IRS Has Lost One Third of Its Auditors As DOGE Cuts Threaten Tax Revenue

The IRS has lost 31% of its auditing staff since January. Estimates predict the IRS could lose up to $323 billion in tax revenue over the next decade due to lower audit activity.

Nearly one-third of IRS tax auditors have left the agency in the first three months of 2025, according to a new government watchdog report, raising alarms about the country’s ability to collect revenue from wealthy individuals and corporations.

The reductions follow efforts by Elon Musk’s Department of Government Efficiency (DOGE) to reduce the federal workforce through layoffs and a voluntary exit program known as deferred resignation, according to CBS News.

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The IRS has lost 3,600 auditors since January, representing 31% of its auditing staff. Overall, the agency has seen an 11% drop in total headcount this year, with DOGE targeting a 40% reduction.

These auditors are typically responsible for reviewing complex tax filings from high-income earners and large companies, areas that have historically brought in substantial tax revenue.

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The watchdog report, issued by the Treasury Inspector General for Tax Administration, suggests the departure of so many experienced agents could weaken enforcement. IRS data from the previous year showed that audits led to $32 billion in recommended tax assessments.

Independent estimates say each dollar spent auditing the top 0.1% of earners can bring in $26 in revenue.

The Biden administration had recently expanded the IRS, increasing staff using funds from the Inflation Reduction Act to strengthen enforcement. Many of the auditors leaving now appear to be junior hires without full job protections, which may explain why audit staff losses are outpacing other departments.

The Treasury Department has defended the changes, calling them necessary to streamline operations and correct what it describes as excessive hiring in recent years. Still, watchdog groups and economists warn the cuts could backfire.

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A report from the Partnership for Public Service found that while DOGE claims $165 billion in savings, more than $130 billion in costs have already offset most of those gains. These include paid leave, rehiring errors, lost productivity, and pending lawsuits.

Estimates from Yale’s Budget Lab predict the IRS could lose up to $323 billion in tax revenue over the next decade due to lower audit activity and reduced compliance. Income taxes from individuals and businesses account for roughly 60% of all federal revenue, making the IRS’s ability to enforce tax laws a central part of fiscal policy.

Experts caution that scaling back audit staff may encourage nonpayment or underreporting, particularly among taxpayers who already have access to complex strategies for avoiding taxes.

The loss of trained agents, combined with rising uncertainty about enforcement, has sparked debate about whether the cuts will ultimately cost more than they save.