The Internal Revenue Service is backing off on performing audits as the Trump administration seeks to dramatically downsize the agency in a move that could cost billions of dollars in tax revenue, according to The Wall Street Journal.
The Trump administration has dismissed 7% of IRS staff since President Donald Trump took office in January, with plans to cut upward of 20% of the workforce, and instituted a hiring freeze at the agency. Congress also took steps to rollback the enforcement spending approved in 2022.
"That's just money being thrown away," Barry Johnson, the former head of the IRS Statistics of Income Division, told the Journal. "It seemed counterproductive to me to lose staff we worked so hard to recruit and bring on."
"We have seen agents just disappear from cases that we're in the middle of, and I don't know what's going to happen," said Kathy Pakenham, co-head of the law firm Vinson & Elkins' tax controversy practice.
She noted the IRS had been increasing activity during the last 18 months of the Biden administration, only for that activity to quickly ramp down once former President Joe Biden left office.
"We have seen like a switch flipping in the number of audits that are being started," Pakenham said.
One source told the Journal that the Department of Government Efficiency assigned to the IRS has overestimated how much of the agency's work can be automated.
"There's no strategy here except to, I don't know, weaken the IRS and replace it with apps," former national taxpayer advocate Nina Olson said. "It's completely different from anything I've seen before."
Treasury Secretary Scott Bessent told NBC News on Sunday the department is "going a big review" of the IRS and the expansion of the agency under Biden.
"I have three priorities for the IRS: collections, privacy, and customer service. And we'll see what level is needed to prioritize all those," he said.
A spokesperson for the IRS declined to comment.