The Cut Inflation Act passing through Congress contains a massive injection of funds for the Internal Revenue Service (IRS), including $4.8 billion that the bill’s sponsors hope will help rebuild the outdated agency technology systems.
Although public attention has focused on the provisions of the Climate and Energy Act, the legislation would allocate $80 billion to the IRS over 10 years. The $4.8 billion — or $475 million a year over ten years — for “enterprise systems modernization” would be a financial boost to the agency’s three-year modernization plan. The modernization plan received $275 million of the budget for the 2022 financial year.
The tax too received a one-time $1 billion round of funding for IT modernization under the American Rescue Plan Act in 2021.
“The two main components of the proposal would rebuild the IRS and impose a minimum corporate tax of 15% to ensure that the wealthiest Americans and businesses cannot avoid paying their fair share of taxes,” they said. Senate Democrats in a statement. summary provisions from the IRS, which would also provide unspecified amounts to boost the agency’s use of technology in law enforcement and operations support. “…The IRS needs the resources to meet this challenge,” the bill’s supporters said.
The Cut Inflation Act, a slimmed-down version of what had been President Biden’s “Build Back Better” plan, passed the Senate on August 7 in the face of unified Republican opposition and is now being voted on. review in the House. It would inject nearly $370 billion into climate and energy programs with the goal of reducing carbon emissions by about 40% by 2030, while allowing Medicare to negotiate prescription drug prices.
Republicans also expressed concerns about the IRS bill’s provisions, arguing that it would give the agency too much power. But Democrats say the IRS urgently needs increased funding to, among other things, modernize its computer systems and better guard against cyberattacks.
These systems date back to the 1960s and are often two or more versions behind the latest software, members of the House Oversight and Reform Committee’s government operations subcommittee said during a hearing in April. Subcommittee chair Gerry Connolly, D-Va., called on the agency to modernize its systems and invest in scanning technology to improve efficiency.
“Years of computer system neglect and a failure to modernize have left the IRS struggling with an operation heavily reliant on outdated programming languages,” he told the hearing.
The Government Accountability Office (GAO) said the IRS also needed to improve its cybersecurity practices or taxpayers would be vulnerable to data breaches. As of May 2022, the IRS had 268 open GAO recommendations dating back years, some related to cybersecurity and systems modernization.
In 2019, the IRS released a multi-year report modernization plan which called for steps such as strengthening cybersecurity protections and using “innovative technologies and processes, such as cloud, Agile, DevOps, application programming interfaces, robotic process automation, and next-generation infrastructure to reduce cost and manual effort.”
To facilitate this effort, the Cut Inflation Act would provide $4,750,700,000 over a decade for modernizing business systems, in addition to what the agency gets from the regular annual appropriations process.
The text of the bill is short on specifics, stating only that the funding is for “necessary expenditures…including the development of callback technology and other technologies to provide more personalized customer service, but not ‘not including the operation and maintenance of legacy systems’.
Taxpayer advocacy groups have called the IRS to expand its use of callback technology — an automated service that allows callers to receive a callback instead of waiting in line — saying IRS representatives are hard to reach.
Additionally, the text of the bill indicates that the $45.6 billion the IRS will receive over 10 years for law enforcement covers “investigative technology” to aid in criminal investigations, including “digital asset monitoring and compliance activities”.
It also says the $25.3 billion for operations support includes necessary expenses such as telecommunications and “information technology.” No specific amount is indicated.