IRS cuts may mean agency’s ‘AI efforts will not succeed,’ GAO says
In the aftermath of severe cuts to the IRS’s workforce, Treasury Secretary Scott Bessent told lawmakers last May that the tax agency planned to at least partially account for those losses through an “AI boom.” A new watchdog report pours a bit of cold water on that hope.
The Government Accountability Office, in a performance audit conducted from April 2024 to March 2026, found multiple instances of IRS units cutting staff members who support AI efforts. The reductions have left “skills gaps” at the agency that “could greatly affect” its ability to use the emerging technology.
Despite the widespread departures and other “organizational and contractual changes,” IRS officials told the GAO that the agency “plans to use more AI in the future.”
“However, IRS officials said they had not identified skills needed to support AI or developed a plan to address the skills gaps,” the watchdog noted in a press release. “The recent staff reductions, the intent to pursue additional AI initiatives, and the absence of a plan to address AI skills gaps increase the risk that IRS AI efforts will not succeed.”
The IRS has invested heavily in AI, as evidenced by a use case inventory that has jumped from 10 entries in 2022 to 129 now. The agency’s Research, Applied Analytics and Statistics unit spent more than $58 million on AI in fiscal 2024, per the GAO, with plans to spend an additional $32 million in fiscal 2026.
But the RAAS division, which is one of the IRS’s most active users of AI, has lost 63 staffers who had worked either full- or part-time on the technology, the report noted.
“IRS ultimately rehired some staff who had been let go due to their status as probationary employees, but officials said many of those employees and other AI-focused employees in RAAS have been reassigned from AI-focused work to other workstreams due to attrition elsewhere in RAAS,” the watchdog wrote.
Other hard-hit IRS units include the Chief Technology Officer’s AI team, which had focused on proof-of-concept projects aimed at agencywide operational improvements. As of May 2025, half the team’s staff was gone and two contracts were not renewed.
“As a result, the CTO paused or suspended support of 10 out of the 11 use cases due to resource limitations,” the GAO stated.
The Office of the Chief Procurement Officer, meanwhile, shed more than 40% of its staff from May to June of last year. Roughly 80% of the IRS’s use cases as of June 2025 involved contracting, and procurement officials told GAO that the shrunken workforce could result in “significant delays in entering into new contracts and modifying or renewing existing ones, including contracts that support mission-critical programs.”
Other specific talent losses called out in the GAO’s report include the IRS’s chief of AI in IT being placed on administrative leave in March 2025, the resignations of three RAAS directors “heavily” involved in supporting AI adoption in May 2025, and an overarching “loss of expertise and institutional knowledge essential for understanding potential applications, benefits, and drawbacks to the use of AI” at the tax agency.
One RAAS official told the GAO that an AI model trained to flag tax returns for audit could be shelved because “the program may no longer have staff to conduct the audits.” Others sounded the alarm on fewer audits due to a smaller enforcement staff, resulting in less data collection — and less data to train AI models.
“Without quality AI models, IRS officials said the agency may have diminished capability to improve IRS’s ability to collect revenue and reduce the number of audits that do not result in a tax change,” the report warned. “Without staff to support AI capabilities and oversee individual use cases, IRS is at risk of initiating projects the agency does not have resources to support or deploying AI systems without resources to ensure they are used responsibly.”
