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MSP #6: INFORMATION TECHNOLOGY MODERNIZATION

Antiquated Technology Jeopardizes Current and Future Tax Administration, Impairing Both Taxpayer Service and Enforcement Efforts

TAS Recommendations and IRS Responses

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1.

TAS RECOMMENDATION #6-1

Compile data on the operations and maintenance costs of all legacy systems to assist in prioritizing decommissioning decisions.

IRS RESPONSE TO RECOMMENDATION: As required by the Office of Management and Budget (OMB), the IRS will continue to regularly report upon our major and minor information technology investments through ITdashboard.gov and other forums. The IRS will also continue to improve cost tracking and reporting according to new government-wide standards such as the Technology Business Management (TBM) framework, as resources and funding allow. While the IRS does consider cost as one factor, decommissioning decisions almost always rely upon other factors such as taxpayer or employee experience, security and risk of aging hardware and software, architectural direction, and other operational considerations.

CORRECTIVE ACTION: As required by the Office of Management and Budget (OMB), the IRS will continue to regularly report upon our major and minor information technology investments through ITdashboard.gov and other forums. The IRS will also continue to improve cost tracking and reporting according to new government-wide standards such as the Technology Business Management (TBM) framework, as resources and funding allow. While the IRS does consider cost as one factor, decommissioning decisions almost always rely upon other factors such as taxpayer or employee experience, security and risk of aging hardware and software, architectural direction, and other operational considerations.

TAS RESPONSE: Compiling this data is in direct support of the IRS Modernization Plan. TAS looks forward to working with the IRS to make this priority successful.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): 9/30/2021

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2.

TAS RECOMMENDATION #6-2

Expedite the development of a Servicewide centralized system to store digital tax records to allow the IRS to go completely paperless.

IRS RESPONSE TO RECOMMENDATION: The IRS is committed to strengthening data intake capabilities to enable enhanced validation, storage, protection, and sharing of data. The IRS established the new Enterprise Digitalization and Case Management Office (EDCMO) in FY 2020 to strategically address these needs and enhance the taxpayer and employee experience by spearheading the IRS’s efforts to modernize and consolidate systems, simplify business processes, and empower taxpayers and employees to rapidly resolve issues in a simplified digital environment. Specifically, EDCMO is developing and leading efforts to transform the IRS into a more digitally driven agency through innovative initiatives designed to reduce paper volume, increase access to digital data, and prepare the IRS to effectively manage and leverage digital data. As part of this, the IRS is committed to working as quickly as possible to increase the amount of paper-based forms and tax records that can be stored digitally and other efforts that push the IRS towards becoming more paperless wherever possible.

CORRECTIVE ACTION: EDCMO is developing and leading efforts to transform the IRS into a more digitally driven agency through innovative initiatives designed to reduce paper volume, increase access to digital data, and prepare the IRS to effectively manage and leverage digital data. As part of this, the IRS is committed to working as quickly as possible to increase the amount of paper-based forms and tax records that can be stored digitally and other efforts that push the IRS towards becoming more paperless wherever possible.

TAS RESPONSE: TAS looks forward to the IRS’s plan to comply with the National Archives and Records Administration (NARA) criteria for all records. TAS is encouraged by the possibilities brought about by tools such as the documentation upload tool (DUT) (i.e., the pilot for digital mailroom).

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 1/31/2023

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3.

TAS RECOMMENDATION #6-3

Create CIO liaisons for each IRS division knowledgeable about both the business needs and the technical aspects to bridge the disconnect between the needs of the IRS divisions and what IT can deliver.

IRS RESPONSE TO RECOMMENDATION: All operating divisions have a dedicated Business System Planning (BSP) individual or function that serves a role similar to what the National Taxpayer Advocate describes. Additionally, Information Technology (IT) leadership regularly meets with operating division leadership to discuss strategic and tactical priorities and acts upon requests as necessary. In the near future, as part of the Taxpayer First Act reorganization strategy, the IRS will strengthen the bridge between the operating divisions and IT at the most senior level, as the CIO will directly report to the IRS Commissioner to work closely with peers in taxpayer service, compliance, strategy, and operations to deliver upon Service-wide priorities. With additional hiring authority and budgetary resources, IT will expand the current business relationship management program whereby specific liaisons within IT act as concierges to help business unit customers navigate complex IT processes and ensure service needs are met.

CORRECTIVE ACTION: IRS Agrees with TAS Recommendation But Cannot Implement It Currently Due to Funding Limitations.

In the near future, as part of the Taxpayer First Act reorganization strategy, the IRS will strengthen the bridge between the operating divisions and IT at the most senior level, as the CIO will directly report to the IRS Commissioner to work closely with peers in taxpayer service, compliance, strategy, and operations to deliver upon Service-wide priorities. With additional hiring authority and budgetary resources, IT will expand the current business relationship management program whereby specific liaisons within IT act as concierges to help business unit customers navigate complex IT processes and ensure service needs are met.

TAS RESPONSE: TAS is encouraged by the IRS meeting with IT leadership on a regular basis. TAS looks forward to working with the IRS to advance these goals to create a seamless experience for taxpayers and employees.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 10/31/2023, TAS is monitoring this recommendation.

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4.

TAS RECOMMENDATION #6-4

Compile a list of IT lessons learned during COVID-19, documenting the problems taxpayers experienced due to IT-related challenges during the pandemic so it can be better prepared for the future.

IRS RESPONSE TO RECOMMENDATION: The IRS has documented lessons learned from various actions related to COVID-19 and the CARES Act, including Economic Impact Payment processing. Further, the IRS has actually implemented these lessons in our programming, processes, and operations for subsequent relief efforts, such as the second Economic Impact Payment. Because the pandemic is still ongoing, and IT resources are focused on implementing additional legislative, filing season, and modernization functionality, the IRS will share existing documentation with the National Taxpayer Advocate, but will only document additional information as resources allow.

CORRECTIVE ACTION: The IRS has documented lessons learned from various actions related to COVID-19 and the CARES Act, including Economic Impact Payment processing. Further, the IRS has actually implemented these lessons in our programming, processes, and operations for subsequent relief efforts, such as the second Economic Impact Payment. Because the pandemic is still ongoing, and IT resources are focused on implementing additional legislative, filing season, and modernization functionality, the IRS will share existing documentation with the National Taxpayer Advocate, but will only document additional information as resources allow.

Update: Information Technology has documented lessons learned from various technology actions related to COVID-19 and the CARES Act, including Economic Impact Payment processing. Further, IT has implemented these lessons into the programming, processes, and operations for subsequent relief efforts, such as the second Economic Impact Payment.

TAS RESPONSE: TAS looks forward to reviewing the lessons learned and working with the IRS to implement actions to mitigate future issues.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): 

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5.

TAS RECOMMENDATION #6-5

Expand modernization efforts to include BMF to provide a comparable level of service (e.g., online accounts, digital services, shorter processing cycles (CADE 2), etc.) to business taxpayers it will provide to individual taxpayers.

IRS RESPONSE TO RECOMMENDATION: The IRS agrees with the importance of the Business Master File (BMF) and continued modernization of the business taxpayer experience in parallel with improvements to the individual taxpayer experience. However, these efforts are likely to require funding and prioritization within the Operations Support portfolio, rather than trying to fit within the very limited Business Systems Modernization (BSM) appropriation and Modernization Plan. The IRS continues to make improvements for business taxpayers in FY 2020 and FY 2021, including customer callback on several business phone applications, integration of BMF data with ECM, and digital communication opportunities with several types of individual, business, and tax exempt customers and their representatives. 

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS believes that BMF taxpayers have the same rights as Individual Master File (IMF) taxpayers to have an end-to-end modernized, real-time platform (i.e., information submission, document processing, taxpayer experience, etc.). TAS is encouraged that the IRS acknowledges the importance of BMF modernization.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open):

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6.

TAS RECOMMENDATION #6-6

Ensure the amount requested for its IT budget is sufficient and sustainable to fully fund its multiyear modernization plan.

IRS RESPONSE TO RECOMMENDATION: The IRS agrees to request the funding required to operate and maintain existing systems, to fund modernization efforts, and to deliver legislation such as the CARES Act. However, the IRS collaborates with the Department of the Treasury, Office of Management and Budget, and Congress through the passback and President’s Budget process. Congress ultimately determines appropriation levels, including the business systems modernization appropriation.

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS appreciates the complexity of the budget process and will work with IRS to raise awareness for the needed additional funding and provide the necessary justification for budget requests.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open):

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7.

TAS RECOMMENDATION #6-7

Consider seeking financial assistance from the Technology Modernization Fund.

IRS RESPONSE TO RECOMMENDATION: While the IRS appreciates government-wide efforts to fund technology modernization and cybersecurity work, the Technology Modernization Fund (TMF) has specific requirements that make other options better suited to our funding challenges. In particular, projects funded by the TMF are expected to pay back loans over five years from regular appropriations, projects are funded on an incremental basis based upon milestone completion, and the use of rapid and iterative development practices is expected. When the IRS implements new technology, even in situations where we replace legacy systems, operations and maintenance costs are often higher for the new system and require ongoing funding (i.e., direct appropriations). Further, one of the key requirements for the IRS Modernization Plan is stable and predictable funding, a requirement that the TMF cannot guarantee.

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS appreciates that the IRS took the time to consider the use of the TMF funds, similar to other larger government agencies. The use of TMF funds could supplement funds allocated by Congress and should be viewed as complementary to that funding. TMF is an alternative source for short-term modernization funding that may assist in completing some of the pilots outlined in TFA for the one- to three-year timeframe.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

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