If the money were spend by market forces rather than government dictate, the funds that go to hire IRS bureaucrats would instead go towards more productive ends, like the production of food or snowmobiles. In other words, instead of wasting human productive capacity on bureaucracy, the people currently employed by the IRS would instead have to find jobs useful to society.

It's not zero-sum at all. The amount of money is zero-sum (obviously), but net social utility isn't zero-sum. That's the point.