In my previous blog post, I discussed the expansion of digital service options to improve taxpayers’ experiences interacting with the IRS. Here, I will discuss the desperate need for multi-year funding to modernize IRS computer systems and infrastructure. Tax administration is at risk, and the country and the IRS need a solution now more than ever.
A Supreme Court justice famously opined that “taxes are the life-blood of government.” In that vein, the IRS is responsible for collecting approximately $3.5 trillion in taxes each year – roughly 95 percent of federal revenue. In addition, the agency is tasked with administering recurring social benefits programs like the Earned Income Tax Credit, and one-time financial relief programs like Economic Stimulus Payments in 2008 and Economic Impact Payments in 2020. Despite these enormous and critical responsibilities, the IRS is overwhelmingly reliant on “legacy” information technology (IT) systems – which the IRS’s IT function has defined as systems that are at least 25 years old, use obsolete programming languages (e.g., COBOL), or lack vendor support, training, or resources to maintain. A recent report published by the Treasury Inspector General for Tax Administration found that 231 IT systems used by the IRS are legacy systems.