Feeling taxed by layoffs, IRS turns to AI helpers

Fewer humans, more bots - just in time for filing season

Tax season 2026 could be an interesting one as the IRS seeks to replace the staff it sent to the unemployment line with AI. Bots could handle tasks ranging from reviewing an org's request for tax-exempt status to processing amended individual filings.

The Treasury Department, the IRS' parent agency, published its latest AI use case inventory this week, which includes 129 items, 61 of which are specific to the IRS. That's a considerable increase from 2024, when the whole of the Treasury said it was working on just 54 AI use cases, 49 of which were IRS specific. 

It's been known that the Treasury Department had been slashing IRS staff since Trump took office about a year ago and had plans to replace eliminated staff with AI - Treasury Secretary Scott Bessent even said as much in May when asked by Congress, suggesting that the "AI boom" could offset staffing cuts without hurting collections.

"I believe through smarter IT, through this AI boom, that we can use that to enhance collections," Bessent told the House Appropriations Committee last year when asked whether staff cuts at the agency would imperil the 2026 filing season. "I expect collections would continue to be very robust as they were this year."

A considerable portion of the IRS staff eliminated in 2025 came from the IT department, which Treasury watchdog data released last summer showed had lost about 25 percent of its workforce amid wider cuts.

Given that, it's not entirely unsurprising that 16 of the 61 IRS AI use cases identified in the latest Treasury AI inventory are information technology ones. 

Among the IT use cases the IRS has identified are a machine learning model designed to process tax-exempt organization annual reports, a coding assistant, support ticket management, multiple internal research tools, and software aimed at eliminating paper documents.

Outside of IT-specific use cases, the IRS is also fielding AI to help it process corporate and individual amended tax filings, interact with taxpayers through various function-specific chatbots, verify identities, digitize forms, and analyze customer service instances. Internally, the IRS is either using or plans to use AI to rank resumes, support employees through more chatbots, and assist in procurement, among other functions. 

Despite Bessent's claim last year that the IRS would be specifically using AI to aid in its collections process, and a specific mention of a "collections chatbot" in the 2024 use case document that suggests the bot was already in operation, it appears that particular AI use case ran its course. There's no mention of AI being used for tax collection in the new use case document at all. 

The Treasury Department didn't respond to questions for this story. ®