IRS Details Six-Year Modernization Plan

The IRS publicly released its Integrated Business Modernization Plan April 18, less than two weeks after Commissioner Charles Rettig briefed Senate lawmakers on how the tax agency planned to fix its outdated IT systems.

Rettig sought early buy-in from Congress on the modernization, which the IRS estimates will cost between $2.3 billion and $2.7 billion over the next six years. While some lawmakers balked at the plan’s cost, doing nothing may actually cost the IRS more.  

According to the report, the costs of operating and maintaining IRS’ IT systems, some of which are more than five decades old, is more than $2.2 billion annually. By fiscal 2026, those costs would balloon to more than $3 billion, along with an increased risk of the kind of systemwide crash that left millions unable to file their taxes on Tax Day 2018.

“The cost of maintaining the current complex technology ecosystem continues to grow every year on an unsustainable trajectory. The cost of operating these systems is overtaking other important components of effective tax administration and limiting capacity to deliver quality service,” the plan states. “We need to transform the taxpayer experience to deliver taxpayer services with speed and quality. We can do so by modernizing our processes and systems and aligning the IRS with industry standards for digital innovation.”

The plan itself is based on four modernization pillars: taxpayer experience, core taxpayer services and enforcement, modernizing IRS operations and cybersecurity and data protection.

Key programs laid out in the plan include offering an omni-channel experience to customers, real-time tax processing and increased transparency of returns, improved fraud detection and a focus on automation and reduced IT complexity.