IRS Audit Revenue Plummets by Billions Following Staff Reductions
A new watchdog report from the Treasury Department’s Inspector General for Tax Administration reveals a significant decline in IRS audit revenue. During fiscal year 2025, audit collections fell to $6.5 billion, a 35% decrease from the previous year's $10 billion. Overall tax enforcement revenue dropped by nearly $5 billion. This decline is directly attributed to sweeping staff reductions, with the agency losing 27% of its examination and collection staff in 2025, totaling over 25,000 employees through layoffs and buyout programs. Consequently, thousands of open audit cases have stalled. The report indicates that examinations of individuals earning over $400,000 plummeted by 27%, and audits of complex business partnerships fell by nearly 30%. Former Treasury officials emphasize that auditing high-income individuals and complex entities requires experienced human oversight, which cannot be fully replaced by technology.
