The Treasury Department and the White House have reached an agreement that limits how the Department of Government Efficiency can access sensitive tax data at the Internal Revenue Service, according to two people familiar with the situation who requested anonymity to discuss the matter.
One of the individuals described it as a memorandum of understanding that includes “all protections” and prohibits DOGE from accessing individual taxpayer information.
The prospect of DOGE accessing taxpayer records, which are closely guarded at the IRS, sparked major concerns among congressional Democrats.
Unions and taxpayer advocacy groups have also filed a legal challenge, claiming that the Treasury Department is violating various federal privacy and taxpayer confidentiality laws. Even Republicans have expressed concern about DOGE’s access to sensitive information.
Treasury Secretary Scott Bessent defended DOGE’s work at his agency, describing it as a serious effort to improve operational efficiency and eliminate fraud and waste. He claims that critics are attacking DOGE because it is moving quickly to disrupt the status quo in Washington and endangers entrenched interests.
Bessent told Fox News earlier this week that one DOGE employee at the IRS was looking into the agency’s “outdated IT system” and accused critics of “fear-mongering.” According to Bessent, DOGE employees working on Treasury payment systems “have no ability to touch anything” and there are “guardrails around them.”
The White House and Treasury’s agreement on DOGE’s access to IRS data, first reported by the Washington Post, comes amid other ongoing legal battles over how tech mogul Elon Musk’s cost-cutting operation can access other Treasury databases containing sensitive personal and financial information.
Bessent’s decision to allow DOGE team members to access Treasury’s payment system, which controls more than $5 trillion of federal payments each year, in the early days of the administration also sparked a separate wave of intense backlash.
A sweeping order from a federal judge in Manhattan prohibits Treasury from allowing any DOGE employees or most political appointees to access the payment system. A separate order from a federal judge in Washington limits who can access it.
The Trump administration is fighting in court to lift those restrictions, which Republicans and the White House have criticised as judicial overreach into their authority to run the government.
The White House and Treasury Department spokespeople did not immediately respond to requests for comment.
In court filings related to the Washington case, the Treasury Department stated earlier on Thursday that it is adding an additional person to the DOGE team that is investigating the federal payments system, as well as two unidentified staffers who will focus on the IRS.
Treasury announced that Ryan Wunderly will replace Marko Elez on the agency’s DOGE team. Elez investigated the federal payments system housed at the Bureau of the Fiscal Service before resigning from Treasury earlier this month after The Wall Street Journal exposed racist social media posts.
In a sworn statement, John York, Bessent’s senior counsellor, stated that Wunderly would take over Elez’s portfolio of responsibilities in reviewing the federal payments system. Wunderly will report to Cloud Software Group’s CEO, Tom Krause, who leads Treasury’s DOGE team and serves as Treasury’s acting fiscal assistant secretary, overseeing the Bureau of the Fiscal Service.
The DOGE efforts at the IRS come as the Trump administration seeks to significantly reduce the size of the tax collection agency. On Thursday, the administration began the process of firing over 6,000 IRS employees, with the terminations expected to have the greatest impact on the agency’s tax enforcement efforts.
During Thursday’s White House press briefing, National Economic Council Director Kevin Hassett defended the IRS’s massive job cuts.
“Our objective is to make sure that the employees that we pay are being productive and effective,” he told me. “There are many, many — more than 100,000 people working to collect taxes, and not all of them are fully occupied.”
