July 2019 JD Supra
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Will the IRS Integrated Modernization Business Plan Work? was published by JD Supra on 7/19/19.

On April 18, 2019, IRS released the IRS Integrated Modernization Business Plan April 2019(Plan) – a six year Plan designed to

modernize the IRS’ technology systems, improve Taxpayer services and protect Taxpayer data. According to IRS, the Plan will cost between $2.3 billion and $2.7 billion through Fiscal Year 2024 and will help IRS achieve modernization required to deliver efficient Taxpayer services and enforcement with enhanced user experiences and curtail the rising operational costs.

According to IRS, the Plan will allow IRS to provide superior service to Taxpayers while delivering long-term budget efficiencies as the IRS decommissions legacy applications, automates manual processes, and expands advanced analytics programs.

First, let’s understand how IRS works:

  • IRS has Four major Business Units:
  • Large Business and International (LB&I)
  • Tax-Exempt and Government Entities (TE/GE)
  • Small Business/Self-Employed (SB/SE)
  • Wage & Investment (W&I)
  • IRS offers Six business processes:
  1. CUSTOMER SERVICE: • Online Payment • Online Account • Third Party • Customer Management • Education & Outreach
  2. INTERNAL OPERATIONS: • Financial Management • Human Capital Management • Asset Management • IT Management • Administrative Management
  3. ACCOUNT MANAGEMENT: • Record Business Events • Settle Account • Settlement Actions • Post Transaction • Analyze Account
  4. INTAKE: • Ingestion Service • Perfection Service • Calculator Services • Anomaly Detection • Verification • Issue Resolution
  5. CASE MANAGEMENT: • Case Inventory • Case Treatment • Workflow Management • Correspondence Management
  6. COMPLIANCE: • Issue Detection • Issue Identification • Issue Selection • Correlation • Inventory Prioritization

How will IRS improve Taxpayer services and protect Taxpayer data and deliver on its Business Plan?

The IRS plans to deliver improved Taxpayer services and protect Taxpayer data via Four Modernization Pillars:

  1. Taxpayer Experience: Help taxpayers resolve issues quickly and efficiently, empower taxpayers with information about their account, obligations and payment options, make services available to customers when they need them and Protect taxpayer information and data.
  2. Core Taxpayer Services & Enforcement: Integrate tax processing systems to increase the cost effectiveness of operations, enable real time processing and increase transparency of return status, increase data usability and the use of data analytics to combat fraud.
  3. Modernized IRS Operations: Reduce complexity of the technical environment, leverage data to deliver secure, agile and efficient applications and services, strengthen organizational agility through automation and streamlining processes.
  4. Cybersecurity & Data Protection: Establish trusted and streamlined access to information through identity and access management technologies, proactively identify emerging threats and vulnerabilities through the use of real time intelligence information and analytics, protect taxpayer data and systems via end to end visibility and common platforms.

Will the Business Plan work?

The Business Plan Report states that it is burdensome and expensive to keep the existing IRS IT infrastructure up and running: “The cost to operate the IRS technology infrastructure annually now exceeds $2.2 billion and is expected to exceed $3 billion by FY2026 if current trends continue”.

IRS receives and warehouses amounts of data that are difficult to visualize. Yet, the Plan makes no mention of Big Data analytics and Artificial Intelligence (AI) support. It could be an enhancement to the Plan that could more quickly and efficiently reduce the annual Tax Gap. This would require enough flexibility in the software to permit the quality of possible increasing enhancements to the Plan that advances in AI could bring to the Plan.