Business & Finance
IRS audit revenue fell 35% in fiscal 2025 following major staff cuts, watchdog report finds
A Treasury Inspector General report indicates that workforce reductions outweighed administrative savings as tax collections dropped by $3.5 billion.
The short version
- A new Treasury Inspector General report found that IRS audit-related revenue dropped by 35% in fiscal year 2025, falling from $10 billion to $6.5 billion.
- The decline followed a 27% reduction in enforcement and collection staff, with more than 25,000 employees leaving through layoffs or early retirement as part of a broader government efficiency push.
- The sharpest drop in oversight occurred in partnership audits, which fell by 76% between 2023 and 2025.
- While IRS leadership contends that improved technology will allow more efficient enforcement, staffing continued to decline in early fiscal 2026 amid proposals for further funding cuts.
Key facts
- IRS audit revenue fell 35% from $10 billion in fiscal year 2024 to $6.5 billion in fiscal year 2025, according to a report from the Treasury Inspector General for Tax Administration.[NPR]
- The agency experienced a 27% decline in enforcement and collection staffing during 2025 as over 25,000 workers were laid off or took early retirement, including roughly 3,600 tax examiners.[NPR]
- Partnership audits decreased by 76% between 2023 and 2025 following the cuts to auditing personnel.[NPR]
- IRS Chief Executive Officer Frank Bisignano defended the agency's enforcement efforts to lawmakers, stating the agency is leveraging technology to execute more targeted audits.[NPR]
- IRS staffing numbers continued to decrease during the first four months of the current fiscal year as the Trump administration proposed further funding reductions for 2027.[NPR]
What remains uncertain
- The full long-term impact on overall voluntary tax compliance and uncollected revenue remains unknown, as the Inspector General noted that downstream effects of the cuts will take time to materialize.[NPR]