IRS lost 40% of IT staff, 80% of tech leaders in 'efficiency' shakeup
theregister.com
theregister.com
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.
Next month's headline: "IRS signs 200-million dollar deal with Grok to use AI to analyse tax returns, determine who gets audited".
Just have a script with “what are the taxes owed by $name” and print the output
I’ll take $5M now and you can own 50% of my startup: GenTaxAI
Someone has to pay to operate a nation state, you can’t borrow forever to fill the gap and there’s nothing left to cut. Roughly the bottom 60% of Americans do not make enough to have a federal income tax liability. So, we can kick the can on the top 40% paying until the bond vigilantes make the decision for the US.
Stated reasons may or may not be actual.
If you recall these were not just accountants but agents who carry guns etc.
I see this as very similar to the ICE situation. Biden has loyalty and power in IRS and so gave it money to help him police. As the government gets more corrupted I think we’ll find more agencies weaponized like this.
The equivalent question is can you provide proof that ICE provides power and is loyal to Trump?
I don’t think you would say that’s a deep state conspiracy.
You’re shifting the discussion to organizations being political, hoping it becomes a divisive topic.
A well-worn and sleazy playbook to dodge any discussion of a problem that has exceeded the tipping point.
I wouldn't call is comment sleazy I think he's just trying to discuss the topic at hand.
Normal people are the easiest to chase; the cut backs have made this a foregone conclusion.
> which is where most tax revenue comes
Because normal people can’t afford transnational accounting shenanigans.
> from and where most of the fraud is.
The Panama papers prove deliberate tax dodges are not by “normal people”.
> I wouldn't call is comment sleazy I think he's just trying to discuss the topic at hand.
Injecting and steering a discussion towards party and identity politics a where there was none is a sure fire way to shutdown a discourse.
Deliberate or not, the method involved is sleazy.
By the way: Given that your definition of normal in your heavily downvoted comment, I’m not surprised you’re defending the comment.
Dig deeper and look back over decades. The 2022 bill and headcount to 100k was a push BACK to normal.
I personally view our IRS head count as being at historical lows by raw headcount; and even lower by population size if we look at the last 40 years (would love data that goes back further).
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-...
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.
This is well-understood by the Federal government. When they set their targets they fully account for the growth of indirect costs created by the audit activity that don’t show up in the ratio.
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.
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.
How will we pay for it? Debt or printing money!
The Federal government has a century of empirical data on this. They set their targets accordingly, which as a heuristic is roughly optimal at around 10:1. This may not be intuitive to you. It wasn’t to me either until I worked at a Federal audit agency. Most of it actually makes sense once you understand the bigger picture.
That extra tax specialist could have been an additional production line worker, which would have created volume, which would have lowered prices, which would have made inputs for other goods cheaper, etc.
It is really wild when you think at a macro level, how much value is destroyed, all due to indirect costs which are extremely difficult to estimate.
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.
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.
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.
That's wildly hyperbolic.
People considering speaking frankly about reality as hyperbolic is how we got here.
> 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
Except for things like hardware drivers, most of the code that will ever need to be written already has been. It will just need to be refactored and recast for new systems and applications, and current-gen LLMs are already extremely good at that.
The line that separates specifications and source code will get increasingly blurry over the next couple of years, eventually reaching a point where it's no longer worth arguing about.
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".
> 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.
America is #1 for sure (if you're rich!)
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...
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.
Few managers are actually leaders. Many are trumped up scribes. And many leaders are not managers.
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...
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".
> "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.
"Don't you support our troops"
Which is completely unrelated but it works very well as an attack line
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/
Poor people pay very little income tax, as is the entire point of a progressive set of tax brackets and a large standard deduction.
It is trivial to not do your taxes wrong if you have legal employment. If you for some reason doubt your ability to do a couple calculations and copy over 6 numbers to a simple form, Turbotax will do that "hard work" for you for $30.
Even using Turbotax, I once failed to report a W2 (because I technically had more than one job) and the "penalty" was a letter that said "Hi, you missed this, we fixed it, give us $270 + $1 interest", which I never responded to because I am disordered, so they took my state income tax return.
No court. No threat. No serious penalty. I didn't even have to talk to anyone.
If we are talking about poor people, who by definition have minimal income, how do you think they supposedly would get hit by some giant IRS penalty? What is the magical pathway?
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.
There's a sleight of hand in your argument here. I said under 25k with EITC. You can't get EITC if you're "claiming no income." That's why it's called earned income tax credit as the credit is intended to help offset welfare cliffs as you start to earn more money but at low incomes. So your whole paragraph here about <25k is null and void as "millionaires and billionaires out there cheating on their taxes and claiming no income" aren't in the <25k EITC bucket I mentioned, they're in the bucket of others earning under 200k.
(As an aside, if someone actually thinks earns nothing and doesn't want EITC which they can't get anyway with zero income they probably won't even be filing, there is no "return" to audit.)
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.
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%.
They barely have any products, and they contract externally for so much other work
Per capita the UK has 2.5x the IT workers in tax collection compared to the US (~25 IT per million vs 65 IT per million). But, those tax collection IT workers help create a system which means UK citizens don't spend hundreds of billions of dollars every year just to file their taxes.
Doctors do not care about the healthcare system one bit.
I live in EU country with public universal healthcare and healthcare over here looks exactly the same. These cunts travel to US on holidays and as kickbacks, and salivate at how the American healthcare is "organized".
Health insurance being tied to employment benefits is because the IRS taxes money, but not benefits, for example.
But if every new dollar currently produces much more then a dollar in returns, it means it's underfunded because taxes that should be collected, that by legal analysis would be planned for in budgeting, aren't.
And that matters for a great many things, but one reason is that if you pay taxes and want a tax cut then one reason you're not getting it is because actual revenues are lower then they should be due to uncollected taxes.
AKA tax fraud steals from the honest tax payer.
I'm sure there's waste in the IRS - but these budget cuts are not being done in good faith.
IRS direct file is just not that complex, I promise you, and are you sure it was even built in house vs contracted?
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.
All amazing ideas (I mean that seriously) but unfortunately not within the IRS's power to make happen.