UConn Research: IRS Staffing Cuts Linked to Billions in Lost Tax Revenue and Filing Declines

NewsData.io · United States · Sep 2, 2026

New research from University of Connecticut accounting professors finds that IRS workforce reductions directly reduce taxpayer filing rates and compliance, with states requiring both federal and state income tax filings seeing up to a 3.2% incremental drop in filings. The study links IRS staffing cuts to a 7.8% decrease in reported non-wage income, potentially costing the federal government $33.8 billion annually. Researchers drew on data from the 2010 IRS hiring freeze, a 1995 staffing reduction, and COVID-era enforcement gaps, finding consistent results across all periods. For staffing firms, the findings underscore the compliance and revenue risks associated with ongoing IRS headcount reductions, with potential downstream effects on government contract spending and tax-related workforce demand.