After timeout on modernization, IRS eyes new IT plans to ‘align’ with Trump admin
The IRS paused its IT modernization programs six months ago and is in the process of developing “new strategic plans” for the coming years that “align” with Trump administration goals, a watchdog report revealed Tuesday.
According to the Government Accountability Office, IRS IT officials said in March that modernization programs were put on hold pending a reevaluation of “investments and priorities.”
Three months later, the tax agency shared an early draft framework with the GAO that detailed nine tech initiatives it intended to prioritize — pared down from 23 it had pursued dating back to September 2024.
The remaining nine include the development of a unified API, improvements to taxpayer services and attempts to lessen IRS reliance on paper records. The GAO cited a Taxpayer Advocate report to Congress in June that said “to enable this reprioritization, many projects continue to be paused or have been canceled.”
“IRS did not provide the broader strategic vision for the framework, nor implementation details, but said it would continue to evolve the framework through stakeholder engagement and cross-functional coordination,” the watchdog added.
The shifting internal targets within the tax agency come at a time when seemingly notable IT modernization progress had been made. The IRS told the GAO that it had spent roughly $2 billion in fiscal 2024 on 23 modernization programs, most of which were on the right track.
That funding infusion, made possible by the Inflation Reduction Act, was in addition to a $6 billion investment in modernization and $19 billion overall on IT at the tax agency from FY2020 through FY2024, the watchdog stated.
Going forward, the IRS said its new strategic plans for FY2026 to FY2030 will be done in concert with the Treasury Department and replace the current strategic operating plan to “align agency efforts with the current administration’s priorities.”
The Treasury plan will be published by February 2026, while the IRS will release its plan in the summer, the GAO reported.
“As IRS fully develops its new IT modernization framework, it will continue to be important for the agency to (1) align new initiatives with documented agency strategic objectives, and (2) have program plans that address key elements,” the watchdog stated. “In addition, for the 23 programs that IRS was previously pursuing, it is also important that IRS consider the usability of the work performed to date.”
The watchdog has previously delivered 33 recommendations to the IRS on how best to address risks to legacy systems and improve IT modernization plans. Per the new report, 10 of those recommendations have not yet been adopted, though the IRS agreed with the GAO’s findings.
Former leaders at the IRS previously told FedScoop that the Trump administration’s workforce reductions would likely undercut IT modernization efforts and slow the use of artificial intelligence. Nina Olson, the National Taxpayer Advocate from 2001 to 2019, warned Congress in February that the IRS’s “brain drain” would hinder IT modernization.
“Outside contractors cannot bring that internal knowledge of tax administration and the tax system, no matter how talented they are,” she told lawmakers.
