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The IRS slashed its staff. One result? More taxes going uncollected
The IRS slashed its auditing staff last year, but the move may have backfired as tax collections from enforcement efforts plummeted, an Inspector General report shows.
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UNITED STATES: A new Inspector General's report shows that as the IRS slashed its auditing ranks last year, collection of unpaid taxes fell. Karen Bleier/AFP hide caption.
The IRS slashed its auditing staff last year in what was billed as a cost-cutting move, but if the effort was designed to improve the government's bottom line, it has backfired.
A new report from the Treasury Department's Inspector General for Tax Administration shows that revenue from audits plunged 35% in fiscal year 2025, meaning billions of dollars in taxes went un-collected . The drop coincides with a 27% cut in enforcement and collection staffing at the IRS, as part of Elon Musk's campaign to boost government efficiency.
"The downstream effects of these reductions are likely to become more apparent over time," the Inspector General wrote.
The IRS had beefed up its auditing ranks during the Biden administration, in an effort to collect more of the estimated $696 billion dollars in taxes that go unpaid every year, mostly as a result of people and businesses that under-report their income.
The increased staffing led to a 41% increase in audit-related revenue in 2024, but that was largely reversed last year. More than 25,000 IRS employees were laid off or took early retirement in 2025, including about 3,600 tax examiners.
The loss in tax revenue from decreased audit activity outweighs any savings from reduced staffing at the tax-collection agency.
This Bay News report is based on originating coverage from NPR.