August 19, 2024 The IRS is facing significant challenges due to its aging technology infrastructure, which heavily relies on systems over 60 years old to manage tax returns and personal data. Despite substantial investments in updates, a recent audit by the Treasury Inspector General for Tax Administration (TIGTA) found that the agency lacks a clear strategy for modernizing these legacy systems, leading to increased risks of delays, security vulnerabilities, and escalating IT costs.

The situation has been further complicated by the closure of the IRS’s Technology Retirement Office, which was originally responsible for overseeing the decommissioning of outdated systems. TIGTA’s report criticizes this decision, highlighting that the lack of a dedicated office for managing legacy systems has left the IRS without a clear modernization strategy. Although the IRS plans to integrate these responsibilities into its Transformation and Strategy Office by September 2025, there are concerns about the agency’s commitment to effectively addressing its technological challenges.

The audit also revealed that the IRS has made limited progress in retiring its legacy systems, with only two out of 334 identified systems having concrete decommissioning plans. Many of these systems, some of which date back to the 1960s, are critical to daily operations but are based on obsolete technologies like COBOL. The IRS’s struggle to modernize not only increases operational costs, which have risen by 35% since 2019, but also exacerbates staffing challenges, as the outdated technology deters new talent from joining the agency. This situation poses a significant risk to taxpayers, who rely on the IRS for accurate and timely tax processing.

Editors note: While the IRS is the latest in a list of government agencies or departments, this is a critical problem in governments across North America and constitutes a significant potential risk to both quality and potentially in reliability of government systems.