- The US IRS lost around 40% of its IT staff during the 2025 DOGE “restructuring”.
- Top-level tech leadership declined by nearly 80% during shake-up
- Workforce reductions have increased pressure on modernization and threatened timely processing of tax returns
The US Internal Revenue Service (IRS) has revealed the extent of the disruption it experienced in 2025, with its technology division absorbing the heaviest losses.
The IRS, which manages the collection of federal taxes in the United States, has lost about 40% of its IT staff and nearly 80% of its senior technology executives during a massive restructuring effort led by the so-called Department of Government Efficiency (DOGE).
The agency’s overall workforce declined by about a quarter during the same period.
Federal Restructuring and the Impact of DOGE on the IRS
The changes occurred as the Trump administration pushed forward a sweeping federal restructuring agenda.
DOGE was at the heart of this effort, which pushed aggressive cost-cutting measures across agencies, often with little explanation or reasoning for its actions.
Within the IRS, the technology branch has seen deeper cuts than most operating divisions, with Chief Information Officer Kaschit Pandya describing the reorganization as the largest internal technology overhaul in two decades.
Pandya said the previous structure relied heavily on siled departments that limited coordination and slowed delivery.
Since then, leaders have established cross-functional teams designed to manage projects from start to finish without fragmented handoffs between units.
The IT division supports filing infrastructure, legislative system updates, cybersecurity controls, and integration with external tax software used by millions of Americans.
A report from the U.S. Treasury’s inspector general for tax administration warned that the agency was already behind in digitally processing paper returns before staff cuts increased the pressure.
The watchdog also noted risks related to the implementation of inflation adjustments and new tax provisions enacted ahead of the 2026 filing season.
At the start of 2025, the IT division had around 8,500 employees, but by October it had 7,135, a drop of around 16% according to official headcount data.
Pandya said total IT losses during the broader restructuring reached about 40%, a figure that may include separations, executive layoffs and reassignments beyond the October headcount comparison.
Reports indicate that as part of the reorganization, 1,000 technical specialists were reassigned to provide front-line services during the U.S. tax season, a redistribution that raised internal concerns about whether modernization priorities could stay on schedule as seasonal demand increased.
Against this backdrop of staff losses and pressure to modernize, agency leaders have introduced AI tools into internal workflows.
Officials say AI systems are intended to help employees with process efficiencies, digital processing of feedback and internal coordination, reassurances that come after significant workforce reductions, inviting scrutiny of capacity and long-term sustainability.
The restructuring and rapid introduction of AI have attracted political attention from those concerned about surveillance and enforcement risks.
Lawmakers have questioned some modernization efforts and external collaborations, reflecting broader debates over oversight and operational transparency.
It remains uncertain whether automation can compensate for the loss of institutional knowledge as legislative filing and implementation deadlines approach.
Via The register
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