In a development following a hiatus in modernization efforts, the Internal Revenue Service (IRS) is contemplating fresh information technology strategies to harmonize with the Trump administration.
IRS Pauses IT Modernization Programs, Awaits New Strategic Plan
The Internal Revenue Service (IRS) has paused its IT modernization programs for the past six months, according to a report by the Government Accountability Office (GAO) released on Tuesday. The move comes as the IRS develops new strategic plans for the coming years, aligning with the Trump administration's goals.
The IRS's new strategic plan for the fiscal years 2026 to 2030 focuses on enhancing cybersecurity, upgrading legacy systems, and improving taxpayer services, closely aligning with the Treasury Department's priorities for financial transparency and secure digital infrastructure.
Nina Olson, the National Taxpayer Advocate from 2001 to 2019, had previously warned Congress in February that the IRS's "brain drain" could hinder IT modernization. The watchdog has delivered 33 recommendations to the IRS on how to address risks to legacy systems and improve IT modernization plans, 10 of which have not yet been adopted.
The IRS has agreed with the GAO's findings regarding the unadopted recommendations. The agency shared an early draft framework with the GAO that detailed nine tech initiatives it intends to prioritize, down from 23 initially. These initiatives include the development of a unified API, improvements to taxpayer services, and attempts to lessen IRS reliance on paper records.
Outside contractors cannot bring the internal knowledge of tax administration and the tax system, according to Nina Olson. Former leaders at the IRS have expressed concerns that the Trump administration's workforce reductions could undercut IT modernization efforts and slow the use of artificial intelligence.
The GAO has emphasized the importance of aligning new IT initiatives with documented strategic objectives and having program plans that address key elements. The GAO also highlighted the importance of considering the usability of the work performed to date for the 23 programs that the IRS was previously pursuing.
The IRS spent approximately $2 billion in fiscal 2024 on 23 modernization programs, with additional investments totaling $6 billion for modernization and $19 billion overall on IT from FY2020 through FY2024. The Treasury plan will be published by February 2026, while the IRS will release its plan in the summer.
The IRS's new strategic plan will replace the current strategic operating plan to align with the current administration's priorities. The plan will be developed in collaboration with the Treasury Department. The IRS did not provide a broader strategic vision for the framework, nor implementation details, but said it would continue to evolve the framework through stakeholder engagement and cross-functional coordination.
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