- US IRS lost around 40% of its IT staff during DOGE ‘restructuring’ in 2025
- Senior technology leadership decreased by almost 80% during restructuring
- Workforce reductions increased the pressure of modernization and threatened the timely processing of tax returns.
The US Internal Revenue Service (IRS) has revealed the scale of disruption it experienced during 2025, with its technology division absorbing the largest losses.
The IRS, which manages federal tax collection in the United States, lost approximately 40% of its IT workforce and nearly 80% of its senior technology leadership during a broad restructuring effort by the so-called Department of Government Efficiency (DOGE).
Overall staffing across the agency decreased by about a quarter during the same period.
Federal Restructuring and the Impact of DOGE on the IRS
The changes unfolded as the Trump administration moved forward with a broad federal restructuring agenda.
Central to that effort was DOGE, which pushed aggressive cost-cutting measures across agencies, often with little explanation or reasoning for its actions.
Within the IRS, the technology arm saw deeper cuts than most operating divisions, and Chief Information Officer Kaschit Pandya described 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 down delivery.
Since then, leadership has established cross-functional teams designed to manage projects from start to finish without fragmented handovers between units.
The IT division supports reporting infrastructure, legislative system updates, cybersecurity controls, and integration with external tax software used by millions of Americans.
A report from the U.S. Treasury Inspector General for Tax Administration warned that the agency was already behind in digitally processing paper returns before staff reductions added to the pressure.
The watchdog also flagged risks related to the implementation of inflation adjustments and newly enacted tax provisions ahead of the 2026 filing season.
At the beginning of 2025, the IT division had approximately 8,500 employees, but in October it had 7,135, a decrease of about 16% according to official workforce data.
Pandya has said that IT’s total losses during the broader restructuring reached about 40%, a figure that may include separations, leadership ousters and reassignments beyond the October staffing comparison.
Reports indicate that as part of the reorganization, 1,000 technology specialists were reassigned to provide front-line 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 loss and modernization stress, agency leadership introduced artificial intelligence tools into internal workflows.
Officials say the AI systems are intended to help employees with process efficiency, digital returns handling and internal coordination — assurances that come after major workforce reductions, inviting scrutiny over capacity and long-term sustainability.
The restructuring and rapid introduction of AI have attracted political attention from those concerned about oversight and enforcement risk.
Lawmakers have questioned certain modernization efforts and external collaborations, reflecting broader debates about oversight and operational transparency.
It remains uncertain whether automation can offset the loss of institutional knowledge as filing deadlines and legislative implementation schedules approach.
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