DOGE Cuts $1.5B IRS Contracts, Trump’s USIP Takeover Sparks Dispute
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Corcos stated that these canceled contracts were contributing to a “death spiral of complexity” in the IRS’s outdated systems. The move is part of a broader effort to reassess IRS modernization spending and eliminate inefficiencies.
IRS Modernization Spending Under the Microscope
The cuts were pulled from the IRS’s $3.7 billion modernization budget, separate from its $3.5 billion IT maintenance fund. Corcos indicated more contract reviews are underway and emphasized that such large budgets exceed what would be considered reasonable in the private sector.
The IRS recently paused its modernization investments to evaluate how emerging AI technologies could reshape its strategy—raising questions about the relevance of the originally planned $80 billion investment under Biden’s Inflation Reduction Act.
Trump’s USIP Takeover Faces Legal Roadblocks
Simultaneously, DOGE officials are entangled in a legal dispute over control of the U.S. Institute of Peace (USIP). A federal judge recently denied a restraining order that aimed to block Trump’s appointed representatives from taking over USIP operations.
The conflict stems from an executive order signed by former President Trump, targeting USIP and three other agencies for restructuring. The administration replaced 11 board members, citing noncompliance with reforms, and appointed Kenneth Jackson as acting president.
The legal standoff underscores deeper tensions around federal restructuring and governance reforms driven by the Trump administration.