TL;DR: IRS sits on top of archaic cobol code and is very expensive to make changes. They're investing $80B over the next 10 years and code redesign is included. I lived in 2 other western countries and will tell you I didn't need to pay $60 tax filing software, nor did I pay $200 CPA every damn year... I just used the software my local government provided AND IT WORKS. https://www.wsj.com/articles/tax-irs-technology-gao-report-1dcdc87 -- t’s one of the country’s most powerful and least popular organizations. It collects trillions of dollars every year from hundreds of millions of Americans. It runs on clunky technology that was outdated several decades ago. And it’s a source of professional obsession for Dave Hinchman. There are few outsiders who understand the inner workings of the Internal Revenue Service better than someone with his curious job: He audits the auditors. Mr. Hinchman is a director of the U.S. Government Accountability Office’s information-technology and cybersecurity team, and he recently published a surprisingly fascinating report about the agency that makes so many people so nuts. He knew the IRS had IT problems. He was still floored by what he found. As it turned out, 33% of the custom-built software applications critical to the agency’s operations counted as “legacy IT,” which means they relied on archaic code or tech so old that it makes the typical member of Congress look young. IRS data shows that 181 out of 776, or about 23%, of its applications are 25 years or older. Source: United States Government Accountability Office analysis of Internal Revenue Service data Mr. Hinchman’s report is a timely reminder of how easy it is to overlook the hidden systems that underpin society. You don’t think about the risk models of financial institutions until you’re scrambling to pull your money during a bank run. You don’t think about faulty airline systems until your flight gets canceled and you’re eating Christmas dinner at the airport Chili’s. And you almost certainly don’t think about the IT constraints of the IRS until your tax refund is months overdue and you can’t get anyone to explain why. But something as basic as information technology has a profound influence on taxpayers, and right now it’s closer in age to the Apollo space program than Apple products. IT is the key to making the experience of interacting with the IRS more tolerable—or at least slightly less miserable. The agency itself agreed with Mr. Hinchman’s findings and recommendations, calling his analysis “a generally accurate description of the agency’s operating environment.” But after fits and starts in recent years, that environment appears to be on the verge of changing. For real this time. Last year, Congress provided the IRS with $80 billion to spend over the next decade. Last week, the IRS unveiled a strategic plan for spending a chunk of that budget on a digital transformation. It calls for rewriting decrepit tech in today’s programming languages and offers a more precise timeline for retiring the databases that nearly qualify for Medicare. “We must take steps to modernize the agency’s technology infrastructure,” said Danny Werfel, the new IRS commissioner, when the plan was released. Other business leaders and company executives could say the same about their own organizations. In both the public and private sectors, projects often fail because of IT deficiencies. We only hear about the bureaucratic inefficiencies and government inadequacies because they get highlighted by watchdogs like Mr. Hinchman. Number of versions behind for Internal Revenue Service’s legacy commercial off-the-shelf software Source: United States Government Accountability Office analysis of Internal Revenue Service data A former U.S. Navy lieutenant, Mr. Hinchman has been a government auditor since 2002, which is long enough to know that people tend to recoil when he tells them what he does for a living. This is the great irony of his job: They assume that he works for the IRS. “The IRS is… unloved,” he said. “For lack of a better word.” (You might have some better words.) After promising that he has nothing to do with their taxes, Mr. Hinchman explains the value of his role at the independent, nonpartisan GAO, where success means identifying points of failure in the federal government. “We literally exist to make sure your tax dollars are being spent as well as possible,” he says. One of the lessons that he’s learned from his work is that anything that can’t be seen is often forgotten about. So when it was time for Mr. Hinchman to poke around the shabby IT of the IRS, he took it upon himself to shine a light on all that stuff he couldn’t initially see. “We’d never taken as close a look as we did,” he said. To understand what he found and why it matters, it helps to know what he was looking for. The GAO routinely audits the IRS, as does the Treasury Inspector General for Tax Administration, but Mr. Hinchman had a narrow mandate for this oversight report: determine how much of the IT was obsolete and describe the agency’s existing plans to replace it. IT complications usually come down to having too much information or not enough technology. The IRS suffers from both. The agency doesn’t function like a bank or credit-card company, where the person you call on a toll-free line instantly pulls up your account. It can’t. There is no single point of access for every specific piece of data about individual taxpayers. Even the “Where’s My Refund” tracker has a hard time answering that very question, since the disparate parts of the IRS’s patchwork system are incapable of working together. “There are 60 different case-management systems throughout the IRS,” said Nina Olson, the former national taxpayer advocate, “and they don’t all talk to one another.” It’s difficult to build on a creaky tech foundation. And the closer that Mr. Hinchman looked, the weaker those crumbling structures appeared. There were hundreds of IRS applications that 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. The IRS tends to be risk-averse for cybersecurity reasons, but falling behind on tech is a risk of its own. Even the most important application used by the IRS requires employees to be fluent in a programming language no longer taught in schools. In fact, there are likely more college graduates these days who can read Latin than write in Cobol. Of course, computer-science majors aren’t going to work in Washington when their talents command huge sums of money across Wall Street and Silicon Valley. But fewer people every year have the niche expertise to keep the agency’s essential systems working properly. That imperils the IRS’s ability to perform its core business: collecting money so the government can pay the bills. The price of tech neglect is not just higher financial costs. It’s more torment for taxpayers. It’s no less painful for the employees sifting through paper forms, circling numbers with red pens and dealing with these inefficiencies every day. The agency has pledged change for longer than some of them have been alive. They are still waiting. more science of success There is no such thing as an overnight radical transformation, least of all in the federal government, but even marginal improvements would make a meaningful difference. At the top of the list of taxpayer complaints is getting “incomprehensible letters,” said Ms. Olson, and it’s exactly the type of problem that would benefit from a piecemeal approach to change. It shouldn’t require a complete overhaul of the entire system to send a letter that makes sense. But getting the biggest stuff right is what really matters, and that’s the focus of the IRS’s latest strategic plan. Mr. Hinchman was delighted to read it. He also said he’s psyched to dig into the IT nitty-gritty. Then he told me something else that makes him unlike just about everybody in the country. “We just started our latest audit,” he said, “and I’m looking forward to engaging with the IRS.” Write to Ben Cohen at ben.cohen@wsj.com
The need for tax software / CPAs is because the tax code is so bloody complicated (even compared to other Western countries). The IRS modernization is a somewhat separate problem.
fair, they can modernize the internal code without benefiting the average tax filer. But they should. The other country I lived also has a complicated tax code, but no Average Joe needs a CPA or a separate software
$80B to upgrade obsolete COBOL code?
OPM - other people's money
The $80B is not just for code rewrite https://thehill.com/business/3937781-heres-how-the-irs-will-spend-its-80-billion-funding-boost
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They will hire a big company like IBM who will burn through billions of tax payer dollars for 10 years, only to admit failure. Then, five years later, they will rehire IBM, and fail again. I hope I'm wrong.
Life pro tip: learn how to file taxes by yourself. Not only it’d save you 200$/year, but also would allow you to make more informed money management decisions. Tax software is also not required - you can use Free File Tax forms online
Once the IRS gets AI trained properly on their enormous e-filed database their cost of auditing will be essentially zero. Scouring financial data to spot inconsistencies and fraudulent patterns should be much easier for AI than humans.
So will they be shelling out higher offers to attract tech talent then?
maybe? they need some high caliber devs to redo the whole shit. I doubt they'll pay anywhere close to FAANG salaries though.
That pension and strict 9-5 sure does sound tempting though doesn't it?