Most Serious Problem: Information Technology Modernization

The IRS’s Modernization Business Plan’s Stated Goal to Improve the Taxpayer Experience Is Commendable, But the IRS Needs Additional Multiyear Funding to Bring it to Fruition 

Aging IRS information technology (IT) infrastructure continues to plague the IRS and directly impact taxpayers. To address the IRS’s failing IT infrastructure and its need for updated technology, the IRS developed its Integrated Modernization Business Plan (Plan), which aims to improve “the taxpayer experience, by modernizing core tax administration systems, IRS operations and cybersecurity.” While this Most Serious Problem raises a few issues with the Plan, if implemented, the Plan would greatly improve the IRS’s IT infrastructure, make tax administration more efficient, and enable the IRS to provide better taxpayer service. While the Plan does not address all of the IRS’s IT issues, for the IRS to make any progress in modernizing its systems, its efforts must be fully funded. 

In April 2019, the IRS released the Plan and a related Companion Document to address various components of the IRS IT strategy for the near future. This multi-year Plan will need to be further updated to comply with all of the requirements of the Taxpayer First Act, but the Plan is a great start, focusing in large part on updates to IRS systems to improve taxpayer experience and service. 

The Plan’s success will largely depend on the funding it receives, and full, dedicated, multi-year funding is needed for the Plan’s complete implementation. A part of the IRS’s modernization will be major updates to IRS IT systems, which are some of the oldest still in use in the federal government. However, IT modernization projects are massive and generally span years. In order to be able to award funding for these projects, the IRS needs consistent multi-year funding. For example, the Plan includes the IRS’s existing efforts to standardize technology support for IRS business processes, creating an Enterprise Case Management (ECM) system. Through ECM the IRS plans to create a simplified infrastructure, hopefully eliminating the need to maintain or rebuild older IT systems. ECM is currently estimated to take six years to develop and implement, so absent continued multi-year funding, the IRS will be unable to make progress in its ECM efforts. 

One concern TAS has with the Plan, is that while the Plan modernizes the Individual Master File (IMF) by implementing Customer Account Data Engine (CADE) 2, which will help the IRS provide better service and support to individual taxpayers, the Plan does not include modernization of the Business Master File (BMF). This gap in the Plan could result in an inability for the IRS to provide the same level of service to business taxpayers that it will provide to individual taxpayers. 

The IRS has been rolling out numerous services to improve taxpayer service in the past several years and is looking at similar improvements to enhance taxpayer service in the near term. These improvements can help address current issues with taxpayer services. 

The National Taxpayer Advocate includes both administrative and legislative recommendations to address this Most Serious Problem.

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