The Treasury Inspector General for Tax Administration reported late last month that the IRS collected $6.5 billion from audits in fiscal 2025, down from $10 billion the year before.
The coverage has been accurate and it has all stopped at the same place, which is that the agency cut roughly 10,000 auditors and collectors and the money followed them out the door. What almost nobody has picked up is the line sitting a few pages away in the same report: the Inflation Reduction Act enforcement funding that paid for those hires was exhausted as of December 31, 2025. There is no pot of money to hire anyone back with. The 35 percent drop is not a snapshot of a bad year. It is the first full year of a new baseline.
That distinction matters because every version of this story carries an unspoken assumption that the decision is reversible, that a future administration or a future commissioner simply staffs the examination division back up and the revenue returns. The Journal of Accountancy’s summary of the report notes the supplemental funding is gone. Reversing this now requires a new appropriation from a Congress that has spent two years cutting the last one.
Who Stopped Getting Audited
The headline number obscures the more interesting finding, which is that the enforcement that disappeared was not distributed evenly.
Examinations of individuals earning more than $400,000 fell to roughly 43,000 in fiscal 2025, down 26 percent from the year before, according to CBS News. Audits of new business partnerships dropped 30 percent, which the report attributes to a reorganization and delayed training. The Global High Wealth program, the unit built specifically to untangle the layered entity structures that very rich people use, had 27 percent fewer employees as of January. Individual examination starts overall fell 30 percent.
Large corporate audits, meanwhile, went up 17 percent.
Read those together and a picture emerges that nobody in the administration has been asked to explain. The audits that survived are the ones that run on standardized filings and established workflows. The audits that collapsed are the ones that depend on experienced people spending months inside complicated returns: partnerships, pass-through structures, high-net-worth individuals with a dozen entities between them and their income. Those are also the audits with the highest yield per hour worked, which is why the revenue fell so much faster than the headcount did. Staffing dropped 27 percent. Audit revenue dropped 35 percent.
The proposed additional tax coming out of examinations tells the same story from another angle. It was $31.9 billion in fiscal 2023. It was $26.8 billion in fiscal 2025.
The Claim That the Report Quietly Falsifies
The agency’s answer to all of this is technology. IRS chief executive Frank Bisignano told CBS that the agency’s “advanced data and analytic strategies allow us to catch instances of tax evasion that would have been undetectable just a few years ago.”
Nobody has held that sentence up against the document it was issued in response to. The report is the test of the claim, and the claim fails it. If analytics were compensating for the missing examiners, the yield per audit would be climbing while volume fell. Instead both fell, and revenue fell faster than either. Total enforcement revenue slipped from a record $98.7 billion in fiscal 2024 to $93.8 billion in fiscal 2025. Detection is not the constraint here. Nobody at the IRS is short of leads. What the agency is short of is people to work them, and a model that flags a suspicious partnership return does nothing at all if there is no revenue agent available to open the case.
There is a version of the technology argument that is honest, which is that automation eventually raises the floor on simple compliance work. That version does not describe fiscal 2025 and the administration knows it.
Sixty-Five Billion Saved, Nine Hundred Billion Lost
The cuts were sold as savings, so it is worth being precise about the arithmetic.
The Budget Lab at Yale ran the numbers on the 2025 workforce reduction and found that cutting nearly 28,000 IRS employees saves about $45.5 billion in costs over ten years while producing $643.2 billion in gross deficit increases, for a net hole of roughly $598 billion. Fold in the separate $20 billion cut to IRS funding and their analysis puts combined savings at $65.5 billion against $926 billion in gross deficit increases through 2035.
Those are projections and projections are arguable. The direction is not. Every serious estimate of IRS enforcement, from the Congressional Budget Office to the agency’s own historical returns, puts the yield on an enforcement dollar somewhere between three and twelve to one. You do not have to accept Yale’s precise figure to see that firing the people who collect money is a strange way to save money.
This is where LiveNewsChat will say the thing the wire copy will not. The Department of Government Efficiency’s IRS reductions were not a cost-cutting failure, because cost cutting was never a coherent description of them. An initiative that spends a dollar to lose between three and ten is not incompetent budgeting; it is a transfer, and the beneficiaries are identifiable. They are the taxpayers whose returns are complicated enough to require an experienced human examiner, which is precisely the population whose audit rate fell hardest. Senator Elizabeth Warren put it more bluntly than we would, telling CBS that “gutting the IRS is a win for wealthy tax cheats and a loss for working people who play by the rules.” The report does not contradict her.
It also is not the first time this administration has arranged the tax-enforcement apparatus around who gets examined. We covered the fight over Todd Blanche’s nomination and the audit immunity question in July, and the pattern rhymes.
What Would Actually Fix It
Congress has to appropriate enforcement money again, and it has to do it as a multi-year commitment rather than an annual line that can be rescinded the moment control of a chamber flips. The Inflation Reduction Act’s ten-year enforcement fund was designed that way for a reason: hiring and training a revenue agent capable of working a partnership return takes years, and no agency will invest in that pipeline against money that might vanish in the next continuing resolution. That fund is now spent, eight months ago, and the Bloomberg Tax reporting on the collections decline makes clear the agency is not replacing it out of its regular budget.
Total federal tax revenue still hit $5.3 trillion in fiscal 2025, and that number is going to keep getting quoted as evidence that nothing is wrong. It is not evidence of anything except that most Americans have taxes withheld from a paycheck before they ever see the money. As NPR framed it, the result of slashing the staff is simply that more taxes go uncollected. The people who cannot avoid paying are still paying. The question is who is now free not to.