IRS enforcement could see big cuts in 2027

IRS auditors may, once again, be asked to do more with less.

The House Appropriations Committee has advanced a funding bill for fiscal year 2027 that would slash nearly $1.4 billion from the IRS’s enforcement budget, Reuters reported. The proposed cuts match the amount the Treasury Department requested in its 2027 budget proposal earlier this month. Treasury also recommended the IRS shed 2,000 jobs, the bulk of them in enforcement, per the Federal News Network.

The cuts would further shrink a function that was already diminished by 2025’s reduction in force. A May 2025 TIGTA report found that the IRS lost 31% of its revenue agents, who perform audits, and at least 18% of its revenue agents, who collect delinquent taxes, through March 2025.

House Democrats opposed the budget bill, with Maryland Democrat Steny Hoyer, ranking member of the Financial Services and General Government Appropriations Subcommittee, likening an IRS with reduced collections capabilities to a business that fails to collect its accounts receivable.

If passed as is, the bill would reduce the IRS’s overall budget from $11.2 billion to $10.2 billion. IRS funding decreased by around $1.1 billion in FY 2026 as well, down from $12.3 billion in FY 2025.

Funding for taxpayer services would remain steady under the bill, at around $3.04 billion, while funds for technology and operations would increase by $445 million.

Treasury Secretary Scott Bessent stressed service levels in remarks to the Senate Appropriations Committee on April 22.

“Although the request for IRS represents a modest decrease, we are still able to maintain current services and implement new initiatives aimed at improving customer experience and making tax compliance easier,” he said.

Too good? The IRS experienced staff cuts of around 27% in FY 2025, sparking concerns that the 2026 filing season would prove difficult, especially given the fact that taxpayers were grappling with a new tax law. So far, the IRS seems to have hit similar benchmarks as it did in 2025. As of April 17, it received only 0.3% fewer returns than last year, and processed 0.4% more.

IRS CEO Frank Bisignano, addressing the Senate Finance Committee, called it the “most successful filing season in IRS history” and claimed it proved that the agency could have “less people and better results,” the Federal News Network reported.

Bessent touted the IRS’s technological improvements, noting that AI and automation allow the agency to identify problems on tax returns and give taxpayers the chance to correct them, reducing the likelihood of audits. Call volumes are down, he said, because taxpayers can “increasingly find the information they need online.”