IRS Chief Information Officer Kaschit Pandya disclosed this week that 40 percent of the agency’s IT staff and nearly 80 percent of its tech executives have left since DOGE-driven cuts began. He made the remarks at an Association of Government Accountants conference, describing the situation as “the biggest IT reorganization in 20 years.”
The IRS IT division started last year with roughly 8,500 employees. The 40 percent figure means approximately 3,400 IT workers are gone. That’s significantly higher than the 1,365 reduction previously reported. Among the departed: around 50 associate chief information officers at the Senior Executive Service level, covering cybersecurity, modernization, applications development, contracts, networks, and data center operations.
Filing season opened January 27. Three weeks in, the IRS is now pulling employees from HR, IT, and other back-office roles into “involuntary details” to cover frontline tax processing work. Training for those detailed staff doesn’t start until February 23. That’s almost a month into filing season.
The tax return processing division hired 50 new employees for this season. That’s 2 percent of its authorized staffing level. Customer service rep ranks are down 22 percent. An anonymous IRS employee told Federal News Network: “It is obvious that some cracks are emerging.”
The Revenue Math
Here is where this stops being a story about government waste and starts being a story about money.
The IRS collects roughly $6 for every $1 spent on audits of high-income taxpayers. In fiscal year 2023, IRS auditors recommended $32 billion in additional tax assessments. Every dollar cut from enforcement capacity costs between $5 and $9 in revenue the government never collects.
The Yale Budget Lab estimated that laying off 18,000 IRS employees results in a $159 billion net revenue loss over a decade. If the cuts trigger a broader increase in tax noncompliance (which happens when people realize audits are less likely), that number climbs to $1.6 trillion.
Former IRS Commissioner Charles Rettig put it plainly: “Aggressive reductions in the I.R.S.’s resources will only render our government less effective and less efficient in collecting the taxes Congress has imposed. It will shift the burden of funding the government from people who shirk their taxes to the honest people who pay them.”
The AI Replacement Claim
Treasury Secretary Scott Bessent told Congress last May that an “AI boom” would compensate for the workforce reductions. CIO Pandya has also referenced AI-driven efficiencies as part of the reorganization plan.
There is no public evidence of AI systems deployed at scale within the IRS that would replace the functions previously handled by 3,400 IT workers and 50 senior technical executives. The agency’s Treasury-appointed CIO, Sam Corcos, is the founder of Levels, a health tech startup. His government technology experience prior to this role was zero.
Corcos has described IRS IT spending as “way beyond any reasonable cost for what you would expect of a private company.” He’s not entirely wrong. The IRS modernization program was 30 years behind schedule and $15 billion over budget. That’s a real problem. But gutting the IT team doesn’t fix a modernization backlog. It makes it permanent.
What Actually Happens Now
The IRS entered 2025 with roughly 102,000 employees. It ended the year with 74,000. The target is fewer than 60,000. 31 percent of revenue agents and auditors are gone. 8,600 taxpayer services employees left. And this summer, Congress passed the “One Big Beautiful Bill Act,” which added complex new tax provisions the IRS must now implement with a skeleton crew.
The people who maintained the systems are gone. The people who understood the legacy code are gone. The people who knew which workarounds kept 40-year-old infrastructure running through filing season are gone. In their place: HR employees being detailed to processing roles with no tax experience and training that starts a month late.
Former IRS executives told FedScoop the cuts will “hinder innovation, reverse AI advancements, embolden tax cheats, and result in a less efficient agency.” Government Executive ran a headline: “‘Setting this agency up for failure.'”
The efficiency argument requires you to believe that an agency collecting $4.7 trillion in annual revenue can lose 40 percent of its technical workforce, 80 percent of its tech leaders, and a third of its auditors while simultaneously implementing new tax law and maintaining service levels. During tax season. With HR workers processing returns.
That’s not an efficiency play. That’s a math problem that doesn’t work.