IRS is evaluating its tech investments and modernization
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By
Natalie Alms
The agency has been trying to update a tax processing system that uses an outdated programming code for over a decade.
The IRS is undertaking a “strategic re-assessment” of its modernization strategy, projects and investments — including the free tax filing website stood up under the Biden administration, Direct File — a senior career technology executive at the IRS, whom the Treasury Department declined to identify, told reporters Friday.
They cited a changing technological environment as a reason for the reevaluation, saying that the agency started trying to move away from legacy coding languages a decade ago as the number of people proficient in them dwindled as a “risk mitigation strategy.”
“However, the landscape has changed today, especially with the advances in [generative artificial intelligence]. We're now able to apply gen AI to extract that logic from the legacy code, and therefore our approach had to also change from risk mitigation to true modernization,” they said.
The tax agency still uses some outdated technology. It has been trying to update a 1960s-era core tax processing system for individual tax account administration, written in legacy code like COBOL, for over a decade.
The tech executive also cited a goal to “untangle from multiple integrator solutions,” which could potentially affect the agency’s contracts. Billionaire Elon Musk’s Department of Government Efficiency effort has targeted contracts across the government already.
“We have heavily relied on outsourcing to third-party solution integrators to help us achieve the intended outcomes. But that comes with its own cost and drastically drives up the financial cost of modernizing,” the official said. “The one that appears most prevalent is how many integrators are involved and how many hand-offs occur in just delivering and deploying a program.”
Under the Biden administration, the IRS was spending some of its roughly $60 billion from the 2022 Inflation Reduction Act to modernize its tech. Republicans on Capitol Hill have attempted to take back that funding several times.
Treasury didn’t immediately respond to requests for additional details from Nextgov/FCW.