Following the delay in modernization, the Internal Revenue Service (IRS) is considering fresh IT strategies to harmonize with the Trump administration's policies.
IRS Announces New Strategic Plans for IT Modernization
The Internal Revenue Service (IRS) has unveiled its new strategic plans for IT modernization, focusing on key areas such as digitalization and automation, tax compliance, customer service, workforce development, and security and data protection. These plans, developed in collaboration with the Treasury Department, aim to align with the current administration's goals.
The strategic objectives of the modernization efforts include improving the digital infrastructure to enhance services for taxpayers, implementing automation technologies to boost efficiency and speed in processing tax returns, and strengthening IT security measures to ensure the integrity and confidentiality of data.
To achieve these goals, the IRS will work closely with the Treasury Department to ensure that digital solutions meet the needs of taxpayers while maintaining data security and integrity.
In the realm of tax compliance, the IRS aims to increase the effectiveness in identifying and pursuing tax evasion, as well as promoting tax fairness through clear communication and fair administration of tax laws. Collaboration with other government agencies will be key in improving tax compliance and addressing systemic inequalities.
Improving customer service and user experience is another priority. The IRS plans to enhance communication channels and overall customer experience through modern technologies, increase the availability of self-service options, and expand online services. Dialogue with the Treasury Department will ensure that these measures align with the government's priorities.
The IRS also recognizes the importance of workforce development and digital competency. Plans include training and educating existing staff to support the digital transformation, as well as recruiting professionals with the necessary digital skills. Collaboration with the Treasury Department will help identify workforce needs and develop appropriate training programs.
Security and data protection are paramount in the IRS's modernization efforts. The plans include strengthening IT security protocols, implementing technologies to detect and ward off cyber threats, and working with the Treasury Department to develop standardized security protocols that are industry-wide accepted.
The Government Accountability Office (GAO) revealed this information in a report on Tuesday. The GAO emphasized the importance of aligning new IRS IT modernization initiatives with documented strategic objectives and having program plans that address key elements. The IRS agreed with the GAO's findings regarding the recommendations that have not been adopted.
The IRS paused its IT modernization programs six months ago, a decision that former leaders previously stated could undercut modernization efforts and slow the use of artificial intelligence. However, the recent announcement indicates a renewed commitment to modernization.
The IRS spent roughly $2 billion in fiscal 2024 on 23 modernization programs, most of which were on the right track. The Inflation Reduction Act made a funding infusion for IT modernization at the IRS possible, in addition to a $6 billion investment in modernization and $19 billion overall on IT at the tax agency from FY2020 through FY2024.
The IRS's new strategic plans will be published in the summer, while the Treasury plan will be released by February 2026, according to the GAO. The IRS did not provide a broader strategic vision for the framework or implementation details, but stated it would continue to evolve the framework through stakeholder engagement and cross-functional coordination.
In February, Nina Olson, the National Taxpayer Advocate from 2001 to 2019, warned Congress that the IRS's "brain drain" would hinder IT modernization. The GAO also stated that it is important for the IRS to consider the usability of the work performed to date on the 23 programs it was previously pursuing.
The GAO cited a Taxpayer Advocate report to Congress in June that said many projects continue to be paused or have been canceled to enable this reprioritization. IRS IT officials said in March that modernization programs were put on hold pending a reevaluation of "investments and priorities."
The IRS is developing new strategic plans for FY2026 to FY2030 that will replace the current strategic operating plan to align with the current administration's priorities. The new plans will focus on digitalization and automation, tax compliance, customer service, workforce development, and security and data protection.
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