IRS technology upgrade will require up to $2.7 billion

April 21, 2019
Computer troubles

Multiply this computer trouble by 150 million taxpayers and you'll get an idea
of the scope of the IRS' new plan to upgrade its technology systems.

The Internal Revenue Service made it relatively unscathed through the 2019 main tax filing season. That's pretty amazing when you consider the agency:

The IRS didn't have much control over those first three issues, but now is looking to take charge when it comes to its aging technology.

IRS unveils upgrade plan: Uncle Sam's tax collector has developed a six-year strategy to modernize IRS Information technology (IT) systems and build the infrastructure the agency needs to move forward in our ever-changing digital world.

For us taxpayers, the IRS says that once the plan is fully implemented, we will see more web tools, online applications, advanced analytics and enhanced cybersecurity.

That would mean advances beyond the current online taxpayer accounts and, hopefully, no more outages like the one that happened just before the 2018 Tax Day deadline.

"Modernized systems are the key component to delivering quality service to taxpayers, providing efficient and robust enforcement activities and keeping taxpayer data secure," said IRS Commissioner Chuck Rettig in a statement announcing the plan.

Benefits for filers and IRS: The upgrade IT infrastructure would expand taxpayer access to information and offer live online customer support. That then should free up taxpayer assistance phone lines for those who need specific IRS attention.

Technological improvements also would also help the IRS implement new tax provisions.

That's a constant need since Congress, although rarely making major tax law changes, does like to continually tinker with the Internal Revenue Code. Even small changes mean that the IRS must integrate them throughout its system.

"Our modernization plan includes multiple milestones and levels of accountability to ensure it is implemented efficiently and effectively," Rettig added. "The integrity of our nation's tax system depends on modernizing IRS operations and the supporting technical pieces. We look forward to working with Congress to implement this plan."

Show the IRS the money: Ah, yes. Working with Congress. That's a given because all these improvements need money and the Representatives and Senators control the purse strings.

How much is the IRS seeking? Lots.

The tax agency estimates it will take $2.3 billion to $2.7 billion to install the IT modernization initiatives, officially titled the IRS Integrated Modernization Business Plan, in two three-year phases.

That's not an easy ask in these days of ballooning deficits and residual political antipathy toward the IRS.

But since the IRS put it out there, the top of its computer systems upgrade estimate is this week's By the Numbers figure.

Now it's up to Capitol Hill.

Upgrade timing: The IRS wants to start the technology improvements this fiscal year, which runs through Sept. 30.

The good news, says the IRS, is that some components of the plan are in place for FY 2019 and the administration’s budget proposal for Fiscal Year 2020 includes $290 million in funding for the plan.

But about the rest of the money to finish the job by FY 2024 …

The IRS notes that "the speed at which new capabilities can be delivered will depend, in part, on the agency’s annual funding levels. The IRS will provide regular reporting to Congress and oversight organizations. The IRS will also work with partners in the tax community as the we implement and update the plan."

What say you, House and Senate members?

Can we please haz a technologically up-to-date IRS?

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