The IRS slashed its staff. One result? More taxes going uncollected
A Treasury Department report reveals that IRS audit revenue dropped 35% in 2025 following significant staff cuts. The reduction in enforcement personnel has led to billions in uncollected taxes, undermining previous efforts to close the tax gap.
Why it matters
This highlights the fiscal trade-offs of government efficiency initiatives and the direct correlation between agency staffing levels and federal revenue collection.
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.
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