Wyden, Merkley, Colleagues Probe Collapse in IRS Investigations of Wealthy Tax Cheats Under Trump

Senators: IRS investigations into abusive tax schemes plummeted last year to lowest levels in the past decade

Washington, D.C. - U.S. Senators Ron Wyden and Jeff Merkley today joined Senate colleagues to demand answers on how Republican funding clawbacks and DOGE staff cuts have gutted the Internal Revenue Service Criminal Investigation Division's ability to investigate sophisticated tax schemes used by wealthy tax cheats.

"As one former head of the shuttered Justice Department Tax Division put it, 'There is usual ebb and flow, but you can't ignore this number.' We write to ask how staffing cuts and other factors contributed to this decline, what impact it will have on revenues and deterring tax cheats, and how the IRS will adequately enforce the law in the face of substantial staffing and budget cuts," the senators wrote to Treasury Secretary and Acting IRS Commissioner Scott Bessent and Internal Revenue Service Criminal Investigation (IRS-CI) Division Chief Guy Ficco.

The IRS-CI 2025 Annual Report found that investigations into abusive tax schemes dropped 63 percent last year to a level roughly 40 percent below any other year in the past decade. This decline comes as sophisticated tax avoidance schemes have become more common, leaving billions in revenue uncollected while honest taxpayers foot the bill.

The letter details how IRS enforcement capacity has been systematically dismantled. Between January and May 2025, the IRS workforce shrank by 25 percent, and IRS-CI lost about 10 percent of its staff. The IRS-CI special agent workforce has been slashed by more than 20 percent since 2010. Meanwhile, the Trump Administration has pulled IRS-CI special agents away from tax enforcement to work on immigration efforts and crime task forces.

The senators noted that IRS-CI has a proven track record of recovering billions by taking down major schemes-including a $2 billion unreported income case involving the late billionaire Robert Brockman that recovered $750 million, and an offshore banking scheme where Credit Suisse helped conceal $4 billion in undeclared accounts, recovering $511 million. For every dollar spent, IRS-CI brings in $16 in direct returns, even before considering dollars saved through deterrence.

"Aggressive tax avoidance and abusive schemes are getting more sophisticated. When the IRS can't pursue these cases, honest taxpayers pay the price," the senators added. "Tax shelter promoters are watching. As one former Justice Department Tax Division leader warned, 'Tax shelter schemes are a pretty lucrative business. If I'm a promoter, I'm watching press releases, reading the report, listening to try to hear the footsteps of enforcement coming up behind me.' When those footsteps grow quieter, cheaters grow bolder."

The senators concluded by requesting answers no later than February 27, 2026 to their questions about what caused the collapse and how IRS-CI plans to maintain enforcement capacity as it braces for another 20 percent loss in special agents over the next two years.

In May 2025, Wyden and nine Democratic colleagues wrote to Treasury Secretary Bessent asking whether the Department had analyzed how slashing the IRS workforce by up to 40 percent would likely allow ultra-wealthy tax cheats off the hook and hamper customer service for working families.

The letter was led by U.S. Senator Sheldon Whitehouse, D-R.I. In addition to Wyden and Merkley, the letter is signed by U.S. Senators Elizabeth Warren, D-Mass., Angus King, I-Maine, Richard Blumenthal, D-Conn., and Bernie Sanders, I-Vt.

The full letter is here.

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