In the midst of Congressional consideration of the administration’s FY2026 budget request for the Internal Revenue Service (which was ultimately approved on February 3, 2026), a group of U.S. Senators is raising questions about fairness in tax enforcement.  Ten Senators, nine Democrats and one Independent, are questioning whether recent workforce reductions and funding decreases are shifting the Internal Revenue Services’s audit strategy away from high-income taxpayers and toward lower- and middle-income taxpayers. 

In a January 26 letter to Acting IRS Commissioner Scott Bessent, the Senators note that current IRS data shows that the agency audits tax returns filed by low-income taxpayers claiming the earned income tax credit at a higher rate than taxpayers earning $500,000 to $1 million per year. 

With respect to workforce reductions, the letter notes that the IRS has lost 25 percent of its employees under the new administration, including 26 percent of revenue agents who are responsible for conducting audits, and that nearly all IRS employees assigned to a new unit focusing on large partnership audits formed in 2023 have left the agency.  According to the letter, the departures of these highly skilled auditors will have a significant impact on the deficit, citing a study showing that the return on investment for partnership audits is over 20 to 1.  The Senators also expressed concern about the diversion of IRS Criminal Investigation agents from traditional tax investigations to work on immigration issues.

The letter cites historical data about the impact of cuts to the IRS enforcement budget.  During the period of deep budget reductions between 2010 and 2021, the IRS enforcement staff was reduced by 30 person, audit rates for taxpayers earning $1 million fell by 77 percent, and audit rates for large corporations were slashed in half.  During that same time period, the IRS reported that more than 125,000 high-income taxpayers did not even bother to file income tax returns. 

The letter notes that Acting IRS Commissioner Bessent has stated that the revenue collection will not be affected by workforce reductions because the IRS can rely upon technology and in particular artificial intelligence to make up for loss of personnel.  The Treasury Inspector General for Tax Administration in its annual assessment of IRS technology concluded that the agency continues to be plagued by weaknesses in core technology functions and that its IT staff was reduced by one-quarter during 2025.  The Senators in their letter further note that billions of dollars from the Inflation Reduction Act of 2022 that was intended to fund IRS technology upgrades has been gradually rescinded over the last three years.

The Senators’ letter concludes with a lengthy list of questions about these issues, including the following:

  • What specific enforcement tasks does the IRS believe can be replaced by AI?
  • What safeguards will be employed to ensure that enforcement does not shift toward simpler correspondence audits of low-income taxpayers?
  • How will proposed technology cuts and recission of IRA funding affect AI systems used in enforcement?
  • How many IRS Criminal Investigation special agents have been diverted to immigration enforcement and what tax enforcement efforts were delayed or forgone as a result?
  • How many enforcement initiatives have been reduced or terminated since January 2025?
  • What is the current state of the specialized large-partnership audit unit?

The letter requests a response from Acting Commissioner Bessent by February 16.