Congress keeps IRS spending on a short leash

Congress is looking to keep the IRS is on a short leash when it comes to its budget and IT spending.

The fiscal year 2018 appropriations report released Nov. 20 by the Senate Appropriations committee, targets the agency's oft-criticized IT shop, mandating progress reports every quarter to the House, Senate and U.S. Comptroller General on major IT investments.

The draft recommendations authorize $160 million for business systems modernization, but lawmakers are looking for updates on cost and lifecycle stages, risks, milestone dates and reasons for any delays or cost increases for every major IT project the agency is working on.

Overall, the Senate bill funds the IRS at $11.1 billion, including $3.6 billion for administration including IT.

"Given the size and significance of IRS's IT investments and the challenges inherent in successfully delivering these complex IT investments, it is important that the Committees on Appropriations be provided reliable information to assist with their oversight responsibilities," committee staffers said in a summary.

The IRS relies on decades-old legacy technology, including the Individual Master File, for core IT administrative functions related to tax-filing. A replacement system, the Customer Account Data Engine and its successor, CADE2, have been stuck in development for years with no planned completion date.

IRS officials told lawmakers in the past that the system can be completed in five years, but only with an additional 50 to 60 employees and $425 million.

For its part, IRS officials have consistently complained that Congress has cut essential funding from the agency in recent years, sapping it of the budget and personnel needed to bring systems like CADE2 to completion.

Former Commissioner John Koskinen, who retired in November 2017, criticized Congress on his way out the door, arguing that a lack of funding for IRS not only hurts the agency, but the federal government as a whole. In an October 2017 press call, Koskinen estimated that a one percent funding loss for the IRS results in approximately $30 billion in lost revenue collected.

On Nov.15, the IRS Advisory Council, composed of industry and advocacy groups, listed "adequate funding" as its first recommendation in its annual public report, arguing that a host of current IRS problems flow from the agency's strapped coffers.

"Regrettably, overall funding for the IRS has decreased dramatically -- by approximately $1 billion -- since FY2010, even though the requirements imposed by Congress have expanded during the same period," the group wrote.

In particular, the council highlighted "the inability to invest in modernizing IRS's Information Technology infrastructure, employee recruitment and essential training." The digital services subgroup also recommended the IRS improve communication with industry and state agencies for IT solutions.