Trump’s cost-cutting at IRS blunts tax agency’s AI plans

President Trump’s moves to slash the IRS have severely dented the tax agency’s ability to harness artificial intelligence, according to a new audit.

The Government Accountability Office, Congress’ investigative arm, said staffing cuts have eviscerated key AI personnel, sapping the IRS’ ability to manage the tools it already uses, much less to expand in the way the agency had planned.

IRS’ procurement office, which handles contracts for AI tools or support, lost 40% of its staff last spring. The agency’s chief technology officer suspended 10 of its 11 projects after half of its team departed.

And the agency’s research and analytics unit lost 63 of its AI-focused employees early last year, blunting the IRS’ ability to explore new AI tools, GAO said.

It adds up to a “skills gap” that “could be hard to close.”

“IRS’s capacity for using and overseeing its large inventory of AI was significantly affected in 2025 amid changes to resource levels and government-wide guidance,” the audit concluded. “Staffing reductions and other changes began affecting IRS’s efforts to develop, procure, and use AI.”

The IRS has been in the middle of a tug-of-war between Democrats and Republicans.

Under President Biden, the agency saw an infusion of tens of billions of dollars, and it went into 2025 with big plans for AI.

Those plans remain — but the agency’s infrastructure has suffered from the Trump cuts, the GAO said.

The staffing cuts saw employees depart on short notice, leaving those who remained in the lurch and without the knowledge to continue some projects. Sometimes that meant the agency didn’t even know whether projects were active, paused or canceled.

GAO said another problem is the agency is losing staff who helped reinforce AI. Fewer audits means less data to train AI models, the audit said.

GAO provided a broad look at the IRS’ use of AI as of last June.

The 126 “use cases” were a dramatic increase from 2022, when the IRS had just 10 AI projects.

About half of the 126 were deemed too sensitive to be publicly reported, or were test projects that are too premature to be reported publicly.

And just 49 of the projects are operational. The rest are in some stage of development or testing.

Of the 49, 14 were for internal agency operations, 18 for tax compliance and fraud detection and 17 were aimed at taxpayer services.

The IRS tallied 25 million sessions with chatbots or voice bots in last year’s filing season. Officials also use AI to analyze how their customer service agents handle taxpayers’ calls, and to do verification of taxpayers using online services.

In its official response, the IRS acknowledged “significant changes” to its staffing and “strategic priorities,” but said it welcomed GAO’s input.

“In this evolving environment, IRS remains dedicated to meeting and exceeding all authoritative standards for federal use of AI,” wrote Frank Bisignano, the IRS’ CEO.