The Government Accountability Office has warned that staffing reductions at the Internal Revenue Service have led to a shortage of skilled personnel capable of developing and supporting artificial intelligence tools. In a report published Tuesday, the congressional watchdog also found that the IRS does not maintain a complete inventory of AI applications.
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Why Are Staffing Reductions at the IRS Causing AI Risks?
According to GAO, workforce cuts in 2025 significantly reduced the number of employees supporting AI initiatives. Officials from the tax agency disclosed that dozens of personnel working on AI were affected by the staffing reductions throughout the past year.
A recent report from Yahoo Finance revealed that the IRS has 27 percent fewer employees in 2026 than in 2025, with the agency’s IT department losing 25 percent of its workforce.
While the IRS has plans to expand AI use cases, it has not identified the skills needed to support these efforts or developed a workforce plan, raising concerns that staffing reductions and the lack of strategy could hinder future AI initiatives, the government watchdog said.
What Issues Did GAO Identify in IRS' AI Inventory?
GAO also discovered gaps in the IRS' AI inventory, which included 126 active use cases as of June 2025 but did not fully capture how AI is being used across the agency. More than 25 percent of the agency’s listed use cases lacked information on expected benefits, limiting visibility into their value, the report cautioned.
The watchdog also identified omissions in the use cases. For instance, AI-enabled tools used to support criminal investigations were not included in the inventory. In addition, the IRS lacks a centralized process to manage AI investments across the agency or ensure alignment with broader strategic goals.
What Steps Did GAO Recommend for IRS to Address Its AI-Related Deficiencies?
GAO made several recommendations to help the IRS strengthen its AI capabilities and governance, including developing a comprehensive plan to address its workforce skills gap and implementing a quality assurance process to improve the accuracy and completeness of the agency’s AI inventory.
The watchdog also urged the IRS to improve internal communication to ensure all AI use cases are properly documented.
The IRS agreed with all recommendations, noting that efforts are underway to address the issues identified in the report.
