IRS Audit Revenue Falls by 35% Amid Workforce Reductions
A Treasury Inspector General report revealed that revenue from IRS audit activities dropped significantly in fiscal year 2025, falling to $6.5 billion—a 35% decline compared to the previous year. This decrease coincided with a sharp reduction in enforcement staff, which fell by nearly 27%, from 27,217 employees in fiscal 2024 to just 19,612 in fiscal 2025. The report highlighted that audit starts declined across most categories. Examinations of individuals with income over $400,000 dropped by 27%, and partnership audits fell sharply from 6,709 to 1,589—a decline of 76%. In contrast, large corporate audit starts increased slightly by 7% during the same period. Collection function revenue rose by 17%, largely due to automated collection notices resuming after pandemic pauses. The Treasury watchdog expressed concern over how staffing losses are affecting IRS operations and its ability to enforce tax laws effectively. Former acting IRS Commissioner Douglas O'Donnell warned that these cuts could diminish confidence in taxpayer compliance, particularly among large corporations.
Topics: audit revenue decline enforcement workforce reduction fiscal year performance IRS