Though Freedom of Information Act requests to the tax agency can still be filed through FOIA.gov, the mail, by fax, or even in person, the IRS’s decision to point online filers to ID.me — whose facial verification technology has, in the past, drawn scrutiny from Congress — has raised some advocates’ eyebrows

Alex Howard, who directs the Digital Democracy Project and also serves on the FOIA Advisory Committee hosted out of the National Archives, said in an email to FedScoop that language on the IRS website seems to encourage ID.me use for faster service. It also doesn’t make significant references to FOIA.gov, a separate governmentwide portal that agencies are supposed to work with by law, he said. 

“While modernizing authentication systems for online portals is not inherently problematic, adding such a layer to exercising the right to request records under the FOIA is overreach at best and a violation of our fundamental human right to access information at worst, given the potential challenges doing so poses,” Howard said. 

The IRS defended its use of the service in responses to FedScoop questions, noting the other ways people can file FOIA requests and that the tool is only required of those seeking to interact with their public records electronically. The agency also said that ID.me follows National Institute of Standards and Technology guidelines for credential authentication services.

“The sole purpose of ID.me is to act as a Credential Service Provider that authenticates a user interested in using the IRS FOIA Portal to submit a FOIA request and receive responsive documents,” a spokesperson for the agency said. “The data collected by ID.me has nothing to do with the processing of a FOIA request.”

The IRS website currently directs people trying to access the agency’s online FOIA portal to use ID.me, which describes itself as a “digital passport” that “simplifies how individuals prove and share their identity online.” According to one IRS page, the “IRS Freedom of Information Act (FOIA) Public Access Portal now uses a sign-on system that requires identity verification.” Those hoping to access online FOIA portal accounts created before June 2023 also must register for ID.me, the site states. 

The ID.me login page directs users to the FOIA portal, stating that those who can’t verify their identity can try visiting the ID.me help page or pursue alternative options. From there, another page tells users to try “another method” for submitting a FOIA. 

The system requires users to upload a picture of their ID: They can choose between taking a selfie and using biometric facial verification software that compares the image to their ID — or wait for a video appointment to confirm their identity. 

The system also appears to prompt users to share their Social Security number and includes terms of service that discuss the handling of biometric data. Two FedScoop reporters tried registering with the system: one had their expired identification rejected and had to attempt again with a passport, while the other’s driver’s license could not be “read” the first time but was accepted during a second attempt in combination with the video selfie. Both FedScoop reporters later received a letter, by mail, notifying them that their personal information was used to access an IRS service using ID.me.

What an ID.me scan looks like when signing into the IRS’s FOIA portal.

The IRS spokesperson said that the collection of a Social Security number is related to the digital authentication process, not the processing of the FOIA request itself, and biometric information is not retained by the IRS. 

“The IRS requires ID.me to delete the selfie and biometric information within 24 hours for taxpayers who verify using the self-service process,” the spokesperson said, adding that “ID.me is also required to delete any video chat recording within 30 days for taxpayers who choose to verify using the video chat pathway.” 

An ID.me spokesperson said in an email to FedScoop that no state or local agency uses the system for identity verification or as authentication for FOIA portals.  

The FOIA portals for the Treasury Department and Social Security Administration do use ID.me, the company spokesperson noted, but both agencies seem to provide more information on alternative submission options to submit requests online. ID.me referred additional questions regarding the IRS’s use of the company’s FOIA portal to the tax agency. Treasury did not respond to a request for comment by the time of publication.

The Social Security Administration offers both ID.me and Login.gov — another government-run ID service — as options to log into its FOIA portal, FOIAXPress Public Access Link. Like the IRS, the SSA said in response to FedScoop questions that mail, fax, email and FOIA.gov are alternatives to filing FOIAs. A Social Security number is not required for accessing FOIAXpress, though it appears to be required for signing into ID.me, which some users might be using to file FOIA requests. 

“In the scenario where a customer uses their ID.me account to access FOIAXpress PAL, the customer selects this sign in option on the login page and is redirected to a webpage on ID.me’s website,” an agency spokesperson said. “If the customer creates an account in this session, ID.me retains info on the registration event in their records.

They continued: “Upon successful account creation, the user is routed back to SSA’s website and allowed access to FOIAXpress PAL. SSA and ID.me retain info on the transaction in our respective records.”

“Submitting a Social Security Number to ID.me is related to the digital identity authentication process; generally it is not required for the FOIA process,” the IRS spokesperson added. 

Albert Fox Cahn, a privacy-focused attorney who directs the Surveillance Technology Oversight Project, expressed concerns about the IRS’s use of ID.me. “This isn’t just creepy and discriminatory, it might break federal law,” he said in a statement to FedScoop. “Under FOIA, public records belong to the public, and no one should have to hand over their biometric data just to see the records they’re entitled to access.” 

The use of ID.me by the government has sparked concerns in the past. In 2022, some members of Congress accused the company of downplaying wait times and misleading people about the way its facial recognition technology worked. The company, meanwhile, has defended its practices, including its work on fighting fraud during the pandemic.

Matt Bracken contributed to this article.

This story was updated June 11, 2024, to update Alex Howard’s professional affiliation.

The post IRS defends use of biometric verification for online FOIA filers appeared first on FedScoop.

Because the tax agency had “not completed its documentation of several elements” of the models used for its National Research Program audits, the IRS could struggle to “retain organizational knowledge, ensure the models are implemented consistently, and make the process more transparent to future users,” according to the Government Accountability Office.

The IRS first piloted AI techniques for sampling tax returns in NRP audits during the 2019 filing season. The tax agency selected 4,000 returns for audit through that new AI-powered methodology, while an equal share was chosen through its traditional selection process. The following year, the NRP sample was approximately 1,500, all selected with the AI-informed process, and in 2021, 4,000 returns were picked based on two different AI samples.

The GAO noted that the implementation of redesigned sample selection processes “can be a complex undertaking,” especially when an emerging technology like AI is added to the mix. With that in mind, the watchdog pointed to the usefulness of its AI accountability framework.

“The AI Framework emphasizes the importance of documentation to help ensure that the AI system’s objectives are met,” the GAO wrote. “It further emphasizes that documentation can offer a way for agencies to provide transparency, such as (1) what the system is for, (2) what it is not for, (3) how it was designed, and (4) what its limitations are.”

The GAO’s audit found that the IRS had fallen short in two framework areas: clearly defining and documenting roles and responsibilities for each step of the AI sample selection process, and documenting the variables used to develop and run those selection models.

As the IRS reviewed the GAO report in April and responded with comments, it made two changes to address the watchdog’s concerns: writing a draft memo that listed the people responsible for steps in the AI development and sample selection process, and updating a technical document with specifics on variables and the code behind the AI models. 

“These actions will increase IRS’s ability to effectively implement and ensure operational effectiveness of the AI models,” the GAO said.

The post IRS dinged by GAO for subpar documentation of AI audit models appeared first on FedScoop.

The House GOP’s Financial Services and General Government Appropriations Bill, released this week by committee Chair Tom Cole, R-Okla., targets the IRS’s Direct File program via a policy rider that prohibits the funding of “a government-run tax preparation software that Congress has not authorized.” 

Just last week, the IRS announced that Direct File would be made permanent following a pilot program that saw more than 140,000 taxpayers across 12 states use the free electronic filing system. The tax agency said the program received more than $90 million in refunds and reported $35 million in balances due during its pilot run. 

Treasury Secretary Janet Yellen touted Direct File further this week during testimony before the Senate Appropriations Subcommittee on Financial Services and General Government, noting that all states will be invited to participate in the program “as soon as next filing season,” with expansion on the horizon “to support all of the most common tax situations over the next few years.”

House Republicans’ bill, which cuts the IRS’s budget by $2.2 billion from fiscal 2024 funding levels, is the culmination of months of sustained attacks on Direct File from GOP members of Congress, state attorneys general and state treasurers and comptrollers. 

The highly lucrative tax preparation industry has also been gunning for Direct File. In an April statement to FedScoop, a spokesperson for Intuit — maker of TurboTax — said the tax agency’s Direct File post-mortem included estimates that were “clearly low, inaccurate, and the IRS even acknowledges conveniently leaving out necessary costs to build and run the pilot.”

Democrats, meanwhile, railed against Republicans’ proposed cuts to the IRS — which include a $2 billion reduction in enforcement funding — and especially the move against Direct File. Senate Finance Committee Chairman Ron Wyden, D-Ore., said in a statement that “the centerpiece” of Republicans’ budget plan for the IRS is “helping rich people cheat on their taxes.”

“If Republicans have the opportunity, they will deprive law-abiding taxpayers of the choice to file their taxes for free with the IRS’s new direct file program by shutting it down before it expands nationwide,” Wyden said. “In short, the winners in this plan are rich tax cheats like Donald Trump, and the losers are typical Americans who earn a wage, follow the law and want to file their tax returns every spring without getting ripped off by big tax software companies.”

News of the GOP’s Direct File targeting came amid a victory lap for the IRS and its Document Upload Tool, which processed its one millionth taxpayer submission. The agency had a limited rollout of the tool in 2021 and expanded it substantially in 2023 thanks in part to funding from the White House’s Inflation Reduction Act.

“The Document Upload Tool is a key part of our ambitious initiative to transform the IRS into a virtually paperless agency, and we continue to see increased use of this by taxpayers,” IRS Commissioner Danny Werfel said in a statement. “This tool saves time for taxpayers and helps IRS employees process responses faster and more efficiently.”

The post House Republicans aim to end IRS’s Direct File in 2025 appropriations bill appeared first on FedScoop.

The decision to make Direct File a permanent program comes after a pilot this year that allowed taxpayers in 12 states to electronically file their federal returns directly with the agency at no cost.

IRS Commissioner Danny Werfel said in a statement that taxpayers this filing season delivered a “clear message” to the agency in wanting “one no-cost option for filing electronically.”

“Giving taxpayers additional options strengthens the tax filing system,” Werfel said. “And adding Direct File to the menu of filing options fits squarely into our effort to make taxes as easy as possible for Americans, including saving time and money.”

More than 140,000 taxpayers — in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming — used Direct File in 2024, according to the agency, receiving more than $90 million in refunds and reporting $35 million in balances due.

The IRS said in a Direct File 2024 post-mortem last month that there was “steadily increasing interest” in the program, though Werfel had to “consult a wide variety of stakeholders” before rendering a decision on its future. 

Now that Treasury Secretary Janet Yellen has accepted Werfel’s recommendation that Direct File continue indefinitely, the agency said it is “examining options to broaden” the system’s availability across the country, “including covering more tax situations and inviting all states to partner with Direct File next year.”

There will be “no limit” on the number of participating states in 2025, the IRS noted, and going forward, Direct File will expand “to support most common tax situations, with a particular focus on those situations that impact working families.”

Werfel said Direct File’s user experience, both within the product and in state-wide systems integrations, “will continue to be the foundation” for the program. 

“Accuracy and comprehensive tax credit uptake will be paramount concerns to ensure taxpayers file a correct return and get the refund they’re entitled to,” he said. “And our North Star will be improving the experience of tax filing itself and helping taxpayers meet their obligations as easily and quickly as possible.”

Though the agency touted positive user feedback in the weeks after the conclusion of the 2024 filing season, Direct File wasn’t without its critics. A Government Accountability Office report last month found that estimated start-up costs for the program were incomplete and “a comprehensive accounting” was needed if the pilot were to be continued and expanded. 

“A review by the Treasury Inspector General for Tax Administration found that IRS had no documentation to support the underlying data, analysis, or assumptions used for Direct File cost estimates. We found this as well,” the GAO wrote. “Without collecting the information needed during the 2024 pilot to inform a comprehensive assessment of the costs associated with Direct File and its benefits, IRS risks making longer-term decisions without full information.”

The highly lucrative tax preparation industry has also been exceedingly critical of Direct File, calling the program “a solution in search of a problem” given other no-cost filing options. 

Those companies have sought to draw a contrast between the 140,000-plus Direct File pilot users and the millions that use their services each year. Derrick Plummer, an Intuit spokesperson, said in a statement to FedScoop that the company’s TurboTax program “has filed millions of completely free tax returns annually and has provided more than 124 million free tax returns over the past decade.”

Shortly after the Direct File announcement, Werfel made another move Thursday to bolster its taxpayer experience, naming Fumi Tamaki its chief taxpayer experience officer. Previously an adviser in the IRS Transformation and Strategy Office focused on “enterprisewide taxpayer journey improvement initiatives,” per an IRS announcement, Tamaki will now set the agency’s vision for continuously improving the taxpayer experience as part of the IRS’s larger digital transformation.

“This is a critical time for IRS, and I am excited to continue working with IRS leaders and our external partners in this role,” Tamaki said in a statement. “The Taxpayer Experience Office team and IRS have made tremendous strides in improving the taxpayer experience. I am committed to build on this work to deliver the experience that taxpayers expect and deserve.”

Billy Mitchell contributed to this article.

This story was updated May 30, 2024 with comments from an Intuit spokesperson.

The post IRS makes Direct File permanent, with plans for expansion appeared first on FedScoop.

The Government Accountability Office found no evidence that the tax agency has conducted a “comprehensive review of the rules and filters contained” in its Dependent Database, an automated program that identifies returns with possible noncompliance risk. The DDB is considered first-wave AI by the GAO due to it having “expert knowledge encoded into a computer system.” 

“While IRS regularly reviews the program, the review process does not comprehensively consider data inputs and assumptions that could inform IRS about the demographic equity of the audit selection process, creating the potential for unintended bias in audit selection,” the report stated. “For example, GAO found that some risk scores contained in the DDB program vary by sex, which could skew selection, and have not been updated since 2001.”

A 2023 Stanford University study found that Black taxpayers are roughly three-to-five times more likely to be audited than filers of other races. The IRS later confirmed the study’s findings, with Commissioner Danny Werfel writing in a letter to Congress that the agency would be “laser-focused” on addressing racial disparities in auditing.  

The GAO noted that the tax agency does not collect data about taxpayers’ race and ethnicity, meaning that predictions about a return’s risk for noncompliance with tax codes doesn’t take either factor into account. But according to the GAO, IRS research still shows “the existence of racial disparities in audits,” with “unintentional algorithmic biases” identified as a possible source.

“Specifically, that research noted (1) limitations in the data used to determine residency and relationship tests for [Earned Income Tax Credit] eligibility, and (2) outdated models as possible contributions to algorithmic bias and, consequently, racial disparities in audits,” the report states.

Once a return is flagged by the DDB program, it is then evaluated by the agency’s Systems Research and Application (SRA) model, which determines the filer’s risk score. Considered second-wave AI, the SRA is a data-mining and machine-learning model that the IRS uses to pinpoint audit patterns and predict outcomes. 

The GAO identified “some components” of the IRS Wage & Investment Division’s “automated audit selection process that could potentially skew selection toward returns with certain demographic characteristics that may not necessarily represent returns with the highest risk of noncompliance.” The SRA ranks risk scores from highest to lowest, and W&I starts with the highest until meeting “its predetermined audit workload,” the watchdog noted.

The GAO pushed the IRS to abide by its AI accountability framework, particularly with regard to “a variety of monitoring activities” that should be followed “to ensure AI systems function as intended.”  

“The agency may be missing opportunities to improve the likelihood that IRS is properly identifying returns at highest risk of noncompliance if it does not consider additional performance measures in reviewing its automated audit selection process,” the report said.

The GAO delivered six recommendations to the IRS regarding its audit selection processes, all of which were agreed to by the agency.

The post IRS’s AI system to flag returns for audit may include unintended bias, report finds appeared first on FedScoop.

In its annual update to the IRA Strategic Operating Plan, the tax agency said it is reliant on IRA funds for digitization and other technological innovations after the appropriations process for fiscal years 2023 and 2024 zeroed out its money for modernization. When those IRA funds are exhausted by fiscal 2026, the IRS said automated taxpayer solutions will be cut back and cyber and cloud work will be incomplete, increasing the risk of cyberattacks and system failures.

“The IRS will continue focusing on making improvements and efficient use of funding,” IRS Commissioner Danny Werfel said in a press release. “We highlight accomplishments rather than taking a victory lap because more work remains. But to stress the importance of continuing this momentum, the IRS will continue working to make a difference for the nation’s taxpayers. At the same time, it’s critical that the IRS has stable, secure funding to allow technology modernization and taxpayer service improvements to continue into the future.”

The accomplishments referenced by Werfel run the gamut of digital projects. Over the past year, the IRS said it used IRA funding to expand online services — pointing specifically to improvements with the Where’s My Refund? tool — resulting in fewer phone calls, paper processes and other burdensome tasks for agency workers. Additionally, the IRS continues to tout its Direct File pilot: More than 140,000 returns this tax season were filed electronically through the agency’s program, though its future remains up in the air.

The agency also leaned into artificial intelligence, pairing the technology with advanced analytics to identify “complex partnerships for audits.” The result of that collaboration between data scientists and tax enforcement officials was 60 audits launched on corporations with average assets exceeding $24 billion, in addition to 76 examinations of “the largest partnerships in the U.S. that represent a cross section of industries including hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms, and other industries.”

Ahead of the anticipated funding shortfall two years from now, the agency said it aims to “accelerate” several digitization efforts in fiscal 2025. Those efforts include an expansion of online services and the modernization of foundational agency technology and “aged programming from the point of intake of tax returns and information systems.” Data security will be prioritized in these efforts, the agency noted.

The IRS will also lean into digitization by making as many as 150 non-tax forms available in digital mobile-friendly formats — on top of the 20 it provided in fiscal 2024 — while enabling “scanning at the point of entry virtually” for every paper-filed tax and information return.  

Still, the IRS said that absent “sustained funding,” the agency will fall short of meeting the modernization goals laid out in its report — especially once IRA appropriations run dry and “if inadequate levels of discretionary funding once again result in underinvestment and service gaps.”

“Without help from Congress, taxpayers will have a difficult time finding someone at the IRS to talk to for help in FY 26,” a supplement document to the plan stated. “The consequences will be a return to the low levels of service, technology that does not fully reflect the digital world we live in, and a return to low audit rates that allow some taxpayers to avoid paying what they owe.”

The post IRS lays out modernization priorities, sounds alarm on funding shortfall appeared first on FedScoop.

In its report, the congressional watchdog highlighted “new and continuing” shortcomings with information systems and the safeguarding of assets, issues that increase the likelihood of unauthorized access to sensitive IRS data. The security deficiencies also pose a threat of disruption to critical agency operations, the GAO warned.

“The continuing control deficiencies related to transaction cycles increase the risk of financial statement misstatements,” the GAO said in its report. “IRS mitigated the potential effect of these control deficiencies primarily through compensating controls that management designed to help detect potential financial statement misstatements.”

The GAO’s audit of fiscal years 2022 and 2023 financial statements from the IRS revealed three new deficiencies, after the agency had taken “corrective actions” to address 51 previous recommendations from the watchdog — 15 of which have been completed and the remaining 36 are in progress.

Those newly identified deficiencies, which the GAO characterized as “sensitive in nature,” cover control problems in security management, access and configuration management. 

Configuration management appeared to present the most significant issues for the IRS, according to the report. Security settings for specific servers that support financial reporting-related systems were not consistently implemented; the watchdog delivered four recommendations to address that deficiency. 

For the security management control problem, the IRS failed to “consistently create a plan of action and milestones for identified weaknesses on a timely basis.” On access controls tied to monitoring and audits, the agency didn’t review and certify a monthly security report in a timely fashion. The GAO made one recommendation apiece for those deficiencies. 

IRS Commissioner Danny Werfel said in a letter responding to a draft version of the GAO’s report that the agency is “committed to implementing improvements dedicated to promoting the highest standard of financial management, internal controls, and information technology security.”

The post Security flaws in IRS systems pose risk to financial statements, GAO says appeared first on FedScoop.

Speaking Wednesday at the Scoop News Group-produced UiPath On Tour: Public Sector event in Washington, D.C., IRS Commissioner Danny Werfel said the agency is using Inflation Reduction Act funds to continue to modernize systems through AI utilization. While taxpayers can interact with the IRS through paper, at in-person centers and over the phone, Werfel said that employing AI capabilities will allow taxpayers to not have to wait or be put on hold, instead logging on and interacting with those technologies to find the answer to a frequently asked question or challenge. 

Werfel said AI can also assist the agency with automated efficiency to reduce mistakes and strengthen the tax system’s integrity, allowing investigators “to go where scrutiny is needed most.” The technology, according to Werfel, can be used to select the corporations and wealthy individuals most in need of auditing, and leave those who are “playing by the rules” alone.

“We’re gonna need an AI-powered solution to help taxpayers get the answers they need,” Werfel said. “Those solutions have to be developed, increasingly. … We have a strong baseline and momentum in using [IRA] funds, of starting to build AI, build chatbots and other solutions to go after these basic questions, but we’re really just getting started.” 

These tools could also help those who face complicated challenges when it comes to filing, including taxpayers living in vulnerable communities, according to the commissioner. Werfel noted that these populations are more susceptible to fraud schemes and often do not have access to services that investigate suspicious or malicious acts.

“Maybe over time we can increasingly find AI solutions to address” more complicated problems, Werfel said. “But in the meantime, we will continue to have human interaction and expert account managers to help.”

Earlier this year, Werfel testified in front of the House Ways and Means Committee and acknowledged that the IRS is using AI to help identify corporations and individuals with a “higher risk for tax noncompliance.”

During the same hearing, Werfel said that from 2010 to 2022, Congress clawed back the IRS’s budget by 25%, a fact he mentioned again at Wednesday’s event. 

The agency’s use of technology was “stagnant” over that time period, he added, despite the tax system reportedly growing in number of filings and overall complexity over the course of 12 years. 

The IRS reported more than 98 million e-filed returns in 2010, accounting for nearly 70% of total filings. In 2022, the agency reported over 152 million e-filing returns received, almost 92% of the total filings.

During the ACT-IAC/DCI CX Summit in Arlington, Va., last year, Werfel said the IRS was making progress in the push for digitization and needed to address “some real mission critical-risks” with IRA funding. This included improvements to static IRS web tools and hiring staff so that taxpayers had a better chance of getting through to the IRS via phone calls. Werfel said Wednesday that call wait times were down to an average of three minutes this tax season, and the agency saw “the most traffic to IRS.gov we’ve ever had.”

The IRS is also working toward the creation of a prototype validation server, specifically at the Statistics of Income division, Office of Science and Technology Policy Deputy Chief Technology Officer Deirdre Mulligan said during the IAPP Global Privacy Summit earlier this month in Washington, D.C. 

“The [SOI] at the IRS is creating multiple synthetic datasets and administrative tax data and building a prototype validation server using differential, formal privacy methodologies that empowers researchers to indirectly conduct statistical analyses on that confidential data,” Mulligan said. 

The federal government, she added, wants to “make sure that even researchers are protecting that data.”

The post With 2023 tax season in the rearview, IRS commissioner eyes expansion of AI capabilities appeared first on FedScoop.

The platform is built on the customer relationship management software company’s existing Einstein 1 platform and includes features to transcribe calls for contact center workers and assist caseworkers with generating reports and documenting information.

“This is the kind of work that requires a lot of expertise and there’s never enough people to handle it,” Casey Coleman, senior vice president of global government solutions at Salesforce, told FedScoop in an interview on the sidelines of the company’s conference in Washington. 

Coleman said the system will cut down administrative time for government employees and “leave the experts to do the job of really interacting with people and making sure that the answer is provided to them.”

The announcement came during the company’s “World Tour D.C.” event, which included panels with multiple government customers from agencies like the U.S. Agency for International Development and the Internal Revenue Service. 

Other software companies — such as IBM and Microsoft — have also announced new AI tools for government in recent months, as interest in the technology continues to grow in the public sector. Meanwhile, the Biden administration is working to create guidance for procurement of those tools. The Office of Management and Budget is planning action on federal procurement of AI later this year and released a request for information on that work.

Coleman said interest in AI from public sector partners has “spiked up,” particularly for uses related to administrative work and things that can be tested quickly.

“Every conversation we have with public sector customers, or prospective customers, includes AI to some degree,” Coleman said. “Everyone is thinking about it — everyone is looking for use cases to test it on.”

Also on Wednesday, Salesforce announced that its Field Service, Privacy Center and Security Center tools are authorized for FedRAMP’s “high” impact level and the Department of Defense’s “Impact Level 5,” which means they’re cleared to be used with the government’s most sensitive unclassified data. GovSlack also achieved FedRAMP “high” authorization in February. 

The post Salesforce launches ‘Einstein 1’ generative AI tool for government appeared first on FedScoop.

Of the nearly $80 billion in Inflation Reduction Act funds appropriated to the tax agency as a whole, $4.8 billion has been set aside for business systems modernization while another $25.3 billion is ticketed for operations support, which encompasses ops and maintenance for IT systems.  

But although the IRS has made some progress in its technology objectives — which include securing data, replacing outdated systems, updating programming languages and providing taxpayers with access to their data and online tools — the agency “hasn’t fully updated its plans to incorporate these additional funds” and is past due in making “changes to the scope and milestones of its IT modernization programs,” the GAO said.

The tax agency said it spent $3.3 billion on IT investments in fiscal year 2022 and $4.4 billion the following year, with roughly $2 billion in fiscal 2023 coming directly from IRA funds. The IRS had simultaneously been charged with completing a roadmap for how it would use the funding, but a December 2023 submission omitted the agency’s technology goals.

“They said that this objective would be included in version two of the roadmap which they expected would be completed very soon,” the GAO said. “Completing the roadmap and then updating ongoing IT modernization plans to reflect revisions driven by the strategic plan are essential to the transformation’s success.”

Previous reports from the congressional watchdog shined a light on myriad technical issues at the tax agency, including 2018 findings that legacy systems posed significant risks due to outdated hardware and a shortage of skilled IT staff. Subsequent reports tracked the IRS’s progress on its cloud computing efforts and its legacy modernization plans — both seen as crucial for an agency that in fiscal 2022 “relied on IT to collect more than $4.9 trillion in taxes, process approximately 260 million tax returns, and issue more than $640 billion in refunds and outlays,” the GAO noted.

The IRA-fueled technology objective, which includes eight initiatives and 38 key projects, so far lacks “the detailed planning needed to successfully operationalize” the agency’s strategic operation plan, GAO said. And without updating or developing new modernization plans that include milestones to complete the work, a description of the necessary work and “details regarding the disposition of the legacy system,” the IRS “runs the risk of cost overruns, schedule delays, and overall project failure.”

Furthermore, the quarterly IRS modernization progress reports delivered to Congress have lacked crucial data points, such as historical cost and schedule goals, the GAO stated. The agency did, however, meet almost all of its required analysis and performance targets for operational investments.

The GAO delivered three recommendations to the commissioner of the IRS: to finish the technology objective roadmap, complete modernization program plans and provide cost and schedule goals quarterly to Congress. 

The agency, which concurred with all three recommendations, said that work on the roadmap is “well underway,” but a time frame for when it would be completed was not provided.

The post IRS needs to move quicker on its IT modernization planning, GAO says appeared first on FedScoop.