The Internal Revenue Service is hiring up to 700 employees for tax enforcement in what Commissioner John Koskinen calls the agency’s “first significant enforcement hiring in more than five years.”

In a memo to employees Tuesday, Mr. Koskinen said the IRS found money for the hiring—despite budget constraints—because of retirements, other departures and unspecified “efficiencies.” The first wave of hiring will begin in a few weeks and will be concentrated in the IRS department that monitors small businesses and the self-employed.

“While adding 600 to 700 new enforcement hires will not replace those who have left, it will help fill key gaps in our enforcement workforce created by years of attrition and will provide existing employees promotion and developmental opportunities, including serving as mentors and instructors for the new staff,” Mr. Koskinen wrote.

The IRS and the Obama administration have been asking for more money from Congress with little success, and attrition has reduced the government’s ability to audit taxpayers.

The agency had 17,208 employees doing tax enforcement in 2015, down 24% from 2010, and audits of individuals are at an 11-year low.

Congress did increase the agency’s budget by $290 million this year, but dedicated that money to taxpayer service, cybersecurity and identity theft.

Despite the new hires, the IRS will still end fiscal 2016 with 2,000 fewer workers than it started.

Write to Richard Rubin