IRS Turns to AI After Laying Off Thousands of Tax Agents

The Internal Revenue Service (IRS) is planning to leverage artificial intelligence (AI) to compensate for significant workforce reductions, including the termination of over 3,000 revenue agents.

Key Developments:

• Massive Layoffs: The IRS has already cut 11% of its workforce, including 3,600 auditors, under the Department of Government Efficiency ("DOGE") led by Trump appointee Elon Musk. Further cuts of 40,000 jobs are proposed.
• AI Integration: Treasury Secretary Scott Bessent announced during a House Appropriations Committee hearing that the IRS will use AI to modernize tax collection and offset staffing losses. The agency claims AI is already employed for "operational efficiency, compliance, and fraud detection."
• Budget Cuts: The IRS faces reduced IT funding, but Bessent framed this as an opportunity to adopt "smarter" technology solutions.

Broader Government AI Push:

• The Trump administration has prioritized AI across federal agencies, including the Department of Defense, FDA, and HHS, through executive orders and policy updates.
• Elon Musk’s DOGE is developing an AI chatbot for government contracts and reportedly staffing a project to deploy AI agents in government offices.
• DOGE has also been accused of using AI to monitor federal workers’ communications.

Concerns and Implications:

• Critics warn that replacing human agents with AI could undermine taxpayer services and oversight.
• The IRS’s reliance on AI aligns with Musk’s broader goal of shrinking the federal workforce, but its effectiveness remains untested.

Credit: Jordan Vonderhaar / Bloomberg via Getty Images

For more details, read the full report from The Register.