IRS' Auditing Cash Cow Seems to Be Drying Up

Audit dollars at the IRS didn't just dip last year under President Trump—they nosedived, a new watchdog report finds. The Treasury Inspector General for Tax Administration says that revenue from IRS audits fell 35% in fiscal 2025, to $6.5 billion from $10 billion a year earlier, after the agency shed about a third of its auditing staff as part of Trump's second-term federal downsizing, reports the New York Times. The IRS launched 30% fewer individual audits compared with the year before, with one division even halting new examinations for half the year amid staffing doubts.

Trump allies argue that technology like AI can offset the conundrum of fewer employees, but details are scant on how to weave that tech into the IRS' workflow. Other enforcement tools for money owed, like mailed notices and phone calls, held steady, and overall tax revenue still hit a record $5.3 trillion in the last fiscal year, though the IRS estimates about $700 billion in legally owed taxes goes uncollected annually. Bloomberg notes that enforcement actions bring in just a small percentage of the agency's total tax revenue.