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IRS loses staff, audits drop
Archived — this story has rotated out of today’s deck. It is kept here in full.
The gist
IRS audit revenue fell 35% to $6.5 billion in fiscal 2025 after workforce cuts. The drop signals billions in uncollected taxes and weakened enforcement.
Background
The IRS lost roughly 28% of its total workforce since the start of 2025, with enforcement and technology roles hit hardest. This followed the Trump administration's cost-cutting efforts, including DOGE's push to reduce federal employees. A Treasury Inspector General for Tax Administration (TIGTA) report released Aug. 26, 2026, detailed the impact on audit revenue and staffing.
How it unfolded
- 2024IRS had 27,217 examination and collection staff; audits brought in $10 billion in fiscal 2024.
- Jan 2025Trump administration began efforts to reduce government size, leading to IRS workforce cuts.
- Mar 2025Small Business and Self-Employed Division paused new examinations due to resource uncertainty.
- Sep 30, 2025Fiscal 2025 ended with audit revenue at $6.5 billion, down 35% from prior year.
- Jan 2026IRS examination and collection staff dropped to 17,517, down nearly 10,000 from fiscal 2024.
- Aug 26, 2026TIGTA released report detailing audit revenue drop and staffing losses.
Who’s saying what
- Official
- Trump administration officials say AI will help identify tax evaders without needing as many workers.
- Expert
- Yale Law professor Sarin compares audits to police presence, noting reduced audits may lower voluntary compliance.
- Caution
- TIGTA warns the downstream effects of staff reductions are likely to become more apparent over time.
Still unverified
The full impact of the audit decline on tax compliance is not yet known, as audits can take years to complete.