The IRS has announced a major “strategic pause” on its artificial intelligence (AI) modernization efforts, and while that might sound like a bureaucratic shift, it could have real consequences for taxpayers, especially when it comes to refunds.
The pause comes as the IRS reevaluates how it uses AI to process returns, detect fraud, and manage tax filings. Treasury Secretary Scott Bessent has expressed confidence in AI’s potential to streamline tax collection and customer service, but the sudden halt raises concerns about how efficiently refunds will be processed this season. IRS officials assure that taxpayers can still file as usual and receive their refunds on schedule, but with AI advancements now on hold, manual processing could cause unexpected slowdowns.
Meanwhile, controversy is brewing within the agency. The IRS’s acting chief counsel, William Paul, is set to be demoted amid concerns that the Department of Government Efficiency (DOGE), led by Elon Musk, may gain access to taxpayer data for federal benefits eligibility and immigration enforcement. Legal experts warn that such a move could create privacy risks and delays in refund verification.
Adding to the turbulence, DOGE is also working to cut costs by shutting down federal office leases, a move that could directly impact IRS staffing and service availability. Hundreds of office closures are expected, meaning taxpayers may have fewer in-person resources when dealing with refund issues or audits.
The good news? The IRS continues to push free tax-filing tools, including Direct File and IRS Free File, which allow taxpayers to submit returns electronically and receive refunds through direct deposit. These options remain the best way to avoid delays in getting your money back.
As tax season continues, the IRS’s internal shakeups could lead to longer wait times, more refund processing scrutiny, and fewer resources for resolving disputes. While AI could eventually improve efficiency, its stalled implementation means taxpayers may need to brace for potential hiccups in getting their refunds on time.
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