IRS embarks on ‘absolutely critical’ refresh of legacy HR systems

The IRS is managing hundreds of legacy HR IT systems with thousands of workflows, but deferred upgrading these systems when the agency faced budget cuts.

The IRS is launching a multi-year effort to overhaul its legacy human resources IT systems — a move that top officials say will improve workforce planning and employee retention.

The agency is working with the Treasury Department’s chief information officer to modernize its HR systems. Among the improvements, the IRS and Treasury are looking to automate some manual HR processes and make greater use of Treasury’s shared service offerings.

IRS Commissioner Danny Werfel told reporters the multi-year modernization effort will improve productivity and “help us retain a strong, highly qualified workforce needed to deliver increasingly better service for taxpayers.”

“It is absolutely critical infrastructure. We can’t maintain a successful personnel and workforce environment strategy without a modern HR platform,” Werfel said in a call. “This is the kind of stuff that happens under the hood in organizations like the IRS that are absolutely critical. And when you don’t have the right funding levels, these things fall behind and you end up wasting a lot of time doing manual processing and not having the right data.”

The IRS expects these HR technology improvements will benefit hiring, workforce planning, and labor relations with unions.

The IRS is managing hundreds of legacy HR IT systems with thousands of workflows, but deferred upgrading these systems when the agency faced budget cuts.

The agency is funding these improvements by tapping into tens of billions of dollars it received in the Inflation Reduction Act to rebuild its workforce and modernize some of the oldest IT systems still running in the federal government.

The IRS is also doubling its network capacity at many of its worksites “to ensure employees are able to quickly access the systems they need to do their jobs.”

The agency expects to complete its network expansion at all its sites ahead of next year’s filing season.

IRS sees progress in going paperless

The IRS is also taking major strides to wean itself off paper. Its Document Upload Tool is giving taxpayers an online option to submit required documents to the IRS when they get a notice from the tax agency in the mail.

Taxpayers no longer have to snail-mail their documents, and they can expect a faster response from the agency. The IRS launched the Document Upload Tool in 2021, and recently received its millionth submission from the tool.

The IRS estimates more than 94% of individual taxpayers no longer need to send mail to the agency, and that 125 million pieces of correspondence can be submitted digitally each year.

“We are working to enable a future in which all taxpayers can meet their responsibilities in a digital manner, if they prefer,” Werfel said. “When the journey is complete, taxpayers will be able to securely file all documents and respond to all notices online and secure access and download their data and account history.”

The IRS, by tapping into Inflation Reduction Act funding, is replacing out-of-date scanning equipment and mail sorting equipment. The agency replaced scanning equipment that’s older than five years old, and installed mail-sorting machines at six of its highest-volume facilities.

As of June 30, the IRS scanned more than 2 million pieces of paper since the start of its digitalization effort.

“These updates allow a more streamlined process of opening, sorting, and scanning mail,” Werfel said, adding that the IRS is scanning “virtually all” paper-filed tax returns and information returns once the agency receives them in the mail.

Digital-first, mobile-friendly services

The IRS is also making more of its most commonly used forms available online and in a mobile-friendly format.

The agency now has a total of 30 forms available for mobile use, allowing taxpayers to fill out common non-tax forms on cell phones and tablet devices and digitally submit them. Taxpayers have submitted more than 72,000 digital forms since September 2023.

“By doing things like providing digital forms, making payments easier, and continuing work to reduce paper-based processes, we are making long-overdue improvements at the IRS,” Werfel said. “We are reversing situations that have long hampered the IRS and frustrated taxpayers and the tax community.”

The IRS is also rolling out new features that allow taxpayers to resolve their tax issues online through their individual online accounts.

Taxpayers can now check the status of their tax refund from their online accounts, and request an updated identity protection PIN from their smartphone or tablet.

Taxpayers under audit can also view information about the status of their audit within their online account without having to call the agency.

“Everyone has an online account. The question is, have they activated it? So, everyone has that opportunity,” Werfel said.

As more taxpayers go online to resolve their tax issues, the agency expects the shift will disrupt online IRS impersonation scams.

“The online account will increasingly be a trusted single source of information for taxpayers to go to, to help figure out whether the IRS is really trying to reach them or not,” Werfel said.

Short wait times for ID theft ‘top priority’

The IRS sees other areas in need of improvement.

The National Taxpayer Advocate wrote in a recent post that identity theft victims are waiting nearly two years to receive their tax refunds.

Werfel said improving wait times for identity theft are “an absolute top priority,” and that the agency is working to reduce call wait times for identity theft victims.

The IRS focused on answering more calls on its main phone line, which accounts for 85% of its total call volume.

“It’s a smart decision to make sure that, if you have 85% of the traffic coming through that phone line, let’s get that in working order,” Werfel said. “But we have other phone lines, and other areas that we’re still working to make investments in. And one of the biggest priorities we have going forward is identity theft victim support.”

For next year’s filing season, Werfel said the IRS is working on improving live assistance through improved efficiency at call centers. The agency, he added, will continue to wean itself off paper processes and increase staffing at Taxpayer Assistance Centers to provide in-person help to the public.

“For this progress to continue, we must maintain a reliable, consistent annual appropriations for our agency, as well as keeping Inflation Reduction Act funding intact,” Werfel said. “With adequate resources, we will be able to continue transforming the agency during 2024, during the 2025 filing season and in the years to come.”

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