The IRS Built a Machine to Chase You. Then It Fired the People Who Knew How to Run It
This is a familiar story about how nothing the government runs works well.
It's a story about what happens when a governmental agency goes all-in on artificial intelligence...126 active AI applications...and then fires the people who built and run those tools.
The Government Accountability office recently published findings about the IRS, and what they reveal about IRS enforcement must be understood if you're a professional with clients who have tax debts.
1. The IRS is All In on AI, Even If It Doesn't Have a Full Staff to Run It
Here's the part of this story that gets lost in the "government dysfunction" narrative.
The GAO found 126 AI systems being used at the IRS with 61% of them still under development as of last June.
But the ones that are live?
They're running full steam ahead.
The IRS has been using AI for years to supercharge its DIF scoring system — the algorithm that grades tax returns for audit potential, flagging the ones most likely to have underreported income.
And those systems are still running despite the loss of AI experienced professionals.
AI-driven automated audits are here. The machine flags the return. The notice goes out. The human gets involved later — if at all. For a client carrying existing tax debt, an unfiled return, or a history of missed payroll deposits, getting flagged by an algorithm accelerates the collection timeline.
The staffing cuts made the IRS slower in some areas. But the deployed AI tools still work.
And they've inherited more of the enforcement load.
2. The AI That Isn't Running Yet is the Real Story — Because Soon It Will Be
This is where the GAO report gets genuinely consequential for anyone advising clients with open IRS matters.
The IRS lost 63 employees from its Research, Applied Analytics and Statistics group which is the unit most directly responsible for building and managing AI tools.
The IRS has no workforce plan to address the skills gap.
Over 25% of the AI use cases in the inventory lacked basic information about what benefit they were even supposed to provide.
What does that mean in plain language?
The 77 AI applications still under development last June are stalled. The enforcement capabilities the IRS was building, e.g., sharper audit selection, more sophisticated fraud detection, faster compliance identification...aren't operational yet.
And yet, IRS CEO Frank Bisignano said in his formal response to the GAO that AI use is "growing rapidly" and that the focus remains on operational efficiency, tax compliance, and fraud detection.
For your client with an open tax problem: The tools that are currently stalled will eventually run. The window where the IRS is operating with degraded AI capacity is temporary.
3. A Broken AI Program Still Generates Automated Collection Activity. That Clock Doesn't Stop
It must feel great for taxpayers reading about IRS dysfunction and concluding that the pressure is off.
But it's not.
Even with the AI program in disarray, even with 25% of the workforce gone, the IRS's core automated collection infrastructure keeps moving as it ever was.
Failure to File penalties. Failure to Pay penalties. Interest on the underlying balance. Interest on the penalties. These don't require a sophisticated AI system. They run on processes that have been automated for decades.
The AI disruption is mostly related to the IRS's capacity to identify and pursue complex cases, cases with payroll tax debt, with dual personal and business liability, cases with multi-year compliance gaps, etc. Those cases require human expertise and analytical capacity that the IRS has temporarily laid off.
That's not an invitation to breathe easy and stick your head in the sand.
The client who gets compliant, who gets into a defined resolution pathway while the IRS is operating with reduced analytical capacity, is positioning themselves ahead before AI enforcement gets really sophisticated.
The client who waits is betting the dysfunction outlasts their CSED clock.
Which is possible but the IRS's current plans say it won't.
TL;DR
⏩ The IRS built 126 AI applications for compliance and fraud detection, then lost 25%+ of its workforce, including 63 people in the unit most responsible for running those tools
⏩Deployed AI tools (like DIF score automation and audit flagging) are still operational and don't require a full staff, meaning automated enforcement didn't slow down
⏩ 77 of the 126 AI applications were still under development when the cuts hit and those tools are stalled, but the IRS has agreed to all 8 GAO recommendations and is rebuilding; the disruption is temporary
⏩The current gap in IRS analytical capacity creates some time but that window closes as the program stabilizes and AI tools come online
⏩ Automated penalty and interest accrual never stopped; waiting while the IRS is disorganized is probably not going to work out real well.
➥ Contact Attorney Stephen A. Weisberg for a free Tax Debt Analysis.
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