IRS Staffing Issues
Last year the IRS lost about 25% of its roughly 100,000-member workforce to early retirement buyout offers. The most important enforcement arms at the IRS are Large Business and International (LB&I) and Small Business/Self Employment (SB/SE), and they were both hit hard by the loss of personnel. The consequences were discussed at the Federal Bar Association Tax Law Conference in early March.
Although there might be fewer audits now in LB&I, the examinations that are still happening are going deeper. This division has evidently retained enough institutional expertise to continue a high level of activity, according to the conference speakers. SB/SE on the other hand seems to be struggling, as this division lost 37% of its workforce. Some of the new revenue agents appear to lack familiarity with the industries related to their cases.
One alternative dispute resolution tool that is getting more attention is the use of fast-track settlements. IRS-trained mediators are employed to bring disputes to a rapid close. In 2025 there was a 28% increase in fast-track cases in LB&I, and 86% of those cases were resolved in about four months.
Conference participants also were concerned about the loss of deep expertise in the areas of partnership structures, international transactions, transfer pricing, and some of the more exotic tax planning strategies. Such expertise “can’t be replaced overnight” according to one speaker. What affect this will have on revenue collections won’t be known for some time.
(March 2026)
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