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IRS Modernization Plans Falling Short, GAO Finds

S.J. Steinhardt
Published Date:
Feb 8, 2023

The IRS recently suspended key elements of its information technology (IT) modernization plans, the Government Accountability Office (GAO) reported.  

In its analysis, the GAO found that about 33 percent of the IRS’s applications, 23 percent of its  software instances in use, and 8 percent of its hardware assets were considered legacy, which the IRS defines as being 25 years or older or written in an obsolete programming language. Some applications ranged from 25 to 64 years in age, as some software in use was up to 15 versions behind the current version, the GAO found.

These legacy assets “will continue to contribute to security risks, unmet mission needs, staffing issues, and increased costs,” the GAO stated, noting that the agency “relies extensively on IT to annually collect trillions of dollars in taxes, distribute hundreds of billions of dollars in refunds, and carry out its mission of providing service to America's taxpayers in meeting their tax obligations.”

As of August 2022, the IRS had documented plans for the 21 modernization initiatives that were underway, including nine associated with legacy systems. Six of those nine did not address the disposition of legacy systems, and IRS officials did not state when they would address them.

Two of the IRS's six suspended initiatives involve replacing the IRS's 60-year-old Individual Master File (IMF) system, the authoritative data source for individual tax account data, on which the agency has been working for a decade. The IRS attributed the suspension to a shift in resources and the targeted completion date of 2020 is now unknown, meaning that the agency will continue “to rely on a critical system with software written in an archaic language requiring specialized skills.”

The report also evaluated the IRS’s cloud-computing efforts, in accordance with an Office of Management and Budget’s June 2019 cloud computing strategy. It found that these efforts fully addressed 11, partially addressed one, and did not address two requirements identified in the strategy, known as Cloud Smart.

The IRS agreed with all nine of the GAO’s recommendations, including that it establish time frames to complete selected modernization plans, and that it fully address OMB’s cloud computing requirements.

"The IRS Integrated Modernization Business Plan released in FY 2019 has guided our technology modernization work since that time, and we have largely delivered those modernization capabilities our funding supported on schedule and within budget," said IRS Deputy Commissioner for Operations Support Jeffrey Tribiano, Accounting Today reported. "The plan provides a six-year strategy to modernize IRS technology systems and build critical infrastructure needed for a fully digital tax system that provides on-demand customer services options. Although limited funding has forced us to rescope, replan and delay certain modernization projects, from FY 2019 through FY 2022, we delivered 147 modernization capabilities across all four components of the plan: improving the taxpayer experience, core services and enforcement, IRS operations and cybersecurity."

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