Faced with the agency’s observation and mitigation of more than 1.4 billion cyberattacks annually, the new IRS Strategic Plan for fiscal years 2022-2026 emphasizes the importance of secure digital transformation and protecting critical data while increasing efficiencies for taxpayers and the agency.
“The IRS remains dedicated to improving service to taxpayers, maintaining the integrity of our tax system, empowering our workforce, supporting our partners and modernizing our systems,” IRS Commissioner Chuck Rettig said at the outset of the strategic plan. “Working toward these strategic goals with consistent multi-year funding will help us better achieve our mission and our long-term vision and deliver on the promise of a new IRS that will take an innovative approach to the future of tax administration to better serve all taxpayers.”
The IRS processed 269 million federal tax returns and forms in fiscal year 2021 and disbursed 492 million economic relief payments in FY 2020-21.
The strategic goals for FY 2022–2026 are focused on four areas, according to the document: Service, to provide quality and accessible services to enhance the taxpayer experience; enforcement, to enforce the tax law fairly and efficiently to increase voluntary compliance and narrow the tax gap; people, fostering an inclusive, diverse and well-equipped workforce and strengthening relationships with external partners; and transformation, to make IRS operations more resilient, agile and responsive to improve the taxpayer experience and narrow the tax gap.
“Our transformation journey includes organizational redesign, modernization efforts, technological innovation and integrated data management capabilities,” the plan states. “…A more efficient, secure and adaptable organization informed by data insights can drive higher quality service, improve enforcement efforts and better enable our employees and partners.”
The plan highlights the challenge of fortifying cybersecurity and data protection, as “a rise in cyberthreats and ransomware attacks in recent years have plagued both government and commercial entities, ranging from public infrastructure impairments to personal data loss.”
“The IRS has a collection of personal and financial data that it must keep secure and defend against complex cyberattacks,” the plan says. “The IRS observes and mitigates more than 1.4 billion cyberattacks annually, including denial-of-service attacks, intrusion attempts, probes or scans and other unauthorized connectivity attempts. Technological and security investments help ensure that the IRS maintains a reputation for delivering high-quality taxpayer experience while safeguarding taxpayer data, which can help with achieving digital self-service adoption targets.”
Another stated challenge is adapting to evolving technology and expectations. “The IRS must be quick to respond to a rapidly evolving environment where taxpayer and employee expectations and legislative and regulatory directions shift. We have a responsibility as a large, high-impact service provider to modernize and operate in response to these changes in a sustainable and cost-effective manner,” the strategic plan continues. “Taxpayer-facing and internal digital transformation initiatives help the IRS quickly meet these shifting expectations and yield a significant return on investment compared to existing technology and processes. Successful adaptation also requires an organizational culture that emphasizes agility to take on new challenges, such as the IRS’s increasing role in the administration of taxpayer benefits. Consistent multi-year funding helps the IRS respond to continued and rapid change in expectations and deliver in a more sustainable manner.”
The plan’s first goal in digital transformation is to “reorganize our operational structure to provide an exceptional taxpayer experience by increasing collaboration and maximizing efficiencies.”
“The IRS will redesign its structure to increase collaboration across business units, ensure consistency of service in each interaction and streamline operations to truly operate as One IRS,” the plan states. “This new organization and implementation of the recommendations within the TFA Report to Congress will enable us to better deliver our mission-critical services, improve the taxpayer and employee experience and continue being cost-conscious stewards of taxpayer funds.”
The second objective is to “modernize technology infrastructure and develop secure and sustainable solutions to improve tax administration.”
“Part of the IRS’s transformation is new, sustainable investment alongside the retirement of legacy systems to improve service and enforcement efforts,” the plan says. “The IRS recognizes that the rate of technological change is swift, and we strive to readily modernize in the face of technological advancements and emerging threats from bad actors.”
This includes strengthening organizational resilience by upgrading and decommissioning systems where appropriate, enhancing operational agility by “adopting advanced technologies and leveraging common platforms across business units,” and accelerating cybersecurity modernization efforts “to protect high-value assets from malicious cyber threats and improve identity and access management for trusted users.”
The third objective is to “increase digitalization to streamline processes, improve access to digital data and lessen our environmental impact.”
“We aim to modernize sustainably by reducing paper reliance, investing in technologies that support climate-friendly operations, offering taxpayers digital access and training employees on digital tools and procedures,” IRS says. “These investments are at the heart of our Digitalization Strategy and part of governmentwide efforts to modernize services and prioritize operations to combat the harmful effects of climate change.”
This includes reducing incoming paper volume and minimizing internal paper-producing processes, converting paper-based information into a digital format and increasing access to digital data, and preparing and training employees to manage and use digital data more effectively.
The final objective in the agency’s transformation plan is to “improve data management and application of analytical capabilities to drive evidence-based decisions.”
“It is crucial to enhance the taxpayer experience by prioritizing data accessibility and analytical skill development to improve how we evaluate compliance,” the agency says. “Our data governance strategy encourages data-driven decision-making and data integration between the IRS and its partners to proactively improve and respond to service and enforcement challenges.”
This goal includes developing a secure data management strategy and a service-wide understanding of operational data to promote data literacy, increasing training and access to analytical capabilities, and improving third-party data sharing and internal data utilization to enhance operational decision-making.
IRS said its progress and success in meeting these transformation goals will be measured in part by the percentage of IT hardware in operation past its useful life and the percent of high-volume notices that can be viewed digitally by IRS customers.
“The IRS has a low appetite for transformation initiatives where organizational synergies and emerging technologies are not developed, there isn’t a clear benefit to IRS employees and/or the taxpayer experience or where costs outweigh benefits,” the agency said. “We are open to exploring innovations that improve processes and lead to secure, sustainable and resilient solutions.”