Treasury’s Bessent Says $2 Billion Cut from IRS Tech Budget Without Operational Disruptions
U.S. Treasury Secretary Scott Bessent told lawmakers Tuesday that the Trump administration has already cut $2 billion from the IRS information technology budget without disrupting operations and plans to save hundreds of millions more through automation and efficiency reforms.
Speaking before a House Appropriations subcommittee, Bessent revealed that the IRS had been spending approximately $450 million annually on processing paper forms, with around 6,500 full-time staff dedicated to the task. By introducing policy changes and automating manual workflows, the Treasury aims to reduce that expense to under $20 million by the end of President Trump’s second term.
The savings so far have been achieved by eliminating unused software licenses, renegotiating contracts, and cutting what Bessent called “wasteful” IT and professional services deals. He projected long-term savings of hundreds of millions of dollars annually in IRS operations.
Bessent also defended the proposed $2.5 billion budget cut for the IRS in the fiscal 2026 White House budget, calling its current tech budget “bloated” due to the Biden-era Inflation Reduction Act, which had allocated $80 billion to enhance IRS IT and tax enforcement. That funding has since been halved by Republican-backed budget rollbacks.
Responding to Democratic concerns that budget cuts could weaken tax enforcement, Bessent said the IRS can maintain strong collections by leveraging AI tools and smarter IT infrastructure, noting that collections remain robust and that training personnel for high-end audits takes years.
He also touched on the looming U.S. debt ceiling, refusing to predict when Treasury would exhaust its borrowing authority but warning that the government is “on the warning track” — close to the limit. Bessent assured lawmakers that no gimmicks would be used to avert default and that Congress would ultimately need to raise or suspend the limit.
Bessent echoed former Treasury Secretary Janet Yellen’s stance on monitoring debt-to-GDP ratio rather than the raw debt number, and said the administration aims to both control debt levels and boost economic growth.
On a lighter note, Bessent also said the Treasury is examining ways to reduce the cost of minting nickel coins, noting: “I believe the dime is profitable.”