The Blubber

A new report from the U.S. Treasury Department’s internal watchdog reveals that close to one-third of the IRS’s tax auditors exited the agency by the end of March, following workforce reductions initiated under the Trump administration’s new cost-cutting directive.

The initiative, led by Elon Musk’s Department of Government Efficiency (DOGE), aims to shrink the federal workforce using a blend of layoffs and a voluntary departure program known as deferred resignation. Musk, who also serves as Tesla’s CEO, said during the company’s April 22 earnings call that DOGE’s mission to eliminate “waste and fraud” is essential to restoring national fiscal discipline.

DOGE has particularly targeted the IRS, with plans to reduce its headcount by as much as 40% within the year. As of March, the agency had already shed approximately 11% of its total staff, according to a May 2 report by the Treasury Inspector General for Tax Administration (TIGTA).

The brunt of these cuts has fallen on revenue agents — the auditors tasked with examining tax returns. About 31% of this group, or around 3,600 auditors, left the agency in the first quarter of 2025, either through the voluntary resignation program or through termination. Experts warn that this could hinder the government’s ability to enforce tax compliance, especially among affluent individuals and large corporations.

“You’re losing the personnel specifically trained to ensure high-income earners and businesses follow tax laws,” said Emily DiVito, an economic policy adviser with the progressive Groundwork Collaborative and a former Treasury Department official.

She continued, “When enforcement weakens, some taxpayers — particularly those inclined to avoid paying — may decide there’s little risk in skipping out on their obligations altogether.”

In response to inquiries, a Treasury spokesperson stated, “Under President Biden, the IRS workforce grew from 79,431 to 102,309. Since then, roughly the same number have exited, with most leaving voluntarily under the Deferred Resignation Program. Reducing bloated hiring from the previous administration and streamlining core operations are necessary steps to improve service and efficiency. The Secretary remains committed to ensuring effective tax collection, privacy protection, and quality customer support.”

The White House declined to comment on the TIGTA findings.

While TIGTA didn’t specify why auditor losses were disproportionate compared to broader staff reductions, it’s worth noting that the Biden administration had previously expanded the auditing workforce to enhance revenue collection. In early 2024, the IRS projected that hiring more auditors using Inflation Reduction Act funds would yield hundreds of billions in recovered taxes.

Because DOGE’s cuts have disproportionately affected probationary employees — those with under two years of federal service — newly hired auditors may have borne the brunt, DeVito explained.

A Cost to Revenue?

IRS audits of high-net-worth individuals and corporations are a major source of federal income. In fiscal 2023, auditors recommended $32 billion in additional taxes, according to TIGTA.

Research from the nonprofit Better IRS suggests that auditing the wealthiest 0.1% of earners yields a $26 return for every $1 spent.

The reduction in auditors casts doubt on the long-term effectiveness of DOGE’s cost-cutting agenda, DeVito said, especially given that the IRS is responsible for collecting the lion’s share of federal revenue.

The Treasury reports that personal and corporate income taxes contribute roughly 60% of total federal funds, with the remainder coming from payroll taxes and user fees, such as park admissions.

According to the Partnership for Public Service, the fiscal impact of DOGE's reforms may undercut the savings it claims. Although DOGE estimates it has saved $165 billion, the group reports that $135 billion of that has been offset by costs related to paid leave, re-hiring wrongly dismissed staff, and a decline in productivity. These figures don’t include legal expenses from multiple lawsuits or the tax revenue lost due to IRS staff reductions.