IRS Audit Revenue Plunged 35%. The Rich Won.

The government that promised the rich would finally get their due quietly dismantled the only department with the teeth to enforce the promise.

"An obvious fact: If you get rid of auditors, you raise less money from audits."

— Natasha Sarin, president of Yale University's Budget Lab

The Internal Revenue Service is supposed to be the great equalizer in American taxation, the agency that makes the difference between a tax code and a tax cheat's club. For one brief, brightly lit stretch, it looked like it might finally close the gap. Then the Trump administration moved to gut the agency's enforcement workforce, and a new report from the Treasury Inspector General for Tax Administration (TIGTA) shows what happened next: audit revenue collapsed by 35 percent in a single fiscal year.

The watchdog found that revenue from IRS examinations, the audits that comb through the complicated returns of corporations and the very wealthy, fell to $6.5 billion in fiscal 2025, down from roughly $10 billion the year before. Individual audit starts dropped 30 percent. Audits of taxpayers earning more than $400,000 fell 27 percent. Proposed additional taxes from examinations slid from $31.9 billion to $26.8 billion.

Rep. Don Beyer (D-Va.), a member of the House's chief tax-writing committee, put the arithmetic in a single line.

The Year the Auditors Went Home

To understand the drop, you have to understand the staffing numbers, and the staffing numbers are the real story.

Under the Inflation Reduction Act of 2022, the IRS built up its examination and collection workforce from about 20,100 employees at the end of fiscal 2023 to roughly 27,200 a year later, the biggest rebuild in decades, largely bankrolled by Democrats and then-President Joe Biden. That funding was projected to generate around $560 billion over ten years, most of it pulled from rich tax cheats and large corporations.

Then the funding ran out and the politics changed. TIGTA reports that examination and collection staffing collapsed to 19,612 by the end of fiscal 2025, and fell further to 17,517 as of January 10, 2026. In plain terms, the agency lost about a quarter of the people whose entire job was to find money that should have been paid. The report says the downstream effects "are likely to become more apparent over time."

Translation: the year the audits fell was the first year the cuts bit. The report is the leading indicator, not the bottom line.

A Quietly Rescinded Promise

What makes the collapse more pointed is what it undid. Congress had agreed, over considerable Democratic protest, to claw back much of the enforcement funding the IRS had won. The agency itself had warned that without it, large-scale layoffs would be possible as early as 2026. The administration followed through, first through voluntary early-retirement and buyout incentives, then through outright furloughs and layoff notices sent to nearly 1,400 employees in a single wave last November.

The irony is not lost on anyone who tracks the books: taxpayers paid a record $5.3 trillion in federal tax revenue in fiscal 2025, up 13.2 percent from fiscal 2023. The government never had more money flowing in. And in that same record year, it spent less of its own staffed power to make sure no one was getting away with not paying their share.

The Institute on Taxation and Economic Policy saw the math the same way.

"We know who benefits the most when the IRS doesn't have enough staff to dedicate to audits," it said. "It's the richest Americans."

No Shortage, Says the CEO

Bisignano, whom Treasury Secretary Scott Bessent installed as the agency's first "CEO," has pushed back on the notion that anything is wrong. There is, in his telling, no staffing shortage.

That assessment does not sit well with the independent watchdog whose job is to check the work. TIGTA said plainly that "staffing reductions starting in January 2025 significantly reduced enforcement staffing," leaving the agency "less equipped to audit the often complex returns of ultra-rich Americans and big corporations."

The disconnect is the point. When the head of the agency insists the workforce is fine while his own inspector general documents a 27 percent cut to the very units that audit the super-wealthy, somebody is not telling the truth. The numbers pick a side.

Sarin, the Yale Budget Lab president who has tracked the war on the IRS' independence, made the mechanism explicit. "Winners are tax cheats, losers are those who are playing by the rules," she said.

The Bill Comes Due

Here is the part that will matter beyond the next budget cycle. Enforcement revenue overall still hit a record $93.8 billion in fiscal 2025, but TIGTA notes that the growth since 2023 has been driven by collection activity, chasing down back taxes with automated notices, not by the kind of forward-looking audits that deter cheating in the first place. That is a lower form of enforcement, and it is precisely the kind that does not reach the most sophisticated evasion.

Tax cheating was already a low-risk crime. A new federal watchdog report has, for the first time, made the risk visibly lower still.

Beyer's line is the cleanest summary available, and it is worth ending on: "While working families are expected to pay their fair share, Trump is making it easier for the rich to get away with not paying theirs."

The question is not whether the audits stopped. The question is who exactly the government decided was no longer worth auditing, and whether anyone in Washington still thinks the answer should be "the people with the most to hide."