- US IRS lost about 40% of its IT staff during DOGE’s “restructuring” in 2025
- Senior technology leadership fell by almost 80% during upheaval
- Workforce reductions increased the modernization burden and threatened the timely processing of tax returns
The United States Internal Revenue Service (IRS) has revealed the extent of disruption it experienced during 2025, with its technology division absorbing the biggest losses.
The IRS, which administers federal tax collection in the United States, lost about 40% of its IT workforce and nearly 80% of its senior technology management during a sweeping restructuring effort by the Department of Government Efficiency (DOGE).
Overall staffing across the agency fell by about a quarter over the same period.
Federal Restructuring and DOGE’s Impact on the IRS
The changes unfolded as the Trump administration advanced a broad federal restructuring agenda.
Central to this effort was DOGE, which pushed aggressive cost-cutting measures across agencies, often with little explanation or justification for its actions
Within the IRS, the technology arm saw deeper cuts than most operational 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.
Management has since established cross-functional teams designed to manage projects from start to finish without fragmented handoffs between units.
The IT division supports filing infrastructure, regulatory system updates, cybersecurity controls and integration with external tax software used by millions of Americans.
A report by the U.S. inspector general for the Internal Revenue Service warned that the agency was already behind in processing paper returns digitally before staff reductions added to the pressure.
The watchdog also noted risks associated with implementing inflation adjustments and recently enacted tax regulations ahead of the 2026 filing season.
At the start of 2025, the IT division included around 8,500 employees, but by October it had 7,135 – a drop of around 16% based on official headcount.
Pandya has said total IT losses during the broader restructuring reached about 40%, a figure that may include separations, executive removals and redeployments beyond the headcount in October.
Reports suggest that as part of the reorganization, 1,000 technical specialists were redeployed to provide frontline services during the US tax season, a redeployment that raised internal concerns about whether modernization priorities could remain on schedule as seasonal demands increased.
Against this backdrop of staff losses and modernization pressures, agency management introduced AI tools into internal workflows.
Officials say AI systems are meant to help workers with process efficiency, digital returns management and internal coordination, assurances that come after major workforce reductions, inviting scrutiny of capacity and long-term sustainability.
The restructuring and rapid introduction of artificial intelligence has drawn political attention from those concerned about oversight and execution risk.
Lawmakers have questioned certain modernization efforts and external collaborations, reflecting broader debates over oversight and operational transparency.
Whether automation can offset the loss of institutional knowledge remains uncertain as submission deadlines and legislative implementation approach.
Via The register
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