‘It’s hard to know exactly what the objective of DOGE was’: Former IRS boss warns Elon Musk’s cuts to the tax agency will be felt in years to come

After Elon Musk’s Department of Government Efficiency (DOGE) slashed more than a quarter of the 100,000-person workforce at the IRS, the agency received 140.2 million individual returns and issued more than 90.4 million refunds, slightly down from the year before .

While the IRS described the 2026 tax season as successful , former acting Commissioner Douglas O’Donnell said DOGE’s extensive cuts will more likely be felt years down the line and made worse by an ever-shrinking agency budget.

“I’ve been very concerned with the ability of the agency to carry out on its mission, whether it’s at the services level or enforcement level, but also just in general to be a functioning federal government agency going forward,” he told Fortune .

For its part, the IRS said its headcount should be relatively stable, expecting to end 2026 with 74,000 employees, about the same as the end-of-2025 staff level.

“Contrary to claims from critics, the IRS delivered a historic, successful 2026 filing season efficiently processing returns and issuing average refunds that were 11 percent higher than last year as Americans benefited from the President’s Working Families Tax Cuts,” an agency spokesperson told Fortune in a statement.

“IRS Chief Executive Officer Frank Bisignano remains committed to maintaining the right workforce to deliver the world-class service American taxpayers deserve.” The IRS’s weak points O’Donnell’s career at the IRS spanned from 1986 until 2025.

He served as acting commissioner from November 2022 to March 2023 and again from January to February 2025, at which point he stepped down from the role.

He now serves as the senior managing director in the KPMG Washington National Tax practice.

Despite his criticism, O’Donnell wants to be clear: The IRS’s problems did not begin with DOGE nor the Trump administration.

Before the staff cuts, the agency had lagged behind other countries for years on modernization that would’ve produced savings, he said.

For example, the IRS has tried to go paperless for nearly four decades , because paper tax returns make up just 6% of all returns but 72% of processing costs, according to a February report from the Treasury Inspector General for Tax Administration.

The IRS plans to reduce the expense of paper processes from $450 million to less than $20 million by 2029.

Still, previous plans often sputtered.

“It was clear that there had been underinvestment for a number of years across multiple administrations,” O’Donnell said.