With ridiculously old IT, where is the IRS spending most of their new $80 BILLION dollar taxpayer funded windfall?

Posted By on April 18, 2023

Legacy Systems at the IRSYup … ENFORCEMENT.

… hundreds of IRS applications have been around for at least 25 years and dozens that have been in existence for more than 50. There were also pieces of software running 15 updates behind the current version. Fifteen! That’s like using a new iPhone with the iOS from the original iPhone … 


So … the IRS needs a serious systems upgrade, but just how much of the latest $80 Billion dollars passed by the last congress is headed towards technology and customer service improvement vs enforcement? Take a look at an article this month from the Taxfoundation.org to find out where all those BILLIONS are going to be spent (as if we don’t really know).

An increase in IRS audit rates should increase tax compliance, but it could simultaneously increase compliance costs thanks to false positives: taxpayers already paying their owed liability nonetheless facing an audit. It would be ideal if the document had a more thorough or binding description of how the agency will protect or respect taxpayer rights while pursuing the (legitimate) goal of reducing the tax gap (i.e., the gap between taxes owed and taxes collected). The document also sticks to the flawed promise of not raising IRS audit rates among taxpayers earning below $400,000. As Josh Zumbrun of The Wall Street Journal noted recently, some returns with reported income below $400,000 may be filed by taxpayers with actual income over $400,000.

Projected IRS spending chart breakdown - Taxfoundation.org April 5, 2023

Additionally, a report from the Government Accountability Office documents that most of the revenue generated from audits over the last decade has come from returns with income below $200,000. The report also shows that in 2021, for each hour spent auditing returns with income below $25,000, the IRS recommended an average additional tax liability of $2,120. And for each hour spent auditing Earned Income Tax Credit returns, the IRS recommended an average additional tax liability of $3,130.


Informational PDF published by the IRS: “Internal Revenue Service Inflation Reduction Act Strategic Operating Plan FY2023-2031”


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