IRS enforcement activity fell despite record tax collections, TIGTA says

IRS enforcement activity declined in fiscal year 2025 after staffing levels fell and supplemental funding was exhausted, even as taxpayers paid a record $5.3 trillion in federal tax revenue, an agency watchdog said in a report.

The report, released Monday by the Treasury Inspector General for Tax Administration (TIGTA), found that taxpayers paid 13.2% more in tax revenue in fiscal 2025 than in fiscal 2023, driven largely by a 17% increase in individual income tax collections.

At the same time, TIGTA found signs of weakening enforcement activity as the IRS lost about 27% of its examination and collection workforce from fiscal 2024 to fiscal 2025.

The IRS’s examination and collection staffing increased from 20,098 employees at the end of fiscal 2023 to 27,217 employees at the end of fiscal 2024 as the agency hired workers with funding from the Inflation Reduction Act of 2022, P.L. 117-169. Staffing then fell to 19,612 by the end of fiscal 2025 and declined to 17,517 as of Jan. 10, 2026, according to the report.

TIGTA said the staffing reductions contributed to a 30% decline in individual examination starts from fiscal 2024 to fiscal 2025. Examinations of taxpayers with income above $400,000 fell 27% during the same period.

“While the workforce reductions influenced metrics in FY 2025, the downstream effects of these reductions are likely to become more apparent over time,” TIGTA said.

The report noted that the IRS increased its focus on higher-income taxpayers in fiscal 2024. However, workforce reduction efforts that began in 2025 affected examination activity across income groups.

Revenue attributed to IRS examination activities increased 41% between fiscal 2023 and fiscal 2024 before falling 35% in fiscal 2025. Proposed additional taxes resulting from examinations declined from $31.9 billion in fiscal 2023 to $26.8 billion in fiscal 2025.

Overall enforcement revenue collected by the IRS reached a record $98.7 billion in fiscal 2024 before declining to $93.8 billion in fiscal 2025.

Despite the decrease, enforcement revenue remained above fiscal 2023 levels. TIGTA said the increase over the three-year period was driven primarily by collection activities rather than examinations.

Collection revenue increased 17% between fiscal 2023 and fiscal 2025, largely because the IRS resumed automated collection notices that had been paused intermittently during the COVID-19 pandemic. The restart of those notices increased activity in nonfiler and other compliance programs.

TIGTA also highlighted the end of supplemental enforcement funding provided by the Inflation Reduction Act. According to the report, the IRS exhausted its remaining enforcement funding from the law as of Dec. 31, 2025.

The report made no recommendations.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.