Is the IRS spending billions on overpriced foreign contractors with little to show for taxpayer money? A new report suggests massive waste and corruption infiltrating our tax collection system. Are you surprised? We’re not.
At a glance:
- IRS spending billions on technology contractors with negligible improvements, according to Department of Government Efficiency (DOGE) report
- Approximately 80% of IRS technology budget directed to contracted operations employing many H-1B foreign workers
- Treasury Secretary Scott Bessent compared private-sector contractors to “pythons constricting government resources”
- IRS technology upgrade system nearly 30 years behind schedule, originally due in 1996
- New leadership working to cut $1.5 billion from modernization budget and empower in-house American tech experts
Wasteful Spending Exposed at IRS
The Internal Revenue Service is hemorrhaging billions of taxpayer dollars on technology contractors with virtually nothing to show for it, according to a damning new report from a consultant hired by the Department of Government Efficiency (DOGE). Despite processing data comparable to a mid-sized bank, the IRS maintains a significantly inflated budget and workforce with little accountability for the massive technology expenditures.
Sam Corcas, the DOGE expert who prepared the report, highlighted the staggering scale of waste taking place within the agency’s technology operations. “It’s hard to really grasp the scale of this,” Corcas stated in his assessment of the IRS’s technology infrastructure and spending patterns.
The report revealed that approximately 80% of the IRS technology budget is being funneled to contractors and software licenses, creating a system where private companies profit enormously while delivering minimal improvements. Many of these contractors rely heavily on imported H-1B workers who are paid less than American counterparts and are unlikely to report problems due to their precarious visa status.
Foreign Workers Replacing American Talent
A particularly troubling aspect of the IRS technology contracts is the widespread employment of foreign H-1B visa workers instead of qualified American technology professionals. These arrangements allow contracting companies to maximize profits through practices like “featherbedding” – artificially inflating project requirements and staffing levels while delivering subpar results.
Kevin Lynn of USTechWorkers has taken a firm stance against this practice, advocating for a complete ban on H-1B workers in government projects. “We should not have any H-1Bs working on federal, state, or local projects,” Lynn said.
The investigation has uncovered multiple instances of bribery and corruption involving H-1B workers placed in management positions, further undermining the integrity of IRS operations. These foreign managers often hire exclusively from their own ethnic networks, creating closed systems that shut out American workers while delivering poor results.
Trump Administration Takes Action
Treasury Secretary Scott Bessent has been vocal about his shock at discovering the entrenched interests that have taken hold within the agency. “I’ve been here eight weeks [and] one of the biggest surprises for me is just seeing how these entrenched interests just keep constricting themselves around the power, around the money, around the systems, and nobody cares,” Bessent remarked.
The new administration has wasted no time addressing these longstanding issues, already cutting approximately $1.5 billion from the IRS modernization budget. This decisive action aims to reduce unnecessary complexity while empowering in-house civil service technology experts who have been sidelined for decades.
Bessent highlighted the astonishing delays that have plagued IRS technology upgrades, noting that systems originally slated for delivery in 1996 remain incomplete despite work beginning in 1990. “They’re like a boa constrictor, they’re like a Python. They constricted themselves around our government, and the costs are unbelievable that are being passed on to the taxpayer,” he said of the contractor ecosystem.
The broader goal of these reforms extends beyond the IRS itself, targeting improved government efficiency across all agencies to address the massive national debt. By prioritizing American workers and reducing reliance on costly foreign labor arrangements, the administration hopes to restore fiscal responsibility and technological competence to the federal government.
