The head of the Treasury Department and a Department of Government Efficiency (DOGE) associate indicated the collaboration between the two agencies will proceed with a focus on systems upgrades paid for by spending cuts, but a court order temporarily bars the Trump administration from carrying out any further workforce reductions.
Treasury Secretary Scott Bessent posted on social media platform X May 22 that “IRS modernization is 30 years behind schedule, $15 billion over budget, and is relying on outdated technology.” Bessent’s post also included a Fox News interview segment in which he and Treasury Special Advisor Sam Corcos — a DOGE affiliate and tech CEO— discussed priorities at the IRS with host Laura Ingraham.
Corcos, who described himself as a software developer, said he was brought in by the administration to review the IRS’ modernization efforts. “The IRS has some pretty legacy infrastructure” similar to “what banks have been using,” said Corcos, describing the challenges with “migrating to a modern system.” The banking industry has largely moved on from older programs based on COBOL and Assembly, he continued, yet the IRS has struggled to completely phase out its old tech.
“Typically in industry this takes a few years, maybe a few hundred million dollars,” according to Corcos, but the IRS is “35 years into” the program. The IRS would say now that modernization completion is “five years away, but it’s been five years away since 1990. It was supposed to be delivered in 1996.”
When asked why modernization has taken so long, Bessent responded in saying one of the “surprises” he’s had in his “eight weeks” in government is the “entrenched interests” that “constrict” available resources. “And nobody cares.”
The Treasury secretary continued in saying “collections, privacy, and customer service” are not “being well-served” because of wasteful spending on consultation contracts, based on what DOGE has reported to him.
“We cannot perform the basic functions of tax collection without paying a toll to all these contractors,” Corcos claimed. He did not directly respond to a CNN report in which an anonymous IRS employee accused Corcos of pulling the plug on the agency’s projects for 2025 using congressionally appropriated funds. Corcos directed attention to the $3.5 billion Operations and Maintenance budget and the $3.7 billion IT modernization budget.
“That’s a lot of budget,” he said, “and we are way beyond any reasonable cost from what you would expect” from a similarly sized private company. Corcos said the IRS is most comparable to a “mid-size” bank.
Touching on recent IRS layoffs, Bessent doubled down on deferring to DOGE on how to best streamline IRS functions and its project roadmap. “This is the department of efficiency, not the department of elimination,” Bessent stressed. (emphasis added.) He questioned why there are the same number of “customer support” staff on Christmas Eve as April 15, or Tax Day.
Bessent said DOGE is prompting him to be skeptical of IRS staffing levels. Corcos stated his intention to remain in his capacity supporting the Trump administration for “six months” as Treasury continues to “look at” modernization and the workforce.
The Treasury Inspector General for Tax Administration reported this month that by March, the IRS’ workforce shrank 11%. This reflects the number employees who accepted the administration’s voluntary resignation offer to step down from their posts in exchange for receiving normal pay and benefits through the remainder of the fiscal year ending September 30. It also incorporates probationary employees who received termination notices in February following the Office of Management and Budget’s guidance on reductions in force (RIF).
Several lawsuits have been filed challenging the legality of the government workforce mass firings. One such complaint, filed April 28 by the American Federation of Government Employees and other labor unions in the U.S. District Court for the Northern District of California, cited an IRS memo dated April 15 detailing a Treasury RIF that would reduce the IRS by 40%.
This includes “approximately 60,000 to 70,000 positions, through biweekly RIF notices,” the labor unions said, citing media coverage of the “leaked” internal communication.
On May 22, Judge Susan Illston granted the unions’ motion for a preliminary injunction. Illston’s order halts any “large-scale” RIFs described by the groups affecting several government agencies, including Treasury. The temporary restraining order extends a two-week pause granted May 9.
“Indeed, the Court holds the President likely must request Congressional cooperation to order the changes he seeks, and thus issues a preliminary injunction to pause large-scale reductions in force and reorganizations in the meantime,” wrote Illston.
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