Top IRS FY 2019 Management and Performance Challenges

Each year TIGTA provides a report on IRS top challenges to be included in the Treasury Department’s annual financial report. This year’s report identifies ten areas of “highest vulnerability” effecting the nation’s tax system.   

Below is the list of ten most serious performance and management challenges facing IRS in FY 2019 as identified by TIGTA:

1. Security Over Taxpayer Data and Protection of IRS Resources

It is incumbent upon the IRS to protect taxpayer data from unauthorized access, systems from internal threats, and employees from taxpayer assaults and threats.

2. Implementing the Tax Cuts and Jobs Act and Other Tax Law Changes

In December 2017 the Tax Cuts and Jobs Act was signed into law. IRS estimates that the significant changes that it makes to the tax code “will require creating or revising about 450 forms, publications, and instructions; modifying about 140 IT systems for tax return processing and compliance activities; and responding to 4 million additional telephone calls and taxpayer correspondence.”

3. Identity Theft and Impersonation Fraud

IRS must continually enhance its prevention and detection processes for identity theft and fraudulent tax filings. It is also committed to prosecuting and protecting taxpayers from phone scammers impersonating IRS officials.

4. Providing Quality Taxpayer Service

Improving the customer experience aligns with the President’s Management Agenda and also builds public trust. IRS is committed to providing high quality customer service whether online, in-person, or via telephone.  Resolving inquiries quickly and efficiently also allows IRS to be more effective with its limited resources and staffing.

5. Upgrading Tax Systems and Expanding Online Services

Modernization and implementation for new IT is critical for IRS to perform its mission.  Current systems rely on aged infrastructure and old programming languages. Modernizing legacy systems has been an IRS challenge for a number of years and will likely continue to be a challenge, but is imperative. IRS is also striving to offer more secure digital services for taxpayers.  

6. Improving Tax Reporting and Payment Compliance

IRS strongly promotes voluntary compliance with tax laws and reporting because each percentage decline in the voluntary compliance rate equates a loss of $30B in federal tax revenue. Better use of the State Audit Program, issuance of levies, and oversight of paid tax preparers are effective methods for increasing compliance and IRS enforcement.

7. Reducing Fraudulent Claims and Improper Payments

TIGTA believes that the IRS is significantly understating its estimate of improper payments associated with refundable tax credits in its reports to the OMB and Congress, and that these programs are a prime target for fraud.  This area will remain a high risk area and challenge for IRS and should be addressed.

8. Impact of Global Economy on Tax Administration

The international tax environment is complex and volatile, requiring IRS to collaborate with foreign tax administrations to enforce compliance of U.S. taxpayers and their reporting of foreign assets and offshore accounts.

9. Protecting Taxpayer Rights

Balancing taxpayer rights against tax compliance will continue to be an IRS challenge. 

10. Achieving Program Efficiencies and Cost Savings

As IRS resources continue to decline it must achieve greater cost savings and efficiencies. For example, in the area of effective use of building capacity and underutilized office space, IRS has not maximized the use of “hoteling” for employees.   Additionally, the agency has given performance awards to employees with conduct or outstanding personal tax issues.

As the IRS strives to overcome these challenges, they will need contractor help to conquer some of these hurdles such as IT systems modernization, reducing fraudulent claims and improper payments, improving digital services, and continually enhancing cybersecurity programs. Contractors should look for opportunities to solve IRS problems in these strategic areas.