IRS cuts leave filing season operations, modernization work ‘in flux’
The IRS’s staff reductions last year “were not targeted or strategic,” according to a new watchdog report, a reality that has left remaining staffers in the dark on some modernization projects and other agency initiatives.
In an audit that examined the 2025 filing season in the wake of those drastic workforce cuts, the Government Accountability Office found that the IRS doesn’t have an updated strategic workforce plan that addresses various staff-related challenges.
While last year’s filing season “was mostly insulated from these changes,” the watchdog sounded the alarm on the effect the cuts will have on “workforce planning and modernization efforts for future filing season operations.”
The Biden White House’s Inflation Reduction Act provided billions of dollars for modernization projects aimed at improving filing season operations, but according to the GAO, those projects “have also been in flux with the ongoing organizational changes.”
In March of last year, IRS leaders dismantled the Transformation and Strategy Office that managed many of those efforts. Since then, agency officials have continued with some IRA-funded IT priorities, while others have been altered to “align with the new administration’s goals,” the report stated.
The tax agency has continued to work on the document upload tool it launched in 2021, and has also moved forward on the redesign and digitization of simple notices, per the watchdog. Other online service enhancements “have been deprioritized as focus has shifted to other initiatives,” according to the report.
Some technology initiatives were paused following the change in administrations but have since resumed, per the GAO, specifically the modernization of call centers that included a pilot program allowing customer service representatives “to access the right information about the taxpayer at the right time and launching a new electronic workforce management system for scheduling Accounts Management staff.”
The IRS’s paperless push may be the IT project most clearly vulnerable following the agency’s workforce reductions. The GAO noted that Trump administration officials determined that the Biden administration’s Zero Paper Initiative “was in line” with current priorities, but “were unsure about the status of some related activities.”
“For example, IRS officials told us that the contract for its scanning and storage efforts ended in May 2025 and IRS signed a 1-year bridge contract with an option to renew each month,” the report stated. “Given the lack of a long-term contract and the fact that increased scanning could affect staffing needs, officials were unsure how much return processing staff there should be for the 2026 filing season. In January 2026, IRS officials told us that they still could not determine staff targets after they had awarded a longer-term contract and ended the bridge contract in September.”
The GAO delivered three recommendations to the IRS as part of its audit, pushing the tax agency to establish an implementation team to manage reform efforts, make sure that a newly developed strategic workforce plan builds off previous plans, and create a blueprint for addressing a correspondence inventory backlog.
The IRS neither agreed nor disagreed with the watchdog’s findings, saying that it would share additional details in a written response detailing its follow-up actions.
