The IRS is based in D.C., which also has a high COL. Additionally, that's for the GS-15 paygrade, which requires a PhD and is the highest possible level -- so you can't be paid more than that. The corresponding paygrade for someone with a masters, or with a few years of experience, is $43-$56k[0]. It's definitely below market IMO.

[0] https://www.federalpay.org/gs/2017/GS-9

Who says the place of performance has to be DC?

As a developer in that area, its not super competitive. It is not even close to what a good senior dev is making. They also don't hire people at this level often because you are talking about a director level position. There is huge political push back. This is why its common for the contractors on the project to be paid twice as much as the employees.

Yeah, as a developer in the area with under 5 years of professional experience I am already at the top end of that range. I did no job hopping, do not work for a company that is particularly well known for high pay and did not graduate from a school with a very well known CS program. I have also heard from former co-workers with similar levels of experience who have moved on to other companies that they are making similar amounts.

It is above average for the area (across all levels of experience, for a very experienced developer it probably isn't), but it is not very far above average, so I would expect someone capable of handling such a massive and critical project to be making significantly more.

GS-15 is the top of the pay scale though, there's no such thing as a GS-16 just step increases that come with years of employment.

Plus, would you really want to endure the months of their hiring process (which intentionally filters out people not wanting a long term job) just to join an agency that has no promotion potential for you over the long term?

Not if you want a good senior developer. These guys are perpetually stuck with junior devs.