor. They also lose the W-2 and 1099 data that runs through IRS systems and gets used to cross-check state filings. States would have to define income independently, build their own reporting forms, and hire their own enforcement staff, or watch their own collections erode along with the federal system.
Cross-Border Tax Enforcement Would Unravel
The IRS sits at the center of a global reporting network. Under the Foreign Account Tax Compliance Act, foreign banks, brokerages, and certain insurers report information on accounts held by U.S. taxpayers directly to the IRS. Institutions that don’t comply face a 30% withholding tax on certain U.S.-source payments.11Internal Revenue Service. Foreign Account Tax Compliance Act (FATCA)
The United States also has income tax treaties with dozens of countries. Each treaty designates a “competent authority” to resolve cross-border tax disputes, and on the U.S. side that authority operates inside the IRS.12Internal Revenue Service. Competent Authority Arrangements Without an IRS, foreign governments have no counterpart to exchange information with and no reason to keep pressing their own banks on FATCA compliance. The practical result is a wider door for hiding income offshore.
Federal Spending Would Face an Immediate Crisis
The federal government spent about $7 trillion in fiscal year 2025.13U.S. Treasury Fiscal Data. Federal Spending That spending covers Social Security, Medicare, national defense, veterans’ benefits, federal salaries, infrastructure, and interest on the national debt. Social Security alone was about 21% of the federal budget in fiscal year 2024.
Tax revenue funds the vast majority of that spending. The rest is borrowed, and borrowing depends on lenders’ confidence that the government can service its debt. A government with no functioning revenue system would struggle to meet existing obligations. Social Security payments, Medicare reimbursements, military pay, and federal salaries would all be at immediate risk.
What Abolish-the-IRS Proposals Actually Say
Serious proposals to abolish the IRS don’t usually contemplate the government simply ceasing to collect revenue. The leading vehicle is the FairTax Act, reintroduced in the 119th Congress as H.R. 25 (the FairTax Act of 2025). It would eliminate federal income, payroll, estate, and gift taxes and replace them with a 23% national retail sales tax.14Congress.gov. Text – HR 25 – 119th Congress (2025-2026): FairTax Act of 2025
The IRS would lose its funding after 2027 under the bill, but collection would shift to state governments, which would administer the federal sales tax and receive an administration fee. In any state that declined, the Secretary of the Treasury would collect directly.14Congress.gov. Text – HR 25 – 119th Congress (2025-2026): FairTax Act of 2025 The bill also calls for repeal of the 16th Amendment, and if that repeal doesn’t happen within seven years, Congress would have to vote on whether to repeal the FairTax Act itself. That built-in reset acknowledges a basic reality: as long as the constitutional authority to tax income exists, any future Congress can bring the income tax back.
Whether a consumption tax collected by 50 state agencies would actually replace the revenue the IRS currently brings in is a separate and contested question. The point for anyone asking what happens if the IRS is abolished is that every serious proposal assumes some collection body has to exist. The consequences above describe an abolition with no replacement, which is exactly the scenario the proposals themselves are written to avoid.