IRS Workforce Cuts to Impede Progress on AI, Modernization

Deep cuts to the IRS workforce mean the agency might have to rely more heavily on technology to keep up taxpayer services and enforcement.

The IRS is set to lose 20,000 workers after the Trump administration's second deferred resignation offer. That's in addition to thousands who have already left or are on administrative leave.

Barry Johnson, former IRS chief data and analytics officer, oversaw the rollout of artificial intelligence at the agency before his retirement in January. When he left, he said the IRS was piloting an AI tool to help employees search the Internal Revenue Code. The agency also used AI to improve taxpayer services, such as with chatbots, and to make enforcement more efficient.

But the workforce cuts could hinder that progress, Johnson said.

"I'm especially concerned with proposed cuts in what we call the field staff, the folks who process tax returns and conduct audits," he said. "Because to the extent that we lose that subject matter expertise, our ability to train and validate AI applications will be diminished."

In this episode of Talking Tax, Johnson talks to Bloomberg Tax reporter Erin Schilling about the challenges of relying on technology with a shrunken staff, how the research division uses taxpayer data while upholding confidentiality, and what it means for the agency when top executives leave.

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