Surveillance of tax evasion by the wealthy was neutralized after one year

In 2025, the first year of the Trump administration, the number of criminal charges filed by the U.S. Internal Revenue Service (IRS) for tax evasion by ultra-high income earners and large corporations has decreased sharply. According to data obtained by the International Consortium of Investigative Journalists (ICIJ), only two cases of suspected tax evasion were transferred from the IRS Large Business and International Division to the criminal investigation team as of fiscal year 2025.

In particular, it was confirmed that for about four months from October 1, 2025 to January 31, 2026, there was not a single criminal complaint related to tax evasion among ultra-high income earners. This is the first official aggregate data showing that the tax investigation system for high-income earners, which was expanded during the Biden administration, has been virtually neutralized.

Why this is important

The number of criminal charges is a key indicator of how actively the IRS is pursuing sophisticated tax evasion by high-net-worth individuals. According to the U.S. Treasury, the wealthiest people account for a disproportionately large share of all tax evasion. If criminal charges are not filed, only civil fines are imposed when tax evasion is detected, but experts point out that such sanctions are unlikely to have a deterrent effect.

Former IRS Commissioner Danny Woerfel (in office from 2023 to 2025) said, “Cutting the IRS budget and staff does not reduce taxes, but rather shifts the burden from those who do not follow the rules onto honest taxpayers.” He evaluated this sudden drop in criminal charges as “a textbook example of the government’s financial burden being passed on to ordinary taxpayers.”

From Biden to Trump: A dramatic reversal of tax administration

To understand this change, it is necessary to look at the policy trends over the past few years. The Biden administration has made cracking down on tax evasion by the wealthy a top priority. A large number of experts were hired to analyze complex tax avoidance techniques, and the 'Global High Wealth Office', an audit team dedicated to billionaires, was expanded.

However, the situation changed rapidly with the inauguration of the Trump administration in January 2025. Under government efficiency efforts led by billionaire Elon Musk, the IRS budget was frozen and large-scale workforce reductions were implemented. The global high-net-worth office lost 38% of its staff within weeks of launching. As the proportion of newly hired employees was high during the Biden era, those with a short employment protection period were prioritized for dismissal.

IRS agents in charge of tax investigations of billionaires testified to ICIJ last year that "all ongoing cases were halted due to budget freezes and team disbandment." ICIJ reported that the IRS is ending audits of the wealthy and large corporations early in 2024 due to budget cuts. Agents at the time described the department as "almost paralyzed."

This is the first time since fiscal year 2019 that the number of criminal charges has been this low.

Expert warning: Tax evasion with impunity, growing inequality

Experts warn that tax evasion without criminal punishment worsens economic inequality. “Overworked and understaffed audit teams do not have the capacity to undertake the additional work required to bring criminal charges against even the most egregious tax evaders,” explains Michael Welu, a former IRS agent.

“Unless we treat illegal tax avoidance as illegal, there is no incentive to stop it,” he added.

Given that the number of criminal charges began to show an upward trend toward the end of the Biden administration, this sharp decline is interpreted as a direct result of the change in policy direction. The IRS declined to comment on this report.

Future outlook [AI analysis]

As long as the Trump administration's policy of reducing government continues, it is highly likely that it will be difficult for the IRS to normalize its tax investigation function for the wealthy. If the current trend continues, the following results are expected.

First, the incentive for tax evasion among ultra-high income earners is likely to increase. This is because the cost-benefit of sophisticated tax avoidance strategies is greatly improved in a situation where the risk of criminal punishment is virtually eliminated.

Second, there is a possibility that tax investigations on the middle class and general taxpayers will be relatively strengthened to make up for the decrease in tax revenue. This may spark a debate on tax fairness.

Third, there is a possibility that pressure to expand the federal budget deficit will increase. According to U.S. Treasury estimates, annual tax revenue losses due to tax evasion by the wealthy amount to hundreds of billions of dollars.

Politically, it is highly likely that the Democratic Party will make this issue an issue with the frame of 'tax cuts for the rich versus tax increases for the common people' ahead of the 2026 midterm elections. However, since restoring the IRS budget requires congressional approval, it is expected that policy change will be difficult to achieve in the short term under the current Senate composition.