IRS Commissioner calls IT modernization ‘virtually impossible’ with start-stop funding

Internal Revenue Service (IRS) Commissioner Charles Rettig testifies before the House Ways and Means Oversight Subcommittee on March 17, 2022 in Washington, DC. The subcommittee held a hearing on the 2022 tax filing season. (Photo by Kevin Dietsch/Getty Images)

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The commissioner of the Internal Revenue Service has criticized the start-stop nature of IT funding provided to the agency by Congress, saying it is “virtually impossible” for any organization to develop a cohesive technology plan with such funding uncertainty.

Speaking Thursday at a hearing of the Subcommittee on Government Operations of the House Committee on Oversight and Reform, Charles Rettig hit back following criticism from lawmakers over the backlog of more than 5 million unprocessed paper tax returns that remains at the agency.

“It is virtually impossible for any agency, any organization — any private sector organization — to build a robust, meaningful technology infrastructure with the start-stop [funding] going on like that,” said the tax agency leader.

The commissioner cited uncertainty created by the numerous continuing resolutions that since 2001 have been signed by lawmakers to provide federal government departments with interim funding and the delay in passing annual appropriations legislation.

For the fiscal year 2022, the appropriations act for agencies was not signed into law until March 15. Agencies require appropriations legislation to enter into contracts necessary to carry out their statutory duties.

Rettig’s remarks came during a hearing held to address the continuing returns backlog and staffing shortages currently crippling the agency.

According to IRS officials, the backlog over the last two years has been exacerbated by a toxic combination of COVID-19 office closures, additional work from administering financial relief packages and responding to changes in tax legislation mid-filing season.

Speaking alongside Rettig at the hearing, lawmakers from both sides of the house gave analyses of the IRS’s woes.

Subcommittee Chair Rep. Gerry Connolly, D-Va., ascribed IRS’s difficulties to years of underinvestment in technology systems, including a failure to automate some of the most basic tax administration measures.

“Years of IT system neglect and a failure to modernize have left the IRS saddled with an operation highly dependent on obsolete programming languages like COBAL, visual and assembly language code … most of these languages are not even taught in school anymore,” he said.

In response to these concerns, Connolly earlier this month introduced a new piece of legislation, co-sponsored by Rep. Katie Porter, D-Calif., that seeks to mandate the addition of bar codes to all tax forms. According to Connelly, this would allow them to be processed electronically rather than manually transcribed by hand, as is currently the case.

At the hearing Rep. Jody Hice, R-Ga., said that additional funding was not the only panacea for the department’s problems, and highlighted multiple failed attempts to update its aging IT infrastructure.

“More funding alone is far, far, far too simplistic an answer,” Hice said. “It assumes that all the money will be spent properly and that throwing more money at the IRS is somehow going to solve all the problems.”

In response to the hearing, a spokesperson for the Professional Managers Association said: “ We appreciate the Democrats focus on increasing IRS appropriations to ensure the Service has the personnel and resources to conduct its important mission. We also understand Republican frustration about the lack of long term planning at the IRS, an issue we feel is exacerbated by the breakdown of the appropriations process.” 

They added: “However, we are also cautious about issues that have become red herrings in these hearings – such as the focus on 2D bar code scanning. While it is true this technology has value, it is also only one part of a larger problem with technology and funding.”

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Congress, COVID-19, House Oversight and Reform Committee, IRS, Professional Managers Association
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