The Internal Revenue Service issued a six-year plan Thursday for updating and modernizing its information technology systems, some of which date back to the Kennedy administration, in an effort to improve taxpayer service and beef up cybersecurity.
The IRS has made previous efforts to update its aging computer systems, but has been constrained by budget cuts and staffing reductions, while also struggling to keep up with new mandates and legislation like the Tax Cuts and Jobs Act of 2017. However, the agency hopes to modernize its IT infrastructure to better protect taxpayer data and aid the tax community.
“Modernized systems are the key component to delivering quality service to taxpayers, providing efficient and robust enforcement activities and keeping taxpayer data secure,” said IRS Commissioner Chuck Rettig in a statement Thursday. “Our modernization plan includes multiple milestones and levels of accountability to ensure it is implemented efficiently and effectively. The integrity of our nation’s tax system depends on modernizing IRS operations and the supporting technical pieces. We look forward to working with Congress to implement this plan.”
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The Treasury Department said Thursday it sees modernization as essential for the IRS to provide American taxpayers with excellent service, help them meet their tax obligations and enforce the law with integrity and fairness to all.
“The IRS supports one of the largest and most complex business operations in the world, proudly serving millions of individual filers, small businesses, tax exempt organizations and large corporations,” said Treasury Secretary Steven T. Mnuchin in a statement. “Technological innovation is vital to the IRS successfully executing its mission, including protecting taxpayer data, enhancing services to taxpayers, and ensuring the health of the nation’s tax system.”
The plan is built around four “Modernization Pillars” for driving the IRS’s mission and future development:
1. Taxpayer Experience: The IRS intends to deploy a variety of new and improved technology systems to help taxpayers understand the tax laws and resolve issues quickly and efficiently. Advanced programming will give taxpayers more information about their accounts, tax obligations and payment options while safeguarding taxpayer information and data.
2. Core Taxpayer Services and Enforcement: The IRS will keep evolving its core tax systems to offer faster, easier tax-filing services by integrating tax processing systems that increase cost effectiveness, enable real-time processing of returns and deploy data analytics to combat fraud.
3. Modernized IRS Operations: The IRS will improve operational efficiencies by reducing system complexities, which will accelerate the pace of change and the adoption of emerging technologies to reduce costs and manual effort. This approach includes acquiring software capable of performing laborious tasks in seconds via automation and artificial intelligence, to get rid of error-prone manual work and improve speed and accuracy.
4. Cybersecurity and Data Protection: The IRS’s computer systems hold a great deal of sensitive taxpayer data that’s prone to cyberattacks and the agency has seen an increasing number of advanced cyber threats. The plan will offer greater protections to data and safeguard against tax refund fraud, protecting against approximately 1.4 billion cyberattacks annually and proactively responding to and anticipating the changing threat environment.
The four modernization pillars and material in the plan were based on a review by the IRS, in consultation with outside experts along with ongoing input and needs from stakeholders and partners in the tax community.
The plan foresees the IRS being able to:
- Significantly enhance the taxpayer experience by standardizing customer workflows and by expanding information access;
- Reduce call wait and case resolution times with customer callback technology, online notices and live online customer support;
- Simplify identity verification to improve access to online services while protecting data;
- Increase systems availability for taxpayers and tax practitioners; and
- Make implementation of new tax provisions more straightforward.
The IRS Integrated Modernization Business Plan provides more details on the expected capabilities through fiscal year 2024. The IRS anticipates working with stakeholders to monitor and improve the plan over time. The IRS expects to implement the plan in two three-year phases, monitor its progress and adjust its investment decisions as part of updating the plan.
“A critical component of the plan involves the IRS’s ongoing efforts to secure our systems and protect taxpayer data,” Rettig said. “The IRS is responsible for safeguarding a vast amount of sensitive financial and personal data involving every taxpayer and business in the nation. This is an area where we cannot fail for the safety of our nation, and modernizing our technology is critical to stay ahead of constant cyber-attacks on our systems.”
One of the main facets of the plan should permit the IRS to modernize its key systems and stabilize the cost of maintaining the technology. By modernizing its systems, the IRS sees potential opportunity to reinvest the savings and keep its technology current and on pace with changing taxpayer expectations.
The plan will depend on future funding, though. The plan includes several milestones and also depends on accountability to ensure it’s implemented effectively.
The IRS said it would provide regular reporting to Congress and oversight organizations as well as work with partners in the tax community as it implements the plan.
The National Society of Accountants welcomed the IRS modernization plan. “The NSA agrees with the philosophy of the modernization initiative,” said NSA CEO John Rice in a statement Thursday. “Our organization has been a vocal advocate for customer service since its inception 74 years ago. The planned improvements in IT, identity protection and information systems security at the IRS are vital. They are central to serving the public and tax and accounting profession in the digital age. But small tax practices must also do their part to secure their data and that of their clients.”
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