Polaczuk said the move was offensive to long-serving staff and may breach the both Treaty of Waitangi obligations and the departments compliance with the State Sector and Human Rights Acts.
The union says originally the IRD made the tests compulsory for all employees, saying that if staff did not agree to the test they would not be considered for a role.
But following pressure from the union it decided to call the testing "optional", though it also cautioned in a letter to employees last week that non-participation "may mean that we have insufficient information that we can rely on to be satisfied of your capability to perform these new roles."
Polaczuk said the testing software was proprietary and expensive, and it was not clear how much taxpayer money would be be wasted on it.
Inland Revenue's Business Transformation restructure aims to modernise and simplify the tax system, but it is being carried out at the same time as a vast redesign of its computer systems.
The PSA considers this a risky concurrence, and has concerns about the integrity of New Zealand's tax system under these cumulative pressures.