- Job cuts at the IRS are decimating the audit division. That could result in tens of billions of dollars in lost revenue for the government. The cuts come after the Biden administration worked to staff up the IRS and pursue cases against high-earning individuals and corporation.
The Internal Revenue Service could be losing some of its teeth.
Staff cuts under Donald Trump’s government-wide reduction are putting large ongoing audits on hold, and the IRS is unlikely to beef up its enforcement division in the short term.
That could mean tens of billions of dollars owed to the government go uncollected, The Wall Street Journal reports. It also effectively nullifies a Biden-era policy to staff up the IRS, making it easier to speak with a worker on the phone or walk-in centers as well as the auditing division.
So far, 7% of all IRS employees have been let go and a hiring freeze is in place at the agency. (More job cuts are expected in the near-term future.) Congress, meanwhile, has rescinded virtually all of the IRS enforcement spending that was approved in 2022.
That could be good news for corporations and high-wealth individuals, who were often subject to additional review by the IRS. Trump has spoken frequently in the past about his own battles with the IRS and used an ongoing audit as an excuse not to release his tax filings in previous elections.
Trump officials are downplaying the staff cuts and their impact on audits. Treasury Secretary Scott Bessent, on Sunday, told NBC “We are doing a big review. I have three priorities for the IRS: collections, privacy and customer service. And we’ll see what level is needed to prioritize all those.”
The Senate has not yet held herings for Bill Long, who Trump has tapped to head the IRS.
In the meantime, the Journal reports audits on two high-worth individuals have been dropped without any demand for additional taxes, and a long-running audit of a corporation was hastily settled when the agent said he would be leaving the government soon and asking for a best offer from the company’s lawyer.
This story was originally featured on Fortune.com
