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The Daily Scoop Podcast
The 2026 tax filing season is upon us. Is the IRS prepared?
00:20:58
Many Americans by now have received their W-2s or…
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- [00:01]
A
Today on the Daily Scoop Podcast from the Scoop News Group, Tax filing season is upon us. Is the IRS prepared? Fed Scoop editor Matt Bracken shares his thoughts. It's Tuesday, February 10, 2026. Welcome to the Daily Scoop Podcast, where you'll hear the latest news and trends facing government leaders. I'm the host of the Daily Scoop Podcast, Billy Mitchell. Thanks so much for joining me. And now let's dive into the day's top headlines. The Defense Department announced Monday that it will incorporate OpenAI's ChatGPT into the military's generative AI platform that's already being used by more than a million personnel. ChatGPT has been widely popular in the commercial sector since it was widely released in 2022. Now the Pentagon plans to add the tech to its Genai mil system, which DoD leadership, including defense Secretary Pete Hegseth, have been pushing hard for the department's employees to use since it was launched in December. The Army, Navy, Air Force, Space Force and Marine Corps have already adopted the system as their preferred generative AI platform. Google's Gemini products were the first tools to be integrated into Genai Mil. Pentagon leaders previously announced that the GROK large language models from xai led by Elon Musk, would also be included in early 2026. On Monday, the DoD announced that ChatGPT will be brought into the system, although the announcement did not provide a time frame for when it will be available now. In other news, the Department of Energy is launching a Genesis Mission Consortium as its latest move to deepen the public private partnerships fueling the AI platform. The initiative announced Monday will facilitate structured partnerships as well as working groups, which will focus on ensuring model validation and reliability, addressing data governance and compliance standards, enabling federated data sharing, and accelerating research throughput via reduced operational bottlenecks. The consortium will act as a collaborative hub and a single coordinated access point for members and resources, according to the agency. Dario Gill, DOE's undersecretary for science and Genesis Mission lead, said in a press release that the Genesis Mission Consortium represents a bold step toward transforming the way we approach scientific challenges or while also acknowledging that the consortium unites government, industry and academia to create a powerful engine for innovation that will drive breakthroughs across multiple disciplines. Since President Trump took office a little over a year ago, federal agencies have strengthened their relationship with private sector vendors, such as through the overhauled vision for FedRAMP and executive branch led pushes for speedy adoption of emerging technology. The Energy Department has followed that lead and taken a private sector friendly approach to advancing Genesis Mission goals, which include creating an AI powered national platform. Since launching the Genesis mission in November, the Energy Department has put out several requests for information directed at industry stakeholders and forged partnerships with 24 technology companies. For more news at the intersection of the federal government and technology, make sure to visit fedscoop.com. Many Americans by now have received their W2s or other important tax documents for the year 2025, which can only mean one thing. It's officially tax filing season. You might be ready to submit your tax documents, but is the IRS itself ready? That's a big question mark looming over the 2026 filing season after the tax agency unleashed seismic cuts to its workforce last year and has pumped the brakes on many of its efforts to modernize. Matt Bracken, editor in chief of FedScoop, has kept a close watch of the irs under the second Trump administration, chronicling the cuts made in 2025 and measuring the possible impact that could have on processing times and backlogs during this filing season. Matt joins me now to discuss the outlook for the 2026 tax filing season, how AI comes into play, and much more about the tax agency's ongoing efforts to modernize. Now let's go to that discussion with my colleague Matt Bracken.
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B
I'm here with Matt Bracken, Editor in Chief of FedScoop. Matt, welcome to the Daily Scoop podcast.
- [04:18]
C
Thank you. It's been a couple more than two years, a little more than two years since I've been here, so I guess it's time I put in my time to the podcast invite.
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B
You are podcast ready after that incubation.
- [04:29]
C
We'll see about that.
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B
So yeah, excited to chat with you. You've been doing a lot of great reporting on everything that's going on at the nation's tax agency, the irs. And as Americans know, they're about to get ready, or maybe some really, you know, over prepared Americans have already filed their tax returns, but tax season is upon us and soon the IRS will fully be consumed with that whole rigamarole. And you've been watching this space for the past couple years since you've joined us, and one thing that we've anticipated is that this tax season may be a bit more difficult based on all the workforce changes, some of the issues with some of the digital tools that the IRS is trying to build and acquire. Not everything is shaping up for the optimal tax season, so to speak. So tell me a bit about what you've covered in regards to the IRS and why this tax season might be a little different because of the changes that were made Last year.
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C
Yeah. So we did a lot of reporting in kind of the immediate aftermath last year of a lot of Trump administration cuts to the IRS which were quite substantial, including a piece about how those cuts would affect modernization, which has always been this really tall order for the agency. It's plagued them. They've been a paper based agency for a long time. And in talking to a handful of former IRS tech officials, they weren't too concerned about the 2025 tax season, but they were very worried about how this year, 2026 would play out. Basically the preparation for tax season start, you know, the summer before the tax season. So when these layoffs happened last February, March, April, they're already in a pretty good position to execute the tax season pretty normally. But, you know, now they have to, you know, take into account major changes in the tax code that have occurred over the past year without the manpower that they're used to supporting it. So the one big beautiful Bill act, for example, there are a lot of changes that have to be accounted for. And they're operating with a staff that's just basically October 2021 levels, how big the agency was before the Inflation Reduction act and all the billions that went into that for not only IT modernization, but customer service enforcement, all sorts of areas that lawmakers felt needed a boost from a personnel standpoint and have now been reversed back. So there's a lot of concerns, I think, from people who have been on the inside and are now on the outside. And the tax agency's watchdog is also a little concerned. She put out a memo to the IRS leadership a couple weeks ago. The big takeaway there, in addition to those reversion to pre pandemic levels of staffing, Overall, they've lost 19% of their staff. It's like 19,000 jobs. And included in that. I don't mean to bombard you with stats, but 8,300 workers who were tasked with key filing season functions gone from the agency year over year. And that includes functions like customer service, updating computer systems, processing returns, a lot of really critical actions that kind of make the tax season go. And already they've seen a backlog of tax returns that haven't been processed yet, 129% higher inventory levels compared to the pandemic.
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B
So like you said, the Inflation Reduction act came in solved or worked on solving a lot of these issues. And now we're right back at square one, it sounds like. And the interesting thing I think we've heard about in recent days is they're now Pulling people whose responsibilities, staffers at IRS who it's not their responsibility to work on tax return processing to now do that because the, the staff is so abysmally reduced at this point that they need all hands on deck to get this tax season, you know, operating the way it should be. So we'll see how it goes. If you're listening, might be good to get your tax stuff in order sooner rather than later. But you've also written about, you know, we kind of COVID so much and we'll get to the modernization aspect of it shortly. But so much of what we're covering right now in the federal space is how agencies are adopting AI and how AI and automation and things like that could potentially help with offsetting, you know, some of these losses that we've seen across all agencies in the federal government over the last year. You wrote about how the Treasury Secretary who, you know, IRS falls under Treasury, Scott Bessen, expects that an AI boom might help offset some of the job losses felt by the irs. How has that materialized in your eyes?
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C
Yeah, I mean, it's a good question. I think one thing to keep in mind is that the IRS now is on, I believe it's seventh commissioner under President Trump. A lot of interims obviously, but yeah, Bessant's day to day responsibilities are overseeing the entire Treasury Department. He brought in Frank Bisignano, the Social Security administrator to kind of do the day to day. He's the first IRS CEO I believe is the title they settled on. So. So those guys are theoretically stretched quite thin. But they're also big believers in AI is kind of a cure all for a lot of like federal government problems and issues. So yeah, it remains to be seen how effective the implementation of AI is within the tax agency. Obviously they've leaned into AI more Treasury put out their AI use case inventory. Recently we've been doing a lot of reporting on those inventories across the Fed scoop beats and treasury and IRS specifically have seen a jump. They went from 49 use cases a year ago to 61 this, this year. So a pretty significant jump. And I think the theory of the case is that's going to make up for this 16% reduction in IT staff. Specifically there were 16 specific AI use cases that involved it. And that was one of Besant's big things. Not only an AI boom, but smarter it. That's how he believes that the agency was going to make up for those staff cuts. But we'll see. I think it's, it's probably too early to tell um, one indication that, you know, things might not be going so smoothly. And again, it might be too early to, to really say it's a failure or anything like that. Way too early. But they are behind the eight ball already on this zero paper initiative that they started to launch I think last April. And again, we talked earlier about how it's a paper based agency for forever, but they're trying to shift that away. That's a whole Trump administration priority digit. The goal was to by 2026 eliminate paper returns. That's not going to happen, according to tigta, the Treasury Department watchdog. But there is an interesting AI use case that's listed called the zero paper AI routing for digitization. They haven't deployed it yet, it's in the pre deployment stage. But obviously they're thinking about how to go after these tasks that move away from paper and lean in on digitization. So we'll see about that. But another thing relatedly that Besset called out in some of these congressional hearings where he's pressed by Democrats. How are you going to address staffing shortcuts? How are you going to, you know, move forward on some of these long standing priorities? And, and one was enforcement. Right. A big part of the Inflation Reduction act was putting more resources toward these high level enforcements targeting kind of like wealthy tax sheets, corporations, that sort of thing. And Besson again kind of like pointed to AI. But you and I both looked at this. We searched for enforcement, we searched for audits, we searched for collections. No references to any of those phrases within the AI use case inventory. So certainly the agency is embracing more AI, but I think again, it remains a wait and see on how effective it is.
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B
Yeah, I mean, it's also, as we've seen so many times across other agencies, people might want to use AI, but is the AI mature enough really to replace those job responsibilities or functions? So that's a really pressure built moment to have to rely on AI potentially to make sure that the tax season goes off without a hitch.
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C
Especially when a lot of those humans in the loop, which are very important to successful implementation of AI are now gone.
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B
You know, a lot of the most.
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C
Tech savvy people, there's certainly a big core that remains, but there's been a lot of tech talent that's exited. Yeah.
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B
And I think to a similar point, you know, you need talent and you need underlying infrastructure modernization to support AI, to get it done. And so as we've said, the talent in a large regard has been lopped off, chopped off. Whatever you want to call it. At the same time, you've also reported that a lot of that modernization investment from the ira, the Inflation Reduction act has also been kind of taken off the table. And a lot of that has seen some backsliding in terms of the plans to modernize. So without that modernization, be curious to know whether, whether it's supporting AI or anything, what's sort of the result of them taking a step back with some of those modernization plans that you've been talking about?
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C
Yeah, I mean the. Like we said earlier, the IT staff has seen a big shakeup internally. We reported last March that The agency cut 50 senior executive level IT professionals just out the door. People with decades of experience internally for things like IT, cybersecurity, other like high level tech priorities. They were put on admin leave. There's been a big restructuring within IT department since we heard from sources in December that up to a thousand IT professionals were shifted other spots within the agency. There's actually a really good Federal News Network story about that shakeup as well. That confirms a lot of what we were hearing too. Some of those people were shifted to jobs that were just completely outside of like the IT realm, doing customer service work. Again, not really leaning into the expertise that they're brought into the agency for. So I think that has created a lot of, you know, internal sort of questions. People who remain, the people who are shifted, how they're going to be able to achieve these big modernization goals that again have been a priority for the agency for, for many, many years. So I think the, the argument probably from the leadership from Bessant and Bisignato would be that again, the AI is going to make up for some of these shifts, some of these losses of long standing IT expertise. And they would probably also argue that again, these have been priorities for a long time. Why aren't we further along? Right. You hear that a lot in Congressional hearings for treasury oversight and IRS oversight. So again, I think remains to be seen whether that AI infusion does make up for some of the loss. But probably a bit of a leap of faith at this moment. And something else to keep in mind. There's no Inflation Reduction Act Part two that's gonna infuse funding to address some of these shortcomings.
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B
Yeah, yeah, it'll be interesting to watch. I guess we'll have to check back in later this year. Finally. You know, we've talked a lot about tax filing season, but another place that the IRS has sort of been in the news lately, although not by its own Volition, it's sort of been broadened from a counter agency, a counterpart in the Immigration and Customs Enforcement Agency at dhs, which has been in the spotlight lately with everything that's going on across the nation with ICE agents and things like that. There had been an agreement in place where ICE was taking data on taxpayers to sort of cross analyze that, cross validate that for its enforcement mission, as you've followed several times now in different, you know, different courts around the country. I think this is a second time now, though. A federal judge has recently ordered that ICE can no longer do that. So what was ICE using IRS data for to kind of for its mission? That seems like a little bit of a stretch potentially. And why did the judge in that case pull back on that data sharing agreement?
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C
Yeah, so I guess there are a couple issues at play. Obviously, there was a memorandum of understanding that was agreed to by ICE and the IRS back last April. The acting commissioner at the time, who I think was the third or fourth acting commissioner, were a few down the road since then, but she stepped down and left the agency. Because of her, I think with the agreement, and I think the main issue is basically Privacy, right. Section 6103 of Federal Tax code guarantees taxpayer privacy. And a lot of the issues here are when you're talking about non citizens who have long been encouraged to pay taxes. Right. That kind of like, helps the case. As you're trying to become a citizen, you're investing in the country. And as the judge in this most recent case noted, that equals like tens of billions in tax revenue coming into the federal government every year. But noncitizens have been disincentivized, the plaintiffs would argue, because now they're willingly giving their information and the IRS is giving that to ICE for the purposes of enforcement. So a judge in November ruled that the IRS can no longer share taxpayer addresses. And this came after an incident in the summer where ICE requested the taxpayer information of 1.3 million taxpayers. A little less, but a big number like that that resulted in about 450,000 or so matches. So that's what they're looking for. But when you're dealing with these bulk data sets, there's obviously a huge potential for mismatches and misidentifications. The judge in the most recent ruling mentioned, you know, the last name Kim. How many Kims are there in this country? A ton. So there's like, a lot of potential for. For duplication and mistaken identity, especially when, you know, you've downsized at these agencies too. So how thorough of a job are you really making sure that people don't get swept up, you know, going outside of the intent? So that's, that's the basic gist of it. The. The other issue that the most recent judge covered was the fact that these immigrant rights groups that brought the action, they're groups that basically provide legal services, tax services to immigrants, non citizens, their businesses have suffered irreparable harm because now non citizens have been a lot more reluctant to come and seek that help. So those are the two biggest issues at play. In addition to the fact that the judge said the agency rulemaking process wasn't exactly followed, this is a major change. When you're giving taxpayer data, which have these privacy protections to a different agency, that's a massive change in decades of policy. So this judge felt that that wasn't addressed adequately. There are all sorts of things swirling here, and obviously appeals processes will play out. I'm sure appeal will be coming for this most recent ruling. It already is for the one in November, but the rulings are intact for the time being. And again, just wait and see.
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B
Yeah. Because that's a preliminary decision. It's. The process still needs to play out, so it's not necessarily a permanent one. And, you know, things may change.
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A
Speaking of looking forward, anything, you know.
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B
As we close out, whether it's IRS related or not that you're keeping an eye on that listeners should also be following?
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C
Yeah, I mean, obviously we're gonna watch and see how the next couple months play out with filing season. I'm sure, you know, the GAO and the TIGTO watchdogs are keeping a close eye on it, as will we see if the season goes off without a hitch or not. If those predictions from a year ago are right, remains to be seen. And you know, again, how AI has continued to being deployed at treasury and the other agencies we cover. I think our team as a whole has done a lot of really great work on it, particularly with regard to dhs. Lindsay Wilkinson and Madison Alder had a great piece a couple weeks ago, kind of digging into the ways DHS and their subcomponents are implementing AI for these very different administrative priorities. We have a story coming from doj. Miranda Nazaro is covering that. So, you know, digging into the AI use case inventories and seeing what's up.
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B
Yeah, because these issues are not just at irs. They are felt across the federal government right now. So, yeah, we will definitely keep an eye on that across the federal government.
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A
But, Matt, fantastic conversation.
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B
You're truly an expert on the topic, so thank you for your time and definitely we'll get you in for a second one soon.
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C
Love it, man.
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B
All right, thanks.
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A
For more on federal modernization efforts, make sure to visit fedscoop.com.
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D
Thanks so much for tuning in to another episode of the Daily Scoop Podcast, available on all podcast platforms. If you've already rated the podcast on your platform of choice, thanks so much. High ratings and good reviews of the show help more people to find it. The Daily Scoop Podcast is a production of the Scoop News Group in Washington, D.C. adam Butler and Carlin Fisher help put the show together, and the entire Scoop News Group team contributes. We'll be back tomorrow with more top headlines. Until then, I'm your host. As always, Billy Mitchell. Thanks so much for listening.