The Internal Revenue Service is preparing for a major shift in how it manages taxpayer data. Elon Musk’s Department of Government Efficiency (DOGE) is planning a hackathon next week at the IRS, with the goal of building a single “mega API” to modernize the agency’s aging systems, according to reporting from WIRED.
Led by DOGE operatives Sam Corcos and Gavin Kliger, the initiative aims to replace the IRS’s fragmented legacy infrastructure with a more centralized platform for data access. Palantir, the government software contractor co-founded by Peter Thiel, has been repeatedly mentioned as a potential partner in the effort.
Supporters argue that a unified system could dramatically improve efficiency, reduce costs, and help combat fraud—goals that align with a recent executive order focused on eliminating information silos across the federal government. However, privacy advocates and some IRS insiders have raised concerns about the speed and scale of the changes. Consolidating sensitive taxpayer information into a single system could increase security risks if not carefully implemented and vetted.
In recent weeks, DOGE leadership has paused several longstanding IRS modernization projects and placed dozens of IRS technologists on administrative leave, part of a broader strategy to fast-track the API buildout. Some experts worry that an aggressive timeline could jeopardize the security and stability of IRS operations, particularly with tax season approaching.
The Treasury Department says the changes are intended to “maximize capabilities” and create “the most efficient service for the American taxpayer.” As the hackathon approaches, all eyes will be on how DOGE balances innovation with the critical need to safeguard Americans’ most sensitive financial data.
Layoffs: IRS
The IRS officially kicked off a sweeping round of layoffs on Friday, starting with its Office of Civil Rights and Compliance, where 75% of employees are being cut. The move marks the beginning of a broader Reduction in Force (RIF) across multiple offices, part of an agency-wide downsizing driven by new administration priorities and recent executive orders. While the full scope and timeline remain unclear, the cuts could eventually impact up to 20,000 positions. The layoffs come at a critical moment for the IRS, with the busy tax filing season underway and hiring freezes already slowing operations. Eligible employees will be offered early retirement and buyout incentives, and the agency has paused reassignments while it manages the transition. IRS leadership says more information will be shared with employees as phases of the RIF roll out in the coming weeks.
Hiring: Booz Allen
Booz Allen Hamilton is doubling down on its commitment to Rome, New York, with plans to keep growing its workforce and investing in the local tech community. After a strong 2024 marked by double-digit growth and key acquisitions like PAR Government Systems Corporation, the company now employs more than 400 people at its Griffiss Business and Technology Park location—and it’s looking to hire even more. Senior Vice President Brian Gunderson says Booz Allen is focused on scaling its capabilities in AI, cyber, and quantum technologies to support the Air Force Research Laboratory and the Department of Defense. With more than 20 open positions, partnerships with local universities, and major facility upgrades underway, Booz Allen is betting big on Rome’s future as a hub for defense innovation and tech talent.
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Opportunity to Watch
A quieter revolution may be coming to federal tech—and it starts with FedRAMP. The Federal Risk and Authorization Management Program, long seen as a necessary but cumbersome gateway for cloud services to work with the U.S. government, is preparing for a major revamp. With new changes on the horizon, commercial AI companies like OpenAI and Anthropic are watching closely. For now, slow, expensive reviews have kept many cutting-edge AI models at arm’s length from federal agencies. But proposed updates—including faster approvals and expanded private-sector roles—could lower the barriers, making it easier for agencies to tap into the latest innovations.
FedRAMP’s modernization effort couldn’t come at a more critical time. As the cuurent administration pushes for faster adoption of commercial AI across federal agencies, there’s growing urgency to bridge the gap between Silicon Valley and Washington. Companies are eager to meet government demand but often get stuck navigating FedRAMP’s complex, high-cost process. If the overhaul succeeds, it could reshape how the government buys and deploys AI—streamlining everything from national security operations to healthcare tech. Until then, much of the latest AI technology will remain tantalizingly out of reach.
