IRS lost 40% of IT staff, 80% of tech leaders in 'efficiency' shakeup

https://www.theregister.com/2026/02/19/irs_job_cuts/

by freitasm • 5 months ago

271 123 5 months ago

The thing that makes me nervous is the statement that they plan to use AI. AI? The thing that is mathematically incapable of perfection, on finance information, for which perfection is table stakes? Not to mention all the privacy issues (although that boat has sailed).

rileymat2• 5 months ago

I am not following, a lot of things get turned into python calculations, so the LLM is not doing the precise math.

cael450• 5 months ago

The people in charge have a pathological hatred for the IRS. AI is just an excuse to continue destroying the capabilities of the IRS. In the meantime, they’ll keep borrowing to fund the government while telling everyone it’s ok because they slashed programs that make up a tiny portion of the budget. This can go on until there is a major economic shock related to US debt, but honestly, most of them will be dead by the time that happens.

bpodgursky• 5 months ago

If you think the state of the average tax return is "perfection as table stakes"..... you might be disappointed.

rtkwe• 5 months ago

Most tax returns these days are prepared and submitted electronically so the basic work of the arithmetic involved should be as close as possible to perfect already. Evaluating that is going to be pretty mathematically intensive though and LLMs have been pretty bad at that. Tool usage has gotten it better so maybe they'll just hand off the validation to the existing traditional computing and mostly be vibes based, 'does this return look legit?' evaluation.

Nition• 5 months ago

I thought I would give the Treasury the benefit of the doubt for a moment and check whether they meant LLMs like we're all assuming, or possibly a more specific finance-focused type of AI. Like how we have specialist neural net AI helping with radiology.

Looking at their official info document[1]... "a secure AI-based chat solution"... "AI-assisted code development"...

Okay they mean LLMs, carry on.

[1] https://home.treasury.gov/system/files/136/Treasury-AI-Strat...

xenadu022• 5 months ago

There are two forces at work:

1. Rich cheats for whom complexity is the goal. Reduced enforcement benefits them without the guilt. They can construct nonsensical schemes but if no one ever audits them they get to feel like they are paying what they owe despite being freeloaders.

2. Strangle the baby types: they hate the federal government. They deliberately want to reduce its income to force cuts to government spending (programs and staff). If they can they will cut other parts of the government then use that to justify reducing taxes. Nothing else matters except shrinking the federal government as much as possible via any means possible. These types also enjoy taking any government service that works and people like and making it as terrible as possible to kill popular support thus making it easier to cut the program entirely.

kerblang2• 5 months ago

I'm starting to realize that an LLM isn't gonna take my job, but it's beginning to make the job aggravating enough to quit anyhow. So many managers have decided they're going to have an AI Miracle and aren't interested in hearing otherwise, no matter what staff tells them.

AtheistOfFail• 5 months ago

An LLM may take the interesting parts of my job but the parts that suck (dealing with people) will never be taken over by an LLM.

hsbauauvhabzb4• 5 months ago

Phone and chat support has already happened, robotic law enforcement is the future. Now pick up that can citizen.

xenadu022• 5 months ago

Indeed. Uber Eats now makes you talk to an AI bot among other customer-hostile issues. I've largely abandoned them. The last straw was a driver leaving the food at some random house I could not even identify from the picture. It made me wait 5 minutes before I could do anything at all. Then it made me talk to a bot.

When I eventually got it to issue a refund I realized they kept the service fees and driver tip. For an order I didn't even receive!

If that's the best they can do I'll just go pick it up myself.

ericmcer• 5 months ago

Unfortunately the big players are pretty entrenched so the degraded quality that appears once AI fails to replace laid off workers will have minimal impact on their bottom line. And the bar for government is literally as low as "Is this such bad UX that it will cause a revolution?".

So why would they care whether its Covid, AI or a Recession that gives them the excuse to do less and less. The system keeps on rolling, the rich get richer, normal peoples lives get incrementally shittier.

watwut• 5 months ago

Does this have anything to do with AI push? It is fairly straightforward that billionaire class cooperating with Trump admin dont want to pay taxes. Republicans want IRS incapable so that tax fraud flourish. Bonus point is that they will be able to pretend worry about it with minorities.

tokyobreakfast3• 5 months ago

Republicans want IRS incapable so that tax fraud flourish.

That's wildly hyperbolic.

kerblang2• 5 months ago

Naturally, AI is expected to play a significant role in all this, making people better at their jobs and more end-user-focused, he said.
However, Pandya said IRS leaders are telling employees that AI won't endanger their jobs.

Not much of trump supporter myself, but I check HN for tech news rather than politics

newswasboring• 5 months ago

The part I don't understand is why can't they wait for the efficiency gains to materialize before firing people? Better pay a few people for a few months extra than be wrong. If AI is going to bring in all this efficiency, this would be peanuts.

mikkupikku• 5 months ago

Its like the "throw him into the deep end" method of teaching kids to swim. (I don't endorse it, but it has worked for many people.)

rmah• 5 months ago

Because, for white collar jobs, that is so rare that it's reasonable to say that it never happens.

monkaiju• 5 months ago

Everyday I am more and more pleased with our company's (or at least our company's tech department) to effectively ban AI.

orphea2• 5 months ago

My manager thinks if we give it a year or two, no one will write code by hand anymore, we will just generate everything from specifications in English.

rdtsc• 5 months ago

So many managers have decided they're going to have an AI Miracle and aren't interested in hearing otherwise, no matter what staff tells them.

Managers' manager convinced them they should expect an AI Miracle. Now your job is to put on a show to pretend to create an AI Miracle so your manager and their manager can pat themselves on the back.

Under enough pressure to use AI people will just produce code as before but LLM-ize it with more comments and verbose crap to look like AI did it. "See boss, I am using AI, so happy you got us this tool".

However, if you do it too well the next step will be "we don't really need so and so, we'll just replace them with an AI agent since it was working out so well".

mschuster91• 5 months ago

Starve the beast in action. The less employees the IRS has, the lower the chance there are enough staff on hand to audit the truly uber rich properly.

mothballed2• 5 months ago

The low income (under 25k) with EITC, were the largest audited group with 298,485 of 626,204 audits performed in 2022. The rest of those earning under 200k had 250,391 audits.[]

48% of audits were under 25k income. 87% of audits were people under 200k income.

Kind of interferes with the idea these audits were all about going after the uber rich. They were way more about going after the poor than they were about going after the rich.

[] l IRS management audit reports obtained via FOIA by via TRAC / https://tracreports.org/reports/706/

DFHippie2• 5 months ago

Do you think gutting the IRS is going to improve that ratio?

hsbauauvhabzb4• 5 months ago

How many of those <25k audits were completely automated? Going after the poor with an automated script at scale is basically free money for a government without compassion.

OkayPhysicist2• 5 months ago

I mean, $200k puts you well above the 90th percentile of earners in the US, so the IRS is (if only slightly) focusing extra resources on the wealthy. Audits go after people who have relatively obviously incorrect information on their taxes. For people under $25,000, there's a good chance they forgot a W2 or something, which means it's a quick identification and fix for the IRS.

justin66• 5 months ago

It's super weird to believe auditing a normal person and auditing "the uber rich" is in any way comparable. In both cases the thing being done can be referred to as an "audit," but that's it.

cake_robot• 5 months ago

The point of prior recent investments in tax police (that the GOP worked to claw back) was specifically to enable the enforcement of complex cases (rich people) that they didn't have the bandwidth to engage.

jcranmer• 5 months ago

The audits of people under that are going to fall under 2 or 3 categories:

a) People who filled in the wrong number on the spreadsheet that is taxes for whatever reason, and the audit is informing the filer that they filled it out incorrectly. I mean, really, taxes should start with the government sending me the form of what it thinks I owe and I should be making corrections to that, since the government already has this information and has done it, and that would make many of these audits go away.

b) People who misunderstood eligibility requirements and claimed deductions they weren't entitled to.

c) So I don't know how these people are counted, but there are absolutely millionaires and billionaires out there cheating on their taxes and claiming no income (e.g., the current president). It's totally plausible that they get listed in the "under 25k income" audit section despite the fact that they are in fact the uber-rich that is the intended target of the outrage.

_DeadFred_• 5 months ago

This follows the same logic as the claim that Biden bulldozed the border wall to make immigration law unenforceable. If you deliberately weaken enforcement capacity (and also burden/cripple government with unsustainable debt), you can then point to dysfunction as proof the system doesn’t work.

The only difference is that in this case, the stated goal of ‘starve the beast’ is intentionally sabotage the entire government as policy goal. Underfund agencies, expand deficits through tax cuts, then cite the resulting debt and institutional breakdown as justification to dismantle more of government.

It almost makes the people who were outraged at the idea of sabotaging border enforcement seem disingenuous that they don't now care that undermining federal capacity is public strategy.

munk-a8• 5 months ago

Defunding the IRS is nothing but an effort to reduce tax enforcement. People that have relatively straightforward finances can be trivially audited in a formulaic way with data that's on hand - a lack of human auditing resources tends to benefit those with more complex finances which also tend to be the people with a lot of money who can afford to lobby for less enforcement funding.

Also for reference, in 2024 the IRS had a rate of return of 415:1, they'll obviously target the lowest hanging fruit first but for every dollar of funding received they collected 415 dollars of tax revenue that would have been missed. This is an obscenely efficient organization.

Traster2• 5 months ago

Implied in your statement - it benefits those who can create more complex financial situations. Often the complexity of the situation is largely synthetic.

munk-a8• 5 months ago

I agree that the complex financials are generally intentionally created for sheltering and that complexity is only possible because of our overly complex tax code which has been made significantly more complex by tax preparer lobbyists from Intuit and others.

yibg• 5 months ago

In both cases though, mostly rich people.

guywithahat3• 5 months ago

Well it's a retort on the 2022 IRA bill, which increased the IRS budget by 80 billion over 10 years, and paved the way to hire 87,000 people. There has been a lot of hiring recently so it's hard to tell one thing from another but this isn't so much of mass layoff as an attempt at returning to normal.

toomuchtodo3• 5 months ago

Please provide evidence for what you considered to be normal to be an effective workforce for the ongoing task at hand (nation state tax collection).

nobodyandproud4• 5 months ago

Normal?

The 100k headcount and bill doesn’t cover what we in the US used to enjoy, with a smaller population: - https://taxpolicycenter.org/sites/default/files/2025-04/IRS%...

- https://www.washingtonpost.com/documents/5856e771-dd09-4517-...

stephen_cagle2• 5 months ago

Is that 415:1 the rate of return of an audit, or the expense:revenue ratio of the IRS as a whole? I remember hearing some time ago that the expense ratio was 11% for the IRS? But 415:1 is way way less than 11%.

conductr• 5 months ago

Captured revenue : cost to capture (could be an audit, billing for interest/fees due, etc. lots of avenues to capture revenue that is being missed).

The problem is these metrics aren't really scalable productivity metrics. If you doubled cost, it might go to 100:1, if you tripled cost, it might go to 0.5:1

Each dollar generally gets more expensive to capture.

jandrewrogers3• 5 months ago

That “415:1” is misleading and manipulative. The target rate of recovery is ~10:1, which is roughly what the IRS actually achieves.

Audits are not an infinite money glitch. I used to work for a Federal audit agency that also recovered ~10:1. The reason we target 10:1 recovery on audits is because the return on funding additional audits beyond that falls off very sharply. Furthermore, more aggressive auditing greatly increases compliance costs which ultimately come back as costs to the Federal government, so the net recovered revenue is even less than the headline figure.

Audit recoveries tend to be about sloppy compliance, not people trying to cheat the system. People with more complex taxes are more likely to screw up the exponentially more complex compliance aspects. Auditors are mostly fighting entropy.

munk-a8• 5 months ago

I'll admit - the 415:1 was pulled from an article detailing information from 2024 but the main point isn't the actual value but the fact that it's more than 1:1. When the IRS receives more funding the US government gets more money than what it is budgeting - this doesn't scale to infinity, at some point you'll have nearly complete auditing capture and more budget will just be burning money but we're no where near that point.

Putting money into the IRS is basically a free money printer for the US government and it's only deep corruption that keeps it so poorly funded.

tokyobreakfast3• 5 months ago

If you're not asking, "how many of these people did nothing?" you've never worked in the public sector.

DFHippie2• 5 months ago

Not all public sector jobs are the same. Working for a defense contractor is not the same as working for the IRS. Defense gets money dumped on it year after year. The IRS gets starved year after year.

Traster2• 5 months ago

This is the case in all layoffs. Is there a bottom 10% of employees at OpenAI? By definition yes. If you do your absolute best to try and make redundant the bottom 10% of employees at OpenAI, how many of them do you think will actually be in the bottom 10%? I bet it's not all of them, it's probably not even close to half of them.

First you've got the good people who don't like the environment, they'll bite your arm off for the redundancy, then you've got the people who are doing fine but for whatever reason are happy enough to take their chances elsewhere, they'll be happy to be top of the redundancy list. Then you've got the good strong performer who pissed off the wrong person, they'll be on the list too. Then you've got the entire team that is really good and hardworking but senior management figure it's easy to just cut the entire team because their project isn't politically valuable. Before you know it the redundancy list is full and it has no correlation to the bottom 10% of performers, but because it's pretty much an almost random sample it does reduce your company's capability by 10%.

nritchie2• 5 months ago

This is just the lazy comment of someone who believes all the right-wing propaganda about government. In my experience, government employees take pride in doing a job worth doing and doing it well.

jdross4• 5 months ago

8,500 IT workers in the IRS is insane.

They barely have any products, and they contract externally for so much other work

justinator3• 5 months ago

They have 150 million paying "customers" (not including businesses) and bring in $5 trillion+ yearly.

IncreasePosts2• 5 months ago

Consider that many millions of those "customers" need to hire a professional for hundreds/thousands of dollars to properly interact with the IRS.

tokyobreakfast3• 5 months ago

The public sector is where you need 12 people (and a project manager) to build an Access database.

cdrnsf2• 5 months ago

And the private sector is how the US has arrived at a miserable, unworkable healthcare system and an out of control carceral system.

munk-a8• 5 months ago

They have worked recently to implement a self-hosted tax submission system and given their rate of return while there may be some mismanagement it is one of the most provably efficient organizations in the government netting 415$ for every dollar of funding in 2024.

bomewish• 5 months ago

Isn’t that a completely bizarre metric though in this instance??! It is specifically the revenue generating arm of the government. If it wasn’t running at a “surplus” that would be very concerning indeed.

jdross4• 5 months ago

I'm not saying we shouldn't have an IRS, and I think IRS agents are probably one of the best ROI gov't employees possible, but 8,500 IT engineers and managers (who I have heard literally didn't even know how to code) makes no sense at all

arcologies19852• 5 months ago

They built IRS Direct File which was a huge improvement. Then the administration killed it to serve tax prep companies.

jdross4• 5 months ago

Do you know how many people 8,500 employees in IT alone is? Google, all of it, has 60,000 engineers

IRS direct file is just not that complex, I promise you, and are you sure it was even built in house vs contracted?

ThunderSizzle2• 5 months ago

Already could file free with free tax usa.

Not that impressive.

I'd be more impressed we got rid of income tax on salaried people entirely, or permit families the same type of deductions that businesses get, and only tax my actual profit - I can't deduct my overpriced housing, or my utilities unless I have a home office for ny own business.

throw0101a• 5 months ago

Consist strategy in hampering income:

"Starve the beast" is a political strategy employed by American conservatives to limit government spending[1][2][3] by cutting taxes, to deprive the federal government of revenue in a deliberate effort to force it to reduce spending. The term "the beast", in this context, refers to the United States federal government and the programs it funds, primarily with American tax money, particularly social programs[1] such as education, welfare, Social Security, Medicare, and Medicaid.[3]

* https://en.wikipedia.org/wiki/Starve_the_beast

Of course the GOP isn't very good at cutting spending, so deficits (and debt) tend to go up under their administration.

sleepybrett2• 5 months ago

I hope when someone else owns the whole government the beast becomes the us military.

hvb2• 5 months ago

Nah, it won't because ANY cuts to DoD will be met with

"Don't you support our troops"

Which is completely unrelated but it works very well as an attack line

dmix• 5 months ago

The headline say 40% based off something a single person said at a conference while the same article says the federal inspector general is saying a 16% reducation, as well as this quote:

According to a report by the US Treasury Inspector General for Tax Administration, the IT department had 8,504 workers as of October 2024. As of October 2025, it had 7,135.

JTbane• 5 months ago

Feels terrible to be an American rn, I'm preparing for major errors and delays in the processing of my tax return.

krior• 5 months ago

Atleast americans haven't lost their sense of humor.

hinkley• 5 months ago

It always sets off my spidey sense when people say 'leadership' because too many conflate management with leadership, and that is unfortunately not always true.

Few managers are actually leaders. Many are trumped up scribes. And many leaders are not managers.

analog8374• 5 months ago

AI audits for everybody. Of course they're going to do it.

neuroelectron• 5 months ago

They can always learn a new skill like programming.

wrs• 5 months ago

I started a new LLC in December and applied for an EIN (company taxpayer ID, required for doing essentially anything else, like opening a bank account). Normally this is done online and takes two minutes. This time the online process failed and I had to fax the form in. Six weeks later, they faxed back the number.

To be clear: when it failed, I just got an error code and was told to fax in the paper form. Which contains exactly the same information I had just typed into the website.

I don’t think the IRS needs fewer tech people.

jmyeet• 5 months ago

Remember when the Biden administration massively increased IRS funding and the Right collectively lost their minds? They fairly successfully pushed the idea that these agents were going to go after average citizens. They never were and you're way too gullible if you ever believed that.

Every $1 spent on the IRS returns roughly $12 in revenue [1]. This revenue doesn't come from W2 employees. It comes from exposing tax fraud from complicated tax schemes used by the very wealthy and corporations. That's why the Right lost their minds about it.

The idea that you save money by cutting IRS funding in the budget is just so laughably false that I'm surprised anybody believes it.

[1] https://budgetlab.yale.edu/research/revenue-and-distribution...

tstrimple• 5 months ago

Right collectively lost their minds

When are they not collectively losing their minds over something? It's like their one consistent characteristic. Jumping from one made up moral panic to the next. Somehow the "average" person cannot see the clear line of what conservatives have supported since the foundation of this country. They lost their minds over the idea that black people could be free citizens of the country. They lost their minds when women got the right to vote. They lost their minds when their objectively racist Jim Crow laws were struck down. They lost their minds when gay people were allowed to get married. They are losing their minds over immigrants and trans folk now. There is always some "other" holding them back and making everything worse. This from the party of "personal responsibility".

insane_dreamer• 5 months ago

Defund the IRS to make it harder to catch the tax evasion of the rich (evasion ain't cheap!), and use the money to fund ICE thugs in American cities and purchase warehouses for detention centers at very high over market value (the corruption in that process is staggering when you dig into it).

America is #1 for sure (if you're rich!)

malklera• 5 months ago

I am really ignorant about taxes in general, but i do not have to fill taxes. My government (Argentina) tells me how much i owe them and that's it. I get public health care, schooling, police, etc. I do not think the problem of the US is how many employees the IRS has.

exabrial• 5 months ago

That's a shame. We can do better. Let's get those numbers up even higher.

JohnTHaller2• 5 months ago

They're guaranteed not to audit the rich anymore

IRS lost 40% of IT staff, 80% of tech leaders in 'efficiency' shakeup

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