Disrupt Your Money: Liberation through Financial Education for Marginalized Business Owners

What’s at Stake When the IRS Is Weakened: How Defunding the IRS Affects Small Business Owners and Financial Transparency

• Meg K. Wheeler • Season 2 • Episode 8

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Think the IRS is just about tax season headaches? Think again.

In this eye-opening episode, Meg unpacks the real cost of weakening the IRS — and why this issue is critical for small business owners, especially those from marginalized communities. From billionaires dodging taxes to low-income families getting audited, the system is broken — and intentional.

🔎 Meg Breaks Down:

  • Why defunding the IRS isn't just a budget issue — it's a political strategy that protects the wealthy.
     
  • How underfunding leads to more audits for low-income and BIPOC taxpayers.
     
  • What this all means for you as a small business owner trying to play by the rules.
     
  • The ripple effects on financial education, taxpayer support programs, and systemic equity.

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This podcast is hosted by Meg K. Wheeler, CPA and Biz Money Coach and Founder of the Equitable Money Project. Meg is on a mission to turn online educators, service providers and coaches from Not Numbers People to Badass Money Makers. Are you ready to Disrupt Your Money? Learn more about Meg here!

This podcast is intended for informational & educational purposes only and is not intended as professional financial advice. 

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Song Credit: Midnight Specials by Ash Nino

SPEAKER_00:

Well, hey there, I'm Meg Wheeler, CPA, entrepreneur, and political activist, and you're listening to Disrupt Your Money, the podcast that's pursuing liberation through financial education. Let's face it, our economy and financial institutions weren't built to support the majority of us. So if we're going to achieve financial equity and justice for all, we've got to build our own. So let's do it, my friends. Let's get ready to disrupt your money. Well, hey there everyone, and welcome back to Disrupt Your Money, the podcast where we dig deep into the systems that shape our financial lives and get real about how to change them. I'm your host, Meg K. Wheeler, CPA, financial educator, and founder of the Equitable Money Project. And today we're talking about something that might not sound sexy on the surface, the IRS. But stick with me because this conversation is critical for you as a small business owner, and especially if you identify as part of a marginalized community. Why? Because how we make, spend, and nurture our money isn't just personal, it's political, it's powerful, and it's revolutionary. So today's episode, What's at Stake When the IRS Is Weakened, is going to be a good one. Let's go ahead and dive in. Now let's start with the basics. The IRS, which is short, of course, for the Internal Revenue Service, is the federal agency that collects taxes and enforces tax laws in the US. Now this sounds pretty simple, right? But this agency plays a huge role in how our government functions. Every year, the IRS collects trillions of dollars in taxes, money that funds things like infrastructure, education, public health, and yes, social services that many Americans rely on. But here's the catch. The IRS isn't just about collecting money. It's also supposed to ensure fairness in the tax system. That means making sure that the ultra-wealthy and massive corporations actually pay their fair share, and that regular people, like you and me, aren't unfairly targeted or burdened. Now, when the IRS is properly funded, it can go after tax evasion at the top. But when it's defunded, that burden shifts, and guess who ends up under the microscope instead? Now, over the last few years, there's been a very intentional movement, mostly driven by conservative lawmakers, to defund and dismantle the IRS. Now, let's be clear, this is not about cutting waste. This is a strategic move that protects the ultra-rich. When audits are slashed for millionaires and billionaires, they get to walk away with billions in unpaid taxes, while the rest of us pick up that tab. Now, in 2022, the Biden administration made a historic move by allocating$80 billion to strengthen the IRS. This was aimed to modernize systems, hire auditors, and go after high-income tax cheats. Now, I do want to note that Congress later reduced this amount to$60 billion. But that funding did make a difference. In 2024 alone, the IRS collected$1.1 billion from 1,600 wealthy Americans with unpaid tax debts. And that was up from$38 million the year before. Now, this IRS funding, not surprising, has been under attack ever since. Certain political leaders have pushed legislation to slash this funding with recent moves to claw back billions. Their argument is that the IRS is, quote, targeting small businesses and middle class Americans, end quote. But the data shows the opposite. Underfunded, understaffed IRS offices have historically focused their audits on low-income taxpayers, especially those who claim the earned income tax credit. And shocker, but many of these folks are black and brown. So when the IRS is weakened, it's not just about fewer audits for the rich, it's about increased scrutiny for marginalized people and a tax system that becomes even more unjust. So if you're a small business owner, especially one from a marginalized community, this matters deeply. First, if the IRS doesn't have the resources to educate and assist taxpayers, which is a big part of their mandate, then you get less support. That means cutting hugely impactful and successful programs like Free File or the Taxpayer Advocate Service, and it means it's harder to navigate your responsibilities, to understand deductions that you can take, and to get clear guidance on what you should do. So you're left guessing, and that means you're left vulnerable. Now, second, when wealthy corporations dodge taxes, guess who has to fill the gap? Folks like you and me, small business owners, regular middle class people. You're paying into a system that is rigged to benefit the few at the top. And now that system is being even further gutted. Third, when the IRS goes after low-hanging fruit, it means more audits for small business owners, not fewer. And for marginalized businesses, which already face barriers to capital and institutional support, these audits can be devastating. So what can you actually do to protect yourself and your business in this landscape? Well, first of all, you can keep your records airtight. Make sure that your bookkeeping is clean, your receipts are saved, and your tax filings are on point. I recommend a cloud-based system, we're big fans of Wave apps, and monthly reconciliation. These are non-negotiables in this current environment. The second thing you can do is to work with a qualified tax professional. And yes, I recognize that this is an investment, but it's one that can save you massive stress and potential legal issues down the line. I highly recommend that you look for a CPA or a tax advisor who is experienced in small business and who understands the nuances of your industry. Third, know your rights. If the IRS contacts you, you do have the right to representation. So don't panic, get a tax pro involved and make sure that you understand what's being asked of you. And don't forget about the taxpayer advocate service, which is an independent organization that exists within the IRS to ensure that every taxpayer is treated fairly and that you know and understand your rights. And for as long as this service continues to exist, let's make sure we're taking advantage of it. Fourth, do not wait until tax season. Tax planning should be a year-round activity. Look at your cash flow, make sure you're figuring out your estimated taxes, and identify those tax deductions now. Do not wait until April. Finally, let's talk about action because this is a systemic issue. It doesn't just affect us, and it needs a systemic response. So, first, support organizations that are fighting for tax justice. There are groups out there like the Institute on Taxation and Economic Policy and Americans for Tax Fairness that are doing this critical work. Donate to them, amplify their message, and stay informed. Second, call your representatives. Tell them that you support fully funding the IRS to ensure that the rich pay their fair share. Make it clear that tax justice is racial and economic justice. And I'm going to pause here to just put a little plug-in for our Substack, Call Your Representatives, where every single week we send you a script that you can use to call your representatives about important policy issues. You can learn more and sign up by heading over to callyourrepresentatives.com. Now, third, educate your community. As a business owner, you have a powerful platform. Talk to other small business owners. Share this podcast episode. Host a workshop. The more we understand what's at stake, the more power we have to push back. Now I recognize that the IRS may not be a sexy topic, but it is a critical one. Because when we talk about financial justice, we cannot ignore the systems that make or break it. And as small business owners, especially those from marginalized backgrounds, we deserve transparency, fairness, and a seat at the table. And we will not get those if we let these institutions collapse from within. Thanks for being here with me today. Make sure to subscribe, share this episode with someone who needs to hear it, and remember your money is powerful. Use it to disrupt. Until next time, my friends, keep building, keep questioning, and keep disrupting.