Heading into Presidents’ Day weekend, Elon Musk and his Department of Government Efficiency (DOGE) turned their attention toward the IRS, drawing pushback from Democrats while a federal judge considered whether to allow the controversial team access to sensitive Treasury data.
DOGE arrives at IRS.
DOGE associates are currently making the rounds at federal agencies on behalf of President Trump in a government-wide audit to identify perceived operational deficiencies, ways to reduce workforce levels and spending, and potential fraud.
Reuters reported February 13 that the IRS was the next stop on the agency tour, as high-ranking DOGE associate Gavin Kliger went to the IRS building to initiate the latest round of scrutiny.
Senate Finance Committee Ranking Member Ron Wyden (D-OR) confirmed that his office received the same information. “That means Musk’s henchmen are in a position to dig through a trove of data about every taxpayer in America,” Wyden posted last Thursday on X, the social media platform owned by Musk and formerly known as Twitter. “And if your refund is delayed, they could very well be the reason.”
Leadership and funding.
The IRS is at an inflection point marked by the early departure of former Commissioner Danny Werfel that coincided with Trump’s inauguration in January, shortly before the opening of tax season. Although Trump previously named former Congressman Billy Long to head the agency, the formal nomination process has not started despite the successful confirmations of other nominees.
Moreso, what remains of the approximately $58 billion IRS funding authorized by the Inflation Reduction Act could still be put on the chopping block. At the beginning of the year, about $20 billion of the once-$80 billion appropriation was rescinded.
Republican lawmakers may look to further claw back amounts for enforcement, hiring, and other spending initiatives as Congress engages in debate over the federal budget and revenue raisers to pay for extensions to tax provisions enacted during Trump’s first term in the Tax Cuts and Jobs Act.
Ways and Means watching closely.
DOGE’s findings from its review of IRS operations may carry over to future congressional meetings.
House Ways and Means Committee members of both parties were in lockstep at a February 11 hearing that the IRS needs to continue modernizing its systems, but lawmakers differed on the matter of funding.
Ways and Means Chair Jason Smith (R-MO) in a February 13 letter to acting IRS Commissioner Doug O’Donnell aired a laundry list of grievances about the direction of the agency and actions taken during the Biden administration.
Smith expressed his disapproval of the “unauthorized” Direct File program; the timing of “numerous” final regs; liberties taken with “the implementation, or lack thereof,” Form 1099-K, Payment Card and Third Party Network Transactions, reporting thresholds; and the “failure to restore confidence in the security of taxpayer data” in the wake of the sentencing of a former IRS contractor now in prison for unlawfully accessing and disclosing tax return information.
Smith told O’Donnell plainly: “Business as usual at the IRS is unacceptable.”
DOGE access to Treasury systems.
Before reaching the IRS, DOGE first inserted itself in the Treasury Department when it sought access to payment systems operated by the Bureau of Fiscal Services.
Reports quickly swirled that Musk and company pushed out a long-time career official to examine payment files used to distribute funds that go toward, for example, Social Security and veteran’s benefits. Treasury Secretary Scott Bessent responded in saying DOGE was given “read only” access and would not take actions to disrupt payments.
A federal judge in New York blocked DOGE’s access after 19 state attorneys general sued the Trump administration. The matter was delegated to another Judge, Jeannette Vargas, who was scheduled to decide on Friday whether to extend the District Court for the Southern District of New York’s injunction against DOGE.
Also on Friday the Treasury inspector general reportedly confirmed that DOGE’s audit of the Treasury payment systems is underway.
Earlier in the week, House Financial Services Committee Ranking Member Maxine Waters (D-CA) and Senate Banking Committee Ranking Member Elizabeth Warren (D-MA) sent a letter to leadership at the Federal Reserve, Federal Deposit Insurance Corporation, and the National Credit Union Administration to sound off against DOGE.
“Given the sensitive data each of your agencies maintain as well as the critical payment infrastructure that the Federal Reserve operates, we urge that you and your staff do not aid and abet this kind of unconstitutional and unlawful conduct should you receive any request to do so by DOGE or other officials,” the senators wrote.
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