IRS enforcement vs. audits

The Internal Revenue Service collected more money from enforcement in the opening months of fiscal 2026 even after a year of steep staffing cuts, while audit odds for high earners remain low on paper. (usnews.com) (cnbc.com) Treasury officials told Reuters enforcement revenue rose 12% in the first five months of fiscal 2026, which began October 1, 2025. The same report said enforcement revenue fell 5% in fiscal 2025, or nearly $5 billion, after staffing reductions hit the agency. (usnews.com) The Internal Revenue Service opened more than 120,000 fewer audits in 2025 than in the prior year, according to the Taxpayer Advocate Service figures cited by Reuters. CNBC separately reported the agency’s workforce fell from more than 102,000 in January 2025 to about 74,000 by December 18, 2025, a drop of roughly 27%. (detroitnews.com) (cnbc.com) An audit is only one part of tax enforcement. Reuters said most enforcement revenue comes from collecting unpaid balances, while audits can take years and do not produce cash quickly. (usnews.com) That helps explain how collections can rise even as the number of audits falls. CNBC said the agency still relies on automated matching of tax forms, math-error notices, exams by mail, and targeted reviews of returns with missing income or unusually large deductions. (cnbc.com) For wealthy taxpayers, the long-run audit trend is still down sharply from the last decade. Internal Revenue Service data cited by CNBC show the audit rate for people earning $1 million or more was 0.7% in 2019, down from 7.2% in 2011. (cnbc.com) The Biden-era Inflation Reduction Act had set aside $45.6 billion for Internal Revenue Service enforcement, but later legislation pulled back much of that money, and 2025 cuts reduced staffing further. Yale’s Budget Lab said the federal “tax gap” now totals about $700 billion a year based on the most recent Internal Revenue Service data. (njspotlightnews.org) (budgetlab.yale.edu) Internal Revenue Service Commissioner Frank Bisignano said the agency will keep using “data-driven enforcement” despite the smaller workforce, according to CNBC. The split between rising collections and fewer audits shows the agency is still bringing in money, but with less capacity for the slow, labor-heavy work of examining returns. (cnbc.com)