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3w ago

IRS Faces 40% Workforce Reduction as AI Promised to Offset Revenue Loss

Nearly one-third of IRS auditors have departed, and the Treasury proposes eliminating 40,000 more jobs, raising concerns about tax compliance and fiscal shortfalls.

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Elon Musk has been spearheading the staff-slashing work of the Department of Government Efficiency but said he plans to leave government soon.
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Overview

  • The IRS has already seen an 11% workforce reduction in 2025, including the loss of 31% of its auditors, according to a TIGTA report.
  • Treasury Secretary Scott Bessent has proposed eliminating an additional 40,000 IRS jobs, potentially halving enforcement staff, as part of the FY2026 budget plan.
  • The Treasury asserts that advancements in AI and IT modernization will maintain tax collection efficiency despite the staffing cuts.
  • Independent analyses, including from the Yale Budget Lab, project potential revenue losses ranging from $159 billion to $1.6 trillion over the next decade due to weakened enforcement.
  • Critics warn that reduced audit capacity could embolden tax evasion, especially among high-income individuals and corporations, undermining federal revenue collection.