IRS cancels $1.5 billion in outdated contracts

A tech executive working with the Trump administration has announced significant budget cuts at the Internal Revenue Service (IRS). Sam Corcos, who is also the CEO of health technology company Levels, said on Thursday that he canceled contracts worth about $1.5 billion. He was reviewing the IRS’s technology modernization efforts. Corcos mentioned that many of the canceled contracts were with outside consultants and involved outdated systems that have been underfunded for years. The IRS had an annual modernization budget of approximately $3.7 billion. He stated that these projects were complicated and not effective. Last week, the IRS decided to pause investments in technology modernization. This decision came as they reassess their approach, especially considering new advances in artificial intelligence. This pause changes plans that originally included $80 billion in investment funding from the Inflation Reduction Act introduced during Joe Biden’s presidency. The modernization efforts aimed to update the IRS's outdated computer systems and improve taxpayer services. Republicans in Congress have long criticized the additional funding, saying it could lead to increased scrutiny of taxpayers. Their objections have already reduced the funding amount significantly. Corcos also acknowledged the hard work of the IRS's information technology staff, stating they have been very helpful in the review process. However, he criticized the IRS's technology costs, suggesting they are much higher than those of private banks handling similar data.