IRS says technology revamp key to improving taxpayer experience

The U.S. Treasury Department and the IRS on Thursday released a list of reforms aimed at modernizing the IRS, making it more secure, efficient and accessible for taxpayers through updating its technology.

“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,” Treasury Secretary Steven Mnuchin said in a statement.

Currently, operating the IRS technology infrastructure costs more than $2.2 billion each year, and is projected to exceed $3 billion by fiscal 2026 if no changes are enacted. Those costs, the agency says, are inhibiting its ability to deliver quality service.

The IRS Integrated Modernization Business Plan, as it is called, would be implemented over the course of six years, in two phases beginning in fiscal 2019. The plan contains four main pillars:

  • Taxpayer experience, including reducing call wait times, expanding access to information, expediting return and refund processing, and simplifying identity verification.
  • Core taxpayer services and enforcement, which refers to filing services and the processing of refunds
  • Modernized IRS operations, including adopting technologies that can allow tasks to be completed more quickly, while increasing worker speed and accuracy
  • Cybersecurity and data protection

The plan also focuses on cutting costs at the agency through automation and introducing new programs to ensure taxpayer compliance.

During testimony before lawmakers on Capitol Hill earlier this month, IRS Commissioner Charles Rettig underscored the need to enhance the agency’s technological infrastructure, saying it suffers about 1.4 billion breach attempts each year, including some “sophisticated” attacks from nation states.

However, Rettig expressed concern about the ability of the IRS to hire the necessary workers to fill its cybersecurity and IT roles as its recruiting competes with “all the other entities that you can imagine” in a sector where the unemployment rate is near zero percent, and there are 300,000 job openings.

Meanwhile, the IRS is also the target of a reform bill advancing through Congress that aims to enhance the taxpayers experience, including measures to help taxpayers resolve disputes with the agency and streamlining communications between staffers and potential victims of identity theft.

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That bill has drawn scrutiny from lawmakers for a provision it contains that would prohibit the IRS from creating its own tax filing software to compete with companies in the private sector.

The IRS is responsible for collecting 90 percent of all federal revenues. It handles about 150 million tax returns each year.