Watchdog: IRS loses $3.5B in 2025 audits due to DOGE cuts.
TL/DR –
The Internal Revenue Service (IRS) collected $6.5 billion in revenue from tax audits in 2025, a significant drop from $10 billion the previous year, due to staff reductions instigated by the Trump administration’s cost-cutting measures according to a Treasury Inspector General for Tax Administration (TIGTA) report. This resulted in a 30% decrease in the number of auditors at the IRS, impacting the agency’s ability to complete time-sensitive investigations and collect unpaid taxes. The IRS initiated a third fewer audits of individuals in the fiscal year 2025 due to staffing shortages.
Audit Revenue Dropped in 2025 Due to IRS Staff Cuts, Says Watchdog Report
The Internal Revenue Service (IRS) saw a reduction in money collected from audits in 2025, a direct consequence of staffing cuts implemented by the Trump administration, according to a recent watchdog report.
The report from the Treasury Inspector General for Tax Administration (TIGTA) revealed that in the fiscal year 2025, concluding on September 30, the IRS only managed to collect $6.5 billion in revenue from tax audits. This is a significant drop from the $10 billion collected the previous year.
Impact of DOGE Staff Reductions
During President Donald Trump’s second term in 2024, his administration launched an initiative to curb government spending. As part of this plan, the Department of Government Efficiency (DOGE) — spearheaded by Elon Musk — was set up, which resulted in a 30% drop in the number of auditors at the IRS’ disposal.
According to the report, “the downstream effects of these reductions are likely to become more apparent over time”. This is because the decrease in staff impedes the IRS’s ability to conduct thorough investigations to collect unpaid taxes from individuals and corporations that under-report their earnings.
The IRS reportedly began a third fewer audits of individuals in the fiscal year 2025, according to TIGTA. One division of the agency was unable to start new audits for six months due to the uncertainty of sufficient staff to handle them.
Contrast with Biden Administration’s IRS Funding
The decrease in audits and staffing marks a turn away from the efforts of the Biden administration. Under Biden, the IRS received approximately $80 billion in additional funding through the Inflation Reduction Act of 2022. This funding aimed to employ tens of thousands of new workers and to clamp down on tax evasion. In 2024, the IRS anticipated that this funding would aid in recovering hundreds of billions of dollars in additional revenue by pursuing overdue and unpaid taxes.
However, by January 2026, the number of IRS employees involved in auditing and collections had decreased to 17,517. This is a reduction of almost 10,000 workers from the fiscal year 2024.
Trump administration officials have claimed that the use of artificial intelligence would assist in identifying tax evaders, thereby reducing the need for a large number of paid workers.
IRS CEO’s Stance on Artificial Intelligence and Advanced Analytics
Frank Bisignano, the CEO of the IRS, emphasized in an April congressional testimony that the IRS is leveraging artificial intelligence and advanced analytics to identify high-risk areas of non-compliance and fraud with enhanced accuracy. He argued that these strategies, which have only come to fruition in recent years, allow for the detection of instances of tax evasion that were previously undetectable.
Nevertheless, TIGTA insists that the reduction in staff is adversely affecting the enforcement of tax laws. The report expressed concern about the impact of these staffing losses on the IRS’s ability to meet department priorities.
Natasha Sarin, former counselor on tax policy to ex-Treasury Secretary Janet Yellen, echoed this sentiment to NPR. She argued that stripping the IRS of resources is not a cost-saving measure but rather a loss-making one because it hampers the IRS’s ability to collect taxes effectively.
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