Former IRS Boss Warns Musk's DOGE Cuts Will Harm Agency

Former acting Commissioner of the Internal Revenue Service (IRS), Douglas O’Donnell, has expressed significant concern regarding the long-term consequences of workforce reductions implemented by Elon Musk's Department of Government Efficiency (DOGE). O'Donnell, who served at the IRS from 1986 until 2025, including two stints as acting commissioner, stated that the cuts, which reduced the IRS workforce by more than a quarter from an estimated 100,000 employees, will be felt for years to come. Despite the IRS describing the 2026 tax season as successful, processing 140.2 million individual returns and issuing over 90.4 million refunds—a slight decrease from the previous year—O'Donnell believes the impact of these reductions will be exacerbated by an "ever-shrinking agency budget." He articulated his worries to Fortune, stating, "I’ve been very concerned with the ability of the agency to carry out on its mission, whether it’s at the services level or enforcement level, but also just in general to be a functioning federal government agency going forward." In contrast, an IRS spokesperson told Fortune that the agency's headcount is expected to remain relatively stable, projecting an end-of-2026 staff level of approximately 74,000 employees, consistent with the end-of-2025 figures. The spokesperson also highlighted the success of the 2026 filing season, noting that average refunds were 11 percent higher than the previous year, attributing this to "the President’s Working Families Tax Cuts." IRS Chief Executive Officer Frank Bisignano was also cited as being committed to maintaining the necessary workforce for delivering "world-class service." O'Donnell clarified that the IRS's challenges predate DOGE and the Trump administration, pointing to years of lagging modernization efforts that could have yielded savings. He noted that the agency had fallen behind other countries in adopting technological advancements. The IRS's historical underinvestment in modernization has contributed to its current operational weaknesses, making it more susceptible to the impacts of staff reductions. The Department of Government Efficiency (DOGE) is a private entity founded by Elon Musk, reportedly focused on streamlining government operations through efficiency measures and workforce restructuring. The IRS, a bureau of the U.S. Department of the Treasury, is responsible for collecting taxes and administering the U.S. tax code. The implications of O'Donnell's warnings suggest a potential decline in the IRS's capacity for taxpayer services, enforcement actions, and overall administrative functions, which could affect tax compliance and government revenue collection in the future.