IRS warns of downtime risk as Congress cuts

Shrinking staff and no money for IT upgrades

irs archive photo

IBM data center back in the day. Tape drives, data input technicians, IT types.

Credit: National Archives

Successive budget cuts by Congress are forcing the Internal Revenue Service to delay system modernization and improve its ability to prevent fraud.

The agency has also been hit with a hiring freeze, and appears to be hiring very few people in IT.

A job search at the federal employment site USAJobs.gov, using the word "computer" produced one result for the IRS, but 54 for the Department of Agriculture, 43 for the Commerce Department, and 73 for the Department of Health and Human Services.

The IRS employed 84,189 last year, down from 86,400 in 2013. When attrition is considered, the IRS says it lost between 16,000 and 17,000 employees since 2010.

IRS Commissioner John Koskinen almost sounded desperate in a memo to employees last week. He warned about the possibility of a shutdown for two days before the fiscal year ends in October. It would be a forced furlough for agency workers.

Congress recently approved a $10.9 billion budget, which represents a $346 million cut for the 2015 fiscal year. "But that really amounts to a total reduction of about $600 million when you count another $250 million in mandated costs and inflation," Koskinen said.

The IRS is heavily dependent on technology, and the impact of the budget reduction to IT this year was put at $200 million. It will mean delays in replacing "aging IT systems" and "increasing the risk of downtime," Koskinen said. A new system to protect against ID theft will be delayed, and other IT cost-efficiency efforts will be curbed.

Ray Bjorklund, president of BirchGrove Consulting and a longtime procurement specialist, said "there's a bit of grandstanding and a bit of lamenting" in Koskinen's message, as well as a "proactive defense" if he's called to testify over a failure by the IRS to meet its "statutory responsibilities."

The "IRS has a checkered IT history," Bjorklund said. The IRS modernization program "has been going on for decades," and the agency "still operates large, minimally automated call centers." Its business workflow "is not as smooth as it could be," and its tools for detecting fraud are limited, he said.

In its 2015 budget the IRS wanted $64 million and 547 new hires to handle the increased workload associated with identity theft and refund fraud. The IRS argued that the money would pay for itself by "protecting" nearly $1.5 billion in revenue.

The IRS also wanted another $211 million, and 2,391 employees, to help it improve taxpayer services and return processing. That included money for advance technology to improve filing.

It also asked for $306 million in the 2015 budget to modernize IT systems.

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