Financial Audit: IRS's FY 2025 Financial Statements

What GAO Found

In fiscal year 2025, the Internal Revenue Service (IRS) collected more than $5.3 trillion in taxes and paid out about $639 billion in tax refunds, credits, and other payments.

Fiscal Year 2025 IRS Collections of Federal Taxes, by Type

In GAO's opinion, IRS's fiscal year 2025 financial statements are fairly presented in all material respects, and although internal controls could be improved, IRS maintained, in all material respects, effective internal control over financial reporting as of September 30, 2025. GAO's tests of IRS's compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements disclosed no instances of reportable noncompliance in fiscal year 2025.

System limitations and other deficiencies in IRS's accounting for federal taxes receivable and other unpaid assessment balances continued to exist during fiscal year 2025. These control deficiencies affect IRS's ability to produce reliable financial statements without using significant compensating procedures. These control deficiencies are significant enough to merit the attention of those charged with governance of IRS and therefore represent a continuing significant deficiency in internal control over financial reporting. Continued management attention is essential to fully addressing this significant deficiency.

In commenting on a draft of this report, IRS stated that it was pleased to receive an unmodified opinion on its financial statements. IRS also commented that it is dedicated to promoting the highest standards of financial management and accountability and will continue to work to provide accurate reporting and improve internal controls.

Why GAO Did This Study

In connection with fulfilling GAO's requirement to audit the consolidated financial statements of the U.S. government, and consistent with its authority to audit statements and schedules prepared by executive agency components, GAO has audited IRS's financial statements because of the significance of IRS's tax collections to the consolidated financial statements of the U.S. government. GAO annually audits IRS's financial statements to determine whether (1) the financial statements are fairly presented and (2) IRS management maintained effective internal control over financial reporting. GAO also tests IRS's compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements.

IRS's tax collection activities are significant to overall federal receipts, and the effectiveness of its financial management is of substantial interest to Congress and the nation's taxpayers.

For more information, contact Dawn B. Simpson at [email protected].