By Erik Wasson | Bloomberg
The Internal Revenue Service lost 31% of its auditors from buyouts and layoffs tied to Elon Musk’s Department of Government Efficiency, departures that are likely to hamper the agency’s ability to go after tax cheats.
More than 3,600 revenue agents — responsible for collecting tax payments — have left the IRS, according to an IRS watchdog report.
In addition, 18% of revenue officers, who oversee challenging tax cases, and 10% of tax examiners — front-line employees who review returns — have also left the agency, the Treasury Inspector General for Tax Administration said in a recent report.
The IRS downsizing is due to a series of moves, spurred by Musk’s DOGE, to cut the agency’s workforce. More than 7,300 probationary employees were terminated. More than 4,100 workers took Musk’s “Fork in the Road” resignation offer, followed by a second round of buyouts where more than 13,100 were approved to leave, according to the report.
The IRS had a large number of newly hired probationary auditors due to a funding boost under President Joe Biden, who increased funding for tax enforcement to rebuild the agency’s depleted capabilities. That means the cuts targeting recent hires disproportionately affected those with auditing jobs.
The terminations have been the subject of ongoing litigation.
The report found that auditors in fiscal year 2023 recommended approximately $32 billion in additional tax assessments. The National Bureau of Economic Research has found that auditors more than pay for themselves, with the IRS collecting $6 for every $1 spent on audits of high-income taxpayers.
The departure of auditors could result in a deeper revenue loss for the government since more people may evade paying taxes if they they’re less worried about getting caught.
The Yale Budget Lab forecast that laying off about 18,000 IRS employees would result in a net revenue loss of roughly $159 billion over ten years. That could rise to as much as $1.6 trillion over ten years if non-compliance is high, the group said.
The White House on Friday released a fiscal 2026 budget requesting $163 billion in non-defense savings that it associates with the DOGE effort. Nearly all of the savings the administration claimed would be plowed into a $119 billion boost in military spending. Adding in the loss of tax revenue could mean the DOGE effort causes a net budget deficit increase.
The report found that just 5% of information technology staff had departed and 10% of customer services agents had left. These groups could soon be targeted for a future round of job cuts that the IRS has said it is planning.
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