# Congressional Budget > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A2f707a47e5e7c787 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text Fiscal Year 2027 Congressional Budget Justification & Annual Performance Report and Plan This page intentionally left blank 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 i 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. ii 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 This page intentionally left blank 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 1 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. 2 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 3 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. 4 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 5% 3% 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 6% 4% 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% -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 0% -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 0% 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 5% 5% Other Resources Reimbursables Offsetting Collections (Non-reimbursable) 39,874 72 User Fees2 50,152 2,900 8,388 13,405 Recoveries from Prior Years 3 52,659 16,620 5% 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 0% -3% 51 Transfers In/Out 83 83 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% 8% Total Budgetary Resources 94,095 $20,014,836 70,829 $16,835,120 69,031 $15,919,047 -3% -5% 6 1% 1 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. 2 FY 2027 User Fees will be allocated as follows: $1B to Enforcement and $256M to Taxpayer Services. 3 These amounts are adjusted to exclude IRA recoveries. 4 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). 5 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. 6 Resources from Other Accounts reflect planned spending from Private Collection Agency retained earnings. Section I – Budget Request 5 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 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 4,750,700 2,043,894 804,292 671,848 727,300 503,366 Direct File Study 15,000 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 1 Amounts reflect original enacted IRA level, before rescissions or proposed cancellations. 2 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. 3 Includes adjustments to prior year obligations and does not include recoveries. 4 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 57 16,996 24,220 7,596 1,674 4 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. 6 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 +$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 7 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. 8 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 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) 1 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 9 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. 10 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 11 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. 12 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 13 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. 14 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 658,343 677,927 732,797 765,985 757,316 782,013 782,013 142 75 176 277 74 139 146 15,000 29,324 11,000 15,000 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 1 Includes Emergency Paid Leave, PCA, and Covid Supplemental Funds. 1 home.treasury.gov/about/budget-financial-reporting-planning-and-performance/strategic-plan Section II – Annual Performance Plan and Report 45,004 256,400 15 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 83 83 136 85 119 67 51 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 60 86 442 526 552 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 72 300 144 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 1 Includes Emergency Paid Leave, PCA, and Covid Supplemental Funds. 16 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 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 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 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 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 9 10,132 6,620 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 1 Includes Emergency Paid Leave, PCA, and Covid Supplemental Funds. Section II – Annual Performance Plan and Report 17 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 Actual Actual Actual Actual Target Target Target Total Ending Inventory (Thousands)1 4,100 2,156 2,923 3,242 2,864 I I I Percent of Closures to Receipts 71.9% 116.4% 93.8% 96.5% 104.1% I I I 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% 87.0% 89.0% Timeliness of Critical Individual Filing Season Tax Products to the Public 92.9% 96.4% 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 N/A N/A N/A N/A N/A B TBD Enterprise Service Completion Rate2 N/A N/A N/A N/A N/A N/A B TBD Examination Efficiency - Individual 108 101 103 82 71 91 95 90 Time to Start Compliance Resolution 66.0% 68.0% 72.0% 76.0% 76.0% I I I Time to Resolve Compliance Issue After Filing (days) 484 404 372 344 351 I I I Repeat Non-Compliance Rate 30.7% 28.1% 18.9% 18.9% 28.9% I I I 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 $0.36 I I I 1 2 4 Cost to Collect $100 Criminal Investigations Completed 2,766 2,552 2,584 2,481 2,850 2,500 2,600 2,600 Conviction Rate 89.4% 90.6% 88.4% 90.0% 89.0% 92.0% 92.0% 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% 20.0% 20.0% Percent of Reportable IT Investments within +/10% Cost Variance at the Investment Level8 94.1% 81.3% 85.7% 85.7% 60.0% 90.0% 90.0% 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% 90.0% 90.0% 6 7 Key: B – Baseline; I – Indicator; TBD – To Be Determined; N/A Not Applicable 1 New FY 2022. Historical data provided for comparative purposes. 2 New FY 2026. Baseline in FY 2026 and report as a measure with a target starting FY 2027. 3 Audits of high-income individuals may take a revenue agent upwards of 250 hours to complete. 4 Due to the timing of hiring and the start date of the lengthy training cycle, the impact of hiring on performance is not immediate. 5 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. 6 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). 7 Target based on industry standard. 8 FY 2025, the name changed from Percent of Major IT Investments within +/- 10% Cost Variance at the Investment Level. 9 FY 2025, the name changed from Percent of Major IT Investments within +/- 10% Schedule Variance at the Investment Level. 18 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 19 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. 20 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 21 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. 22 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 23 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 75 82 157 493 493 Digital Services 241 110 350 Engagement Channels 37 53 91 Enterprise IT Management 123 278 401 Filing and Intake 168 186 354 Infrastructure Management 99 226 326 Internal Operations 32 259 291 IRS Cybersecurity 17 427 444 Network Services 90 344 434 Platforms and Applications 154 210 364 Compute Services Storage Services 195 Tax Account Management User Services Total $1,375 74 74 76 271 277 277 $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 0% 281 0% $4,589,914 100% IRA Operations Support Reimbursable Private Collection Agencies Total Section III – Additional Information 25 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 23 159 Online Accounts 128 30 159 Zero Paper 136 7 143 Unisys Modernization 18 9 26 Case Management 53 27 79 Compliance Case Selection & Anomaly Detection 64 15 79 Filing Season and Legislative Delivery1 Filing Season and Legislative Delivery 159 159 Data & Platform Engineering Enterprise Data Platform (EDP) 20 106 Infrastructure Tech Ops Virtual Infrastructure Replacement 106 106 620 396 1,015 60 477 537 $680 $873 $1,553 Subtotal 85 0 Mission-driven infrastructure, telecommunication, network bandwidth, cybersecurity, government labor, equipment, software, and business-driven enhancements Total $0 Note: All estimates are pre-decisional and do not include labor costs. 1 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). 26 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 27 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. 28 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 29 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. 30 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 $93,760 11.1 Examination 4,000 9,170 2.3 4,429 12,246 2.8 5,098 12,174 2.4 6,309 8,070 1.3 Collection 1,741 57,874 33.2 1,762 69,769 39.6 2,296 82,117 35.8 1,894 81,809 43.2 228 5,323 23.4 227 4,036 17.7 288 4,393 15.3 278 3,881 14 Automated Underreporter (AUR) 1 The cost of the enforcement programs was calculated using budget data from the IRS Integrated Financial System (IFS) and includes direct dollars and FTE from the Enforcement appropriation, Exam and Collections budget activity, and dollars from the Operations Support appropriation prorated using actual FTE realized for each major enforcement program. The table below shows the different types of FTEs and how they drive compliance activities leading to high measurable ROI (across a ten-year average). Reductions in enforcement spending create missed opportunities and lost revenue for the United States, as compliance activities generate more revenue than their operating costs. Business Unit Type Description Total Revenue ($ 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 3 Field Collection Collection Field Function (Revenue Officer) $12.26 8.9 Automated Collection System (ACS) ACS $31.23 22.8 Automated Underreporter (AUR) 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 31 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 11 2,555 Alabama 60 California Alaska 2 Idaho 485 58 Illinois 1,721 222 Indiana 1,288 Delaware 1 Iowa 301 Florida 110 Louisiana 261 166 Massachusetts Arizona California Georgia 198 9 107 Idaho 1 Michigan 407 Illinois 47 Missouri 4,133 4 Nebraska 140 North Dakota 50 2 Ohio 422 728 Oregon 533 42 Pennsylvania 784 Indiana 1 Iowa 7 Kansas Kentucky 744 Louisiana Maryland 156 1 Massachusetts 252 721 Texas South Dakota 1,741 Michigan 5 75 Utah 156 Minnesota 3 Missouri 142 Washington 1,605 180 Washington DC Nebraska 142 Total New Jersey 5,971 New York Ohio 8 717 335 347 Pennsylvania 280 Puerto Rico 313 875 Tennessee 678 524 Texas 37 1,914 Utah 172 97 Virginia Washington 256 8 Wisconsin Wyoming Total 32 1,958 235 3,365 1 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. 16 4 West Virginia 48 $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 33 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 1 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 1 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 34 Section IV – Additional Information This page intentionally left blank Publication 4450 (Rev. 4-2026) Catalog Number 39720Z Department of the Treasury Internal Revenue Service www.irs.gov --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A2f707a47e5e7c787. Public record. Not legal advice.