The Internal Revenue Service lost 31% of its auditors from buyouts and layoffs tied to Elon Musk’s Department of Government Efficiency, departures that are likely to hamper the agency’s ability to go after tax cheats.

More than 3,600 revenue agents — responsible for collecting tax payments — have left the IRS, according to an IRS watchdog report.

In addition, 18% of revenue officers, who oversee challenging tax cases, and 10% of tax examiners — front-line employees who review returns — have also left the agency, the Treasury Inspector General for Tax Administration said in a recent report.

The IRS downsizing is due to a series of moves, spurred by Musk’s DOGE, to cut the agency’s workforce. More than 7,300 probationary employees were terminated. More than 4,100 workers took Musk’s “Fork in the Road” resignation offer, followed by a second round of buyouts where more than 13,100 were approved to leave, according to the report.

The IRS had a large number of newly hired probationary auditors due to a funding boost under President Joe Biden, who increased funding for tax enforcement to rebuild the agency’s depleted capabilities. That means the cuts targeting recent hires disproportionately affected those with auditing jobs. 

The terminations have been the subject of ongoing litigation.

The report found that auditors in fiscal year 2023 recommended approximately $32 billion in additional tax assessments. The National Bureau of Economic Research has found that auditors more than pay for themselves, with the IRS collecting $6 for every $1 spent on audits of high-income taxpayers.

The departure of auditors could result in a deeper revenue loss for the government since more people may evade paying taxes if they’re less worried about getting caught.

The Yale Budget Lab forecast that laying off about 18,000 IRS employees would result in a net revenue loss of roughly $159 billion over ten years. That could rise to as much as $1.6 trillion over ten years if non-compliance is high, the group said. 

The White House on Friday released a fiscal 2026 budget requesting $163 billion in non-defense savings that it associates with the DOGE effort. Nearly all of the savings the administration claimed would be plowed into a $119 billion boost in military spending. Adding in the loss of tax revenue could mean the DOGE effort causes a net budget deficit increase.

The report found that just 5% of information technology staff had departed and 10% of customer services agents had left. These groups could soon be targeted for a future round of job cuts that the IRS has said it is planning.

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The initial response to artificial intelligence from the accounting community was one of wonder and amazement and, for a while, it seemed like every firm from the smallest storefront to the largest network was eager to demonstrate its embrace of the technology.

But today, as more firms become familiar with AI — especially its generative and agentic variants — firms are focusing less on blanket adoption and more on governance, recognizing both its powerful potential and its very real limitations.

Virtually every firm included in this year’s list has a formal governance policy specifically governing AI use, and the few who do not have already found ways to work AI into already existing frameworks. Further, a rough consensus of what an AI policy should look like has begun to form. Firms in general have implemented strict prohibitions on unloading sensitive client data into public AI tools, require mandatory training on responsible AI use, and regularly monitor and assess their AI activities.

Many others have gone further, doing things like establishing cross-functional AI teams, addressing AI in their written information security plans, educating people on AI’s ethical challenges, or establishing private cloud environments specifically for AI.

(Read more: “AI in accounting: Weighing the pros and cons.“)

Much of this has been done in recognition of AI’s risk and its limitations. It is not 2023 anymore and no one is thinking AI will solve all their problems. Yes, the technology has done many impressive things: Firm leaders report major time savings, deeper analytics, expanded automation, better brainstorming, and incredible efficiencies in software development. At the same time, nearly all the Best Firms for Technology have been frustrated by inaccurate, inconsistent or low-quality outputs, naming this as one of their biggest disappointments with the technology.

Other firms mentioned lengthy and difficult implementations, cybersecurity and data privacy problems, and difficulty working with tools like Excel.

“AI is far from a silver bullet. It’s easy to build something that works in the innovation lab, but it’s much more challenging to build something reliable and scalable across the firm. Even well-trained models can be inconsistent, and costs can rise quickly without a clear return,” said Jonathan Kraftchick, an assurance partner at Top 100 Firm Cherry Bekaert.

These firms’ approach toward AI has much in common with their technology stance as a whole, as every firm in this year’s list also said they have a written technology strategy. Each one is taking a deliberate and intentional approach to their technology infrastructure with the expectation that it will pay dividends in the future.

When asked what they hope AI would be able to do eventually, leaders mentioned not just these problems being solved, but also bots being able to better connect the dots and understand contexts better, which would enable them to become true assistants that can handle complex administrative tasks, as well as better data cleaning capacities and better interoperability with things like Excel or PowerPoint.

(Read more: “AI will replace some accountants using AI: How not to be one of them.“)

Yet these challenges are not preventing firms from continuing major investments in AI; they are, in fact, accelerating them, as tech spending is going up. Of the 10 firms in this list, four said their technology spending has increased significantly since last year, four said it increased slightly, one said it stayed about the same and one said that, while absolute costs have significantly grown, its per-user costs have shrunk. As for why so many firms are spending more on tech, AI was frequently cited, alongside rising service fees and the need to support additional staff.

“We are a digitally determined organization from the top down. We seek to invest in technologies that improve our capabilities, responsiveness, and our quality. Fiscal year 2024 and 2025 has us investing in AI-enabled solutions which support these attributes. Additionally, some core solutions under transition/transformation result in overlapping costs for the duration of the change,” said Peter Sebilian, chief technology officer and chief information security officer for Top 100 Firm AAFCPAs.

This focus on AI plays into other aspects of their technology. For instance, this year’s firms lean heavily on cloud computing, with the majority saying they have no physical servers on site. Even among those that do have at least one, the applications they use are almost entirely cloud-based. Similarly, cybersecurity is a big priority for each of these firms as well, as nearly all of them adhere to at least one recognized cybersecurity standard, such as SOC 2, ISO 27001 or NIST CSF.

Overall, these are firms that take AI seriously in terms of not only adoption but oversight and supporting infrastructure. Given the rapid pace of development in this sector, who knows what we’ll see next year?

With all that in mind, below are this year’s Best Firms for Technology.

(Read more: See the 2024 Best Firms for Technology.)

UBS Group AG agreed to pay $511 million to settle a U.S. investigation into how Credit Suisse Group, the Swiss bank it bought, helped rich Americans evade taxes even after pledging to stop the practice a decade ago. 

A Credit Suisse unit pleaded guilty to conspiring to help its customers hide more than $4 billion from the Internal Revenue Service in at least 475 offshore accounts, the Justice Department said. The U.S. also filed a criminal charge related to U.S. accounts booked at Credit Suisse AG Singapore, which it will drop if the bank cooperates sufficiently. 

The resolution ends a long-running scandal involving Credit Suisse, which used Swiss bank secrecy laws to help Americans hide money from the IRS for decades. Even after reaching a 2014 deal where it pledged to stop the practice, Credit Suisse helped U.S. taxpayers open and maintain accounts they didn’t declare to the IRS, hiding their assets and income. 

“Credit Suisse committed new crimes and breached the May 2014 plea agreement with the United States,” according to documents filed in federal court in Alexandria, Virginia. 

UBS shares were up 0.1% at 9:19 a.m. in Zurich, trading at 25.49 Swiss francs ($30.922).

Credit Suisse unlawfully helped clients hide assets, including a billionaire scion of a wealthy European family, according to the court filings, which didn’t name him. Given his holdings, Credit Suisse had the “highest obligation” to know as much about him as possible but failed to ask about his status, classify him as a U.S. taxpayer, or close his account, the bank said in the filing. 

“As early as 2010, the European billionaire was the subject of numerous news articles that identified him as a U.S. resident living in a mansion and referenced U.S. lawsuits in which he admitted to U.S. residency,” according to the court documents. “Credit Suisse kept the account open for years after it had definitive knowledge of the account holder’s US status.” 

Zero tolerance

UBS must continue to cooperate with the U.S. under the deal, which could expose other clients to prosecution.

“UBS was not involved in the underlying conduct and has zero tolerance for tax evasion,” the bank said in a statement. The bank declined to specify the precise impact that the settlement would have on second-quarter earnings. In its first-quarter report released on April 30, UBS said that its balance sheet reflected provisions for the matter that it believed to be appropriate, without giving an amount. 

The settlement by President Donald Trump’s Justice Department came after prosecutors under former President Joe Biden failed to resolve the case, despite pledging to crack down on repeat corporate offenders. 

Pressure mounted after a 2023 Senate Finance Committee report said there were “major violations” of Credit Suisse’s 2014 plea deal. It put the value of “thousands of previously undeclared accounts” valued at more than $1.3 billion – far below the $4 billion that the bank admitted on Monday. 

“This settlement fully vindicates the findings of my investigation,” Senator Ron Wyden, the ranking Democratic member of the Senate Finance Committee, said in a statement. “Ultra-wealthy and shady Swiss bankers shouldn’t get a free pass to cook up offshore tax evasion schemes when regular Americans are paying their fair share.”

Court documents detailed how Credit Suisse enabled tax cheating by Dan Horsky, an American business professor who pleaded guilty in 2016 to hiding more than $200 million in assets from the IRS. It also detailed how the bank helped a U.S.-Colombian family evade taxes.

Whistleblowers told the Senate committee that the family members held nearly $100 million at Credit Suisse for a decade before transferring those assets to other banks without telling the IRS. One family member, Gilda Rosenberg, pleaded guilty on March 10 to conspiring with two relatives to hide $90 million from the IRS between 2010 and 2017.

An attorney for the whistleblowers, Jeffrey Neiman, said their evidence “uncovered and exposed this ongoing misconduct” despite the risk it posed to them.

“Today, they feel vindicated — for telling the truth, for risking everything, and for standing up to one of the world’s most powerful financial institutions,” Neiman said. 

The tax resolution came after UBS received a key regulatory exemption to manage $11 billion in U.S. pension funds despite four previous convictions between UBS and Credit Suisse. On Jan. 15, the Labor Department granted a five-year extension to UBS of its status as a so-called Qualified Professional Asset Manager.

UBS secured the exemption despite the Labor Department noting the “scope, seriousness, and recurrent nature of UBS’ prohibited misconduct are unique,” according to a notice in the Federal Register. The agency cited the need for independent annual audits to ensure UBS adheres to “applicable fiduciary provisions” and “a strong culture of compliance.”

UBS said in its first-quarter report that it had a provision for potential costs tied to Credit Suisse’s compliance with the 2014 plea deal. It didn’t disclose an amount.

A Bloomberg Intelligence analysis estimated that more than a quarter of the group’s legal reserves of $3.85 billion at the end of March were for Credit Suisse cases in the U.S. UBS also had $2 billion in contingent liabilities relating to litigation, regulatory and similar matters for the Credit Suisse purchase.

The settlement comes amid fresh scrutiny of Credit Suisse’s history of handling Nazi-linked accounts. In December, the bank reinstated Neil Barofsky as an independent ombudsman to oversee its review of those accounts. The decision was announced by the Senate Budget Committee, which is probing Credit Suisse’s internal investigation.

“A clear-eyed and historically complete evaluation of Credit Suisse’s servicing of Nazi-linked accounts demands painful facts to be met head on, not swept aside,” Senator Chuck Grassley of Iowa and Senator Sheldon Whitehouse of Rhode Island said in a statement at the time.