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1 1 (November 2, 2023)

handle is hein.crs/govenis0001 and id is 1 raw text is: I ~ or nin November 2, 2023 The IRS Business Systems Modernization Program: An Overview The Internal Revenue Service (IRS) collects 95% of the funds needed to operate federal government programs and agencies. In FY2022, the agency collected $4.9 trillion in taxes, processed 263 million tax returns and other forms, and issued $642 billion in refunds. Critical to this output are the IRS's information technology (IT) and business systems. Many have expressed long- standing concerns that those systems are outdated, inefficient, and technically incompatible with accomplishing the main goals of the FY2022-FY2026 IRS strategic plan, such as improving in-person, telephone, and online taxpayer assistance. To varying degrees, the IRS's IT and business systems rely on core legacy computer systems from the 1960s that operate with outdated computer programming languages such as Common Business Oriented Language (COBOL) and Assembly Language Code. The Government Accountability Office (GAO) has stated in several recent reports that legacy systems like the IRS's contribute to security risks, unmet mission needs, staffing concerns, and increased costs. Responding to these concerns, since the late 1990s, the IRS has spent billions of dollars to modernize its IT and business systems through a program called business systems modernization (BSM). The program has focused on developing an infrastructure for undertaking a number of projects related to taxpayer services, such as online accounts and case management. A primary goal of the modernization effort has been to replace the IRS's COBOL- based Individual and Business Master Files, which are still used to process individual and business returns. Origin and Evolution of the BSM Progran The BSM program launched several technology development initiatives between FY1999 and FY2002. Among them was the Customer Account Data Engine (CADE), which was intended to replace the Individual Master File with a faster, more efficient, and more secure data management system. In 2004 congressional testimony, Robert F. Dacey of the GAO described the project as the linchpin modernization project because most IRS information system applications and processes relied on output from the Individual Master File. IRS officials initially estimated that CADE would cost $66 million and be ready to deploy by late 2001. After a string of delivery delays and cost overruns, the IRS stopped working on CADE in 2009, after spending about $400 million on the project. It was used to process about 40 million individual tax returns in FY2009. The IRS began to develop a more advanced version of CADE (CADE 2) in 2010. The initial plan was to develop the technology in three phases (or transition states), with the first phase to be completed by January 2012 and the second phase by January 2014. The GAO has reported that the first phase was completed in January 2014, and that the deadline for the second phase was moved to 2023. According to the latest IRS projection, full deployment may not happen until FY2028 to FY2030. The IRS repackaged and expanded the BSM program when it issued a six-year plan for upgrading its IT systems in April 2019, known as the IRS Integrated Modernization Business Plan (IMBP). The initiative was focused on improving taxpayer services and making enforcement activities more cost-effective through the deployment of certain BSM technologies. These objectives were to be accomplished through a series of projects intended to (1) expand online access to taxpayer information and other IRS services, (2) reduce call-wait and case-resolution times, (3) accelerate tax return and refund processing times, (4) simplify taxpayer identity verification, and (5) eliminate millions of lines of legacy IT code. The IRS initially projected that all IMBP projects would be completed in two phases (FY2019 to FY2021 and FY2022 to FY2024) at a cost of $2.3 billion-$2.7 billion. Funding Congress set up a special account in FY1997 (the Information Technology Investment Account) to facilitate its oversight of BSM program spending and results. From the start of the program in FY1998, BSM funds have been available only for the acquisition, development, and implementation of products and services related to modernization projects. None of the funds may be used for the maintenance and operation of the IRS's existing IT systems. Initial BSM funding was $295 million in FY1998. Since then, funding has fluctuated. It peaked in FY2002 at $406 million and remained above $300 million until FY2005, when it fell to $203 million. Funding then remained below $300 million until FY2012, when it rose to $330 million. BSM appropriations stayed close to $300 million until FY2018, when they dropped to $110 million. Funding steadily rose again until Congress approved no BSM funding in FY2023. Enacted BSM funding has totaled $5.9 billion from FY1998 to FY2023. The then-National Taxpayer Advocate proposed in her FY2018 Report to Congress that the BSM program ought to be funded on a multiyear basis. Her rationale was that such Won I flesedrch Service t Ier~ I live hi a ~ 'e 914 0

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