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Fiscal Year 2027

Congressional Budget

Justification & Annual

Performance Report and Plan

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FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Table of Contents

Message From the Chief Executive Officer �� ii

Section I – Budget Request �� 1

A – Mission Statement �� 1

B – Summary of the Request �� 1

1.1 – Appropriations Detail Table �� 5

1.1.1 – Inflation Reduction Act (IRA) Appropriations Detail Table �� 6

1.2 – Budget Adjustments Table �� 7

C – Base Adjustment and Program Changes Description �� 7

1.3 – Object Classification (Schedule O) Obligations Table �� 9

D – Appropriations Language and Explanation of Changes �� 10

Section II – Annual Performance Plan and Report �� 15

A – Budget and Performance �� 15

2.1 – Budget Activities �� 15

2.2 – Performance Measures �� 18

2.3 – Performance Measure Description �� 19

2.4 – Performance Summary �� 20

B – Changes in Performance Measures �� 23

Section III – Additional Information �� 25

A – Summary of Capital Investments �� 25

B – Summary of Facilities Improvements and Equipment �� 32

Section IV – Additional Information �� 33

4.1 – Summary of IRS FY 2027 Discretionary Budget Request �� 33

4.2 – Summary of IRS FY 2027 Total Resources Budget Request �� 34

4.3 – Summary of IRS FY 2027 Total Resources FTE �� 34

Table of Contents

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Message From the Chief Executive Officer

On behalf of the dedicated employees of the Internal Revenue Service, I

am pleased to present the IRS Fiscal Year (FY) 2027 Congressional

Justification. This request describes how the IRS will responsibly

steward taxpayer resources to administer the nation’s tax laws with

integrity, efficiency, and a strong commitment to service, while

supporting the Administration’s pro-growth economic agenda.

The tax relief enacted through the One Big Beautiful Bill Act remains a

cornerstone of that agenda. The IRS plays a central role in ensuring that

its historic benefits—including No Tax on Tips, No Tax on Overtime, the

new deduction for car loan interest, and expanded deductions for

seniors and families—are delivered in a timely manner and as intended.

Our workforce continues to implement these provisions while maintaining reliable taxpayer service

and safeguarding federal revenue.

The changes made by the One Big Beautiful Bill Act set the stage for an historic filing season for

taxpayers in 2026, with an estimated tax benefit for individuals of $220 billion. An important part of

this benefit will be an increase in refunds for individual taxpayers—we expect the highest refunds in

recent history—which means real money landing in the pockets of working families.

As we look toward FY 2027, the IRS is focused on three strategic priorities:

• Data-Driven Enforcement

The IRS is modernizing enforcement through expanded use of artificial intelligence, advanced

analytics, and improved data integration. These tools allow us to more precisely identify

high-risk noncompliance and fraud, deter identity theft, and focus enforcement resources on

higher-value cases, improving fairness while minimizing burden on compliant taxpayers.

• Simplified, Digital-First Taxpayer Experience

We are transforming how taxpayers interact with the IRS by expanding secure online services

that allow taxpayers to manage their affairs with greater ease and transparency. At the same

time, we remain committed to ensuring taxpayers receive high-quality assistance by phone

and in person for those who need or prefer it. Our FY 2027 investments balance digital

innovation with accessible, personalized service.

• A Renewed Commitment to Taxpayer Privacy and Security

Protecting taxpayer information is fundamental to public trust. The IRS continues to

strengthen cybersecurity defenses, modernize security infrastructure, and enforce rigorous

data protection protocols to ensure taxpayer data remains secure.

Message From the Chief Executive Officer

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

The IRS supports the U.S. economy by collecting revenues that fund essential government

programs, including national defense, infrastructure, healthcare, Social Security, and other critical

services, while at the same time ensuring improper and fraudulent tax payments and abusive tax

practices are reduced and mitigated. In recent years, the IRS has also served as a key partner in

advancing a more efficient, responsive, and accountable federal government.

Our recent performance demonstrates the results of disciplined management and strategic

investment. In FY 2025, the IRS collected more than $5.3 trillion in revenue, processed over 271

million returns, and issued approximately 113 million refunds totaling nearly $358 billion. We

delivered one of the most successful filing seasons in years, with telephone assistors answering 87

percent of calls received on our main telephone lines with an average wait time of just three minutes.

The IRS achieved these gains by spending smarter and through operational discipline. In FY 2025,

the IRS eliminated approximately $2 billion in planned information technology spending primarily

through contract renegotiations and reprioritizing end-user license agreements. We are also

reducing costly paper-based processes through automation, policy changes, and process redesign.

The FY 2027 budget request and IRS’ supplemental funding builds on this progress by supporting

targeted technology modernization, operational efficiency, and workforce investments. In addition

to discretionary funding, the IRS depends on supplementary funding sources to sustain key tax law

enforcement activities and maintain service to taxpayers. Continued collaboration with Congress

will be essential to ensure IRS operations evolve in ways that taxpayers deserve. The IRS is at a

pivotal moment—transforming operations, embracing innovation, and strengthening accountability.

With the support of Congress, we will continue to build an IRS that works better for taxpayers,

supports economic growth, and ensures the trust of the American people.

Sincerely,

Frank J. Bisignano

Chief Executive Officer of Internal Revenue

Message From the Chief Executive Officer

iii

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FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Section I – Budget Request

A – Mission Statement

Provide America’s taxpayers top-quality service by helping them understand and meet their tax

responsibilities and enforce the law with integrity and fairness to all.

B – Summary of the Request

The IRS is responsible for administering the Federal Government’s tax system and meeting the

needs of U.S. taxpayers by helping them understand their tax responsibilities and enforcing the law

with integrity and fairness. Operations at the IRS, as required by law, include collection of individual

and corporate taxes, examination of returns, taxpayer assistance, oversight of tax-exempt organizations, administering multiple refundable tax credits, and other specialized programs.

In FY 2025, the IRS collected about $5.3 trillion in taxes from 271 million returns, which represents a

vast majority of the revenue that supports operations of the federal government. Due to the

complexity of the U.S. tax code, core responsibilities of the IRS include making it easier for

taxpayers to understand and meet their tax obligations.

Some Key Tax Statistics in FY 2025 Include:

271M

113M

$3,173

$5.3T

FEDERAL

TAX RETURNS

AND FORMS

PROCESSED

TOTAL

INDIVIDUAL

REFUNDS

COLLECTED IN

GROSS TAXES

$93.8B

ENFORCEMENT

REVENUE

COLLECTED

AVERAGE

INDIVIDUAL

REFUND

Note: These statistics are from October 1, 2024, through September 30, 2025. The Average

Individual Refund amount includes refunds issued in FY 2025 for all tax years.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

FY 2027 Budget Request and Priorities

The FY 2027 Budget requests $9.8 billion from Congress, a decrease in funding of $1.4 billion or 12.2

percent from the FY 2026 Enacted level of $11.2 billion. When including other resources, the total

request of $15.9 billion represents a change of -2.5 percent from FY 2026.

The FY 2027 Congressional Justification represents a comprehensive assessment of the IRS’s

financial condition and underscores its stewardship of public resources in service of the American

people. Central to the Administration’s economic agenda is the implementation of the One Big

Beautiful Bill Act (OB3) and Working Families Tax Cuts, which deliver historic tax relief measures

such as No Tax on Tips, No Tax on Overtime, and expanded deductions for seniors and families.

Throughout FY 2025, IRS employees focused on ensuring these benefits were delivered accurately,

efficiently, and on time. To support this mission, the IRS aligned its efforts around three strategic

priorities: data-driven enforcement, a simplified digital-first taxpayer experience, and a renewed

commitment to taxpayer privacy.

Through modernized systems and advanced analytics, including artificial intelligence, the IRS

strengthened its ability to identify fraud, reduce non-compliance, and protect taxpayers from

identity theft, allowing enforcement staff to focus on higher-value work. At the same time, the IRS

significantly improved taxpayer service by expanding online account capabilities and enhancing

guidance and resources, while maintaining strong phone and in-person support. These efforts

contributed to exceptional operational results in FY 2025, including the collection of more than $5.3

trillion in revenue, the processing of over 271 million returns and forms, and the issuance of approximately 113 million refunds totaling nearly $358 billion. Service improvements culminated in the most

successful filing season in years, with telephone assistors answering 87 percent of calls and an

average wait time of just three minutes.

These achievements were realized through smarter spending and operational discipline. An

all-inclusive review of the IRS technology portfolio eliminated roughly $2 billion in planned, mostly

one-time, IT spending, reduced inefficiencies tied to outdated paper processes, and redirected

resources toward modernization. The IRS also maintained strong financial accountability, earning an

unmodified audit opinion for the 26th consecutive year and demonstrating reliable internal controls

over financial reporting. As the IRS continues its transformation, it remains focused on advancing

technology, strengthening its workforce, and fostering a culture of efficiency, integrity, and accountability—laying the foundation for a modern IRS that Americans can trust to fulfill its mission. IRS is

also modernizing how we measure customer service by sunsetting our legacy Customer Service

Representative Level of Service measure and replacing it with new enterprise metrics to reflect new

technologies and service channels.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Reducing Interest Costs Through Investment in Taxpayer Services

Unresolved U.S. federal tax returns can result in interest payments on delayed refunds—costs borne

directly by the U.S. Treasury. In FY 2025, these payments totaled $16.82 billion, up from $3.54 billion

in FY 2022.

Adequate funding for the Taxpayer Services account is necessary to support timely return

processing and reduce inventory levels, particularly older returns that drive interest accrual.

Lower and more stable inventory levels help limit the growth of interest costs over time. Accordingly,

reducing interest costs requires both sustained Taxpayer Services funding and targeted operational

improvements. The IRS is focused on reducing existing inventory, prioritizing older returns,

improving processing times, and preventing future backlogs.

An Ounce of Prevention is Worth a Pound of Cure

In FY 2024, the IRS estimated an overall improper payment rate of 21.9 percent and estimated

improper payments totaling $21.4 billion for the Additional Child Tax Credit, American Opportunity

Tax Credit, Earned Income Tax Credit, and Net Premium Tax Credit. Besides ensuring taxpayer

compliance with the Internal Revenue Code, funding to strengthen enforcement, data analytics and

matching, and outreaching and education reduces improper payments which are currently double

the total of this budget request. Adequate IRS Enforcement funding ensures taxpayer compliance

and limits wasteful overpayments of taxpayer-funded credits.

IRS Appropriations and Activities

Taxpayer Services

• Pre-Filing Taxpayer Assistance and Education funds expenses to assist with tax form

preparation, including tax law interpretation, publication, production, and advocate services.

• Filing and Account Services funds programs that provide filing and account services to

taxpayers, process paper and electronically submitted tax returns, issue refunds, and

maintain taxpayer accounts.

Enforcement

• Investigations funds the Criminal Investigative (IRS-CI) programs that investigate potential

criminal and civil violations of tax laws, enforce criminal statutes relating to violations of tax

laws and other financial crimes, and recommend prosecution as warranted.

• Examinations and Collections funds programs that enforce the tax laws and increase

compliance through Examination and Collection programs, which ensure proper payment

and tax reporting.

• Regulatory funds the development of published IRS guidance materials; interpretation of tax

laws; internal advice to IRS on general non-tax legal issues; enforcement of regulatory rules,

laws, and approved business practices; and support for taxpayers in the areas of pre-filing

agreements, determination letters, and advance pricing agreements.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Technology and Operations Support

• Infrastructure funds administrative services related to space and housing, rent and space

alterations, building services, maintenance, guard services, security countermeasures and

non-IT equipment.

• Shared Services and Support funds policy management, administration, IRS-wide research

support; strategic planning; communications and liaison; protection of sensitive information

and the privacy of taxpayers and employees; finance, human resources, printing and

postage; business systems planning; and procurement.

• Information Services funds staffing, equipment, and related costs to manage, develop,

modernize, enhance, maintain, and operate the information systems supporting IRS critical

business operations and tax administration programs.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

1.1 – Appropriations Detail Table

Dollars in Thousands

FY 2025

Operating Plan1

Appropriated Resources

FY 2026

Enacted

FY 2027

Request

FY 2026–2027

% Change

New Appropriated Resources

FTE

Amount

FTE

Amount

FTE

Amount

FTE

Amount

Taxpayer Services

23,001

$2,780,606

23,227

$3,036,606

24,299

$3,130,969

Pre-filing Taxpayer Assistance

and Education

4,582

778,608

4,078

782,013

4,078

782,013

Filing and Account Services

18,419

2,001,998

19,149

2,254,593

20,221

2,348,956

Enforcement

32,350

$5,437,622

27,522

$4,999,000

22,728

$4,102,376

-17%

-18%

Investigations

2,968

758,132

3,146

809,106

2,678

676,237

-15%

-16%

Exam and Collections

28,475

4,505,595

23,548

4,033,962

19,397

3,299,780

-18%

907

173,895

828

155,932

653

126,359

-21%

-19%

10,371

$4,100,826

9,131

$3,159,759

9,110

$2,598,023

-18%

Regulatory

Technology and Operations

Support

916,955

Infrastructure

892,795

331,059

-63%

Shared Services and Support

4,176

1,149,693

4,353

1,143,908

4,332

1,143,908

Information Services

6,195

2,034,178

4,778

1,123,056

4,778

1,123,056

Subtotal New Appropriated

Resources

65,722

$12,319,054

59,880

$11,195,365

56,137

$9,831,368

-6%

-12%

641

117,029

888

162,000

932

170,100

Other Resources

Reimbursables

Offsetting Collections

(Non-reimbursable)

39,874

User Fees2

50,152

2,900

8,388

13,405

Recoveries from Prior Years

52,659

16,620

1,256,400

16,620

Unobligated Balances from Prior

Years4

2,285

514,850

1,265

631,000

700

70,000

-45%

-89%

IRA Funding Usage5

24,220

6,735,757

7,596

4,507,900

1,674

4,246,817

-78%

-6%

Operational

23,137

4,569,516

7,086

2,293,900

1,164

2,093,817

-84%

-9%

Modernization

1,083

2,166,241

510

2,214,000

510

2,153,000

-3%

Transfers In/Out

Resources from Other Accounts

1,155

271,916

1,200

272,000

1,200

275,000

Subtotal Other Resources

28,373

$7,695,782

10,949

$5,639,755

12,894

$6,087,679

18%

Total Budgetary Resources

94,095

$20,014,836

70,829

$16,835,120

69,031

$15,919,047

-3%

-5%

FY 2025 represents the Operating Plan level before the Inter-Appropriations Transfer (IAT) of up to $272 million from Enforcement to Taxpayer Services. Other

Resources and Full-time Equivalents (FTE) reflect actuals.

FY 2027 User Fees will be allocated as follows: $1B to Enforcement and $256M to Taxpayer Services.

These amounts are adjusted to exclude IRA recoveries.

Unobligated balances from prior years includes unexpired amounts that remain available for obligation in the year shown (FY 2026 actual of $631 million and FY

2027 estimate of $70 million).

Reflects the rescissions to enforcement including $1.4 billion from the Fiscal Responsibility Act of 2023 (P.L. 118-5), $20.2 billion from the Further Consolidated

Appropriations Act, 2024 (P.L.118-47), $20.2 billion from the Full-Year Continuing Appropriations and Extensions Act, 2025 (P.L. 1194), and $11.661 billion from

the Consolidated Appropriations Act, 2026 (P.L. 119-75). In addition, this includes the proposed budget cancellation of $371 million of unobligated balances from

Energy Security appropriated by P.L. 117-169.

Resources from Other Accounts reflect planned spending from Private Collection Agency retained earnings.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

1.1.1 – Inflation Reduction Act (IRA) Appropriations Detail Table

IRS IRA funding was almost $80 billion at enactment, however, $54 billion has been rescinded as of

FY 2026. The IRS has relied heavily on IRA funds. IRA funding is expected to be exhausted in FY

2028. While the IRS remains focused on technology to improve productivity and efficiency, with the

impending exhaustion of these funds, the IRS is in the process of re-evaluating its modernization

plan to duly prioritize investments in FY 2026 and FY 2027. The IRS looks forward to partnering with

Congress to maintain and continue modernization of its IT portfolio.

Dollars in Thousands

Budgetary

Resources

FY 2022

Enacted1

Taxpayer

Services

3,181,500

Enforcement

45,637,400

Operations

Support

25,326,400

Business

Systems

Modernization

Recission2

FY 2022 to

FY 2024

FY 2025

FY 2026

FY 2027

Actual

Estimated Estimated Remaining

Obligations3 Obligations3 Obligations4 Obligations4 Balance

Enacted

Post

Recission

3,181,500

1,290,125

1,185,939

636,852

(41,789,525)

3,847,875

1,633,145

2,075,784

138,946

(11,661,000)

13,665,400

3,970,894

2,665,253

2,994,754

3,450,933

583,566

4,750,700

2,043,894

804,292

671,848

727,300

503,366

Direct File

Study

15,000

11,603

Energy

Security

500,000

129,124

59,135

4,489

65,500

$79,411,000 ($53,821,401) $25,589,599

$9,008,796

$6,735,757

Total

(370,876)

68,584

$4,507,900 $4,246,817 $1,086,932

Amounts reflect original enacted IRA level, before rescissions or proposed cancellations.

Reflects the rescissions to enforcement including $1.4 billion from the Fiscal Responsibility Act of 2023 (P.L. 118-5), $20.2 billion from the Further Consolidated

Appropriations Act, 2024 (P.L.118-47), $20.2 billion from the Full-Year Continuing Appropriations and Extensions Act, 2025 (P.L. 1194), and $11.661 billion from

the Consolidated Appropriations Act, 2026 (P.L. 119-75). In addition, this includes the proposed budget cancellation of $371 million of unobligated balances from

Energy Security appropriated by P.L. 117-169.

Includes adjustments to prior year obligations and does not include recoveries.

FY 2026 and 2027 estimated obligations will be adjusted to align with actuals in future submissions.

The table below is a summary of actual and estimated IRA FTE.

Internal Revenue Service FTE

Taxpayer Services

Enforcement

Operations Support

Business Systems Modernization

Direct File Study

FY 2023

Actual

FY 2024

Actual

FY 2025

Actual

FY 2026

Estimated

FY 2027

Estimated

10,518

3,956

11,182

6,241

1,024

495

8,047

8,676

745

2,317

3,608

3,693

300

350

327

621

612

310

300

764

16,996

24,220

7,596

1,674

Energy Security

Total Budgetary FTE

13,661

IRA resources in FY 2026 and FY 2027 will be used to support customer service for taxpayers and

for technology modernization and operations.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

1.2 – Budget Adjustments Table

Dollars in Thousands

FY 2026 Enacted

FTE

Amount

59,880

$11,195,365

Changes to Base:

FY 2027 Maintaining Current Levels (MCLs):

$22,969

Pay Annualization (1.0% average pay raise)

$22,969

Subtotal Changes to Base

FY 2027 Current Services

$22,969

59,880

$11,218,334

Program Increases

1,132

$94,363

Maintain Customer Service

1,132

$94,363

Program Decreases

(4,875)

($1,481,329)

(161)

($22,969)

(4,714)

($777,841)

Program Changes:

Reduction to Offset Unfunded FY 2026 MCLs

Staff Reductions

($680,519)

Non-Labor Reductions

Subtotal FY 2027 Program Changes

(3,743)

($1,386,966)

FY 2027 President's Budget Request

56,137

$9,831,368

C – Base Adjustment and Program Changes Description

Maintaining Current Levels

Pay Annualization (1.0% in 2026)

+$22,969,000 / 0 FTE

• Per guidance issued by the Office of Management and Budget, funds are requested

for annualization of the January 2026 1% average pay raise.

Program Increase

Maintain Customer Service

+$94,363,000/ +1,132 FTE

+$94,363,000 / +1,132 FTE

• This investment will provide funding to meet OB3-related phone and online

demands, to implement OB3-related outreach activities that inform taxpayers about

new legislative initiatives and provide support to taxpayers and tax practitioners on

multiple platforms that encourage voluntary tax compliance.

• Implementing the OB3 is a coordinated and involved effort to turn new law into

stellar services for taxpayers and tax practitioners. OB3 implementation updates

involve careful planning, clear communication, and strong coordination across IRS

Business Units to ensure the IRS is responsive to taxpayers’ needs while improving

the taxpayer experience.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

• The IRS toll-free telephone customer service operation is one of the world’s largest

service providers and is a key part of the IRS’s service delivery. Taxpayer experience

research continues to indicate phone service as a preferred service channel. If the IRS

does not receive full funding, taxpayers will experience longer telephone wait times,

delayed responses on the IRS’s online service portals and to correspondences.

Historically, when taxpayers are unable to access streamlined and efficient service

channels, telephone and online communication demands shift to higher cost service

channel options such as paper correspondence. Taxpayers’ use of less efficient

service channels will negatively impact taxpayers’ ability to remain tax compliant.

Program Decrease

-$1,481,329,000 / -4,875 FTE

Reduction to Offset Unfunded FY 2026 MCLs

-$22,969,000 / -161 FTE

• The IRS will reduce staffing to offset the unfunded FY 2027 annualization cost of the

FY 2026 1.0% pay raise.

Staff Reductions

-$777,841,000 / -4,714 FTE

• IRS is in the process of conducting workforce restructuring efforts that will result in

fewer staff by the end of FY 2027. This effort will yield significant savings to the

taxpayer, once fully implemented.

Non-Labor Reductions

-$680,519,000 / 0 FTE

• IRS is in the process of conducting workforce restructuring efforts that will result in

reduced non-labor spending by the end of FY 2027.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

1.3 – Object Classification (Schedule O) Obligations Table

Dollars in Thousands

FY 2025

Operating

Plan

FY 2026

Estimated

Obligations1

FY 2027

Estimated

Obligations

6,259,980

6,055,631

5,596,925

11.3 – Other than full-time permanent

78,371

64,124

59,779

11.5 – Other personnel compensation

421,338

505,389

478,246

11.8 – Special personal services payments

101,036

92,946

78,328

11.9 – Personnel Compensation (Total)

$6,860,725

$6,718,091

$6,213,278

12.1 – Personnel benefits

2,357,683

2,297,166

2,113,811

Object Classification

11.1 – Full-time permanent

13.0 – Benefits for former personnel

Total Personnel and Compensation Benefits

21.0 – Travel and transportation of persons

12,486

6,571

6,486

$9,230,894

$9,021,828

$8,333,575

65,607

62,013

50,586

22.0 – Transportation of things

31,842

31,393

27,271

23.1 – Rental payments to GSA

610,845

591,037

211,846

23.2 – Rental payments to others

1,271

983

423

23.3 – Communications, utilities, and miscellaneous charges

289,136

257,478

240,006

24.0 – Printing and reproduction

41,987

37,276

36,471

25.1 – Advisory and assistance services

916,981

332,392

287,598

25.2 – Other services from non-Federal sources

112,058

107,083

89,383

25.3 – Other goods and services from Federal sources

317,890

290,592

255,799

25.4 – Operation and maintenance of facilities

194,707

192,338

77,265

25.6 – Medical care

19,095

19,124

19,044

25.7 – Operation and maintenance of equipment

34,860

2,638

2,194

26.0 – Supplies and materials

61,951

58,568

43,025

31.0 – Equipment

252,531

60,932

56,005

32.0 – Land and structures

42,698

40,946

12,734

41.0 – Grants, subsidies, and contributions

81,000

86,000

42.0 – Insurance claims and indemnities

3,701

2,745

2,142

91.0 – Unvouchered

10,000

Total Non-Personnel

$3,088,160

$2,173,537

$1,497,793

Total Obligations

$12,319,054

$11,195,365

$9,831,368

66,796

59,880

56,137

Full-time Equivalents (FTE)

Amounts reflect obligations of annually appropriated discretionary resources. FY 2026 and FY 2027 excludes obligations from multi-year carryover.

See footnotes in 1.1 – Appropriations Detail Table.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

D – Appropriations Language and Explanation of Changes

Appropriations Language

Explanation of Changes

TAXPAYER SERVICES

For necessary expenses of the Internal Revenue Service to

provide taxpayer services, including pre-filing assistance and

education, filing and account services, taxpayer advocacy

services, and other services as authorized by 5 U.S.C. 3109,

at such rates as may be determined by the Commissioner,

$3,130,969,000; Provided, That not to exceed $206,500,000

of the amounts provided under this heading shall remain

available until September 30, 2028, of which not less than

$17,000,000 shall be for the Tax Counseling for the Elderly

Program, not less than $22,000,000 shall be available for

low-income taxpayer clinic grants, including grants to

individual clinics of up to $200,000, not less than

$62,500,000 shall be available for the Community Volunteer

Income Tax Assistance (VITA) Matching Grants Program for

tax return preparation assistance, and not more than

$5,000,000 shall be available for the VITA Incubator Grant

Program: Provided further, That not less than $251,600,000

of the amounts provided under this heading shall be available

for operating expenses of the Taxpayer Advocate Service, of

which not less than $7,000,000 shall be for identity theft and

refund fraud casework.

ENFORCEMENT

For necessary expenses for tax enforcement activities of the

Internal Revenue Service to determine and collect owed

taxes, to provide legal and litigation support, to conduct

criminal investigations, to enforce criminal statutes related to

violations of internal revenue laws and other financial crimes,

to purchase and hire passenger motor vehicles (31 U.S.C.

1343(b)), and to provide other services as authorized by 5

U.S.C. 3109, at such rates as may be determined by the

Commissioner, $4,102,375,000; of which not to exceed

$250,000,000 shall remain available until September 30,

2028; of which not less than $60,257,000 shall be for the

Interagency Crime and Drug Enforcement program; and of

which not to exceed $35,000,000 shall be for investigative

technology for the Criminal Investigation Division: Provided,

That the amount made available for investigative technology

for the Criminal Investigation Division shall be in addition to

amounts made available for the Criminal Investigation Division

under the "Technology and Operations Support" heading.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Appropriations Language

Explanation of Changes

TECHNOLOGY AND OPERATIONS SUPPORT

For necessary expenses to operate the Internal Revenue

Service to support taxpayer services and enforcement

programs, including rent payments; facilities services;

printing; postage; physical security; headquarters and other

IRS-wide administration activities; research and statistics of

income; telecommunications; information technology

development, enhancement, operations, maintenance and

security; the hire of passenger motor vehicles (31 U.S.C.

1343(b)); the operations of the Internal Revenue Service

Oversight Board; and other services as authorized by 5

U.S.C. 3109, at such rates as may be determined by the

Commissioner; $2,598,024,000 , of which not to exceed

$275,000,000 shall remain available until September 30,

2028; of which not to exceed $10,000,000 shall remain

available until expended for acquisition of equipment and

construction, repair and renovation of facilities; of which not

to exceed $1,000,000 shall remain available until

September 30, 2029, for research; and of which not to

exceed $70,000 shall be for official reception and representation expenses: Provided, That not later than 30 days after

the end of each quarter, the Internal Revenue Service shall

submit a report to the Committees on Appropriations of the

House of Representatives and the Senate and the

Comptroller General of the United States detailing major

information technology investments in the Internal Revenue

Service portfolio, including detailed, plain language

summaries on the status of plans, costs, and results; prior

results and actual expenditures of the prior quarter;

upcoming deliverables and costs for the fiscal year; risks

and mitigation strategies associated with ongoing work;

reasons for any cost or schedule variances; and total

expenditures by fiscal year: Provided further, That the

Internal Revenue Service shall include, in its budget justification for fiscal year 2028, a summary of cost and schedule

performance information for its major information

technology systems.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Appropriations Language

Explanation of Changes

ADMINISTRATIVE PROVISIONS-INTERNAL REVENUE

SERVICE (INCLUDING TRANSFER OF FUNDS)

SEC. 101. Not to exceed 5 percent of any funds made

available to the Internal Revenue Service in this Act or any

other provision of law may be transferred to any other

Internal Revenue Service appropriation upon the advance

notification to the Committees on Appropriations of the

House of Representatives and the Senate.

SEC. 102. The Internal Revenue Service shall maintain an

employee training program, which shall include the

following topics: taxpayers' rights, dealing courteously with

taxpayers, cross-cultural relations, ethics, and the impartial

application of tax law.

SEC. 103. The Internal Revenue Service shall institute and

enforce policies and procedures that will safeguard the

confidentiality of taxpayer information and protect

taxpayers against identity theft.

SEC. 104. Funds made available by this or any other Act to

the Internal Revenue Service shall be available for improved

facilities and increased staffing to provide sufficient and

effective 1–800 help line service for taxpayers. The

Commissioner shall continue to make improvements to the

Internal Revenue Service 1–800 help line service a priority

and allocate resources necessary to enhance the response

time to taxpayer communications, particularly with regard

to victims of tax-related crimes.

SEC. 105. The Internal Revenue Service shall issue a notice

of confirmation of any address change relating to an

employer making employment tax payments, and such

notice shall be sent to both the employer's former and new

address and an officer or employee of the Internal Revenue

Service shall give special consideration to an offer-incompromise from a taxpayer who has been the victim of

fraud by a third party payroll tax preparer.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Appropriations Language

Explanation of Changes

SEC. 106. None of the funds made available under this Act

may be used by the Internal Revenue Service to target

citizens of the United States for exercising any right

guaranteed under the First Amendment to the Constitution

of the United States.

SEC. 107. None of the funds made available in this Act may

be used by the Internal Revenue Service to target groups

for regulatory scrutiny based on their ideological beliefs.

SEC. 108. None of funds made available by this Act to the

Internal Revenue Service shall be obligated or expended on

conferences that do not adhere to the procedures, verification processes, documentation requirements, and

policies issued by the Chief Financial Officer, Human

Capital Office, and Agency-Wide Shared Services as a

result of the recommendations in the report published on

May 31, 2013, by the Treasury Inspector General for Tax

Administration entitled "Review of the August 2010 Small

Business/Self-Employed Division's Conference in Anaheim,

California" (Reference Number 2013–10–037).

SEC. 109. None of the funds made available in this Act to

the Internal Revenue Service may be obligated or

expended— (1) to make a payment to any employee under

a bonus, award, or recognition program; or (2) under any

hiring or personnel selection process with respect to

re-hiring a former employee; unless such program or

process takes into account the conduct and Federal tax

compliance of such employee or former employee.

SEC. 110. None of the funds made available by this Act may

be used in contravention of section 6103 of the Internal

Revenue Code of 1986 (relating to confidentiality and

disclosure of returns and return information).

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Appropriations Language

Explanation of Changes

SEC. 111. The Secretary of the Treasury (or the Secretary's

delegate) may use the funds made available in this Act,

subject to such policies as the Secretary (or the Secretary's

delegate) may establish, to utilize direct hire authority to

recruit and appoint qualified applicants, without regard to

any notice or preference requirements, directly to positions

in the competitive service to process backlogged tax

returns and return information.

SEC. 112. Notwithstanding section 1344 of title 31, United

States Code, funds appropriated to the Internal Revenue

Service in this Act may be used to provide passenger carrier

transportation and protection between the Commissioner

of Internal Revenue's residence and place of employment.

SEC. 113. None of the funds made available by this Act may

be used to purchase firearms or ammunition for the Internal

Revenue Service above the levels in the possession of the

Internal Revenue Service on December 22, 2022.

The budget proposes allocating an additional $5 million for the Volunteer Income Tax Assistance (VITA)

Incubator Grant Program. This would allow the IRS to expand on the success of its existing VITA and

Tax Counseling for the Elderly (TCE) grant programs. The VITA Incubator Program Grant would provide

financial support for organizations that are new to the VITA program, which provides free tax return

preparation services to low and middle-income taxpayers. These startup grants will allow organizations to implement their tax preparation infrastructure and operations, while engaging volunteers and

providing initial return preparation services during the first year as a grant recipient. Recipients of the

VITA incubator grant would not be required to provide matching funds equal to the grant award.

Section I – Budget Request

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Section II – Annual Performance Plan and Report

A – Budget and Performance

Treasury carries a great responsibility for fostering prosperity and security for the American people.

The IRS plays a critical role both in the U.S. economy and globally to meet the needs of the nation.

The Treasury Strategic Plan 2026–20301 charts a course to guide meeting the responsibilities to the

public. As the Bureau Strategic Plans are finalized, more information on measures such as validation

and verification of data and explanations of results will be developed. Subsequently, the IRS will

release its Strategic Plan 2026-2030, which focuses our efforts on delivering a modern taxpayer

experience, strengthening compliance, modernizing our operations, providing a renewed

commitment to taxpayer privacy, and addressing the tax gap.

2.1 – Budget Activities

Dollars in Thousands

Taxpayer Services

Resource Level

FY 2021

Actual

FY 2022

Actual

FY 2023

Actual

FY 2024

Actual

FY 2025

Actual

FY 2026

Enacted

FY 2027

Request

Pre-Filing Taxpayer

Assistance and

Education

$674,187

$685,038

$765,860

$891,895

$959,064

$854,152

$797,159

Appropriated

Resources

658,343

677,927

732,797

765,985

757,316

782,013

142

176

277

139

146

15,000

29,324

11,000

15,000

17,063

96,308

190,674

57,000

Reimbursables

Unobligated Balances

from Prior Years

1,500

IRA Funding Usage

Resources from Other

Accounts1

14,202

7,036

823

Filing & Account

Services

$2,574,103

$2,645,899

$3,142,688

$3,304,501

$3,479,760

$2,968,306

$2,773,944

Appropriated

Resources

1,927,220

2,111,293

2,118,270

2,390,038

2,358,301

2,254,593

2,348,956

Reimbursables

39,307

32,505

27,069

27,220

22,916

42,861

User Fees

64,900

78,900

3,900

520,404

2,900

Unobligated Balances

from Prior Years

9,055

2,129

9,783

1,494

89,553

91,000

55,000

1,073

872,050

365,346

1,006,091

579,852

68,584

533,622

420,000

111,616

Budget Activity Total

$3,248,291

$2,646,584

$3,908,547

$4,196,396

$4,438,824

$3,822,458

$3,571,103

Full-time Equivalents

(FTE)

32,025

31,658

37,469

38,760

39,012

31,058

30,565

IRA Funding Usage

Resources from Other

Accounts

Includes Emergency Paid Leave, PCA, and Covid Supplemental Funds.

home.treasury.gov/about/budget-financial-reporting-planning-and-performance/strategic-plan

Section II – Annual Performance Plan and Report

45,004

256,400

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Dollars in Thousands

Enforcement

Resource Level

FY 2021

Actual

FY 2022

Actual

FY 2023

Actual

FY 2024

Actual

FY 2025

Actual

FY 2026

Enacted

FY 2027

Request

Investigations

$725,362

$792,024

$865,341

$993,932

$1,085,710

$1,026,553

$1,084,908

Appropriated

Resources

630,093

674,705

720,335

730,339

723,167

809,106

676,237

Reimbursables

1,950

2,152

45,400

34,562

38,329

53,266

55,929

Offsetting Collections

(Non-reimbursable)

57,370

64,628

6,372

13,539

39,874

50,152

52,659

300,000

User Fees

Unobligated Balances

from Prior Years

27,591

45,603

IRA Funding Usage

28,889

24,684

18,589

35,000

34,548

182,096

256,921

78,946

136

119

8,222

4,852

29,678

8,645

8,780

Exam & Collection

$4,302,694

$4,544,349

$4,785,362

$5,503,737

$6,102,057

$4,486,170

$4,175,349

Appropriated

Resources

3,987,323

4,268,195

4,196,705

4,160,701

4,006,797

4,033,962

3,299,780

1,719

1,371

1,966

288

1,859

2,208

2,319

Transfers In/Out

Resources from Other

Accounts1

Reimbursables

667,000

User Fees

Unobligated Balances

from Prior Years

143,195

181,127

IRA Funding Usage

Resources from Other

Accounts1

Regulatory

Appropriated

Resources

Reimbursables

177,873

49,087

107,677

190,000

261,300

1,133,938

1,782,909

57,000

170,458

93,657

147,517

159,723

202,815

203,000

206,250

$158,990

$201,989

$167,792

$199,332

$210,614

$184,458

$159,910

132,507

176,447

127,446

132,224

150,238

155,932

126,358

222

243

442

526

552

33,000

User Fees

Unobligated Balances

from Prior Years

26,189

25,000

IRA Funding Usage

Resources from Other

Accounts1

37,000

47,735

22,000

25,000

3,142

19,287

37,933

3,000

300

144

Budget Activity Total

$5,187,046

$5,538,363

$5,818,494

$6,697,001

$7,398,381

$5,697,181

$5,420,167

Full-time Equivalents

(FTE)

35,492

36,017

33,969

39,310

43,479

29,718

28,582

Includes Emergency Paid Leave, PCA, and Covid Supplemental Funds.

Section II – Annual Performance Plan and Report

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Dollars in Thousands

Technology and

Operations Support

Resource Level

FY 2021

Actual

FY 2022

Actual

FY 2023

Actual

FY 2024

Actual

FY 2025

Actual

FY 2026

Enacted

FY 2027

Request

Infrastructure

$937,590

$933,687

$1,042,452

$1,096,769

$952,442

$1,108,492

$953,498

Appropriated

Resources

885,606

912,624

890,992

901,871

886,698

892,795

331,060

854

564

596

634

591

697

732

16,656

5,343

16,422

1,745

5,225

20,000

100,351

150,111

4,709

140,000

566,706

Reimbursables

Unobligated Balances

from Prior Years

IRA Funding Usage

Resources from Other

Accounts1

34,474

15,156

34,091

42,408

55,219

55,000

Shared Services

$1,406,233

$1,381,274

$1,310,927

$1,467,098

$1,491,788

$1,380,606

$1,354,309

Appropriated

Resources

1,040,954

1,141,596

1,133,584

1,137,436

1,117,077

1,143,908

Reimbursables

27,874

28,433

42,146

41,177

25,177

29,698

31,183

Unobligated Balances

from Prior Years

29,297

1,000

22,571

20,982

74,409

30,000

User Fees

37,454

IRA Funding Usage

12,289

108,893

265,247

263,922

166,000

168,218

Resources from Other

Accounts1

308,107

160,501

3,734

2,257

11,204

11,000

Information Services

$2,852,713

$2,910,329

$3,499,991

$3,795,329

$4,246,628

$4,079,035

$3,882,670

Appropriated

Resources

2,061,216

1,988,182

2,047,004

1,587,191

1,552,614

1,123,056

Reimbursables

26,344

27,036

27,562

30,188

27,641

32,605

34,235

User Fees

408,044

291,706

9,872

10,132

6,620

Recoveries from Prior

Years

Unobligated Balances

from Prior Years

35,134

112,959

67,422

135,919

186,398

225,000

48,676

1,275,636

2,040,842

2,467,164

2,688,754

2,716,009

321,975

441,771

72,496

1,180

2,679

3,000

2,750

Budget Activity Total

$5,196,536

$5,225,290

$5,853,370

$6,359,196

$6,690,858

$6,568,133

$6,190,477

Full-time Equivalents

(FTE)

11,867

12,041

12,369

13,118

13,919

9,550

9,585

IRA Funding Usage

Resources from Other

Accounts1

Includes Emergency Paid Leave, PCA, and Covid Supplemental Funds.

Section II – Annual Performance Plan and Report

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

2.2 – Performance Measures

Performance Measure

FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2025 FY 2026 FY 2027

Actual

Target

Total Ending Inventory (Thousands)1

4,100

2,156

2,923

3,242

2,864

Percent of Closures to Receipts

71.9%

116.4%

93.8%

96.5%

104.1%

Customer Accuracy – Tax Law (Phones)

92.8%

92.0%

91.4%

90.4%

86.3%

89.0%

87.0%

89.0%

Customer Accuracy – Accounts (Phones)

93.0%

91.8%

89.2%

90.2%

85.2%

87.0%

89.0%

Timeliness of Critical Individual Filing Season

Tax Products to the Public

92.9%

96.4%

96.6%

97.3%

91.0%

78.0%

85.0%

Timeliness of Critical TE/GE & Business Tax

Products to the Public

92.9%

96.0%

86.5%

94.8%

97.1%

89.0%

77.0%

83.0%

Enterprise Self-Assistance Participation Rate

92.3%

93.9%

94.2%

95.8%

96.6%

94.0%

96.4%

96.3%

Assistor Service Rate

N/A

TBD

Enterprise Service Completion Rate2

N/A

TBD

Examination Efficiency - Individual

108

101

103

Time to Start Compliance Resolution

66.0%

68.0%

72.0%

76.0%

Time to Resolve Compliance Issue After Filing

(days)

484

404

372

344

351

Repeat Non-Compliance Rate

30.7%

28.1%

18.9%

28.9%

Collection Coverage

41.2%

38.3%

34.9%

39.1%

38.8%

37.2%

31.0%

28.4%

Exam Starts – High Income Individuals3

2,227

3,625

4,326

4,052

3,692

6,786

2,264

2,486

Exam Starts – Partnerships

4,327

3,155

6,709

2,285

1,589

3,174

2,932

2,248

Exam Starts – Large Corporations

(Assets>=$250M)5

1,490

1,365

1,400

1,263

1,483

1,375

1,629

1,593

$0.33

$0.29

$0.34

$0.36

Cost to Collect $100

Criminal Investigations Completed

2,766

2,552

2,584

2,481

2,850

2,500

2,600

Conviction Rate

89.4%

90.6%

88.4%

90.0%

89.0%

92.0%

Rentable Square Feet per Person

278

264

248

224

230

229

306

299

Percent of Aged Hardware

9.3%

7.1%

19.9%

17.6%

13.1%

20.0%

Percent of Reportable IT Investments within +/10% Cost Variance at the Investment Level8

94.1%

81.3%

85.7%

60.0%

90.0%

Percent of Reportable IT Investments within

+/- 10% Schedule Variance at the Investment

Level9

100.0%

87.5%

92.8%

71.4%

30.0%

90.0%

Key: B – Baseline; I – Indicator; TBD – To Be Determined; N/A Not Applicable

New FY 2022. Historical data provided for comparative purposes.

New FY 2026. Baseline in FY 2026 and report as a measure with a target starting FY 2027.

Audits of high-income individuals may take a revenue agent upwards of 250 hours to complete.

Due to the timing of hiring and the start date of the lengthy training cycle, the impact of hiring on performance is not immediate.

The impact of hiring on performance is not immediate due to required training for new Revenue Agents and the average case cycle time of about 36 months for

these large corporations.

The impact of hiring on performance is not immediate due to required academy, on-the-job training (6+ months), and the average time it takes to complete an

investigation (400-500 days).

Target based on industry standard.

FY 2025, the name changed from Percent of Major IT Investments within +/- 10% Cost Variance at the Investment Level.

FY 2025, the name changed from Percent of Major IT Investments within +/- 10% Schedule Variance at the Investment Level.

Section II – Annual Performance Plan and Report

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

2.3 – Performance Measure Description

Budget Level Performance Measure

Description

Total Ending Inventory

The total number of accounts management and correspondence inventory.

Percent of Closures to Receipts

The number of adjustment cases closed divided by the number of adjustment cases

received, shown as a percentage.

Customer Accuracy – Tax Law (Phones)

The number of correct answers given by a live assistor on Toll-free tax law inquiries

divided by the total number of inquiries, shown as a percentage.

Customer Accuracy – Customer

Accounts (Phones)

The number of correct answers given by a live assistor on Toll-free account inquiries

divided by the total number of inquiries, shown as a percentage.

Timeliness of Critical TE/GE & Business

Tax Products to the Public

The number of Critical Tax Exempt/Government Entities (TE/GE) and Business (CTB)

tax products available to the public seven calendar days before the official IRS start

of the individual filing season divided by the total number of products, shown as a

percentage. CTB tax products are forms, schedules, instructions, and publications

used by large number of TE/GE and Business filers to prepare a complete and

reasonably accurate return or form by the filing date occurring during the fiscal year

(e.g., income tax, excise tax, exempt organization return, etc.).

Timeliness of Critical Individual Filing

Season Tax Products to the Public

The number of Critical Individual Filing Season (CIFS) tax products available to

the public seven calendar days before the official IRS start of the (individual) filing

season divided by the total number of products, shown as percentage. CIFS tax

products are those tax forms, schedules, instructions, and publications required by

large number of filers to prepare a complete and reasonably accurate Individual

Income Tax Return.

Enterprise Self Assistance Participation

Rate (ESAPR)

The number of taxpayer self-assisted services completed divided by the total

number of services, shown as a percentage.

Assistor Service Rate (ASR)

The number of completed contacts by assistors through phone or live chat divided by

contacts received, shown as a percentage.

Enterprise Service Completion Rate

(ESCR)

The number of completed services through phone, live chat, and bots divided by

contacts received, shown as a percentage.

Examination Efficiency – Individual

(1040)

The sum of all individual 1040 returns closed by Small Business/Self-Employed,

Taxpayer Services, and Large Business and International (Field Exam and

Correspondence Exam programs) divided by the total full-time equivalent expended

in relation to those individual returns.

Time to Start Compliance Resolution

The number of all individual income tax enforcement cases started within six months

of the return posting date, divided by the total number of cases closed, shown as a

percentage.

Time to Resolve Compliance Issue After

Filing

The median time it takes to close all individual income tax enforcement cases in

days (excluding disaster, bankruptcy, and TEFRA cases for exam and collection cases

that are not closed as full paid), starting from filing date.

Repeat Non-Compliance Rate

The number of individual taxpayers in a fiscal year with additional non-compliance

two years after the initial tax year that contains a filing, payment, or reporting

compliance issue, divided by the total number of taxpayers, shown as a percentage.

Collection Coverage

The volume of collection work disposed divided by the total volume of collection

work available, shown as a percentage.

Section II – Annual Performance Plan and Report

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Budget Level Performance Measure

Description

Exam Starts - High Income Individuals

The number of examinations started during the fiscal year of individuals with a total

positive income of $10 million and above.

Exam Starts - Partnerships

The number of partnership examinations started during the fiscal year.

Exam Starts - Large Corporations

The number of examinations started during the fiscal year of large corporate returns

reporting assets of $250 million and above.

Cost to Collect $100

The cost of collecting $100 is computed as total operating costs divided by gross

collections multiplied by 100. Operating costs are comprised of items charged to

discretionary appropriations, mandatory appropriations, and user fees. This includes

costs charged to the IRA, which was enacted August 12, 2022.

Criminal Investigations Completed

The total number of subject criminal investigations completed during the fiscal year,

including those that resulted in prosecution recommendations to the Department of

Justice as well as those discontinued due to a lack of prosecution potential.

Conviction Rate

The total number of convictions divided by the total of adjudicated criminal cases,

shown as a percentage.

Rentable Square Feet per Person

The amount of Rentable Square Feet the IRS maintains per person requiring space.

Percent of Aged Hardware

The quantity of IT hardware in operation past its useful life divided by the total

hardware in use, shown as a percentage.

Percent of Reportable IT Investments

within +/- 10% Cost Variance at the

Investment Level

Number of reportable IT investments within +/-10 percent variance between planned

total cost and projected/actual cost within a fiscal year divided by the total number

of reportable IT investments in that fiscal year, shown as a percentage.

Percent of Reportable IT Investments

within +/- 10% Schedule Variance at

the Investment Level

Number of reportable IT investments within +/-10 percent variance between planned

days and projected/actual days within a fiscal year divided by the total number of

reportable IT investments in that fiscal year, shown as a percentage.

2.4 – Performance Summary

In FY 2025, the IRS tracked 24 budget-level performance measures, including 18 with established

targets and six indicators without targets. Overall, the IRS met or exceeded nine of the 18 targets.

Performance was strongest in Taxpayer Services, mixed in Enforcement, and more limited in

Technology and Operations Support.

Taxpayer Services

Taxpayer Services performance outcomes reflect a strong filing season execution and continued

improvement in service delivery. Timeliness of Critical Individual Filing Season Tax Products to the

public was 97.3 percent, exceeding the 91 percent target, with 110 of 113 products delivered on

time. There were no major tax law changes affecting filing season preparation which supported this

performance result. The Enterprise Self-Assistance Participation Rate reached 96.6 percent,

surpassing the 94 percent target. Self-assisted services totaled approximately 2.8 billion, a 21.7

percent increase from FY 2024, while employee-assisted services declined 1.7 percent to 99.1

million. Total services provided increased 20.7 percent to approximately 2.9 billion, reflecting

continued migration to digital and automated channels.

Section II – Annual Performance Plan and Report

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

To support a shift toward a digital-first taxpayer experience, the IRS is modernizing how it measures

service performance by introducing two new enterprise metrics: the Assistor Service Rate and the

Enterprise Service Completion Rate. These metrics reflect Taxpayer Services’ broader effort to

modernize service channels and better align performance measurement with how taxpayers interact

with the IRS today. Both measures will establish baseline results in FY 2026, with performance

targets beginning in FY 2027.

Together, these metrics provide a more comprehensive and integrated view of the taxpayer service

experience across both live and automated channels. The Assistor Service Rate measures the

percentage of services completed by assistors through live interactions, including telephone assistance and live chat.

The Enterprise Service Completion Rate expands upon this view by capturing a holistic picture of

service completion across multiple service channels. In addition to live telephone assistance and

live chats, the Enterprise Service Completion Rate reflects continued advancements in automated

and digitally enabled services, including vendor services, voicebots, and chatbots. By evaluating

performance across these various platforms, the Enterprise Service Completion Rate demonstrates

how well the IRS is integrating technology with traditional service methods to meet taxpayer needs

efficiently and effectively.

The introduction of these metrics strengthens the IRS’s ability to measure performance in a way that

reflects today’s service environment, which combines human-assisted support with automated,

self-service tools. This integrated approach enhances visibility into service delivery outcomes and

supports the agency’s broader goal of delivering the best possible taxpayer experience through

improved access, responsiveness, and service completion across all channels.

Enforcement

In FY 2025, enforcement operations demonstrated mixed results. The IRS completed 2,850 Criminal

Investigations, a 14.9 percent increase from FY 2024, exceeding the 2,500 target, driven by

increased staffing and a focus on shorter cycle-time cases. The criminal conviction rate declined

slightly from FY 2024 and remained below target, reflecting reliance on external partners, including

the Department of Justice and U.S. Attorney’s Offices, for prosecution and court outcomes.

Collection Coverage was 38.8 percent, exceeding the 37.2 percent target but decreasing 0.8

percent from FY 2024; net dispositions increased 2.6 percent, while total available inventory rose

3.3 percent, supported by the resumption of delinquent return and balance due notices. Exam

Starts for Large Corporations with assets of $250 million or more totaled 1,483, a 17.4 percent

increase from FY 2024, exceeding the 1,375 target, with continued growth anticipated as newly

trained employees reach full productivity.

Although the IRS continues to work closely with prosecutorial partners to maintain strong case

selection and oversight, criminal conviction rate declined slightly from FY 2024 and remained below

the FY 2025 target as resources were shifted to other priorities. IRS Criminal Investigation must

depend on partners outside IRS control, including reliance on Department of Justice and U.S.

Attorney's office, to accept its cases for prosecution and move them through the courts.

Section II – Annual Performance Plan and Report

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Technology and Operations Support

Within Technology and Operations Support, the IRS notably exceeded its goal for reducing aged

hardware. Percent of Aged Hardware was 13.1 percent, outperforming the 20 percent industry

standard target, reflecting focused hardware refresh strategies and timely implementation to

improve infrastructure reliability and operational efficiency.

In FY 2025, the IRS advanced its transformation agenda through phased development of major

modernization initiatives aimed at substantially completing most efforts within the next two years.

The focus is on expanding automation, strengthening enterprise data integration, and improving

system interoperability to enhance taxpayer service and compliance operations. Key initiatives

include the Enterprise Data Platform (EDP) to standardize and secure enterprise data access, the

Zero Paper initiative to digitize paper submissions through AI-enabled processing and reduce cycle

times, and the Developer Experience Platform to streamline software development and deployment

across the enterprise. Combined with continued investments in cybersecurity, cloud scalability,

digital intake, and legacy system replacement, these efforts position the IRS to operate as a more

agile, secure, and data-driven organization while delivering a seamless and reliable taxpayer

experience.

The IRS also made great progress by expanding digital scanning and e-filing capabilities to reduce

backlog and speed up processing. The IRS achieved online and mobile accessibility for 21

additional non-tax forms, bringing the total to 71 available for online submission.

Overall Performance Outlook

The IRS remains committed to maintaining current levels of performance and service delivery while

managing all resources responsibly. To support continued success, the IRS is making targeted

investments to build organizational capacity, including modernizing systems and processes and

strengthening the tools and infrastructure needed to operate effectively in an evolving environment.

These efforts position the IRS for greater resilience and sustained effectiveness.

Continued investment in digital services is expected to strengthen service delivery across channels

and improve the taxpayer experience by expanding access to self-service options and reducing

reliance on assisted channels. As system integration efforts continue, these investments are

expected to support improved operational efficiency, more reliable service delivery, and the IRS’s

ability to respond to evolving taxpayer needs and expectations.

Within Compliance and Technology and Operations Support, FY 2027 targets are supported by

risk-based enforcement strategies, strengthened governance, and disciplined project management.

The complexity and timing of high-income, partnership, and large corporate casework may

contribute to year-to-year variability; however, continued use of data analytics and targeted

resource alignment is expected to support steady progress in enforcement outcomes. In parallel,

ongoing infrastructure modernization, reduced aged hardware, and facilities optimization are

expected to enhance operational resilience, cybersecurity, and workforce productivity, supporting

achievement of FY 2027 performance targets.

Section II – Annual Performance Plan and Report

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

B – Changes in Performance Measures

Performance Measure or Indicator

1. Customer Service Representative (CSR)

Level of Service (LOS) (discontinue)

Proposed Change and Justification

Discontinue – This measure is discontinued for FY 2026 reporting in the FY

2027 CJ.

The IRS is replacing LOS with Assistor Service Rate to more accurately

capture how the IRS serves taxpayers today and better capture performance

across live and automated service channels.

Discontinue – This measure is discontinued for FY 2026 reporting in the FY

2027 CJ.

2. LOS(A) (discontinue)

The IRS is replacing LOS(A) with Enterprise Service Completion Rate to more

accurately capture how the IRS serves taxpayers today and better capture

enterprise performance across all service channels.

New – Assistor Service Rate is defined as the percent of services provided

over the phone or through live chat completed by assistors.

3. Assistor Service Rate (new FY 2026)

This measure provides information on Assistor Calls Answered, Informational

Messages, Assistor Live Chat, Telephone Busies, Telephone Emergency

Closed, Telephone Secondary Abandons, Telephone Disconnects, Live Chat

Abandons.

This measure will baseline in FY 2026 with no target reporting in the FY 2027

CJ and begin reporting a target effective for FY 2027 in the FY 2028 CJ.

New – Enterprise Service Completion Rate is defined as the percent of

services provided to taxpayers through phone, bot, and live chat service

channels.

4. Enterprise Service Completion Rate

(new FY 2026)

This measure provides information on Assistor Calls Answered, Informational

Messages, Voice Bot Automation Completions, Assistor Live Chat, Chatbot

Automation Completions, Telephone Busies, Telephone Emergency Closed,

Telephone Secondary Abandons, Telephone Disconnects, Voice Bot

Disconnects, Live Chat Abandons.

This measure will baseline in FY 2026 with no target reporting in the FY 2027

CJ and begin reporting a target effective FY 2027 in the FY 2028 CJ.

5. Taxpayer Satisfied with the IRS

(discontinue)

6. Percent of Major IT Investments within

+/- 10% Cost Variance (modify)

7. Percent of Major IT Investments within

+/- 10% Schedule Variance (modify)

Discontinue – The interagency agreement was terminated as of 3/21/2025,

leaving FY 2024 as the final score available for this measure; discontinued for

FY 2026 reporting in the FY 2027 CJ.

Modify – Name change to Percent of Reportable IT Investments within +/10% Cost Variance effective FY 2025; modified for FY 2026 reporting in the

FY 2027 CJ.

For better alignment based on Treasury Reporting requirements, the Cost and

Schedule variance data uses eligible reportable Investments. The name was

changed to reflect this alignment.

Modify – Name change to Percent of Reportable IT Investments within +/10% Schedule Variance effective FY 2025; modified for FY 2026 reporting in

the FY 2027 CJ.

For better alignment based on Treasury Reporting requirements, the Cost and

Schedule variance data uses eligible reportable Investments. The name was

changed to reflect this alignment.

Section II – Annual Performance Plan and Report

This page intentionally left blank

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Section III – Additional Information

A – Summary of Capital Investments

I. Introduction

Technology and Operations Support (TOS) funding is essential for maintaining the technology

infrastructure and systems that support the IRS mission of tax administration. The funding enables

IT to deliver a successful filing season, provides employees and taxpayers with reliable and efficient

technology tools to perform compliance and customer service, and ensures robust cybersecurity

controls are in place to protect sensitive taxpayer data.

The table below shows the IT budget with its discretionary and mandatory funding sources including

IRA Business System Modernization funding. Non-discretionary funding for IT allows the IRS to

dedicate 30-35% of its IT budget towards new development, modernization, and enhancements. In

the years when the IRS had a discretionary BSM allocation, it could only dedicate roughly 10% of its

total IT budget to Development, Modernization, and Enhancement (DME) activities.

Dollars in Millions

DME

O&M

Total

Case Management

FY 2027 IRS IT Budget by IT Investment

144

119

263

Compliance

157

493

Digital Services

241

110

350

Engagement Channels

Enterprise IT Management

123

278

401

Filing and Intake

168

186

354

Infrastructure Management

226

326

Internal Operations

259

291

IRS Cybersecurity

427

444

Network Services

344

434

Platforms and Applications

154

210

364

Compute Services

Storage Services

195

Tax Account Management

User Services

Total

$1,375

271

277

$3,215

$4,590

Dollars in Thousands

FY 2027 IT Funding Sources with Percent Breakdown

IT Funding Source

Total

% of Total

Technology and Operations Support

1,124,324

24%

IRA Business Systems Modernization

727,300

16%

2,716,009

59%

22,000

281

$4,589,914

100%

IRA Operations Support

Reimbursable

Private Collection Agencies

Total

Section III – Additional Information

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

A summary of capital investments, including major information technology and non-technology

investments, can be accessed at home.treasury.gov/about/budget-performance/Pages/

summary-of-capital-investments.

summary-of-capital-investments

II. IRS Key Initiative Overview

In FY 2027, the IRS will continue advancing critical IT modernization initiatives that strengthen service

delivery, automate end-to-end taxpayer processes, and improve operational efficiency while reducing

long-term costs. These investments include capabilities designed to automate, integrate and

standardize data across the enterprise, strengthen analytics and reporting, and accelerate the

delivery of digital services. Modernization of infrastructure is essential to ensure the IRS can adapt to

evolving technologies, protect sensitive taxpayer information, and administer the tax code effectively.

Without modernization, the IRS would be unable to sustain performance with a reduced headcount.

The FY 2027 IT modernization budget, allocated across the IT Investments, supporting key modernization initiatives below, represents a prudent and necessary investment to sustain performance,

enable future workforce efficiencies, and deliver enduring value to taxpayers and the Nation.

IRS IT Modernization Estimates Key Initiatives

Dollars in Millions

Vertical/Foundational Area

Taxpayer Services & Online

Accounts

Tax Processing

Key Initiative

Discretionary

IRA BSM

IRA OS

Total

TOS Planned DME Planned DME Planned DME Planned DME

Taxpayer Service

136

159

Online Accounts

128

159

Zero Paper

136

143

Unisys Modernization

Case Management

Compliance

Case Selection &

Anomaly Detection

Filing Season and Legislative

Delivery1

Filing Season and

Legislative Delivery

159

Data & Platform Engineering

Enterprise Data Platform

(EDP)

106

Infrastructure Tech Ops

Virtual Infrastructure

Replacement

106

620

396

1,015

477

537

$680

$873

$1,553

Subtotal

Mission-driven infrastructure, telecommunication, network

bandwidth, cybersecurity, government labor, equipment,

software, and business-driven enhancements

Total

Note: All estimates are pre-decisional and do not include labor costs.

Filing Season and Legislative Delivery, while not formally a key modernization initiative, includes funding to strengthen core systems, improve capability and

performance, and increase operational flexibility—supporting a successful Filing Season and enabling timely implementation of legislative requirements,

including the One Big Beautiful Bill Act (OB3).

Section III – Additional Information

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Taxpayer Services and Online Accounts

Taxpayer 360

Taxpayer 360 (TP360) will continue to advance the modernization of the IRS contact center by

building a single, unified interface that provides customer service representatives with the right data,

at the right time, and in the right format to resolve taxpayer inquiries. This “single pane of glass”

approach reduces manual tasks, unifies taxpayer data, and incorporates knowledge management

and artificial intelligence–enabled features such as agent assist and real-time research support.

Once fully implemented, TP360 is expected to reduce average call handle time by 40 to 60 percent,

improving both customer service representative productivity and taxpayer satisfaction.

Online Accounts

IRS digital services enable taxpayer or representative self-service, reduce operational burden, and

ensure system accuracy and stability for filing season. This capability gives taxpayers and representatives easier access and control of their account information, more ability to complete necessary

actions via self-service, and reduce paper-based processes. More than 38 million taxpayers have

accessed their Individual Online Account since inception, with additional growth expected. In FY

2027, IRS continues to expand access to more partnerships, exempt organizations, and tax professionals to view account status, make payments, and manage authorizations through the same

digital channel. Additional authorization tools will allow taxpayers and their representatives to

securely share information with approved third parties—such as tax software providers and

mortgage lenders—through time-limited, consent-based access, reducing the need for paper

copies and manual data entry.

Tax Processing

Zero Paper

This effort transforms how the IRS manages tax form submissions and correspondence by shifting

away from manual, paper-based processing at campus centers and instead relocating paper mail to

third-party sites for digital scanning and ingestion. Using cloud-based technology, this modernization enables data to be extracted and transmitted directly into IRS processing systems, reducing

the need for physical storage, and improving efficiency. In FY 2027, this initiative will continue

enterprise scanning and data capture enabling large-scale digitization of the next priority forms

beyond Forms 940, 941, and 1040. The Zero Paper initiative will continue building upon its scanning

capacity to scale digital intake across forms and correspondence prioritized by the IRS to include

high-volume tax forms, correspondence, and information returns. This work will be connected to

back-end inventory management systems such as Accounts Management Services (AMS) and

Digital Inventory Management (DIM), so that scanned work is routed digitally to downstream teams

without delay, helping reduce backlogs and speed resolution for taxpayers.

Section III – Additional Information

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Unisys Modernization

This initiative replaces the IRS’s aging Unisys mainframe tax processing systems with modern

technology so returns can be processed faster and more reliably. Today, more than 45

subsystems—built on 15+ million lines of COBOL—handle validation, error resolution, and access

to return data for over 30,000 employees. Although artificial intelligence is reducing the burden,

legacy systems are expensive to maintain and increasingly hard to support as the workforce with

these skills shrinks. Moving these core functions to secure, scalable platforms with modern

languages, interfaces, and automation will reduce operational risk, improve system uptime during

filing season, and ensure the IRS can continue to process returns and serve taxpayers efficiently in

the years ahead. In FY 2027, modernization of validation, perfection, and error processing for

additional forms continues, reducing reliance on Unisys while improving the speed and consistency

of extension processing. IRS also plans to migrate more Integrated Data Retrieval System

subsystems to the modern architecture, prioritizing those that most directly enable Unisys

retirement and better, more timely access to taxpayer account data.

Compliance

Case Management

The Case Management initiative is replacing fragmented legacy systems with a unified and

automated platform that streamlines the full lifecycle of compliance cases. By consolidating applications into modern environments such as leading commercial Software-as-a-Service platforms

and calculators, the IRS is building streamlined workflows that provide integrated access to

taxpayer data and offer customizable platforms and advanced tools that enhance productivity of

IRS employees, improve case cycle time, and promote taxpayer compliance. This initiative will

reduce operational costs, improve case accuracy, shorten issue resolution times, allowing

compliance personnel to spend more time on high-value work while enabling taxpayers to receive

more efficient case resolutions. In FY 2027, the program continues to broaden both the technology

platform and the range of workloads it supports by deploying several new modern workflows onto

the Pega platform.

Case Selection & Anomaly Detection

The Case Selection & Anomaly Detection initiative is modernizing the IRS’s ability to identify and

prioritize compliance cases by moving from legacy systems to a next-generation, data-driven

platform. This investment leverages artificial intelligence and machine learning to improve fraud

detection, prioritize high-impact cases, and embed real-time compliance verification into tax return

submissions. By transforming how the IRS selects and routes compliance work, Case Selection will

enable faster identification of pre-refund risks, shorten audit cycles, and improve both compliance

revenue and taxpayer fairness.

In FY 2027, Case Selection & Anomaly Detection will continue to implement new capabilities that

use artificial intelligence to augment examiner capacity by automating evaluation of taxpayer

responses and onboarding workflows to the enterprise platform to expand automation to additional

workloads.

Section III – Additional Information

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Data and Platform Engineering

Enterprise Data Platform

The Enterprise Data Platform initiative makes IRS data easily accessible to any authorized application

by providing a semantic layer that standardizes data across the enterprise, enabling seamless access

and collaboration, exposing curated, contextualized data through Open API-compliant interfaces,

and accelerating integration with modern applications and services. In FY 2027, the program will

consolidate data from approximately 40 distinct systems into a unified Enterprise Data Platform. The

objective is to consolidate 120 systems and expand integration to more than 200 data sets in the

future state. This gives users a single, trusted source they can reuse across efforts, reducing

duplicate data stores and helping initiatives like Taxpayer 360, Online Accounts, and Unisys Modernization move faster and more reliably with more consistent and secure data.

Infrastructure Tech Ops

Virtual Infrastructure Replacement

The Virtual Infrastructure Replacement initiative is modernizing the IRS’s virtual infrastructure by

transitioning from legacy systems to a unified, cloud-ready platform and moving off older, more

expensive systems. This effort will improve scalability and resiliency, reduce operational costs, and

provide a secure foundation for mission-critical applications. By consolidating environments and

leveraging modern tools, the IRS will be able to support faster deployments, strengthen cybersecurity, and ensure that infrastructure remains aligned with evolving business needs. By FY 2027, the

initiative will execute the migration of approximately 10,000 virtual machines with no interruption to

production services, shifting workloads to lower-cost, higher-performing infrastructure and transitioning day-to-day operations from a managed service provider to in-house staff.

Cybersecurity

Zero Trust

Instead of assuming that anything inside the IRS network is trusted, Zero Trust requires every user,

device, and system to prove who they are and what they are allowed to do — every time they try to

access data or applications. This is important because it strengthens defenses against modern

cyber threats, better protects taxpayer information across cloud and on-premise systems, and

keeps the IRS aligned with federal cybersecurity requirements.

Section III – Additional Information

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

3.1 – Return on Investment (ROI) for IRS Major Enforcement Programs

This section describes the IRS’s three major enforcement programs—Examination, Collection, and

Automated Underreporter (AUR). These programs show the actual program costs to actual revenue

collected from FY 2022 through FY 2025. The purpose of this analysis is to provide insight into how

efficiently enforcement resources generate revenue and support overall tax compliance. The data

reflects real-world operational outcomes and serves as an indicator of average return on investment

(ROI) over time, rather than a precise measure of individual enforcement actions.

The Examination Program verifies the accuracy of tax reported by individuals, businesses, and

other entities, including large corporations, partnerships, international filers, tax-exempt organizations, estates, and government entities. Examination activities include both field and correspondence audits and are supported by the IRS Chief Counsel and Appeals functions. Program costs

reflect the full scope of resources required to conduct these examinations.

The Collection Program focuses on securing delinquent taxes and unfiled returns through

enforcement tools such as liens, levies, asset seizures, installment agreements, offers-incompromise, substitute-for-return procedures, and summons authority. It also emphasizes taxpayer

education to promote future compliance. Program costs include activities carried out through the

Automated Collection System, Field Collection, and correspondence-based payment compliance

efforts and an estimate of associated support costs which include dollars from the Operations

Support appropriation prorated using actual FTE realized for each major enforcement program.

The Automated Underreporter (AUR) Program compares information returns filed by third

parties—such as Forms W-2 and 1099—with amounts reported on individual tax returns. When

discrepancies are identified, tax examiners review and research the cases. If discrepancies cannot

be resolved, the IRS issues proposed notices and assessments. The AUR program is largely datadriven and plays a key role in identifying underreported income.

ROI is calculated by dividing enforcement revenue by program cost, providing an estimate of how

much revenue is generated for every dollar invested in enforcement activities. Enforcement revenue

includes tax, interest, and penalties collected during a fiscal year, even when the enforcement

actions relate to prior tax years or extend across multiple years. Because some enforcement cases

take significant time to resolve, costs and collections may not align within the same fiscal year,

making the ROI an average measure rather than a precise annual return.

Section III – Additional Information

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Limitations and Use of ROI in Resource Allocation

The section emphasizes that the reported ROI reflects only direct enforcement outcomes and does

not account for indirect effects, such as increased voluntary compliance resulting from the deterrent

impact of enforcement activities. While net revenue is theoretically maximized when resources are

allocated based on marginal direct and indirect returns, those marginal effects are difficult to

measure reliably. As a result, the IRS uses average ROI as one of several tools to guide decisionmaking and continues to allocate enforcement resources across a broad range of activities to

ensure fairness, compliance, and that taxpayers pay the taxes they owe.

Dollars in Millions

FY 2022

FY 2023

FY 2024

FY 2025

Enforcement

Program

Cost1

Revenue

ROI

Cost1

Revenue

ROI

Cost1

Revenue

ROI

Cost1

Revenue

ROI

IRS Total

$5,969

$72,366

12.1

$6,419

$86,051

13.4

$7,682

$98,685

12.8

$8,480

$93,760

11.1

Examination

4,000

9,170

2.3

4,429

12,246

2.8

5,098

12,174

2.4

6,309

8,070

1.3

Collection

1,741

57,874

33.2

1,762

69,769

39.6

2,296

82,117

35.8

1,894

81,809

43.2

228

5,323

23.4

227

4,036

17.7

288

4,393

15.3

278

3,881

Automated

Underreporter

(AUR)

The cost of the enforcement programs was calculated using budget data from the IRS Integrated Financial System (IFS) and includes direct dollars and FTE from

the Enforcement appropriation, Exam and Collections budget activity, and dollars from the Operations Support appropriation prorated using actual FTE realized

for each major enforcement program.

The table below shows the different types of FTEs and how they drive compliance activities leading

to high measurable ROI (across a ten-year average). Reductions in enforcement spending create

missed opportunities and lost revenue for the United States, as compliance activities generate more

revenue than their operating costs.

Business Unit

Type

Description

Total Revenue

($ in millions)

ROI

Individual

Revenue Agent

$5.18

3.8

Small Business Specialty

Revenue Agent

$16.67

12.2

Small Corps/Partnerships

Revenue Agent

$3.03

1.8

High-net-worth (HNW) (Global

High Wealth)

Revenue Agent

$6.27

3.7

Pass Through Entity (PTE)

Revenue Agent

$9.33

5.6

Large Corporate

Revenue Agent

$29.31

17.4

Individual

Tax Compliance Officer

$5.30

3.9

Campus Collection (CSCO)

Compliance Services

Collection Operations

(CSCO)

$4.15

Field Collection

Collection Field Function

(Revenue Officer)

$12.26

8.9

Automated Collection System

(ACS)

ACS

$31.23

22.8

Automated Underreporter

(AUR)

AUR

$47.20

34.5

Small Business/Self-Employed

Individual

Service Center

$27.83

20.3

Small Business/Self-Employed

Large Business & International

Small Business/Self-Employed

Collection

Section III – Additional Information

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

B – Summary of Facilities Improvements and Equipment

In the Joint Explanatory Statement accompanying the Consolidated Appropriations Act of 2026, P.L.

119-75, Congress directed the IRS to include in the FY 2027 budget request “a table and

description of the equipment acquired, and the construction, repair, and renovation of facilities

made in the prior year and planned for the current and budget years by project, location, and office.”

FY 2025 Actuals

Facilities Location

Equipment

FY 2026 Plan

Improvements

Facilities Location

Equipment

Improvements1

2,555

Alabama

California

Alaska

Idaho

485

Illinois

1,721

222

Indiana

1,288

Delaware

Iowa

301

Florida

110

Louisiana

261

166

Massachusetts

Arizona

California

Georgia

198

107

Idaho

Michigan

407

Illinois

Missouri

4,133

Nebraska

140

North Dakota

Ohio

422

728

Oregon

533

Pennsylvania

784

Indiana

Iowa

Kansas

Kentucky

744

Louisiana

Maryland

156

Massachusetts

252

721

Texas

South Dakota

1,741

Michigan

Utah

156

Minnesota

Missouri

142

Washington

1,605

180

Washington DC

Nebraska

142

Total

New Jersey

5,971

New York

Ohio

717

335

347

Pennsylvania

280

Puerto Rico

313

875

Tennessee

678

524

Texas

1,914

Utah

172

Virginia

Washington

256

Wisconsin

Wyoming

Total

1,958

235

3,365

4,794

118

$21,423

Amounts include the cost of space consolidation.

Equipment purchases include furniture acquisition, appliances, A/V equipment, electrical infrastructure, warehouse equipment, installation

services, and associated logistics/administrative

costs. The items reflect both new office setups

and upgrades to existing workspaces, including

conference rooms, open offices, training rooms,

warehouse areas, and breakrooms.

West Virginia

$15,459

Plans for FY 2027 have not yet been developed;

new equipment and facilities expenses are

currently expected to be consistent with

previous years.

Section III – Additional Information

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

Section IV – Additional Information

4.1 – Summary of IRS FY 2027 Discretionary Budget Request

Dollars in Thousands

FY 2027

IRS Budget Request

FY 2026 Enacted

Technology and

Operations Support

Taxpayer Services

Enforcement

Total

$000

FTE

$000

FTE

$000

FTE

$000

FTE

$3,036,606

23,227

$4,999,000

27,522

$3,159,759

9,131

$11,195,365

59,880

Changes to Base:

FY 2027 Maintaining

Current Levels (MCLs)

6,006

12,359

4,604

22,969

Pay Annualization

(1.0% average pay raise)

6,006

12,359

4,604

22,969

6,006

12,359

4,604

22,969

9,131

$11,218,334

59,880

Subtotal FY 2027

Changes to Base

FY 2027 Current Services

$3,042,612

23,227

$5,011,359

27,522

$3,164,363

Program Increases

$94,363

1,132

$94,363

1,132

Maintain Customer

Service

$94,363

1,132

94,363

1,132

Program Decreases

($6,006)

(60)

($908,984)

(4,794)

($566,339)

(21)

($1,481,329)

(4,875)

Reduction to Offset

Unfunded FY 2027 MCLs

(6,006)

(60)

(12,359)

(80)

(4,604)

(21)

(22,969)

(161)

Staff Reductions

(777,841)

(4,714)

(777,841)

(4,714)

Non-Labor Reductions

(118,784)

Program Changes:

Subtotal FY 2027

Program Changes

(561,735)

(680,519)

$88,357

1,072

(908,984)

(4,794)

($566,339)

(21)

($1,386,966)

(3,743)

Total FY 2027 Request

$3,130,969

24,299

$4,102,375

22,728

$2,598,024

9,110

$9,831,368

56,137

Dollar/FTE Change FY27

Request over FY26 Enacted

$94,363

1,072

($896,625)

(4,794)

($561,735)

(21)

($1,363,997)

(3,743)

Percent Change FY27

Request over FY26 Enacted

3.11%

4.62%

-17.94% -17.42%

-17.78%

-0.23%

-12.18%

-6.25%

Section IV – Additional Information

FY 2027 Congressional Budget Justification & Annual Performance Plan and Report

4.2 – Summary of IRS FY 2027 Total Resources Budget

Request

The following provides a summary of the FY 2027 budget request, which totals $9.8 billion in discretionary resources and assumes the use of additional IRS budgetary resources. Continued collaboration with Congress will be essential to ensure sufficient discretionary funding to support full IRS

operations.

Dollars in Thousands

Taxpayer

Services

Enforcement

Technology

and Operations

Support

Discretionary

3,130,969

4,102,375

2,598,024

Carryover

70,000

Inflation Reduction Act

68,584

User Fees

256,400

1,000,000

Other Resources1

45,150

317,792

141,520

10,000

$514,462

$3,571,103

$5,420,167

$6,190,477

$737,300

$15,919,047

Funding Source

Total

Business

Systems

Modernization

Total

$9,831,368

$70,000

3,450,933

727,300

$4,246,817

$1,256,400

Includes reimbursables, offsetting collections, transfers, recoveries from prior years, and Private Collection Agencies

4.3 – Summary of IRS FY 2027 Total Resources FTE

Taxpayer

Services

Enforcement

Technology

and Operations

Support

Discretionary

24,299

22,728

9,110

Carryover

700

Funding Source

1,024

User Fees

3,828

4,560

714

1,294

125

30,565

28,582

9,585

Total

56,137

700

Inflation Reduction Act

Other Resources1

Business

Systems

Modernization

350

300

1,674

8,388

2,133

300

69,032

Includes reimbursables and Private Collection Agencies

Section IV – Additional Information

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Publication 4450 (Rev. 4-2026) Catalog Number 39720Z Department of the Treasury Internal Revenue Service www.irs.gov

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.