When the Internal Revenue Service audits a tax return and finds an underpayment, it proposes an amount of additional tax before that amount is finalized, appealed or collected. A new report from the Treasury Inspector General for Tax Administration found that the total dollar amount of tax the IRS proposed through its examinations fell from $31.9 billion in fiscal 2023 to $26.8 billion in fiscal 2025, a drop of roughly 16 percent in two years that lines up closely with a sharp reduction in the agency’s audit workforce over the same period. For anyone counting on government programs that draw partly on enforced tax collection, from Medicare financing to veterans’ benefits, the trend is a rough proxy for how much ground federal tax enforcement is losing even before a single dollar of that proposed tax is actually paid.
Proposed Tax Is Not the Same as Collected Tax
The $31.9 billion and $26.8 billion figures describe what IRS examiners recommended taxpayers owed after auditing a return, not what the government ultimately received. Proposed adjustments can be reduced on appeal, contested in Tax Court, written off as uncollectible, or paid in full, so the figure functions as a measure of audit reach and aggressiveness rather than a final revenue number. TIGTA tracks it because it moves earlier and faster than final collections, making it a leading indicator of how much examination activity is actually happening inside the agency, separate from the collection notices and payment plans that make up a different part of the IRS’s enforcement work. Reporting the proposed figure alongside collected revenue is standard practice for the watchdog precisely because the two numbers can diverge for years: a proposed adjustment from a fiscal 2025 audit of a complex return might not be resolved, contested or paid until well into the following decade.
A Decline That Tracks the Workforce
The two-year drop lines up with a broader staffing story documented in the same report, Trends in Compliance Activities Through Fiscal Year 2025. The IRS’s examination and collection workforce peaked at 27,217 employees at the end of fiscal 2024, boosted by Inflation Reduction Act hiring, before falling to 19,612 by the end of fiscal 2025 and to 17,517 by January 10, 2026. Fewer examiners generally means fewer audits opened and fewer adjustments proposed, and the timing of the decline in proposed additional tax, concentrated in fiscal 2025, the same year staffing losses accelerated, supports a direct link between the two trends rather than a coincidence of timing.
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Which Audits Slowed, and Which Didn’t
Not every audit category shrank at the same rate, which matters for understanding where the $26.8 billion figure came from. The IRS reported a 17 percent increase in large corporate audit starts in fiscal 2025, even as the agency opened about 30 percent fewer audits of new business partnerships, a slowdown TIGTA linked to a separate internal reorganization that shifted staff and delayed training for revenue agents. Examinations of individual taxpayers earning more than $400,000 fell by roughly 27 percent over the same period. The unevenness means the decline in proposed additional tax reflects a reshuffling of where the IRS pointed its shrinking workforce, not a uniform pullback across every type of return, and it helps explain why the total didn’t fall further given how steep the staffing losses were in percentage terms.
Audits Take Years, So the Full Effect Is Still Ahead
TIGTA’s report cautions that examinations opened years earlier can still be working their way through the system, and that the complete effect of the recent staffing reductions on both audit counts and proposed tax dollars is likely to show up more clearly in future years than in the fiscal 2025 numbers alone. Some of the decline reflects examiners who left before finishing cases already assigned to them; some reflects audits that were never opened in the first place because no one was available to do the work. Distinguishing between the two matters, because only the second category represents tax enforcement capacity that has simply disappeared rather than been delayed to a later fiscal year. TIGTA’s own framing treats the fiscal 2025 numbers as an early read rather than a settled verdict on the effect of the staffing cuts, which is one reason the report avoids projecting where the proposed-tax figure will land once the current round of examinations finishes working through the system.
Record Revenue, a Smaller Enforcement Share
The decline in proposed additional tax did not stop the IRS from collecting more money overall. Total tax revenue paid to the agency reached $5.3 trillion in fiscal 2025, a 13.2 percent increase from fiscal 2023, driven mostly by growth in ordinary filing and withholding rather than by enforcement. That contrast is precisely why TIGTA reports proposed additional tax as its own line item: a shrinking enforcement footprint can hide behind rising overall receipts for years before it shows up as a measurable revenue loss. The report’s own language, that the effects of the workforce reductions are “likely to become more apparent over time,” reads as a caution that the $26.8 billion figure may not mark the bottom of the two-year slide. Enforcement revenue overall fell to $93.8 billion in fiscal 2025 from a historic $98.7 billion the year before, a decline TIGTA attributed mainly to examination-related revenue rather than to collections, which reinforces that the drop in proposed additional tax is not an isolated statistic but part of the same broader pullback in audit-driven enforcement.
The Programs Hidden in Plain Sight
Separately, a shrinking IRS audit staff has nothing to do with whether an older household is already leaving money on the table through programs it never applied for. Medicare Savings Programs, VA Pension with Aid and Attendance, and state unclaimed property all exist because a benefit was created and then left opt-in, which means a household has to know to ask before it ever sees a dollar of it.
The Benefits Checklist walks through all eleven of these programs and includes a printable tracker for keeping application deadlines and documents in one place.
Look up which of the eleven programs might apply in The Benefits Checklist.
This article was researched and drafted with the assistance of AI tools, using enforcement data published by the Treasury Inspector General for Tax Administration, and was reviewed for accuracy before publication.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
