Revenue from audit work undertaken by the US Internal Revenue Service (IRS) fell by 35% to $6.5bn in fiscal year 2025 (FY25), the New York Times (NYT) reported, citing a Treasury Inspector General for Tax Administration (TIGTA) document.
The figure was $10bn a year ago.
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The downturn in audit proceeds followed workforce reductions introduced by President Trump at the start of his second term, the report added. The reduction led to the departure of approximately 30% of the agency’s audit-focused personnel.
The contraction in headcount was expected to constrain the federal government’s capacity to execute the labour-intensive examinations required to identify and collect overdue taxes from individuals and corporate entities.
According to the TIGTA, the IRS initiated 30% fewer individual audits in FY25 compared to the previous year.
Within one key operational unit, officials paused the launch of new tax audits for a six-month period because of uncertainty surrounding whether sufficient personnel were available to handle the caseload.
Because tax audits frequently take years to conclude, the broader budgetary consequences of the staffing changes may take time to fully materialise.
The NYT added that officials at the current administration have stated that technological tools including AI could enable the agency to identify audit targets more effectively.
They also told the publication that the use of technology will allow investigations to be conducted with fewer staff.
However, comprehensive public plans for these mechanisms have not been released.
Despite the sharp decline in revenue directly elicited from audits, other compliance operations remained relatively steady.
Collections resulting from mailed notifications and telephone communications regarding unpaid taxes were broadly unchanged. IRS has also reinitiated several programmes that were halted during the pandemic, the report added.
Total annual tax receipts also increased to a record $5.3tn over the last fiscal year.
