IRS
IRS criminal referrals against big corporations and ultrawealthy plummeted during Trump’s first year
New data shows how a key office hammered by layoffs and cost-cutting referred at most two cases in fiscal year 2025.
Dodging taxes got less risky for the ultrarich and corporations after Donald Trump returned to the White House last year. During the new administration’s first year, the U.S. Internal Revenue Service has referred at most two cases of possible tax evasion by ultrawealthy people or large businesses to its criminal investigators, a sharp drop from previous years, according to new data obtained by the International Consortium of Investigative Journalists.
The steep decline underscores the administration’s dramatic reversal of a Biden-era effort to step up the IRS scrutiny of big companies and wealthy individuals.
“When the IRS budget and staff is cut, your taxes don’t go down. Instead, those that choose not to play by the rules shift the burden of funding our government to those that do,” said Danny Werfel, the IRS’s commissioner from 2023 to 2025 after reviewing the data. “The apparent sharp reduction in the inventory of IRS criminal fraud referrals is a textbook example of that.”
Early last year, IRS agents assigned to billionaire audits told ICIJ that their cases ground to a halt when their teams were decimated and budgets frozen under the rapid cost-cutting effort led by billionaire Elon Musk. The new referral numbers are among the first enforcement data the agency’s Large Business and International Division, which is tasked with auditing big businesses and billionaires, has reported during Trump’s second term.
Not all criminal referrals trigger further investigation or lead to a prosecution. But they are a key metric of how vigorously the IRS’s civil divisions are investigating sophisticated tax dodging among high-net worth individuals. The wealthiest Americans account for a disproportionately large share of tax cheating, according to the U.S. Treasury Department, and experts see sophisticated tax evasion schemes as a big contributor to runaway economic inequality. In the absence of criminal referrals, experts say, the cost of getting caught cheating on taxes is often a civil fine that carries little deterrent effect.
Michael Welu, a former IRS agent who focused much of his career on helping auditors identify major cases for possible prosecution, said that overworked and understaffed audit teams are less likely to spend the extra time it takes to craft a criminal referral on egregious cheating.
“Unless we start treating illegal schemes as what they are, there’s no incentive to stop,” Welu said.
The IRS declined to comment on this story.
Last year, ICIJ reported that the IRS had begun closing audits of ultrawealthy individuals and corporations due to deep budget cuts. Agents in the Large Business and International division described their teams as in a state of near paralysis as management grappled with lost agents, orphaned cases and uncertainty over future layoffs.
The Global High Wealth office, situated within the division and tasked with auditing billionaires, was hit especially hard last year, losing 38 percent of its staff within weeks of Trump taking office.
Its staff had swelled during the Biden administration, which had prioritized hiring experts at untangling intricate tax maneuvers. But that meant the office had a large share of recent hires who had fewer job projections and were quickly fired.
The new data does not indicate whether the two criminal referrals that the Large Business and International division made in fiscal year 2025, which began in October of 2024, occurred under the Biden or Trump administration. It also shows that the division referred no cases of ultra wealthy tax cheating to criminal investigators between October 1, 2025, and January 31, 2026.
The last time the number of criminal referrals from the Large Business and International Division was this low was fiscal year 2019.
Although critics have accused the division of taking too lenient an approach toward wealthy taxpayers, the office’s number of referrals to criminal investigators had begun to tick up before the latest wave of cuts. In 2023 and 2024, after the agency had received a funding infusion, it made seven referrals each fiscal year to criminal investigators.
“It’s logical to expect a drop in referrals when you have so few agents,” said Robert Warren, a former IRS agent and assistant professor of accounting at Radford University in Virginia who also reviewed the data. “If you’re engaging in a large tax evasion scheme and you’re a company under the authority of [the Large Business and International division], the chances of you going to jail are like that of getting hit by lightning.”