The Internal Revenue Service (IRS) is pausing the operational overhaul it started during the Biden administration and is set to make changes to its workforce, senior Treasury Department officials said on a Friday call with reporters. A Treasury Department official said that the U.S. tax collectio n agency has an opportunity to make a strategic pause on its modernization effort. The official took an indirect swipe at the initial $80 billion in additional funding given to the IRS in Democrats’ 2022 Inflation Reduction Act, saying that a large investment often yields a small outcome. The announcement of a pause follows Thursday reports in multiple media outlets saying the IRS would shed as much as 20 percent of its workforce amid inquiries at the agency by the Department of Government Efficiency (DOGE). The Washington Post reported Thursday that DOGE officials told the acting IRS chief to get rid of more than 18,000 jobs, representing about 20 percent of the agency’s workforce. Treasury Department officials said Friday they didn’t have a specific number in mind for the amount of IRS jobs they want to cut but that the agency had an opportunity to realign its workforce. The IRS announced it was getting rid of nearly 7,000 trial employees earlier this year. Treasury Department officials also said the Direct File program launched during the Biden administration, which is an online portal allowing taxpayers to file their taxes directly with the IRS, was being reviewed. Treasury Secretary Scott Bessent has said the program would be available for the 2025 tax season. Multiple outlets also reported Thursday that acting IRS Commissioner William Paul, a career agency employee, would be replaced by Andrew De Mello, who was nominated as the inspector general for the Education Department during Trump’s first term. Treasury officials declined to comment on these reports on the Friday call with reporters. Republicans have been gunning for the funds enabling the IRS overhaul since it was first announced in 2022. When Republicans took control of the House in 2023, the first piece of legislation they passed was a rescission of the IRS funds. During funding fights over the course of 2023 and 2024, Republicans were able to claw back 20 percent over the initial $80 billion funding boost for the IRS and managed to freeze most of the remaining funds set aside for increased audits and additional tax enforcement, much to the annoyance of the Biden White House during its final weeks in office. As of September last year, the IRS spent $9 billion, or 16 percent, of the remaining$60 billion in Inflation Reduction Act (IRA) funding that was available to the agency, the Treasury Inspector General for Tax Administration (TIGTA) said in a report released Friday. The largest expenditure has been $3.7 billion for employee compensation, the TIGTA report concluded. Treasury Department officials said Friday they also were reviewing enforcement practices at the IRS. Each year, the IRS fails to collect around $700 billion in taxes owed to the government, an amount that’s known as the tax gap. Former IRS commissioner Charles Rettig told Congress in 2022 that the gap could be as large as $1 trillion, or nearly 4 percent of U.S. gross domestic product in the last year that it was measured. ...read more read less