According to a report from the Treasury Department’s watchdog, the Trump administration’s plan to reduce the IRS workforce has resulted in nearly one-third of the agency’s tax auditors leaving by March.
Elon Musk’s Department of Government Efficiency, or DOGE, has sought to reduce the federal workforce through layoffs and so-called deferred resignations. Musk, Tesla’s billionaire CEO, stated on the electric vehicle maker’s April 22 earnings call that DOGE’s efforts “in addressing waste and fraud” will “get the country back on track.”
The IRS has been a focus of DOGE’s cost-cutting efforts, with plans to cut up to 40% of its workforce this year. Through March, those efforts resulted in the tax agency losing approximately 11% of its workforce, according to a report released on May 2 by the Treasury Inspector General for Tax Administration (TIGTA).
However, revenue agents — IRS employees who conduct audits — have taken a much larger hit, with 31% of those employees, or approximately 3,600 auditors, submitting a deferred resignation plan or being fired in the first three months of 2025, according to the report.
Experts believe that losing a large number of auditors could have an impact on the federal government’s ability to collect tax revenue, as these agents typically handle cases involving wealthy taxpayers or corporations.
“You lose the very staff trained to keep high-end taxpayers and corporate tax payers in compliance,” said Emily DiVito, senior adviser on economic policy at the left-leaning Groundwork Collaborative and former policy adviser at the US Treasury Department, which oversees the IRS.
She went on: “You can see some behavioral effects when taxpayers, especially those that really don’t want to pay their bills, come to accept there is very little risk to not paying at all, or even filing.”
When contacted for comment, a Treasury spokeswoman stated, “The Biden Administration expanded the IRS from 79,431 to 102,309 employees. Under new leadership, approximately the same number of employees have left the IRS, with the vast majority departing voluntarily via the Deferred Resignation Program.
Rolling back wasteful Biden-era hiring surges, as well as consolidating critical support functions, are critical to improving both efficiency and service quality. The Secretary is committed to achieving efficiency while providing the collections, privacy, and customer service that the American people expect.”
The White House did not immediately respond to a request for comment on the TIGTA report.
While the TIGTA report did not explain why auditor departures outpaced overall IRS cuts, the tax agency had made an effort to hire more auditors during the Biden administration to improve revenue collection. In February 2024, the IRS stated that it expected to collect hundreds of billions of dollars in additional taxes after hiring more auditors with funds from the Inflation Reduction Act.
Because the DOGE cuts focused on firing “probationary workers,” or junior federal employees with less than a year or two on the job, DeVito speculated that the reductions may have affected more newly hired auditors.
Reducing federal revenue?
Auditing wealthy individuals and corporations can be profitable for the federal government. Auditors recommended $32 billion in additional tax assessments for fiscal year 2023, according to the TIGTA report.
According to an analysis by Better IRS, an advocacy group for free tax filing, every dollar spent on auditing the top 0.1% of earners can return approximately $26 in tax revenue.
The reduction in the IRS auditing force raises concerns about the effectiveness of DOGE’s efforts, given that the tax agency collects the majority of the country’s revenue, DeVito added.
According to the Treasury Department, individual and corporate income taxes account for roughly 60 cents of every $1 in federal revenue, with the remaining 40 cents coming from payroll taxes and fees, such as paying admission to national parks.
According to a recent analysis by the nonpartisan research group Partnership for Public Service, DOGE’s cost-cutting efforts may end up costing nearly as much as they saved.
DOGE claims to have saved $165 billion, but the Partnership for Public Service estimates that the savings have cost $135 billion in paid leave, rehiring mistakenly fired employees, and lost productivity. The figure also does not account for the impact of multiple lawsuits filed against DOGE’s actions, as well as lost tax revenue due to IRS cuts, according to the group.
According to a Yale Budget Lab estimate, the IRS may lose $323 billion in tax revenue over the next decade as a result of lower tax compliance and fewer audits.
“The argument from DOGE is to save money — that if we don’t have as big of a federal workforce, then we are saving the government money,” DeVito told reporters. However, given the potential loss of tax revenue, the IRS reduction “simply doesn’t make sense,” she said.