The Trump administration and Elon Musk’s Department of Government Efficiency (DOGE) aim to downsize the federal government to cut the nation’s deficit. The Treasury Department appears to be within their sights, with Musk alleging there have been “fraudulent payments” at the department. While the goal of cutting waste and eliminating fraud is a lofty one, DOGE must consider the notion that the country may be better served in that regard by expanding the Treasury Department rather than cutting it back.

The administration has already shown an interest in paring down the Treasury’s resources. This month, Homeland Security Secretary Kristi Noem requested the reassignment of special agents from the Treasury’s Internal Revenue Service to assist DHS in deportation efforts. Although the effective use of law enforcement officers is to be commended, it shouldn’t come at the cost of vital Treasury Department resources. I implore DOGE and the Trump administration’s budget-cutters to look at the benefits of the recent influx of funding to the Treasury in recent years and the importance of its collection and enforcement departments.

The increased funding led to better resources for taxpayers but not enough expansion of the enforcement and collection departments. The enforcement and collection departments of the IRS identify and look for tax evasion and non-compliance. The collection efforts ensure that owed taxes are paid, contributing to the decrease of the national deficit.

In Fiscal Year 2023, the IRS audited 582,944 tax returns, identifying $31.9 billion of understatements. That figure shows that significant revenue can be generated from auditing individuals and businesses. Between 2013 and 2021, the IRS only examined 0.44% of individual returns and 0.74% of corporate returns.

The number of audits of individuals and businesses is way too low. DOGE hopes to audit the Treasury to omit inefficiencies in the agency. In addition to looking for inefficiencies, DOGE should recommend that the auditing rate be increased.

The Government Accountability Office studied IRS audits from 2010 to 2019 and found that individuals underreported their income tax by an average of $245 billion annually between 2011 and 2013. This is a large amount of money the government leaves on the table each year, but with such low audit rates, it goes unrecovered.

A study published by the National Bureau of Economic Research found that audits not only collect unrecovered sums but also are significant deterrents. The analysis found over the 14 years following an audit, the IRS recovers approximately three times more than the initial audit. Even further, the study found that audits could bring in over $12 for every $1 spent for the top 10% of earners.

As an attorney representing middle-class individuals during and after audits, I have seen firsthand how an audit changes taxpayer behavior. The possibility of another audit influences their choices, making them much less likely to misreport deductions such as large home offices, business meals, excessive car expenses or even hobbies misrepresented as business losses.

Audits, especially those aimed at the upper middle class, are a cost-effective way to bring in money. I hope that DOGE’s audit of the Treasury sheds light on the positive impact of audits. It has been proven that audits bring in more than they cost and serve as effective deterrents to all taxpayers.

It is common knowledge that an audit results in paying high professional fees to assist in representation during the process. Additionally, interest associated with an audit easily results in a taxpayer paying more than double what they owed had they originally paid their full tax amount on time. If the fear of an imminent audit looms over the nation, taxpayers are much more likely to report their actual income earned.

Not only should audit rates be increased but collection activities should as well. In July 2024, the IRS announced that the agency surpassed the $1 billion mark in collections from high-wealth taxpayers with past-due taxes.

The IRS loses substantial revenue by not actively targeting these non-compliant taxpayers. To address the national deficit, DOGE and the Trump administration should strengthen collection and enforcement efforts rather than reassigning the IRS’s criminal investigation division to aid Immigration and Customs Enforcement. The administration needs to focus on taxpayers who defraud the government of large amounts each year through false returns, non-filing or non-payment of taxes.

Enhancing the IRS’s capacity to pursue non-compliant taxpayers is essential to DOGE’s plan for securing the country’s fiscal stability.

Jessica Ledingham is a Maryland tax attorney.