Treasury prepares RIF for office created to avoid financial crisis, IRS IT resumes hiring after mass reassignments

The IRS tech shop is back in hiring mode, after losing more than 40% of its workforce under the Trump administration.

At an IRS IT all-hands meeting earlier this month, Chief Information Officer Kaschit Pandya told staff that his office plans to hire up to 175 additional technical employees.

According to a memo recapping the March 23 meeting, Pandya said his office is focused on “filling skill gaps in cloud, data, AI and infrastructure to support strategic initiatives.”

IRS IT is looking to increase staffing after permanently moving nearly 1,200 employees out of the organization last December.

Many, but not all, of those employees have been put on 120-day details to taxpayer services to handle frontline filing-season work. Aside from these temporary details, employees who have moved out of IRS IT have been given few details about what work they’ll be doing for the agency in the long term.

Human resources employees have also been reassigned to cover the frontline filing season work. In total, approximately 1,500 IRS employees are on 120-day temporary details.

According to the memo obtained by Federal News Network, Pandya also addressed “questions about workload and staffing, explaining the approach to reprioritizing work.”

The Government Accountability Office reported last week that major staffing reductions at the IRS “could greatly affect its ability to use AI.”

One of the agency’s biggest users of AI, its Research, Applied Analytics and Statistics (RAAS) unit, lost more than 60 employees last year who worked on AI full-time or part-time. This office spent $28 million on AI-related work in fiscal 2025, and planned to spend another $32 million on AI work this fiscal year.

An IRS official in this office told GAO that RAAS may no longer deploy an AI model focused on prioritizing tax returns for audit because the program doesn’t have staff to conduct the audits.

The IRS lost more than a quarter of its total workforce last year through voluntary separation incentives and retirements. But its tech shop lost a disproportionate amount of its staffing.

Pandya recently said at an industry conference in February that IRS IT lost about 40% of its employees and nearly 80% of its leadership last year.

One former IRS IT employee on temporary detail to do filing season work, who spoke on condition of anonymity to avoid retaliation, said they are now in training to do the work of a GS-5 customer service representative, a significantly lower grade than the work they were previously doing.

Another individual familiar with the IRS staffing shakeup said employees on 120-day details are currently enrolled in eight hours of daily training for the next few months. These employees, the individual said, must remain on camera for the duration of these virtual training sessions, and if they turn off their cameras, they’ll get a message to turn them back on.

“This whole experience has been so gut-wrenching. We honestly don’t think they will stop at four months — because what’s the point of training someone for four months to not have them do the work they were trained for,” the individual said.

According to two IRS employees who attended the meeting, Pandya told IT employees not to expect the same grade in the next performance evaluation that they received last year, and that many may receive a three out of five or lower.

According to the readout memo, Pandya “clarified changes in performance management” during the all-hands meeting, “emphasizing the need for outcome-based, measurable commitments.”

Treasury prepares RIFs for financial crisis watchdog office

Meanwhile, the Treasury Department is preparing for targeted layoffs at an office focused on monitoring the stability of the U.S. financial system.

Treasury is preparing to send reduction-in-force notices to employees at its Office of Financial Research. The office was created by Congress in the aftermath of the 2008 recession to avoid a similar economic crisis.

In an email obtained by Federal News Network, Treasury’s Associate Chief Human Capital Officer Michael Wenzler told OFR staff that a “significant number of positions will be abolished and impacted employees will be placed, demoted, and/or separated” no later than May 15.

“This is a general notice that the reorganization and impending RIF may impact you,” Wenzler told employees in a March 10 email.

In compliance with governmentwide RIF procedures, Treasury employees facing RIF notices are eligible for “outplacement program assistance,” allowing them to compete for vacant positions the department isn’t eliminating. That includes a Career Transition Assistance Plan, which gives RIF’d employees priority for any positions within Treasury at or below their current level.

“I would also encourage you to proactively look for open positions within Treasury,” Wenzler wrote.

Employees were given until March 23 to accept a voluntary separation offer through the Deferred Resignation Program, as well as an opportunity to retire early.

Employees facing RIFs may also begin registering for a Reemployment Priority List, which would give them priority consideration to be hired back at their agency.

The Trump administration, in its fiscal 2026 budget proposal, planned to cut staffing for the Office of Financial Research by more than 60% — from nearly 200 full-time employees to 72.

“To align with the administration’s initiative to improve government efficiency and effectiveness, the Department of the Treasury and the OFR are implementing a staffing streamlining effort with a focus on maximum efficiency,” Treasury wrote in its FY 2026 budget justification.

Treasury also proposed cutting OFR’s $110 million budget by nearly 23%.

The House version of the One Big Beautiful Bill Act would have severely limited OFR’s budget, but that provision didn’t make it into the final version that became law last year. The first Trump administration cut staffing at OFR by nearly 50%.

Ranking Member of the House Financial Services Committee’s financial institutions subcommittee Bill Foster (D-Ill.) introduced a bill with other House Democrats last year that would establish minimum budget and staffing levels for the Office of Financial Research and the Financial Stability Oversight Council that it supports.

“For years, Republicans have tried to cut funding for these agencies, which would weaken their ability to protect our economic system. This legislation would help protect the important work these agencies do and insulate them from misguided efforts that only serve to put American consumers at risk,” Foster said in January.

Sen. Jack Reed (D-R.I), who backed language in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that created OFR, said in a statement that the office is fee-funded “and doesn’t cost taxpayers a dime.” Reed said that through these RIFs,  “Secretary Bessent is dismantling the early warning system for financial crises.”

“This isn’t a cost-saver, it is another reckless move by the Trump Administration that undermines economic stability,” Reed said.

If you would like to contact this reporter about recent changes in the federal government, please email jheckman@federalnewsnetwork.com, or reach out on Signal at jheckman.29

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