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The Need for IRS Reform: Taxpayers Deserve a Modern IRS

March 20, 2018

Current Systems from the Kennedy Era

In this day and age, no major organization can be successful without modern technology to support it.  And yet, did you know that the IRS continues to maintain information technology (IT) systems dating back to when President Kennedy was in office in the early 1960s?  These systems, which are critical to ensuring the IRS’s ability to collect the nation’s taxes and issue refunds, are older than the internet, cell phones, and VCRs (if you don’t know what that last one is, here’s a hint).

David Powner from the Government Accountability Office testified at an October 2017 hearing about the importance of IRS IT:

“IRS relies extensively on IT systems to annually collect more than $3 trillion in taxes, distribute more than $400 billion in refunds, and carry out its mission of providing service to America’s taxpayers in meeting their tax obligations.”

While the IRS spends approximately $2.4 billion annually on IT, it has struggled to replace its older IT systems, with replacements often costing substantially more and taking significantly longer to develop and implement than initially estimated.  Furthermore, using outdated systems poses significant risks to the IRS’s ability to effectively do its job.

As Danny Verneuille from the Treasury Inspector General for Tax Administration explained in October 2017:

“Successful modernization of IRS systems and the development and implementation of new information technology applications are critical to meeting the IRS’s evolving business needs and to enhancing services provided to taxpayers.  The IRS’s reliance on legacy (i.e., older) systems, aged hardware, and its use of outdated programming languages pose significant risks to the IRS’s ability to deliver its mission.”

Outdated systems have significantly impacted the IRS’s ability to assist taxpayers.  Whether it is longer processing times for tax refunds or frustrations over the inability to reach the IRS by phone, the IRS’s outdated IT affects many aspects of the taxpayer experience.  Outdated and duplicative IT systems also make it more difficult for the IRS to readily access taxpayer information when contacted with a problem.  In April 2017, the National Taxpayers Union Foundation described the issue:

“The IRS operates at least 60 different case management systems.  This means that when a concerned taxpayer gets through to an IRS representative, that agent might not have access to that person’s file. This adds to the taxpayer’s wait time and aggravation as the representative tries to figure out who in the bureaucracy would be able to access the needed information.”

New Systems for the Modern Era

As we think boldly about the IRS of the future – one that is oriented towards helping taxpayers – we should also think boldly about what a modern IRS looks like.  One where taxpayers can easily access their information, day or night, readily have their questions answered, and quickly resolve issues.  One where the IRS can be trusted to protect taxpayer information, proactively combat identity theft tax refund fraud, and readily assist taxpayers when they are victims of this fraud.  One where the IRS meets you, the taxpayer, where you are, whether it is online, in-person, or by phone.  It also means having an IRS that is held accountable when modernization efforts fall short.

As we work towards the first major overhaul of the IRS in 20 years, our goal is to ensure that reforms are built upon IT systems that are modern and up-to-date – systems that work for the taxpayer, not against them.