Publication 4450 (Rev. 3-2022) Catalog Number 39720Z

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Text

Fiscal Year

2023

Congressional

Budget

Justification

& Annual

Performance

Report and Plan

Publication 4450 (Rev. 3-2022) Catalog Number 39720Z

Department of the Treasury Internal Revenue Service www.irs.gov

Table of Contents

Commissioner’s Message .......................................................................................................................................................... 3

Section I – Budget Request ....................................................................................................................................................... 4

A – Mission Statement .......................................................................................................................................................... 4

1.1 – Appropriations Detail Table ....................................................................................................................................... 4

B – Summary of the Request.............................................................................................................................................. 10

1.2 – Budget Adjustments Table ........................................................................................................................................ 12

C – Base Adjustment and Program Changes Description............................................................................................... 13

Maintaining Current Levels .............................................................................................................................................. 13

Pay Annualization (2.7%) ................................................................................................................................................ 13

Pay Raise (4.6%) ............................................................................................................................................................. 13

Non-Pay ........................................................................................................................................................................... 13

Base Adjustment ................................................................................................................................................................. 13

Program Increases .............................................................................................................................................................. 14

1.3 – Object Classification (Schedule O) Obligations ...................................................................................................... 18

D – Appropriations Language and Explanation of Changes .......................................................................................... 19

E – Legislative Proposals .................................................................................................................................................... 28

Section II – Budget and Performance Plan ........................................................................................................................... 29

A – Strategic Alignment ..................................................................................................................................................... 29

Taxpayer Services ............................................................................................................................................................... 31

2.1 – Budget Adjustments Table ................................................................................................................................... 31

2.2 – Object Classification Obligations ........................................................................................................................ 32

2.3 – Appropriation Detail Table .................................................................................................................................. 33

2A – Pre-Filing Taxpayer Assistance and Education ................................................................................................. 33

2.1.1 – Budget and Performance Report and Plan ...................................................................................................... 36

2B – Filing and Account Services ................................................................................................................................. 36

2.1.2 – Budget and Performance Report and Plan ...................................................................................................... 40

Enforcement ........................................................................................................................................................................ 41

2.1 – Budget Adjustments Table ................................................................................................................................... 42

2.2 – Object Classification Obligations ........................................................................................................................ 43

2.3 – Appropriation Detail Table .................................................................................................................................. 44

2C – Investigations ......................................................................................................................................................... 44

2.1.3 – Budget and Performance Report and Plan ...................................................................................................... 47

2D – Exam and Collections ........................................................................................................................................... 47

2.1.4 – Budget and Performance Report and Plan ...................................................................................................... 52

2E – Regulatory.............................................................................................................................................................. 53

2.1.5 – Budget and Performance Report and Plan ...................................................................................................... 55

Operations Support ............................................................................................................................................................ 56

2.1 – Budget Adjustments Table ................................................................................................................................... 57

2.2 – Object Classification Obligations ........................................................................................................................ 58

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2.3 – Appropriation Detail Table .................................................................................................................................. 59

2F – Infrastructure ........................................................................................................................................................ 59

2.1.6 – Budget and Performance Report and Plan ...................................................................................................... 61

2G – Shared Services and Support ............................................................................................................................... 62

2.1.7 – Budget and Performance Report and Plan ...................................................................................................... 65

2H – Information Services............................................................................................................................................. 66

2.1.8 – Budget and Performance Report and Plan ...................................................................................................... 69

Business Systems Modernization ....................................................................................................................................... 70

2.1 – Budget Adjustments Table ................................................................................................................................... 70

2.2 – Object Classification Obligations ........................................................................................................................ 71

2.3 – Appropriation Detail Table .................................................................................................................................. 72

2I – Business Systems Modernization .......................................................................................................................... 72

2.1.9 – Budget and Performance Report and Plan ...................................................................................................... 75

B - FY 2021 - FY 2023 IRS Integrated Modernization Business Plan............................................................................ 76

C – Changes in Performance Measures ............................................................................................................................ 79

Section III – Supplemental Information ................................................................................................................................ 80

3.1 – Summary of Capital Investments ............................................................................................................................. 80

3.2 – IRS Performance Measures Table............................................................................................................................ 86

3.3 – Return on Investment (ROI) for IRS Major Enforcement Programs................................................................... 87

Section IV – Appendix ............................................................................................................................................................ 89

4.1 - COVID-19 Supplemental Funding............................................................................................................................ 89

4.2 - Carryover Investments from FY 2022 Congressional Justification ....................................................................... 90

4.3 – Summary of IRS FY 2023 Cyber Security Budget Request ................................................................................. 101

4.4 – Summary of IRS FY 2023 Budget Request ........................................................................................................... 102

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Commissioner’s Message

The Internal Revenue Service (IRS) is the primary source of funding

for the United States government and collected more than $4 trillion

in gross taxes in FY 2021. As the past year shows, we are more than a

tax administration agency. We also make it possible for the

government to perform its vital functions and be effective on

everything from education to defense. The unprecedented events of

the last two years illustrate the significant role the IRS plays in the

overall economic health of our country. We have effectively

supported economic growth and recovery while fulfilling our core

mission, including delivery of two extended tax filing seasons. Now

we’re planning for a new organizational structure and an increase in

our workforce that will position us well for the future. These

endeavors will also further the IRS’s efforts in delivering a stellar

taxpayer experience. Given the importance of the IRS to the nation, I

believe it is essential for me to leave the agency in a stronger

position, with greater resources, when my term ends in November 2022.

At a time when the IRS has faced consequential resource challenges, we have taken on new responsibilities affecting almost

every American. IRS employees’ heroic efforts during this national crisis included distributing three rounds of Economic

Impact Payments totaling more than $800 billion as well as more than $500 billion in individual refunds since the spring of

2020. In 2021, we were called upon to implement portions of the American Rescue Plan Act, including the provision for

advance payments of the 2021 Child Tax Credit (CTC) to provide much needed help to eligible Americans. We issued the

first round of more than 35 million Advance CTC payments on July 15, and further monthly payments were made through

the end of calendar year 2021. The IRS worked hard to deliver this program quickly, efficiently, and on time. In June, we

sent more than 36 million letters to people who may be eligible, to let them know about this benefit, and stood-up an online

portal allowing taxpayers to make updates to their accounts or opt out from receiving the advance CTC.

Like all federal agencies, the IRS is best able to fulfill its mission – providing the services Americans deserve and

appropriately enforcing the tax laws – when it receives the resources it needs. We anticipate over 60 percent of our 83,000

employees will retire within the next six years. Building back a strong workforce, augmenting taxpayer services, and

establishing proper support functions are my top priorities - and the premise of this budget request. An appropriate level of

consistent, multi-year funding will allow the IRS to continue enhancing the taxpayer experience, narrowing the tax gap to

ensure equitable administration of the tax code, protecting IRS systems and taxpayer data, and modernizing our information

technology systems. This request will address the IRS’s paper inventory, bolster our telephone level of service, and continue

developing innovative approaches to understanding, detecting, and resolving potential noncompliance to maintain taxpayer

confidence in the tax system. Efforts to expand the use of data, analytics, and artificial intelligence across all lanes in the

audit process, from selection to examination will persist.

We are making a difference and we want to continue to successfully pursue our mission on behalf of our great country.

Chuck Rettig

Commissioner

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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.

1.1 – Appropriations Detail Table

Dollars in Thousands

% Change

FY 2021

Appropriated Resources

New Appropriated Resources:

Taxpayer Services

Pre-Filing Taxpayer Assistance and

Education

Filing and Account Services

Enforcement

Investigations

Exam and Collections

Regulatory

Operations Support

Infrastructure

Shared Services and Support

Information Services

Business Systems Modernization

Subtotal New Appropriated Resources

Other Resources:

Reimbursables

Annualized CR3

FTE

AMOUNT

FTE

AMOUNT

FTE

AMOUNT

FTE

AMOUNT

FTE

25,989

$2,587,606

27,990

$2,763,606

32,865

$3,385,723

33,041

$3,684,593

17.42%

22.51%

18.05%

33.33%

4,514

21,475

34,989

3,012

30,987

990

12,037

5,536

22,454

35,604

2,965

31,615

1,024

11,631

2.29%

2.68%

33.77%

10.95%

11.61%

26.36%

17.12%

17.66%

17.37%

9.26%

15.66%

13.19%

8.14%

21.25%

39.20%

18.30%

8.44%

20.42%

9.06%

9.38%

9.22%

3.32%

-0.93%

4,783

6,740

412

83,807

866,539

2,818,054

$6,272,313

838,596

5,228,803

204,914

$3,833,734

405,408

1,125,014

2,303,312

$310,027

$14,100,667

7.79%

19.79%

8.43%

8.70%

8.59%

2.83%

2.51%

5,183

6,740

412

83,807

803,873

2,581,850

$5,861,649

785,121

4,883,575

192,953

$4,543,268

1,039,852

1,200,105

2,303,311

$310,027

$14,100,667

6,003

27,038

38,831

3,243

34,530

1,058

11,523

5,067

6,564

308

75,533

720,276

2,043,330

$5,004,622

667,279

4,160,748

176,595

$3,928,102

918,659

1,109,740

1,899,703

$222,724

$11,919,054

5,967

26,898

38,607

3,223

34,331

1,053

11,923

5,122

6,915

394

73,409

657,618

1,929,988

$5,004,622

678,193

4,170,886

155,543

$4,104,102

886,713

1,046,754

2,170,635

$222,724

$11,919,054

-5.60%

2.68%

33.77%

10.95%

20.31%

37.91%

25.33%

25.67%

16.04%

-2.40%

-55.87%

1.38%

21.25%

39.20%

18.30%

694

98,412

585

157,000

614

164,851

614

164,851

4.96%

5.00%

4.96%

5.00%

502,449

35,304

414,364

19,476

1,006

340,733

19,476

1,006

340,733

19,476

1069.77%

-17.77% 1069.77%

-17.77%

1,590

652,599

3,144

1,332,422

140

3,398

421,908

140

3,398

421,908

140

3,398

-98.70%

-68.34%

-98.70%

-68.34%

334

2,699

76,108

138,409

$1,493,677

$13,412,731

460

4,275

79,808

117,243

$2,054,043

$13,973,097

821

2,482

86,289

146,057

$1,107,063

$15,207,730

$1,695

$85,502

146,057

$1,107,063

$15,207,730

78.48%

-41.94%

8.12%

24.58%

-46.10%

8.84%

-92.61%

-60.35%

7.13%

24.58%

-46.10%

8.84%

66,504

User Fees

Recovery from Prior Years

10,000

Transfers In/Out

Recoveries Paid

Resources from Other Accounts 4

Subtotal Other Resources

Total Budgetary Resources

FY 2023

Request

% Change

FY 2022 to FY 2023

FY 2022 to FY 2023 Request with Technical

Adjustment

Request

Operating Plan1, 2

Offsetting Collections - Non

Reimbursables

Unobligated Balances from Prior

Years

FY 2022

FY 2023

Request with Technical

Adjustment

10,500

AMOUNT

5.00%

FY 2021 Other Resources represent actuals.

FY 2021 Operating Plan includes an interappropriation transfer from Enforcement ($208 million) to Taxpayer Services ($32 million) and Operations Support ($176 million).

FY 2022 Annualized CR includes an interappropriation transfer of $208 million from Enforcement to Taxpayer Services.

FTE

AMOUNT

5.00%

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

Note: The new appropriated resources do not include the $15 million in the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), $750.7 million under the Coronavirus Aid, Relief, and

Economic Security (CARES) Act (P.L. 116-36), the $509 million provided in the Consolidated Appropriations Act, 2021 (P.L. 116-260), and the $1.86 billion provided by the American Rescue Plan

(ARP) (P.L. 117-2). Unobligated balances in FY 2022 and FY 2023 inlcude ARP funding.

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Introduction

The Internal Revenue Service (IRS) Fiscal Year (FY) 2023 budget request is $14.1 billion, $2.2 billion (18 percent) more

than the FY 2022 Annualized Continuing Resolution (ACR) level of $11.9 billion, to administer the nation’s tax system

fairly, collect more than $4 trillion in gross taxes to fund the government, and strengthen tax compliance. The Budget

comprises initiatives to improve the taxpayer’s experience with the IRS, that will ultimately lead to increased voluntary tax

compliance. The request also aims to ensure we stay current with the paper inventory and improve telephone and in-person

service; facilitate better oversight of high income and corporate tax returns; and accelerate the development of digital tools to

enable smarter communication with taxpayers. In addition, the Administration continues to support a multiyear investment in

IRS enforcement to increase tax compliance and revenues that the President has previously proposed.

An extensive enforcement program will generate and protect billions in additional revenue while reducing the tax gap. The

IRS has an overall enforcement return on investment (ROI) of about $5 for every $1 invested compared to the IRS appropriated

budget, excluding significant deterrence effects. Overall, this request proposes new and enhanced strategies for refining how

the taxpayer interacts with the IRS by implementing strategies that put taxpayers first, bringing services to underserved

communities and providing new and improved online tools for taxpayers to communicate with the IRS easily and quickly.

An appropriate level of funding will allow the IRS to continue enhancing the taxpayer experience, narrowing the tax gap to

ensure equitable administration of the tax code, protecting IRS systems and taxpayer data, and modernizing our information

technology systems. Taxpayer services is only one component of funding required to serve taxpayers effectively. During the

pandemic, for example, the Information Technology (IT) division provided the equipment necessary to allow thousands of

IRS customer service representatives to telework, which enabled phone assistance to continue during a period of

overwhelming demand while keeping our employees safe.

The IRS dedicates itself to improving the taxpayer experience so that taxpayers and their representatives can understand and

meet their tax obligations with minimal burden. The aim is to increase voluntary compliance by simplifying the tax filing,

correction, and payment processes. To help achieve this, we will focus on improving education and outreach on taxpayer

rights and obligations and enhancing service channels to meet taxpayer needs. In addition to improving the taxpayer

experience, another priority is to ensure taxpayers comply with federal tax laws. To this effect we continue to develop

innovative approaches to understanding, detecting, and resolving potential noncompliance to maintain taxpayer confidence in

the tax system.

The IRS expanded its taxpayer services through proactive outreach efforts to connect with underserved communities such as

those with limited English proficiency (LEP), lower-income earners, military, veterans, retired and homeless, among other

communities. We engaged hundreds of local and national groups, religious organizations, and numerous others to help

contact underserved communities ensuring all eligible recipients could benefit from the Economic Impact Payments and

Advance Child Tax Credit. We expanded communication options for LEP communities, such as releasing a Spanish version

of Form 1040 and debuting Schedule LEP. In 2021, IRS translated 75-80 percent of the most popular pages on IRS.gov into

seven languages.

Expanding our offerings in multiple languages is just one way the IRS is working to enhance the taxpayer experience.

Another way is by providing new virtual services and online tools to tax professionals so they can better assist their clients.

Enhancing the experience of taxpayers and tax professionals is essential to maintaining a voluntary tax system. Ensuring fair

enforcement of the tax laws is just as critical as the services we provide. The IRS makes it possible for the government to

perform its vital functions, helping fund the great work of our nation on everything from education to defense.

Though enforcement and taxpayer services efforts continue to expand, the IRS’s budget has decreased by approximately 15

percent in real terms since FY 2010. As a result of this decrease in funding, Taxpayer Services FTEs have not increased and

Enforcement FTEs have declined by 30 percent from FY 2010 through FY 2021, while real Gross Domestic Product (GDP)

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has increased by 29 percent (see Figure 1.1). Current staffing levels are close to 1974 levels (see figure 1.2 for the past 12year history).

Reduced FTEs have crippled tax administration bandwidth and significantly diminished the IRS’s ability to:

•

Deliver meaningful customer service,

Maintain sufficient audit coverage of entities and individuals contributing the most to the tax gap,

Collect taxes taxpayers acknowledge they owe but have not paid,

Reduce the tax gap through a coordinated effort of both meaningful guidance and enforcement,

Fund the government, and

Modernize IT systems and facilities.

Figure 1.1

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Figure 1.2

Note: FTE shown are funded through IRS annual appropriations as well as through funding provided in administrative provisions and supplemental legislation passed in addition to the annual

appropriations. In FY 2020, this includes 2,144 FTE funded through the CARES Act. In FY 2021, this includes 2,933 FTE funded through supplemental appropriations within the Consolidated

Appropriations Act, 2021 and the American Rescue Plan.

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Reductions to enforcement staffing levels over the last decade factored pointedly into reduced total enforcement revenue

collected (TERC) by around $95 billion.

Figure 1.3

While a portion of the unpaid tax obligations that make up the tax gap result from a lack of knowledge or ambiguity and

complexity in tax law, willful evasion is a significant contributing factor. The IRS could help remedy this with the funding of

a multi-year enforcement initiative, that would include targeted investments in enforcement activities designed to increase

revenue and lower the tax gap. The FY 2023 request and legislative proposals provide the IRS with a blueprint to address

various facets of the tax gap.

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Restructuring IRS Appropriations to Align Support Costs to Mission Costs

With this budget, the Administration proposes a change to the appropriations language that would allow Taxpayer Services

and Enforcement funding to be used for certain associated support costs that are currently reserved for Operations Support

funding. Currently, Taxpayer Services and Enforcement funding only pays for an employee’s labor cost, not the cost to hire

the employee or the IT equipment and space needed to make them productive. There are significant benefits to this change –

future IRS budgets would reflect the full cost of Taxpayer Services and Enforcement, to include their necessary support costs.

The changes would also prompt IRS Business Units to be more efficient with their support costs because they stand to

directly benefit from savings.

The IRS proposes using an internal reimbursable agreement process to carry out the proposed funding structure. In FY 2023,

rental and Chief Financial Officer (CFO) costs will be reallocated from Operations Support to Taxpayer Services and

Enforcement with more costs planned to move out of Operations Support in the future. A total of $710 million will be shifted

from Operations Support to Taxpayer Services ($299 million) and Enforcement ($411 million) (see figure 1.4). For additional

information, please see section D – Appropriations Language and Explanation of Changes includes a more detailed

description and justification of this proposal.

Figure 1.4

Appropriation

Taxpayer Services

Enforcement

Operations Support

Business Systems Modernization

Grand Total

Proposed Adjustments

FY 2023

Request

3,385,723

5,861,649

4,543,268

310,027

$14,100,667

Rent

265,830

368,613

(634,443)

CFO

33,040

42,051

(75,091)

Adjustment

Total

298,870

410,664

(709,534)

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Proposed

Funding Levels

3,684,593

6,272,313

3,833,734

310,027

$14,100,667

B – Summary of the Request

The IRS is responsible for administering the nation’s tax system and meeting the needs of America’s taxpayers by helping

them understand their tax responsibilities and by enforcing the law with integrity and fairness. The IRS’s core operations

include collection of individual and corporate taxes, examination of returns, taxpayer assistance, and oversight of tax-exempt

organizations, as well as administering multiple refundable tax credits and other specialized programs.

In FY 2021, the IRS collected more than $4 trillion in taxes (gross receipts before tax refunds) and collects nearly all the

revenue that supports the federal government’s operations. With the U.S. tax base becoming more complex, one of the IRS’s

key responsibilities is to make it easier for taxpayers to understand and meet their tax obligations.

269M

Federal Tax

Returns

and Forms

Processed

$4.1T

Collected in

Gross Taxes

$1,691

Average

Individual

Refund

$75.0B

Enforcement

Revenue

Collected

The IRS’s FY 2023 budget request is composed of strategic investments that are aligned with the President’s Management

Agenda, as well as with mission driven efforts that will perpetuate the trajectory of the agency to better serve the taxpayer –

warrant an impartial tax system – and lessen the tax gap. The FY 2023 Budget requests a total program increase of $1.3

billion including:

•

$320.2 million for continuing the Taxpayer First Act implementation activities;

$469.3 million for continuing enforcement strategies that ensure a fair tax system;

$389.1 million for implementing strategies to enhance taxpayer services;

$78.1 million for building and enhancing IT systems that will improve taxpayer services;

$39.5 million to enhance and increase IT operations; and

$10.2 million to establish the Mississippi Delta hiring initiative designed to provide job opportunities for those who

live in underdeveloped communities and develop a pipeline of talent.

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FY 2023 Budget Request and Priorities

The FY 2023 request is $14.1 billion, $2.2 billion or 18.3 percent more than the FY 2022 ACR of $11.9 billion. The Budget

request includes, $12.8 billion in base resources and $1.3 billion in program increases to carry out the IRS mission, including:

•

Putting Taxpayers First ($320 million),

Ensure Fairness of the Tax System ($469 million),

Enhance Taxpayer Service ($389 million),

Integrated Modernization Business Plan ($78 million),

Critical IT Operations ($39 million), and

Focused Strategies for Reaching Underserved Communities ($10 million).

Appropriation Account (Status Quo)

Taxpayer Services

Enforcement

Operations Support

Business Systems Modernization

Total Appropriated Resources

($ in Millions)

$3,385.7

5,861.6

4,543.3

310.0

$14,100.7

The following appropriation levels reflect the FY 2023 proposed appropriations language change, outlined in section D, that

charges $710 million of support costs that were historically part of Operations Support to Taxpayer Services and

Enforcement, for costs associated with rent and the Chief Financial Officer. When considering the proposed request, the

appropriation levels for the FY 2023 budget are as follows:

Appropriation Account (with Change)

Taxpayer Services

Enforcement

Operations Support

Business Systems Modernization

Total Appropriated Resources

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($ in Millions)

$3,684.6

6,272.3

3,833.7

310.0

$14,100.7

1.2 – Budget Adjustments Table

Dollars in thousands

Bureau: Internal Revenue Service

Summary of Proposed FY 2023 Request

FTE

FY 2022 Annualized CR (ACR)

75,533

Amount

$11,919,054

Changes to Base:

Maintaining Current Levels (MCLs)

$436,363

Pay Annualization (2.7% average pay raise)

62,546

Pay Raise (4.6% average pay raise)

321,837

Non-Pay

51,980

Base Adjustment

1,183

$438,882

1,183

438,882

Subtotal FY 2023 Changes to Base

1,183

$875,245

FY 2023 Current Services

76,716

$12,794,299

573

320,170

Taxpayer Experience Strategy

573

239,170

Ensure Fairness of the Tax System

2,513

469,253

Enhance Taxpayer Service

3,858

389,112

Integrated Modernization Business Plan

104

78,143

Critical IT Operations

39,521

Adjustment to Reach Current Operating Levels

Program Changes:

Program Increases

Putting Taxpayers First

81,000

User Authentication

Focused Strategies for Reaching Underserved Communities

10,169

Subtotal FY 2023 Program Increases

7,091

$1,306,368

Total FY 2023 Budget Request

83,807

$14,100,667

See footnotes in 1.1 -- Appropriations Detail Table

This table does not include the proposed technical adjustment that would move certain support activities from Operation

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations.

The adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and

increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

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C – Base Adjustment and Program Changes Description

Maintaining Current Levels…………………………….……………………………………………. +$436,363,000 / 0 FTE

Pay Annualization (2.7%) +$62,546,000 / 0 FTE

Funds are requested for annualization of the January 2022 2.7 percent average pay raise.

Pay Raise (4.6%) +$321,837,000 / 0 FTE

Funds are requested for a 4.6 percent average pay raise in January 2023.

Non-Pay +$51,980,000 / 0 FTE

Funds are requested for non-labor expenses such as travel, contracts, rent, supplies, and equipment.

Base Adjustment……………………………………………………………………….………+$438,882,000 / +1,183 FTE

The FY 2023 base begins at the FY 2022 ACR level of $11.9 billion. In addition to $436 million to maintain current staffing

levels, the base was adjusted by $439 million dollars to reach current operating funding levels.

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Program Increases ……….…………………….……….……………………………………. +$1,306,368,000 / +7,091 FTE

Collectively the following proposed FY 2023 investments total $390,808,000 with 1,832 FTE; the remaining $915,560,000

with 5,259 FTE is made up of the carried over FY 2022 investments – which are displayed in the Program Increase Table

below and discussed in section 4.2.

TAXPAYER SERVICES

Bureau: Internal Revenue Service

Summary of FY 2023 Request

FY 2023 Program Increases:

Putting Taxpayers First

User Authentication

$000

Taxpayer Experience Strategy

Ensure Fairness of the Tax System

Enhance Taxpayer Service

Critical IT Operations

ENFORCEMENT

FTE

$000

OPERATIONS SUPPORT

FTE

FY 2022 Program Increases:

Putting Taxpayers First

User Authentication

Taxpayer Experience Strategy

Ensure Fairness of the Tax System

Enhance Taxpayer Service

Integrated Modernization Business Plan

Subtotal FY 2022 Program Increases

Total FY 2023 Program Increases

FTE

BSM

$000

83,575

54,000

29,575

138

15,461

42,082

138

15,461

42,082

156,000

1,510

Focused Strategies for Reaching Underserved Communities

Subtotal FY 2023 Program Increases

$000

TOTAL

FTE

$000

141,118

54,000

87,118

279

44,000

39,521

10,169

200,000

39,521

10,169

1,510

1,648

$15,461

$135,772

129

$390,808

1,832

40,036

27,000

38,870

100,146

143

179,052

27,000

294

13,036

38,870

370,857

2,493

143

148,167

2,348

100,146

98,396

40,945

152,052

469,253

189,112

294

2,513

2,348

$188,203

$427,778

2,402

4,050

$409,727

$425,188

2,590

2,645

$239,487

$375,259

163

292

FTE

Positions

78,143

104

78,143

104

$78,143

104

$915,560

$1,306,368

5,259

7,091

$000

User Authentication

$54,000

Contract Services

54,000

Proactive Outreach and Education

102

204

$34,439

Revenue Agent

4,785

Attorney

2,316

Other

130

11,126

Contract Services

Focused Strategies for Reaching

Underserved Communities

Other

16,212

122

$17,119

122

8,119

Contract Services

9,000

Taxpayer Experience Office

134

$15,484

Other

Human Resources Support

134

15,484

Other

Total

20,076

279

558

$141,118

Public Law 116-25, The Taxpayer First Act (TFA), requires the IRS to develop and implement a Taxpayer Experience

Strategy (TXS) to improve the American taxpayer’s experience with the IRS. To fulfill the TXS requirement, the IRS’s

Taxpayer First Act Office (TFAO), in partnership with key internal and external stakeholders and subject matter experts,

identified certain areas of focus to inform the development and implementation of the TFA TXS. The FY 2023 funding

concentrates on:

•

279

$239,575

Putting Taxpayers First +$141,118,000 / +279 FTE

Position Type/Other Costs

FTE

Expanding an application to protect taxpayers’ personally identifiable information,

IRS - 14

•

Expanding strategies that increase the IRS’s outreach and taxpayer education efforts,

Developing strategies to reach underserved communities, and

Providing human resources support for implementing the TFA.

User Authentication +$54,000,000 / 0 FTE

Section 2304 of the TFA requires the IRS to verify the identity of any individual opening an IRS online account before such

individual can use online applications, including online tools for tax professionals. IRS will utilize the services of a thirdparty vendor, which charges for each new taxpayer who signs up for an IRS online account. Funding will provide

authentication services for approximately 15 million estimated additional taxpayers who will sign up for online services such

as applying for an identity protection PIN, obtaining a transcript, viewing account information, entering into an Online

Payment Agreement, and functionalities of the Tax Pro Account application.

Proactive Outreach and Education +$34,439,000 / +102 FTE

The optimal taxpayer experience is for taxpayers to have all the information they need to comply with their tax obligations

without expending any additional effort. To optimize the impact of an enhanced taxpayer experience, improved outreach, and

a better understanding by taxpayers of their obligations is foundational. Building out a system of Proactive Outreach and

Education will allow the IRS to use various channels, languages, and personalized messaging to reach taxpayers at the right

time through the right format. Equipping taxpayers with this information proactively minimizes the likelihood of them having

to contact the IRS, freeing up IRS resources to address other taxpayer needs. Educating taxpayers will increase confidence in

the agency, enable them to meet tax obligations, and enable the IRS to better anticipate and respond to taxpayer needs. The

following are highlights of what will be accomplished with funding:

•

Provide taxpayers with updates through their online accounts or push information to their mobile devices. This will

include information on how to open online accounts and increasing usage of self-service digital options;

Deliver information and education through additional social media platforms:

- Capture data and analytics from platforms to understand demographic profiles;

- Apply emerging technology that customizes messaging to the right taxpayer groups through their optimal

platform at the right time;

Issue simplified and improved notices;

Analyze data to determine language translations needed for social media; and

Use evidence-based approaches to design easy to understand plain language communications.

Focused Strategies for Reaching Underserved Communities +$17,119,000 / +61 FTE

The IRS leverages outreach relationships through two grant programs with local and national partners to educate and inform

taxpayers about meeting their tax obligation. The Volunteer Income Tax Assistance (VITA) program provides underserved

communities with free tax filing assistance and aids low-to-moderate-income taxpayers who cannot prepare their own tax

returns, including the elderly, persons with disabilities, and those with limited English proficiency. The Tax Counseling for

the Elderly Program (TCE) offers free tax counseling and assistance to elderly individuals (60 or older) in preparing their

federal income tax returns. Additional funding will further expand IRS outreach and tax assistance services along with

resources to address projected program staffing needs and support anticipated partner cultivation and growth of the two grant

programs.

IRS - 15

Taxpayer Experience Office (TXO) +$15,484,000 / +67 FTE

In the Taxpayer First Act Report to Congress, the IRS identified as part of its key organizational structure the establishment

of a new office designed to improve taxpayer experiences with the IRS. The Taxpayer Experience Office (TXO) drives

strategic direction for improving the taxpayer experience across the IRS and helps ensure a consistent voice and experience

across all taxpayer segments by developing agency-wide guidelines and expectations. Collaborating with peers across the

entire agency, this office promotes an enterprise-level holistic view of the taxpayer experience with teams of experts in the

areas of customer experience, research, behavioral analytics, human-centered design, and service delivery. The TXO

provides IRS organizational units with information on industry trends and ways to apply customer service best practices

within the framework of IRS operations and federal limitations.

Human Resources Support +$20,076,000 / +49 FTE

Funding for this initiative will continue the implementation of a service-wide training strategy, as required in section 2402 of

the TFA. Key areas of this strategy will focus on organizational awareness, career paths, people first training, employee

online forums, organizational liaisons, internal concierge service, and enhanced training technologies. Resources are also

required to coordinate IRS-wide efforts for recruiting, hiring, onboarding, enabling, and training new employees to efficiently

focus on large business, high-income and high-wealth taxpayers, partnerships, abusive crypto-currency transactions, and

promoter-related examinations. Funding is requested to identify resource gaps, assess, and improve the way the IRS selects

qualified individuals, and develop an integrated approach to hiring, recruitment, and training. Onboarding employees who

have technical expertise in these areas will be critical. The IRS will also create a Center of Excellence for employee

development that will be available to the Department as a shared service.

Enhance Taxpayer Service +$200,000,000 / +1,510 FTE

Position Type/Other Costs

FTE

Increase Telephone Level of Service

Customer Service Rep

Manager

Positions

$000

1,510

1,520

$200,000

1,500

172,800

Contractual Services/ IT

2,487

24,713

Total

1,510

1,520

$200,000

This investment will allow the IRS to increase the telephone level of service (LOS) to 85 percent assuming phone demand

returns to pre-pandemic levels and the IRS can provide in-person services at pre-pandemic levels. This investment will build

on the IRS’s efforts to improve telephone services for underserved communities such as those who are deaf or hard of

hearing, LEP communities, and victims of tax related identity theft. During the 2021 filing season, the IRS’s level of service

fell short of its targets because of the Coronavirus (COVID-19) pandemic and legislation aimed at providing relief that

resulted in massively increased demand for the toll-free lines. Individual and Business taxpayer telephone demand increased

by 456 percent and 244 percent, respectively during the 2021 filing season. In FY 2021, the number of taxpayers calling to

schedule appointments at Taxpayer Assistance Centers (TACs) was 3.9 million above the same period in the prior year.

In addition to expanding LOS for underserved communities, funding for this initiative will improve the way taxpayers

interact with IRS by enhancing and expanding the range of modern, digital tools provided by IRS to deliver a service

experience comparable to those available in the private sector. By empowering taxpayers to address certain needs without

requiring live assistance, development of these tools is essential to IRS’s long-term success in satisfying taxpayer

expectations and meeting the ongoing growth in demand for assistance. These resources will enable IRS to address strategic

service needs, such as:

IRS - 16

•

Expanding the features of individual Online Account to provide more personalized content and the ability to update

and store information used for key activities like alerts, payments and estimating withholding;

Developing a robust Business Online Account to provide business taxpayers (and their representatives) an

integrated online account experience that enables them to securely manage and fulfill their federal tax obligations;

Providing critical electronic payment capabilities in light of the planned decommissioning of Direct Pay and the

Electronic Federal Tax Payments System (EFTPS); and

Making improvements to IRS.gov to provide a modern and consistent experience that provides taxpayers the

information they need in a timely, searchable, and mobile-adaptive environment.

Critical Information Technology Operations +$39,521,000 / +36 FTE

Position Type/Other Costs

FTE

IT Specialist

Positions

$000

7,031

72 $

39,521

Contractual Services

32,490

Total

The IRS continues to transform its technological landscape and has made progress on its modernization journey to provide

taxpayers with a seamless customer experience, while empowering employees with the tools and systems needed to provide

top quality services and enforce tax law. These successes have increased the need to sustain critical IT operations to maintain

optimum network performance and functionality. The IRS continues to deploy and incorporate new, modernized tools for

taxpayers, tax professionals, and employees. Taxpayer service improvements (additional digital services, real-time account

information, etc.), enterprise efficiency advances (automation, artificial intelligence, machine learning, etc.) and new

employee tools (case management, collaboration, learning platforms, etc.) all require additional bandwidth to sustain a high

volume of users processing digitalized capabilities.

Economic Development in Underserved Communities +$10,169,000 / +7 FTE

Position Type/Other Costs

FTE

Analyst

Positions

$000

7,640

14 $

10,169

Contractual Services

2,529

Total

The IRS will cultivate new opportunities for adults and students in underserved communities by partnering with state labor

and human services officials to identify talent and design training programs for adult candidates. Additionally, the IRS will

develop a talent pipeline by partnering with colleges, universities (with a special focus on Historically Black Colleges and

Universities and other minority servicing institutions) and high schools to design training programs to prepare participants for

IRS careers. These partnerships will foster equitable economic growth, establish long-term federal employment options, and

develop a continual stream of talent suited to further enhance the taxpayer experience and support the IRS mission. As a first

step, the IRS plans to create a center in the Mississippi Delta Region, which currently has the highest rate of poverty in the

United States, excluding the U.S. Territories.

IRS - 17

1.3 – Object Classification (Schedule O) Obligations

Dollars in thousands

Internal Revenue Service

Object Classification

11.1 Full-Time Permanent Positions

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

6,106,908

6,264,496

11.3 Other than Full-Time Permanent Positions

86,008

93,663

98,308

11.5 Other Personnel Compensation

301,867

336,242

372,976

11.8 Special Personal Services Payments

7,105,375

29,681

30,239

49,677

11.9 Personnel Compensation (Total)

6,524,464

6,724,640

7,626,336

12.1 Personnel Benefits

2,400,621

2,527,702

2,881,499

20,240

13,728

14,297

$8,945,325

$9,266,070

$10,522,132

141,505

13.0 Benefits to Former Personnel

Total Personnel and Compensation Benefits

21.0 Travel

69,038

75,642

22.0 Transportation of Things

23,288

23,568

37,972

23.1 Rental Payments to GSA

579,736

609,019

634,381

23.2 Rent Payments to Others

23.3 Communications, Utilities, & Misc.

24.0 Printing & Reproduction

25.1 Advisory & Assistance Services

7,196

280

306

317,043

298,292

346,087

32,307

32,421

36,108

1,021,157

695,468

1,139,330

170,157

25.2 Other Services

89,204

91,615

25.3 Purchase of Goods & Services from Govt. Accounts

155,815

172,736

194,947

25.4 Operation & Maintenance of Facilities

199,042

202,780

223,733

25.6 Medical Care

15,097

17,724

44,877

25.7 Operation & Maintenance of Equipment

70,123

46,150

62,282

25.5 Research & Development Contracts

25.8 Subsistence & Support of Persons

26.0 Supplies and Materials

32,281

28,408

34,462

31.0 Equipment

269,122

249,320

362,726

32.0 Land and Structures

32,645

45,987

76,858

41.0 Grants, Subsidies

54,000

63,000

42.0 Insurance Claims & Indemnities

2,135

2,074

2,115

33.0 Investments & Loans

43.0 Interest and Dividends

44.0 Refunds

91.0 Unvouchered

4,500

7,500

7,690

Total Non-Personnel

$2,973,729

$2,652,984

$3,578,535

New Appropriated Resources

$11,919,054

$14,100,667

Appropriations:

Taxpayer Services

2,587,606

2,763,606

3,385,723

Enforcement

5,004,622

5,861,649

Operations Support

4,104,102

3,928,102

4,543,268

Business Systems Modernization

222,724

310,027

$11,919,054

$14,100,667

73,409

75,533

83,807

New Appropriated Resources

FTE

See footnotes in 1.1 -- Appropriations Detail Table

Note 1: This table does not include the proposed technical adjustment that would move certain support activities from Operations

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment

would reduce the Operations Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer Services

appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Note 2: This table does not include the $15 million in the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), $750.7 million

under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-36), the $509 million provided in the Consolidated

Appropriations Act, 2021 (P.L. 116-260), the $1.86 billion provided by the American Rescue Plan (ARP) (P.L. 117-2)

IRS - 18

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, associated support costs, and other

services as authorized by 5 U.S.C. 3109, at such rates as

may be determined by the Commissioner, $3,684,593,000;

of which not to exceed $100,000,000 shall remain available

until September 30, 2024; of which not less than

$11,000,000 shall be for the Tax Counseling for the Elderly

Program; of which not less than $26,000,000 shall be

available for low-income taxpayer clinic grants, including

grants to individual clinics of up to $200,000; of which not

less than $30,000,000, to remain available until September

30, 2024, shall be available for the Community Volunteer

Income Tax Assistance Matching Grants Program for tax

return preparation assistance; and of which not less than

$235,000,000 shall be available for operating expenses of

the Taxpayer Advocate Service: Provided, That of the

amounts made available for the Taxpayer Advocate

Service, not less than $5,500,000 shall be for identity theft

and refund fraud casework.

Adding “associated support costs” would allow the IRS to

reallocate service-related support costs from Operations

Support to Taxpayer Services, to ensure that Taxpayer

Services reflects the full cost of delivering mission critical

activities. See the following section titled Restructuring

IRS Appropriations to Align Support Costs to Mission

Costs, on page IRS-25, for more information regarding this

proposal.

Allowing $100,000,000 to remain available until

September 30, 2024, in the Taxpayer Services account

provides IRS with needed relief in the event that IRS is not

successful in hiring thousands of employees in extremely

tight labor markets where IRS has campus facilities.

Note.—A full-year 2022 appropriation for this account was

not enacted at the time the budget

was prepared; therefore, the budget assumes this account is

operating under the Continuing

Appropriations Act, 2022 (Division A of P.L. 117–43, as

amended). The amounts included for

2022 reflect the annualized level provided by the

continuing resolution.

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)), associated support costs, and to provide

Adding “associated support costs” would allow the IRS to

reallocate service-related support costs from Operations

Support to Enforcement, to ensure that Enforcement

reflects the full cost of delivering mission critical activities.

See the following section titled Restructuring IRS

Appropriations to Align Support Costs to Mission Costs, on

page IRS-25, for more information regarding this proposal.

IRS - 19

other services as authorized by 5 U.S.C. 3109, at such rates

as may be determined by the Commissioner,

$6,272,313,000; of which not to exceed $250,000,000 shall

remain available until September 30, 2024; of which not

less than $60,257,000 shall be for the Interagency Crime

and Drug Enforcement program; and of which not to

exceed $21,000,000 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 "Operations Support" heading.

Note.—A full-year 2022 appropriation for this account was

not enacted at the time the budget was prepared; therefore,

the budget assumes this account is operating under the

Continuing Appropriations Act, 2022 (Division A of P.L.

117–43, as amended). The amounts included for 2022

reflect the annualized level provided by the continuing

resolution.

OPERATIONS SUPPORT

For necessary expenses to operate the Internal Revenue

Service, including headquarters; 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; $3,833,734,000;

of which not to exceed $275,000,000 shall remain available

until September 30, 2024; 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, 2025, for

research; and of which not to exceed $20,000 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

Integrated Modernization Business Plan portfolio,

including detailed, plain language summaries on the status

of plans, costs, and results; prior results and actual

The administration proposes editing the following verbiage

from the Operations Support language: For necessary

expenses to operate the Internal Revenue

Service, including; headquarters

This change would allow the IRS to reallocate servicerelated support costs from Operations Support to the

mission-specific appropriations, Taxpayer Services or

Enforcement, to reflect the full cost of delivering mission

critical activities in those taxpayer-facing accounts. See the

following section titled Restructuring IRS Appropriations

to Align Support Costs to Mission Costs, on page IRS-25,

for more information regarding this proposal.

The administration proposes to remove the following

statement [from the IRS FY 2023 Operations Support

language]: “of which not less than $10,000,000, to remain

available until expended, shall be available for

establishment of an application through which entities

registering and renewing registrations in the System for

Award Management may request an authenticated

electronic certification stating that the entity does or does

not have a seriously delinquent tax debt,”. With the FY

2022 enacted budget, the IRS has received $30,000,000 of

IRS - 20

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 2024, a

summary of cost and schedule performance information for

its major information technology systems.

no year funds earmarked for this effort from since FY

2020. The IRS is committed to completing this project and

will use those earmarked funds to complete it. If funding

needs arise beyond those available funds, the IRS would

use current year funds to complete the project.

Note.—A full-year 2022 appropriation for this account was

not enacted at the time the budget was prepared; therefore,

the budget assumes this account is operating under the

Continuing Appropriations Act, 2022 (Division A of P.L.

117–43, as amended). The amounts included for 2022

reflect the annualized level provided by the continuing

resolution.

BUSINESS SYSTEMS MODERNIZATION

For necessary expenses of the Internal Revenue Service's

business systems modernization program, $310,027,000, to

remain available until September 30, 2025, for the capital

asset acquisition of information technology systems,

including management and related contractual costs of

said acquisitions, including related Internal Revenue

Service labor costs, and contractual costs associated with

operations authorized by 5 U.S.C. 3109: 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

Integrated Modernization Business Plan 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.

Note.—A full-year 2022 appropriation for this account was

not enacted at the time the budget was prepared; therefore,

the budget assumes this account is operating under the

Continuing Appropriations Act, 2022 (Division A of P.L.

117–43, as amended). The amounts included for 2022

IRS - 21

reflect the annualized level provided by the continuing

resolution.

ADMINISTRATIVE PROVISIONS-INTERNAL

REVENUE SERVICE (INCLUDING TRANSFER OF

FUNDS)

SEC. 101. Not to exceed 4 percent of the appropriation

made available in this Act to the Internal Revenue Service

under the "Enforcement" heading, and not to exceed 5

percent of any other appropriation made available in this

Act to the Internal Revenue Service, may be transferred to

any other Internal Revenue Service appropriation upon

advance notice to the Committees on Appropriations of the

House of Representatives and the Senate: Provided, That

an additional 2 percent of the appropriation made

available in this Act to the Internal Revenue Service under

the "Enforcement" heading may be transferred to the

appropriation made available in this Act to the Internal

Revenue Service under the "Taxpayer Services" heading

upon advance notice to the Committees on Appropriations

of the House of Representatives and the Senate.

This change will allow IRS to transfer up to 6 percent into

the Taxpayer Services account from Enforcement in case

this flexibility is still needed in FY 2023 to address

inventory issues, while still retaining the existing 4 percent

transfer authority out of Enforcement to the Operations

Support or BSM accounts, and the existing 5 percent

transfer authority out of any of the other accounts.

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

IRS - 22

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.

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 rehiring 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).

SEC. 111. Notwithstanding any Congressional notification

requirements for a reprogramming of funds in this Act,

IRS - 23

funds provided in this Act for the Internal Revenue Service

shall be available for obligation and expenditure through a

reprogramming of funds that augments or reduces existing

programs, projects, or activities by up to $10,000,000

without prior Congressional notification of such action.

IRS - 24

Structural Changes to IRS Appropriations to Improve Mission Delivery and Transparency

With this Budget, the Administration proposes structural changes to IRS appropriations that would align the IRS funding for

support activities with mission delivery activities. The current appropriations language segments many support activities into

Operations Support. The Operation Support appropriation language specifies it must be used to fund support costs such as:

… 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 …

By separating funding for these activities from the mission activities that they support, this structure obscures the full cost of

delivering the IRS mission. The administration proposes a multi-year process to shift activities from Operations Support into

the mission appropriations, so the IRS budget better reflects the full cost of its mission programs. This shift in resources

would improve full-cost transparency, mission delivery and long-term accountability.

Challenges

The Operations Support account currently funds multiple activities that directly contribute to and ensure that IRS personnel

funded in Enforcement and Taxpayer Service accounts can execute their missions. For example, while revenue agent salaries

are funded in the Enforcement account, the facilities (and the resulting rent and physical security) and the computer

equipment and systems that the agents use to conduct their work are funded in the Operations Support account. The Program

Integrity Allocation Adjustment (PIAA), like similar proposals included in previous budgets provides an illustrative example

– its mission is solely focused on tax law enforcement, but a third of its funds were needed in the Operations Support

appropriation. Aligning these support costs in the mission appropriation would better reflect the full cost of those mission

programs – providing improved transparency.

The effect of the current language as written is that Taxpayer Services and Enforcement fund mostly salaries and benefits,

while Operations Support funds most other costs. This distortion is apparent when comparing the relative amounts of IRS

labor and nonlabor in Taxpayer Services and Enforcement (91 percent labor) to Operations Support (45 percent labor) in this

budget.

Figure 1.5

IRS - 25

The separation between IRS labor and its associated, often non-labor, support complicates efficiency tradeoffs and creates

prioritization challenges. For example, the IRS must prioritize Operations Support funding for IT investment requests coming

from different business units. If the funding of these activities came from the business units’ appropriations, which is a

long-term goal of this project, they could potentially contribute from their own funding – allowing business units to invest in

IT to deliver on their mission.

The reimagined IRS under the Taxpayer First Act calls for modernization and technology enhancements to advance the IRS

into the 21st century with more user-friendly electronic interactions, secure digital accounts, and self-service options. This

mandate continues the growth trend of IT, currently funded exclusively by Operations Support and Business Systems

Modernization (BSM), even as IT becomes increasingly intertwined with IRS operations. The costs of maintaining aged

information systems, complying with cybersecurity mandates, and implementing other mandates, drive further growth.

Orienting funding by mission appropriation would also improve business unit leaders’ ability to allocate resources to their

highest priority needs. It would improve the alignment between performance metrics for the units and their funding. By

making business unit leaders directly responsible for the funding, and by extension the performance of their programs, these

changes make leaders more accountable to Congress and the American public.

Remedy

To address this problem, the administration proposes changes to its appropriations language and an attendant shift between

appropriations. The specified appropriation language changes would allow IRS to fund certain support activities from

Taxpayer Services and Enforcement appropriations using cost pools. Cost pools would be created using IRS internal

reimbursable arrangements. For FY 2023, the Administration proposes to implement the capability by funding Rent and CFO

Services from the mission appropriations. We expect the change would result in more efficient use of IRS resources and

constitute progress towards implementing cost pools for additional support activities, including IT.

Proposed Changes

Budget Activity

Pre-Filing Taxpayer Assistance & Education

Filing & Account Services

Taxpayer Services

Investigations

Exam & Collections

Regulatory

Enforcement

Infrastructure

Shared Services & Support

Information Services

Operations Support

Business Systems Modernization

Grand Total

FY 2023 Request

804

2,582

3,386

785

4,883

193

5,861

1,040

1,200

2,304

4,544

310

14,101

Rent

210

266

308

369

(635)

CFO

(75)

Proposed

Funding

867

2,818

3,685

839

5,228

205

6,272

405

1,125

2,304

3,834

310

14,101

Implementing cost pools for IT, a future goal for this effort, would allow IRS leaders to make tradeoff decisions to fund key

technology enhancements. Such enhancements would allow the IRS to accomplish its mission to provide American taxpayers

with top quality service in understanding and meeting their tax responsibilities and to apply the tax law with integrity and

fairness for all. For example, an Enforcement activity could deploy IT robotic process automation to reduce its time to close a

IRS - 26

case by providing its own enforcement funds to IT to fund the automation effort. Currently, such an innovation would have to

be prioritized with all other Operation Support costs.

Incremental Transition

The IRS plans and proposes to incrementally transition from its current structure to the new, full-cost focused mission

appropriations and a significantly reduced Operations Support appropriation over the next three years. This gradual transition

would provide time to test associated business processes, such as assigning or allocating shared costs from multiple business

units to cost pools and implement updates to the accounting system before requesting additional funding shifts from

Operations Support. Activities are currently expected to include:

•

Information Technology,

Communications,

Facilities Management,

Human Capital Organization,

Enterprise Change and Innovation,

Procurement,

Chief Financial Officer,

Printing and Postage, and

Other shared services.

While much is expected to be shifted, the IRS requests to retain the Operations Support appropriation to fund certain support

activities, such as the National Headquarters costs incurred for IRS leadership.

With the noted appropriation changes, the IRS is targeting to shift the full costs of the missions to their respective

appropriation by FY 2025. To accomplish this, the IRS plans to shift more functions and funds from the Operations Support

appropriation to the Taxpayer Service and Enforcement appropriations going forward.

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E – Legislative Proposals

For information on the FY 2023 revenue legislative proposals, please follow this link: https://home.treasury.gov/policyissues/tax-policy/revenue-proposals

Reduce Paperwork Burden by Permanently Authorizing Current Home to Work Transportation for the IRS Commissioner

The IRS requests that the IRS Commissioner position be permanently added to 31 U.S.C. § 1344(b)(6) as one of the

government officials authorized home-to-work transportation. The IRS Criminal Investigations unit completed an extensive

assessment of the Commissioner’s threat environment and has classified the threat status as high.

PROPOSAL:

Amend Title 31 U.S.C. § 1344(b)(6) to include “the Commissioner of Internal Revenue” as a federal executive with

authorization for passenger carrier transportation between residence and place of employment.

REASONS FOR CHANGE:

As head of one of the most controversial organizations in the Federal government, the Commissioner is the “face of the IRS”

and a frequent fixture in national media. Historically, Commissioners average multiple formidable threats per year directed at

them and their family members, including threats of assassination. The internet has allowed anyone with a web browser to

access personal information of government officials, including photos and home addresses. Instances of individuals phoning,

mailing, or visiting a Commissioner’s residence, including the current Commissioner, are common and well documented.

Dignitary protection experts have long recognized the vulnerability of protected individuals who are engaged in predictable

activities, such as commuting to/from the workplace and for many years IRS Criminal Investigation Division (CI) has

consistently provided transportation for the IRS Commissioner from Home to Work under recurring 90-day authorizations.

The administrative burden of compiling, organizing, and summarizing the information required for the recurring 90-day

Home to Work authorizations is significant, requiring executive approval from IRS’s Chief of Criminal Investigations,

Treasury’s Assistant Secretary for Management, and the Secretary of the Treasury.

Fund the Federal Payment Levy Program via Collections (proposal also included in the Fiscal Service CJ)

Estimated costs: $220 million in Fiscal Service costs to operate the Tax Levy Program in the Treasury Offset Program over

10 years. Fiscal Service is currently being reimbursed for this cost from IRS appropriated funding.

This proposal improves the way the Fiscal Service collects its reimbursement from IRS to cover Fiscal Service’s costs in

developing and operating the Federal Payment Levy Program (FPLP), which utilizes the Treasury Offset Program to process

levies of federal payments to collect delinquent tax debts. Under the Economy Act, the IRS pays fees to Fiscal Service from

the IRS annual discretionary appropriation. This proposal authorizes Fiscal Service to recover its costs from levy collections,

rather than from IRS’s direct appropriation, which reduces administrative and overhead costs for both Fiscal Service and IRS.

It would also allow IRS to re-direct the use of appropriated dollars that are currently needed to fund FPLP to other initiatives

that will aid in the collection of delinquent tax debt.

IRS - 28

Section II – Budget and Performance Plan

A – Strategic Alignment

The IRS is developing its FY 2022 – 2026 Strategic Plan to serve as a roadmap to help guide its programs and operations.

IRS’s strategic priorities align with Treasury’s FY 2022 – 2026 strategic priorities to improve the taxpayer experience,

enforce the tax law fairly and efficiently, foster a diverse workforce and transform our operations to be more sustainable and

efficient. The IRS Strategic Plan will be published by Spring 2022.

This budget supports the following Treasury Strategic Objectives for FY 2022 – FY 2026 and Agency Priority Goals for FY

2022 - FY 2023 for all appropriations:

IRS co-leads the following objective with the Department Office of Tax Policy:

Goal 1: Promote Equitable Economic Growth and Recovery

•

Objective 1.1 Tax Administration and Policy

IRS supports the following eight objectives:

Goal 2: Enhance National Security

•

Objective 2.1 Cyber Resiliency of Financial Systems and Institutions

Objective 2.4 Transparency in the Financial System

Goal 3: Protect Financial Stability and Resiliency

•

Objective 3.3 Financial Innovation

Goal 4: Combat Climate Change

•

Objective 4.4 Sustainable Treasury Operations

Goal 5: Modernize Treasury Operations

•

Objective 5.1 Recruit and Retain Diverse and Inclusive Workforce

Objective 5.2 Future Work Routines

Objective 5.3 Better Use of Data

Objective 5.4 Customer Experience Practices

Agency Priority Goals (APGs): IRS supports the Bureau of Fiscal Service’s Improving the Payment Experience APGs for

FY 2022 – FY 2023.

Bureau of Fiscal Service Improving the Payment Experience: Create a modern, seamless, inclusive, and secure Federal

payment experience for the public that meets customer needs while reducing costs, expanding financial inclusion, and

improving climate sustainability of Treasury’s operations. By September 30, 2023, Treasury will:

•

Increase the electronic payment rate for Treasury-disbursed payments to 96.56% by the end of FY 2023, compared

with 96.18% in FY 2021; and

− Achieving this increased electronic payment rate would lead to an estimated reduction of 4.8 million

checks. (Assuming FY 21 payment volume data, which excludes Economic Impact Payments and Advance Child Tax Credit

payments) Note: Future legislation related to payment processing may impact these target measures.

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•

Increase the electronic payment rate for IRS individual tax refunds to 81.00% by the end of FY 2023, compared

with 80.34% in FY 2021.

Accomplishments and Priorities

IRS’s FY 2021 accomplishments include:

•

Launched the Child Tax Credit Update Portal in support of the American Rescue Plan;

Identity Protection PIN program was expanded to all 50 states, the District of Columbia, Puerto Rico, Virgin

Islands, and military personnel living overseas in January 2021, fully implementing the requirements of the

Taxpayer First Act Provision Section 2005 three-years earlier than requested;

Registered over 169,000 taxpayers with Secure Access Virtual Assistant, resulting in a savings of over $11 million;

and,

Expanded electronic processing of amended returns to include a direct deposit of refunds in support of the of

reducing paper checks APG.

FY 2023 IRS Initiatives

The following are IRS’s FY 2023 strategic priorities with initiatives to support Treasury’s goals and objectives. IRS rolled

over FY 2022 initiatives Putting Taxpayers First, Ensure Fairness of the Tax System, and Integrated Modernization Business

Plan.

•

Putting Taxpayers First initiative will support the following Treasury Strategic Objectives: 1.1 - Tax Administration

and Policy, 2.1 - Cyber Resiliency of Financial Systems and Institutions, 3.3 - Financial Innovation, 5.1 - Recruit

and Retain a Diverse and Inclusive Workforce, 5.3 - Better Use of Data, and 5.4 - Customer Experience Practices.

Ensure Fairness of the Tax System initiative will support Treasury Strategic Objectives: 1.1 - Tax Administration

and Policy and 2.4 - Transparency in the Financial System.

Enhance Taxpayer Experience initiative will support Treasury Strategic Objectives: 1.1 - Tax Administration and

Policy and 5.4 - Customer Experience Practices.

Integrated Modernization Business Plan initiative will support Treasury Strategic Objectives: 1.1- Tax

Administration and Policy, 3.3 - Financial Innovation, 5.2 - Future Work Routines, 5.3 - Better Use of Data, and 5.4

- Customer Experience Practices.

Augment IT Operations initiative will support Treasury Strategic Objective: 1.1 - Tax Administration and Policy.

Economic Development in Underserved Communities initiative will support Treasury Strategic Objective: 1.1 - Tax

Administration and Policy and 5.1 - Recruit and Retain a Diverse and Inclusive Workforce.

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Taxpayer Services

Appropriation Description

The Taxpayer Services appropriation provides funding for taxpayer service activities and programs. This includes printing

forms and publications, processing tax returns and related documents, offering filing and account services, taxpayer

assistance, providing taxpayer advocacy services, and supporting activities.

The Taxpayer Services budget request for FY 2023 is $3,385,723,000 in direct appropriations and 32,865 FTE, excluding the

proposed technical adjustment. This amount is an increase of $622,117,000 or 22.51 percent, and an increase of 4,875 FTE,

or 17.42 percent from the FY 2022 ACR of $2,763,606,000 and 27,990 FTE.

2.1 – Budget Adjustments Table

Dollars in thousands

Taxpayer Services

Summary of Proposed FY 2023 Request

FTE

FY 2022 Annualized CR (ACR)

27,990

Amount

$2,763,606

Changes to Base:

Maintaining Current Levels (MCLs)

$108,631

Pay Annualization (2.7% average pay raise)

17,105

Pay Raise (4.6% average pay raise)

88,016

Non-Pay

3,510

Base Adjustment

825

Adjustment to Reach Current Operating Levels

$90,285

825

90,285

Subtotal FY 2023 Changes to Base

825

$198,916

FY 2023 Current Services

28,815

$2,962,522

192

119,034

Program Changes:

Program Increases

Putting Taxpayers First

User Authentication

81,000

Taxpayer Experience Strategy

192

38,034

Enhance Taxpayer Service

3,858

304,167

Subtotal FY 2023 Program Increases

4,050

$423,201

Total FY 2023 Budget Request

32,865

$3,385,723

See footnotes in 1.1 -- Appropriations Detail Table

This table does not include the proposed technical adjustment that would move certain support activities from Operation

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations.

The adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and

increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

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2.2 – Object Classification Obligations

Dollars in thousands

Taxpayer Services

Object Classification

11.1 Full-Time Permanent Positions

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

1,599,164

1,668,445

1,991,237

11.3 Other than Full-Time Permanent Positions

53,855

67,240

70,141

11.5 Other Personnel Compensation

122,409

149,810

166,410

9,750

10,154

11.8 Special Personal Services Payments

11.9 Personnel Compensation (Total)

1,775,428

1,895,245

2,237,942

12.1 Personnel Benefits

576,632

625,520

762,029

13.0 Benefits to Former Personnel

19,887

13,334

13,887

$2,371,947

$2,534,099

$3,013,858

21.0 Travel

5,162

5,966

10,668

22.0 Transportation of Things

671

599

611

23.3 Communications, Utilities, & Misc.

1,290

1,258

1,285

24.0 Printing & Reproduction

9,791

9,783

10,437

25.1 Advisory & Assistance Services

45,729

55,802

139,505

25.2 Other Services

25,190

27,032

49,534

25.3 Purchase of Goods & Services from Govt. Accounts

68,677

70,401

76,079

4,209

3,872

4,461

Total Personnel and Compensation Benefits

23.1 Rental Payments to GSA

25.7 Operation & Maintenance of Equipment

26.0 Supplies and Materials

31.0 Equipment

400

254

374

54,000

63,000

489

498

Total Non-Personnel

$215,659

$229,507

$371,864

New Appropriated Resources

$2,587,606

$2,763,606

$3,385,723

Pre-filing Taxpayer Assistance & Education

657,618

720,276

803,873

Filing & Account Services

1,929,988

2,043,330

2,581,850

New Appropriated Resources

$2,587,606

$2,763,606

$3,385,723

25,989

27,990

32,865

41.0 Grants, Subsidies

42.0 Insurance Claims & Indemnities

Budget Activities:

FTE

See footnotes in 1.1 -- Appropriations Detail Table

Note 1: This table does not include the proposed technical adjustment that would move certain support activities from Operations

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment

would reduce the Operations Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer Services

appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Note 2: This table does not include the $15 million in the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), $750.7 million

under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-36), the $509 million provided in the Consolidated

Appropriations Act, 2021 (P.L. 116-260), the $1.86 billion provided by the American Rescue Plan (ARP) (P.L. 117-2)

IRS - 32

2.3 – Appropriation Detail Table

Dollars in thousands

Taxpayer Services

Appropriated Resources

FY 2021

Operating Plan

FTE

FY 2022

Annualized CR

AMOUNT

FTE

FY 2023

Request

AMOUNT

FTE

AMOUNT

Change

% Change

FY 2022 to FY 2023

Request

FY 2022 to FY 2023

Request

FTE

AMOUNT

New Appropriated Resources:

Pre-Filing Taxpayer Assistance and Education

4,514

657,618

5,536

720,276

5,967

803,873

431

83,597

7.79%

11.61%

Filing and Account Services

21,475

1,929,988

22,454

2,043,330

26,898

2,581,850

4,444

538,520

19.79%

26.36%

Subtotal New Appropriated Resources

25,989

$2,587,606

27,990

$2,763,606

32,865

$3,385,723

4,875

$622,117

17.42%

22.51%

514

39,449

429

45,000

450

47,250

2,250

4.90%

5.00%

78,900

991

78,900

920

Other Resources:

Reimbursables

Offsetting Collections - Non Reimbursables

User Fees

6,281

Recovery from Prior Years

Unobligated Balances from Prior Years

64,900

21,760

877

190,789

7,268

3,100

1295.77%

7,268

276,216

(3,100)

(276,216)

-100.00%

Transfers In/Out

Recoveries Paid

Resources from Other Accounts

Subtotal Other Resources

1,463

$323,229

3,600

$407,388

1,441

$133,422

(2,159)

($273,966)

-59.97%

-67.25%

Total Budgetary Resources

27,452

$2,910,835

31,590

$3,170,994

34,306

$3,519,145

2,716

$348,151

8.60%

10.98%

See footnotes in 1.1--Appropriations Detail Table

The new appropriated resources in this table do not include the proposed technical adjustment that would move certain support activities from Operation Support and charge the

full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment would reduce the Operation Support appropriation by $709.5 million

for rent and CFO adjustments and increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.6 million.

2A – Pre-Filing Taxpayer Assistance and Education ($803,873,000 in direct appropriations and an estimated $201,000 in

reimbursable programs): This budget activity funds direct labor and some non-labor expenses to assist with tax return

preparation, including tax law interpretation, publication, production, and advocate services. The program activities include:

•

Pre-Filing Services Management supports headquarters staffing and support for Taxpayer Advocate Service and

Customer Assistance Relationship and Education (CARE) program activities. CARE provides pre-filing taxpayer

assistance and education.

Taxpayer Communication and Education research customer needs; develops and manages educational programs;

establishes partnerships with stakeholder groups; and disseminates tax information to taxpayers and the public

through a variety of media, including publications and mailings, websites, broadcasting, and advertising.

Media and Publications develops and produces notices, forms, and publications for printed and electronic tax

materials, and provides media production services to taxpayers.

Taxpayer Advocacy provides advocate services to taxpayers by identifying the underlying causes of taxpayer

problems and participating in the development of systematic and/or procedural remedies.

Account Management and Assistance – Field Assistance provides face-to-face assistance, education, and

compliance services to taxpayers. It includes return preparation, answering tax questions, resolving account and

notice inquiries, and supplying forms and publications to taxpayers.

Taxpayer Advocate Case Processing provides advocate services to taxpayers to resolve taxpayer problems through

prompt identification, referral, and settlement.

Wage and Investment (W&I) HQ Management and Administration provides staffing, training, and direct support

for W&I management activities of strategic planning, communications and liaison, finance, human resources,

equity, diversity and inclusion, business modernization, and embedded training.

IRS - 33

•

Taxpayer Services Research provides resources to support taxpayer services by conducting taxpayer behavioral

studies, data analysis, and uses advanced analytics to deliver results and conclusions to inform business decisions to

improve IRS products and services.

National Distribution Center processes orders for IRS forms and publications received from individual taxpayers,

tax practitioners, and IRS tax return preparation partners.

Description of FY 2021 Performance – Pre-Filing and Taxpayer Assistance

In FY 2021, the Timeliness of Critical Individual Filing Season (CIFS) Tax Products to the Public (i.e., tax forms, schedules,

instructions, and publications) was 92 percent (81 out of 88 products delivered timely), exceeding the FY 2021 target of

85 percent. This accomplishment was partially due to the enactment of the P.L. 116-260, Consolidated Appropriations Act of

2021, which determined the February 12 filing season start date. The legislation provided more time to meet the annual goal.

Additional factors that contributed to exceeding this year’s target and are proven models for future success include

prioritizing work on the release of critical products; planning for legislative changes to quickly re-prioritize work targeted to

critical products impacted by the law; granting of overtime, credit, and compensatory time during workdays, weekends, and

holidays; and workload planning and monitoring by management as well as the efforts of our employees. The IRS expects to

achieve a target of 89 percent for FY 2022 and FY 2023.

In FY 2021, the IRS Timeliness of Critical Tax TE/GE and Business (CTB) Filing Season Tax products to the Public was

92.9 percent, exceeding the target of 85 percent. These results were achieved due to the enactment of the P.L. 116-260,

Consolidated Appropriations Act of 2021, which determined the February 12 filing season start date. The legislation provided

more time to meet the annual goal. Additional factors that contributed to exceeding this year’s target and are proven models

for future success include prioritizing work on the release of critical products; planning for legislative changes to quickly

reprioritize work targeted to critical products impacted by the law; granting of overtime, credit, and compensatory time

during workdays, weekends, and holidays; and workload planning and monitoring by management as well as the efforts of

our employees. The IRS expects to achieve a target of 89 percent for FY 2022 and FY 2023.

Figure 2.1

IRS - 34

The Enterprise Self-Assistance Participation Rate (ESAPR) represents the percent of taxpayers who use one of the IRS’s selfassistance service channels (e.g., automated calls, web services) versus needing support from an IRS employee (e.g., face-toface, over the phone, or via paper correspondence). The FY 2021 ESAPR was 92.3 percent, exceeding the target by

3.7 percent. The web services that had the largest percent change are: Where’s My Amended Return (226.4 percent); Online

Accounts Sessions (117.8 percent); and Get Transcripts Online (108.1 percent). Compared to FY 2020, total services

increased by 36.4 percent, self-assisted services increased by 38.9 percent and assisted services rose 12.4 percent. In FY

2022, IRS will update the existing Online Payment Agreements (OPA) and Installment Agreements (IA) applications to

include business taxpayers and include a new chatbot application for OPAs and IAs for small business and self-employed

taxpayers. The IRS expects to achieve a target of 91 percent for FY 2022 and 91 percent for FY 2023.

FY 2023 Changes by Budget Activity

Dollars in thousands

Pre-Filing Taxpayer Assistance & Education

FY 2022 Annualized CR (ACR)

Changes to Base:

FTE

Amount

5,536

Maintaining Current Levels (MCLs)

Pay Annualization (2.7% average pay raise)

$720,276

$26,645

4,185

Pay Raise (4.6% average pay raise)

21,536

Non-Pay

924

Base Adjustment

Adjustment to Reach Current Operating Levels

Subtotal FY 2022 Changes to Base

FY 2022 Current Services

$5,952

5,952

$32,597

5,536

Program Increases:

Putting Taxpayers First

$752,873

17,649

350

17,649

33,351

Total FY 2023 Request

431

5,967

$51,000

$803,873

Dollar/FTE Change FY 2023 Request over FY 2022 ACR

Percent Change FY 2023 Request over FY 2022 ACR

431

$83,597

7.79%

11.61%

Taxpayer Experience Strategy

Enhance Taxpayer Service

Subtotal FY 2023 Program Increases

This table does not include the proposed technical adjustment that would move certain support activities from Operation

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The

adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the

Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

IRS - 35

2.1.1 – Budget and Performance Report and Plan

Dollars in thousands

Pre-Filing Taxpayer Assistance & Education

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

Resource Level

Annualized CR

Request

Actual

Appropriated Resources1

$594,962

$640,379

$621,907

$632,893

$658,344

$720,276

$803,873

Reimbursable Resources2

260

118

578

142

191

201

$594,966

$640,639

$622,025

$633,471

$658,486

$720,467

Budget Activity Total

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

$804,074

User Fees2

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.

Pre-Filing Taxpayer Assistance & Education

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

Measure

Actual

Target

Timeliness of Critical Filing Season Tax Products to the Public

(Ot, L)

93.1%

59.6%

92.6%

78.4%

92.0%

85.0%

89.0%

Timeliness of Critical TE/GE & Business Tax Products to the

Public (Ot, L)

96.7%

100.0%

96.1%

96.0%

92.9%

85.0%

89.0%

Enterprise Self Assistance Participation Rate (E, L)3

79.0%

82.0%

85.4%

90.6%

92.3%

89.0%

91.0%

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Strategic Goal Measure

In FY 2017, the IRS renamed the Taxpayer Self Assistance Rate measure to Enterprise Self Assistance Participation Rate.

2B – Filing and Account Services

($2,581,850,000 in direct appropriations, $47,049,000 from reimbursable programs, and $78,900,000 from user fees): This

budget activity funds direct labor and non-labor expenses that provide filing and account services to taxpayers, process paper

and electronically submitted tax returns, issue refunds, and maintain taxpayer accounts. The public continues to file more

returns electronically (approximately 93.6 percent of individual returns were filed electronically during the 2021 filing

season). The program activities include:

•

Filing and Account Services Management administers filing and account services programs.

Submission Processing processes paper and electronically submitted tax returns and supplemental documents,

accounts for tax revenue, processes information documents, and issues refunds and tax notices.

Account Management and Assistance – Electronic/Correspondence Assistance provides education and assistance to

taxpayers and resolves accounts and notice inquiries through telephone, paper, and internet correspondence.

Electronic Products and Services Support (EPSS) provides centralized operations and support capabilities for the

IRS suite of electronic products, including e-help desk, technology support, and operations support.

Electronic Tax Administration (ETA) markets and administers electronic tax administration products and services.

Business Performance Lab initiates, recommends, and manages systemic solutions for the detection and treatment

of improper refunds while ensuring effective treatment for payment of valid refund claims, leads the development

of innovative business processes and technology solutions and represents Return Integrity & Compliance Services

(RICS) interest in support of the service-wide revenue protection strategy.

Health Care Tax Administration provides funds to administer the health insurance tax credit portion of the Trade

Adjustment Assistance Reform Act of 2002.

Joint Operations Center (JOC) provides service, support, and technology for telephone, correspondence, and

electronic media inquiries; real time monitoring and routing of inbound calls; monitoring of Customer Service

Representative (CSR) accuracy; and management of the enterprise telephone database.

IRS - 36

Description of FY 2021 Performance – Filing and Account Services

In FY 2021, Customer Accuracy – Tax Law, the IRS answered 92.8 percent of tax law questions over the telephone correctly,

exceeding the target of 90.0 percent by 3.1 percent. IRS will continue to monitor results through data-driven analysis of

reports to achieve future goals. Ongoing efforts have and will continue to focus on production meetings with field sites,

promoting coding consistency of product reviews, and providing training to managers and employees to ensure quality

service to customers. For FY 2022 and FY 2023, the IRS set the Tax Law Accuracy target at 89.0 percent.

For Customer Accuracy – Accounts, the IRS answered 93.0 percent of account questions over the telephone correctly,

exceeding the FY 2021 target of 91.0 percent. IRS will continue to monitor results through data-driven analysis of reports to

achieve future goals. Ongoing efforts have and will continue to focus on production meetings with field sites, promoting

coding consistency of product reviews, and providing training to managers and employees to ensure quality service to

customers. For FY 2022 and FY 2023, the IRS set the Accounts Accuracy target at 89.0 percent.

Figure 2.2

The Customer Service Representative (CSR) Level of Service (LOS) measures the relative success rate of taxpayers wanting

to speak with a CSR. In FY 2021, CSR LOS was 18.5 percent, falling short of the 32.0 percent target. New legislation

resulted in added, unplanned demand for toll-free assistance. Compared to FY 2020, total assistor demand was up more than

200.0 percent, with some lines seeing increases of more than 2 million calls. Despite these challenges, the IRS was able to

answer 3.8 million more calls in FY 2021 than the prior year. The IRS will continue to monitor demand in real time and shift

staff between telephones and paper processing to address demand. During the pandemic, IRS processed more than 450

million Economic Impact Payments and over 200 million advance payments of the Child Tax Credit. Prioritizing pandemic

response, combined with pandemic disruptions to on-site work, delayed tax return processing, taxpayer correspondence, and

other critical services, resulting in unprecedented increases in correspondence inventory levels. As a result, the IRS lowered

its FY 2022 LOS target to 30.0 percent, in order, to devote more resources towards processing correspondence inventory.

With the additional resources requested in this budget, the IRS will increase the FY 2023 LOS target to 85.0 percent

assuming phone demand returns to pre-pandemic levels the IRS can provide in-person services at pre-pandemic levels and as

inventories are expected to reach normal levels.

IRS - 37

Figure 2.3

The Taxpayers Satisfied with the IRS indicator, the All-Individual Tax Filers Score, is based on the annual American

Customer Satisfaction Index (ACSI) Survey, which is the only uniform, cross-industry/government measure of customer

satisfaction with the quality of goods and services available to U.S. residents. The measure is calculated as a weighted

combination of the ACSI Individual Electronic Tax Filer and Individual Paper Tax Filer Customer Satisfaction Index scores

based on a 100-point scale. The Taxpayers Satisfied with the IRS measure declined four points in 2021 to 70 as shown above,

due to a statistically significant decrease in the electronic filer score, following impacts from the COVID-19 pandemic.

IRS - 38

FY 2023 Changes by Budget Activity

Dollars in thousands

Filing and Account Services

FY 2022 Annualized CR (ACR)

FTE

Amount

22,454

$2,043,330

Changes to Base:

Maintaining Current Levels (MCLs)

$81,986

Pay Annualization (2.7% average pay raise)

12,920

Pay Raise (4.6% average pay raise)

66,480

Non-Pay

2,586

Base Adjustment

825

Adjustment to Reach Current Operating Levels

Subtotal FY 2023 Changes to Base

$84,333

825

84,333

FY 2023 Current Services

825

23,279

$166,319

$2,209,649

Program Increases:

Putting Taxpayers First

111

101,385

111

3,508

20,385

270,816

User Authentication

81,000

Taxpayer Experience Strategy

Enhance Taxpayer Service

Subtotal FY 2023 Program Increases

3,619

$372,201

Total FY 2023 Request

26,898

$2,581,850

Dollar/FTE Change FY 2023 Request over FY 2022 ACR

4,444

$538,520

Percent Change FY 2023 Request over FY 2022 ACR

19.79%

26.36%

This table does not include the proposed technical adjustment that would move certain support activities from Operation

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The

adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the

Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

IRS - 39

2.1.2 – Budget and Performance Report and Plan

Dollars in thousands

Filing and Account Services

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

Resource Level

Actual

Annualized CR

Request

$1,564,488

30,147

$1,712,511

34,905

$1,872,175

62,794

$1,901,467

72,769

$1,927,220

39,307

Appropriated Resources1

Reimbursable Resources2

$2,043,330

44,809

$2,581,850

47,049

User Fees

40,553

69,987

3,900

64,900

78,900

$1,635,188

$1,817,403

$1,938,869

$1,974,236

$2,031,427

$2,167,039

Budget Activity Total

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

78,900

$2,707,799

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.

Filing and Account Services

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

Measures

Actual

Target

Request

Customer Accuracy - Tax Law (Phones) (Ot)

96.7%

95.5%

91.6%

91.0%

92.8%

90.0%

89.0%

Customer Accuracy - Accounts (Phones) (Ot)

96.0%

96.1%

94.3%

93.5%

93.0%

91.0%

89.0%

Customer Service Representative (CSR) Level of Service (LOS) (Oe)

77.1%

75.9%

65.4%

53.1%

18.5%

32.0%

30.0%

85.0%

Taxpayers Satisfied with the IRS (based on a 100 point scale) (Ot, L)4

Indicator

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Strategic Goal Measure

The CSR LOS includes toll-free telephone lines answered by Accounts Management assistors only. These lines service 82 percent of all telephone traffic. Achieving the FY 2023 LOS

target of 85 percent requires timely enactment of appropriations so the IRS can complete hiring and training ahead of the filing season and assumes that demand and in person services

return to pre-pandemic levels. The IRS’s Automated Collection System (ACS) toll-free line is used by taxpayers for compliance related inquiries. For FY 2021, the ACS LOS was 37.8

percent. These are both included in the Enterprise LOS, which measures the relative success rate of taxpayers calling to speak with an IRS Assistor on any IRS toll-free telephone line.

The Enterprise LOS in FY 2021 was 21.3 percent.

Based on the American Customer Satisfaction Index (ACSI) survey; the All-Individual Tax Filer score is calculated from separate ACSI Individual Paper Filer and Electronic Filer customer

satisfaction index scores; available on an annual basis at the end of January and computed on a 100-point scale.

IRS - 40

Enforcement

Appropriation Description

The Enforcement appropriation provides funding for the examination of tax returns, both domestic and international;

administrative and judicial settlement of taxpayer appeals of examination findings; technical rulings; monitoring of employee

pension plans; determination of qualifications of organizations seeking tax-exempt status; examination of tax returns of

exempt organizations; enforcement of statues relating to detection and investigation of criminal violations of the internal

revenue laws; identification of underreporting of tax obligations; securing of unfiled tax returns; collection of unpaid

accounts; and supporting activities.

The Enforcement budget request for FY 2023 is $5,861,649,000 in direct appropriations and 38,607 FTE, excluding the

proposed technical adjustment. This amount is an increase of $857,027,000 or 17.12 percent, and 3,003 FTE or 8.43 percent

more than the FY 2022 ACR of $5,004,622,000 and 35,604 FTE. It is important to note, as mentioned in the introduction,

although not included in the request, the IRS along with the Administration are still committed to the attainment of multi-year

funding for an extensive enforcement program initiative that will generate and protect billions of dollars in additional revenue

while reducing the tax gap.

IRS - 41

2.1 – Budget Adjustments Table

Dollars in thousands

Enforcement

Summary of Proposed FY 2023 Request

FTE

FY 2022 Annualized CR (ACR)

35,604

Amount

$5,004,622

Changes to Base:

$202,663

Maintaining Current Levels (MCLs)

Pay Annualization (2.7% average pay raise)

32,228

Pay Raise (4.6% average pay raise)

165,832

Non-Pay

4,603

358

Base Adjustment

$229,176

358

229,176

Subtotal FY 2023 Changes to Base

358

$431,839

FY 2023 Current Services

35,962

$5,436,461

152

54,331

Taxpayer Experience Strategy

152

54,331

Ensure Fairness of the Tax System

Adjustment to Reach Current Operating Levels

Program Changes:

Program Increases

Putting Taxpayers First

2,493

370,857

Subtotal FY 2023 Program Increases

2,645

$425,188

Total FY 2023 Budget Request

38,607

$5,861,649

See footnotes in 1.1 -- Appropriations Detail Table

This table does not include the proposed technical adjustment that would move certain support activities from Operation

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations.

The adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and

increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

IRS - 42

2.2 – Object Classification Obligations

Dollars in thousands

Enforcement

Object Classification

11.1 Full-Time Permanent Positions

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

3,130,581

3,206,471

3,629,712

11.3 Other than Full-Time Permanent Positions

26,773

21,384

22,901

11.5 Other Personnel Compensation

145,294

145,755

162,644

11.8 Special Personal Services Payments

29,500

19,739

38,741

11.9 Personnel Compensation (Total)

3,332,148

3,393,349

3,853,999

12.1 Personnel Benefits

1,327,649

1,380,796

1,563,995

323

358

373

$4,660,120

$4,774,503

$5,418,366

21.0 Travel

55,527

60,269

118,808

22.0 Transportation of Things

8,581

8,300

21,349

23.2 Rent Payments to Others

282

243

268

23.3 Communications, Utilities, & Misc.

4,208

5,880

6,140

24.0 Printing & Reproduction

2,770

2,982

3,402

25.1 Advisory & Assistance Services

173,410

50,446

121,080

25.2 Other Services

34,826

31,962

69,407

25.3 Purchase of Goods & Services from Govt. Accounts

30,394

33,322

42,155

125

119

9,470

13.0 Benefits to Former Personnel

Total Personnel and Compensation Benefits

25.4 Operation & Maintenance of Facilities

25.6 Medical Care

25.7 Operation & Maintenance of Equipment

1,966

1,762

8,446

26.0 Supplies and Materials

20,830

19,381

22,625

31.0 Equipment

6,108

7,027

11,498

42.0 Insurance Claims & Indemnities

970

922

941

91.0 Unvouchered

4,500

7,500

7,690

Total Non-Personnel

$344,502

$230,119

$443,283

New Appropriated Resources

$5,004,622

$5,861,649

Investigations

698,193

667,279

785,121

Exam & Collections

4,120,886

4,160,748

4,883,575

Budget Activities:

Regulatory

New Appropriated Resources

185,543

176,595

192,953

$5,004,622

$5,861,649

34,989

35,604

38,607

FTE

See footnotes in 1.1 -- Appropriations Detail Table

Note 1: This table does not include the proposed technical adjustment that would move certain support activities from Operations

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment

would reduce the Operations Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer Services

appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Note 2: This table does not include the $15 million in the Families First Coronavirus Response Act (FFCRA) (P.L 116-127), $750.7 million

under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-36), the $509 million provided in the Consolidated

Appropriations Act, 2021 (P.L. 116-260), the $1.86 billion provided by the American Rescue Plan (ARP) (P.L. 117-2)

IRS - 43

2.3 – Appropriation Detail Table

Dollars in thousands

Change

% Change

FY 2022 to FY 2023

Request

FY 2022 to FY 2023

Request

FTE

Enforcement

Appropriated Resources

FY 2021

Operating Plan

FTE

AMOUNT

FY 2022

Annualized CR

FTE

FY 2023

Request

AMOUNT

FTE

AMOUNT

New Appropriated Resources:

Investigations

3,012

678,193

2,965

667,279

3,223

785,121

258

117,842

8.70%

17.66%

Exam and Collections

30,987

4,170,886

31,615

4,160,748

34,331

4,883,575

2,716

722,827

8.59%

17.37%

990

155,543

1,024

176,595

1,053

192,953

16,358

2.83%

9.26%

34,989

$5,004,622

35,604

$5,004,622

38,607

$5,861,649

3,003

$857,027

8.43%

17.12%

3,891

57,000

59,850

2,850

5.00%

Regulatory

Subtotal New Appropriated Resources

Other Resources:

Reimbursables

101

Offsetting Collections - Non Reimbursable

59,965

10,000

User Fees

Recovery from Prior Years

1,670

1,453

3,175

252,301

2,000

140

Recoveries Paid

Unobligated Balances from Prior Years

544

254,643

Transfers In/Out

Resources from Other Accounts

10,500

500

5.00%

(54)

-100.00%

(250,301)

-99.21%

331

113,931

433

88,951

787

108,455

354

19,504

81.76%

21.93%

Subtotal Other Resources

976

$434,100

513

$413,074

871

$185,573

358

($227,501)

69.79%

-55.08%

Total Budgetary Resources

35,965

$5,438,722

36,117

$5,417,696

39,478

$6,047,222

3,361

$629,526

9.31%

11.62%

See footnotes in 1.1--Appropriations Detail Table

Note: The new appropriated resources in this table do not include the proposed technical adjustment that would move certain support activities from Operation Support and

charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment would reduce the Operation Support appropriation by

$709.5 million for rent and CFO adjustments and increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.6 million.

2C – Investigations

($785,121,000 in direct appropriations, and an estimated $55,922,000 from reimbursable programs): This budget activity

funds the Criminal Investigation (CI) programs that explore 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. The

program activities include:

•

General Management and Administration supports the headquarters management activities of strategic planning,

communications, finance, and human resources for CI activities.

Identity Theft, through CI's collaboration with internal and external business partners, combats the inherent risks of

Stolen Identity Refund Fraud (SIRF) by focusing on significant tax investigations, prosecutions to maximize

deterrence, and preventing the IRS from issuing fraudulent refunds.

CI supports the enforcement of criminal statutes relating to violations of internal revenue laws and other financial

crimes. CI investigates cases of suspected intent to defraud involving both legal and illegal sources of income and

recommends prosecution as warranted. This includes the investigation and prosecution of tax and moneylaundering violations associated with narcotics organizations.

Criminal Tax Legal Support provides legal advice and support from IRS Counsel to CI.

International Investigations supports international investigations involving U.S. citizens residing abroad, nonresident aliens, expatriates (U.S. citizens living abroad who have renounced their citizenship), and investigations

involving other international issues, including legal support (e.g., Foreign Tax Credit and Foreign Earned Income

Exclusion, Corporations, Non-Profits, Pension Plans, etc.).

Cybersecurity supports CI’s cyber-efforts around inherent risks to CI’s networks and systems, while focusing

enforcement and investigative actions on the criminals that pose those threats. This activity also supports security

IRS - 44

program management that protects the safeguarding of all data and systems within CI while adhering to all federal

regulatory security compliance mandates and local security policies.

Description of FY 2021 Performance – Investigations

Criminal Investigation serves the American public by investigating potential criminal violations of the Internal Revenue

Code and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law. CI uses

the following measures to evaluate its success in achieving its mission.

Figure 2.4

In FY 2021, CI completed 2,766 Criminal Investigations, exceeding the year-end target of 2,600 by 6.4 percent. Cases of a

Legal nature completed decreased 14.1 percent compared to the same period in FY 2020, while Illegal and Narcotics cases

increased 12.4 percent and 25.9 percent, respectively. Legal source cases include people that earn their income legally, but

willfully violate the tax laws (tax evasion). Examples of illegal cases include embezzlement, mortgage fraud, telemarketing

fraud, and money laundering. Narcotics cases are similar to illegal cases; however, these cases are specific to profits and

financial gains of organized drug groups involved in narcotics, narcotics trafficking, and money laundering. Although

Criminal Investigations Completed increased compared to last year, COVID-19 continues to impact day-to-day investigative

activities thereby contributing to a higher cycle time for investigations completed. Based on projected staffing levels,

setbacks and challenges presented due to the COVID-19 pandemic and its impact on future performance, IRS set a target of

2,600 for FY 2022 and 2,500 for FY 2023.

IRS - 45

Figure 2.5

The FY 2021 Conviction Rate of 89.4 percent was 2.8 percent below the year‐end target of 92.0 percent while convictions

are up 6.4 percent. The COVID-19 pandemic continues to limit court availability throughout the country and impact day-today investigative activities in support of the judicial system thereby contributing to fewer cases being processed.

Additionally, decreases in the number of special agents in previous years has led to a decline in the total amount of cases

initiated and consequently recommended for prosecution. Despite this, appropriate case selection and effective field

performance continue to positively affect the quality of cases resulting in convictions. The IRS will keep the Conviction Rate

targets for FY 2022 and FY 2023 at 92 percent.

IRS - 46

Dollars in thousands

Investigations

FTE

FY 2022 Annualized CR (ACR)

Changes to Base:

Maintaining Current Levels (MCLs)

Pay Annualization (2.7% average pay raise)

Pay Raise (4.6% average pay raise)

Non-Pay

Base Adjustment

Adjustment to Reach Current Operating Levels

Subtotal FY 2023 Changes to Base

FY 2023 Current Services

Amount

2,965

$667,279

2,995

$25,934

3,955

20,352

1,627

16,996

$42,930

$710,209

Program Increases:

Putting Taxpayers First

3,529

Total FY 2023 Request

219

228

3,223

3,529

71,383

$74,912

$785,121

Dollar/FTE Change FY 2023 Request over FY 2022 ACR

Percent Change FY 2023 Request over FY 2022 ACR

258

8.70%

$117,842

17.66%

Taxpayer Experience Strategy

Ensure Fairness of the Tax System

Subtotal FY 2023 Program Increases

This table does not include the proposed technical adjustment that would move certain support activities from Operation Support

and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment

would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer

Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

2.1.3 – Budget and Performance Report and Plan

Dollars in thousands

Investigations

Resource Level

Appropriated Resources1

Reimbursable Resources2

User Fees2

Budget Activity Total

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY2022

FY 2023

Request

Actual

Annualized

$589,295

33,618

$581,680

28,295

$595,686

27,749

$619,227

41,233

$630,093

1,950

$667,279

53,259

$785,121

55,922

$622,913

$609,975

$623,435

$660,460

$632,043

$720,538

$841,043

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation

transfers.

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.

Investigations

Measures

FY 2017

Actual

FY 2018

Actual

FY 2019

Actual

FY 2020

Actual

FY 2021

Actual

FY 2021

Target

FY 2022

Target

FY 2023

Target

Criminal Investigations Completed (Ot)

3,089

3,051

2,797

2,624

2,766

2,600

2,500

Conviction Rate (Oe)

91.5%

91.7%

91.2%

90.4%

89.4%

92.0%

Key: Oe - Outcome Measure, Ot - Output/Workload Measure

2D – Exam and Collections

($4,883,575,000 in direct appropriations, and an estimated $3,062,000 from reimbursable programs): This budget activity

funds programs that enforce the tax laws and increase compliance through examination and collection programs that ensure

proper payment and tax reporting. This budget activity also includes campus support of the Questionable Refund program

and appeals, and litigation activities associated with exam and collection. The program activities include:

IRS - 47

•

Compliance Services Management supports management associated with exam and compliance program activities.

Payment Compliance – Correspondence Collection supports IRS collection activities by initiating contact and

collecting delinquent taxpayer liabilities through written notices and other means.

Automated Collections and Support initiates contact and collects delinquent taxpayer liabilities through the

centralized Automated Collection System (ACS).

Payment Compliance – Field Collection conducts field investigations and collection efforts associated with

delinquent taxpayer and business entity liabilities, including direct taxpayer contact and outreach programs to

protect the interest of the federal government in delinquent tax liability situations.

Tax Reporting Compliance – Document Matching supports the Automated Underreporter (AUR), Combined

Annual Wage Reporting (CAWR), Federal Unemployment Tax Act (FUTA), and other document matching

programs.

Tax Reporting Compliance – Electronic/Correspondence Exam initiates written correspondence with taxpayers

related to tax issues arising from claims on their tax returns.

Tax Reporting Compliance – Field Exam compares taxpayer income levels and corresponding tax liabilities to

ensure the accuracy of taxpayer returns.

Fraud/Bank Secrecy Act enforces the anti-money laundering provisions of the Bank Secrecy Act of 1970 (BSA)

and the USA Patriot Act of 2001. It examines non-bank financial institutions for compliance with these laws,

receives and processes more than 15 million financial reports annually, and manages a centralized database of that

information for the Financial Crimes Enforcement Network. The Fraud program follows the money trail to support

the criminal investigation of tax evasion operations. Fraud technical advisors and revenue agents supply

investigative leads and referrals to federal, state, and local law enforcement agencies.

Appeals supplies an administrative review process that provides a channel for impartial case settlement before a

case is docketed in a court of law.

Litigation provides legal support for the IRS in litigation of cases, including interpretation of the tax law.

Specialty Programs – Exams examines federal tax returns of businesses and individuals responsible for the filing

and payment of employment, excise, estate, and gift taxes.

International Collection supports international field collection efforts associated with delinquent taxpayer and

business entity liabilities from U.S. citizens residing abroad, non-resident aliens, expatriates (U.S. citizens living

abroad who have renounced their citizenship), and those involving other international issues (e.g., Foreign Tax

Credit and Foreign Earned Income Exclusion).

International Exams supports the international exam program involving U.S. citizens residing abroad, non-resident

aliens, expatriates, and other examinations involving other international issues including legal support (e.g., Foreign

Tax Credit and Foreign Earned Income Exclusion, Corporations, Non-Profits, Pension Plans, etc.).

Enforcement Research provides resources for market-based research to identify compliance issues, for conducting

tests of treatments to address noncompliance, and for the implementation of successful treatments of taxpayer noncompliant behavior.

Unit General Management and Administration provides staffing, training, and direct support for headquarters

management activities of strategic planning, communication and liaison, finance, human resources, equity, diversity

and inclusion, business system planning, and embedded training.

Earned Income Tax Credit (EITC) Management and Administration supports headquarters management associated

with EITC.

IRS - 48

•

Integrity & Verification Operations supports civil fraud detection and prevention efforts in a pre-refund

environment including monitoring performance and developing policy, procedures, and guidance for processing

civil revenue protection programs.

ID Theft Victim Assistance has end-to-end responsibility and accountability for identity theft victim assistance

policy and operations, which includes paper inventories from tax-related ID theft, the Identity Theft Protection

Specialized Unit, and Return Preparer Misconduct.

Whistleblower Office provides staffing, training, and direct support to process, assess, and analyze tips from

individuals who identify tax problems during their daily business, regardless of where encountered (including

workplace).

Communications and Liaison coordinates local government and liaison relationships; manages congressional, state,

and national stakeholder relationships and issues; coordinates crosscutting issues, including audit management and

legislative implementation; manages national media contacts and local media relationships; and ensures compliance

with disclosure and privacy laws.

Return Integrity, Verification & Program Management provides policy and program oversight of revenue protection

efforts such as detection, prevention, and treatment of improper refunds (identity theft and non-compliance),

including managing systemic solutions regarding payment of valid refund claims and the development of

innovative technology solutions supporting IRS-wide revenue protection strategies.

Description of FY 2021 Performance – Exam

The Examination program provides taxpayers top quality service by helping them understand and meet their tax

responsibilities and by applying the tax law with integrity and fairness. The performance metrics IRS uses to gauge the

Examination program’s performance are discussed below.

To highlight IRS’s strategic direction, focusing on large businesses, high-income taxpayers, and partnerships, and to

complement the inclusion of “in process” examinations in the IRS Data Book, three new indicators were developed for

FY 2021 reporting. These new indicators allow IRS to track the progress of examinations throughout the year, allowing for a

direct and clear picture of IRS activities. Some examinations close within a year while others take several years to close.

These indicators focus on starts rather than closures which provide a better view of where resources are being applied in the

current fiscal year.

Exam Starts – High Income Individuals indicator was created for FY 2021 reporting to monitor resources associated with

examinations of individual return filers reporting over $10M of Total Positive Income (TPI).

Exam Starts – High-Income Individuals1

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

1,941

2,307

2,108

2,693

2,227

New indicator added for FY 2021; historical data provided for comparative purposes.

While continuing to allocate resources to work the exams started in prior fiscal years, the IRS started 2,227 new High-Income

Individual tax return examinations in FY 2021. Throughout the year, the IRS will monitor resources, work in-progress and

planned starts while continuing to devote senior level staff to train new hires.

Exam Starts – Partnership’s indicator was created for FY 2021 reporting to monitor resources associated with the

examination of Partnership returns.

Exam Starts – Partnerships1

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

10,221

9,033

5,823

4,106

4,327

New indicator added for FY 2021; historical data provided for comparative purposes.

IRS - 49

While continuing to allocate resources to work the exams started in prior fiscal years, the IRS started 4,327 new Partnership

tax return examination in FY 2021. Compared to the same period in FY 2020, Exam Starts-Partnerships increased 4.5

percent. Projected examinations are trending downward due to other competing priorities and training of new hires.

Exam Starts – Large Corporations indicator was created for FY 2021 reporting to monitor resources associated with

examinations of large corporate returns reporting assets of $250 million and above.

Exam Starts – Large Corporations

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

2,577

2,396

2,009

1,700

1,490

New indicator added for FY 2021; historical data provided for comparative purposes.

While continuing to allocate resources to work the exams started in FY 2020, the IRS started 1,490 new Large Corporation

tax return examinations in FY 2021. Projected examinations are trending slightly downward due to other priority work and

the training of new hires.

Exam Efficiency – Individual is the sum of all individual 1040 returns closed divided by the total FTE expended in relation

to those individual returns. While total exam closures and FTEs increased 48.3 percent and 2.4 percent, in FY 2021,

compared to FY 2020, Exam Efficiency – Individual was 108, falling short of the 111 target. Based on prior year hiring and

the most current FTE data available, the IRS lowered the target to 100 for FY 2022 as qualified Exam staff will be reassigned

to work unprecedented correspondence inventory levels. The FY 2023 target is set at 114 as inventory is expected to go back

to normal. The IRS will closely monitor starts and inventory levels to ensure the targets are met.

Time to Start1

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

Collection

86.2%

86.7%

80.1%

85.6%

86.0%

Bal Due

88.0%

90.1%

90.3%

90.5%

90.2%

Automated Underreporter (AUR)

0.1%

0.0%

Exam

40.9%

41.8%

39.3%

52.0%

Total

58.8%

60.1%

60.9%

66.3%

66.0%

New indicator added for FY 2020; historical data provided for comparative purposes.

Time to Start Compliance Resolution is the percentage of all individual income tax enforcement cases started within six

months of the return posting date. This indicator reflects the effect of expedited issue detection and more integrated

enforcement approaches. It supports expedited document matching, enhanced anomaly detection leading to faster issue

identification, and data and analytics to improve issue identification and treatment selection. While the percent of individual

enforcement cases started within 6 months was 66 percent, which is consistent with FY 2021 and much higher than previous

years, the percent of Exam cases started showed a significant increase of 32 percent (39.3 percent vs. 52.0 percent), compared

to Collection and AUR cases.

Time to Resolve1

Collection: Bal due notice

Collection: non-notice

AUR

Exam

Total

FY 2017

379

650

556

507

491

FY 2018

368

755

581

502

494

FY 2019

330

373

602

551

469

FY 2020

400

345

618

597

491

FY 2021

286

491

756

626

484

New indicator added for FY 2020; historical data provided for comparative purposes.

Time to Resolve Compliance Issue After Filing is the median time it takes to close all individual income tax enforcement

cases in days. This indicator reflects the complete life cycle from return filing to resolution. It also reflects the effect of

process enhancements, such as new self-correction capabilities, including Online Account. It supports expedited document

IRS - 50

matching and enhanced anomaly detection, which will lead to faster issue identification. For FY 2021, the overall Time to

Resolve Compliance Issue After Filing was 484 days, with the time to resolve Collection cases with balance due notices

showing the most significant reduction as taxpayers may have used the Economic Impact Payments and Additional Child Tax

Credit to pay down debt.

Repeat Non-Compliance Rate1

Reporting

Filing

Payment

Total

FY 2017

7.3%

39.1%

30.0%

29.2%

FY 2018

7.4%

38.1%

30.5%

30.0%

FY 2019

7.7%

39.8%

29.9%

31.4%

FY 2020

8.1%

43.9%

28.6%

35.6%

FY 2021

5.5%

39.6%

29.0%

30.7%

New indicator added for FY 2020; historical data provided for comparative purposes.

Repeat Non-Compliance Rate measures the percentage of individual taxpayers with repeat non-compliance two years after

the initial tax year for filing, payment, or reporting compliance. This indicator supports expedited document matching,

enhanced anomaly detection leading to faster issue identification, and Enterprise Case Management. It also promotes

improved customer service through expanded access to new self-correction capabilities and improved behavioral analytics. It

allows the IRS to better understand and change non-compliant taxpayer behavior. For FY 2021, the Repeat Non-Compliance

Rate was 30.7 percent compared to 35.6 percent for FY 2020.

Description of FY 2021 Performance ‒ Collection

The Collection program collects delinquent taxes, secures delinquent tax returns through the fair and equitable application of

tax laws, and provides education to customers to promote future compliance. The performance goals that the IRS uses to

gauge collection program performance are discussed below.

The Collection Coverage measure is calculated by taking the total volume of collection work completed divided by total

collection work available. Collection Coverage was 41.2 percent, exceeding the FY 2021 target of 33 percent. The increase is

attributed to net dispositions increasing 32.5 percent while total available inventory grew 12.3 percent from FY 2020, to more

than 53 million. Based on the need to reassign qualified Collection staff to work the unprecedented inventory caused by the

COVID-19 pandemic, the target will be set at 36.5 percent for FY 2022 and 32.1 percent for FY 2023.

The Cost to Collect to $100 is computed as total operating costs divided by gross collection and then multiplied by 100.

Total operating costs include dollars obligated, expended, and disbursed against appropriated funds; excluded are costs

reimbursed by other federal agencies and private entities for services performed for these external parties. Gross collections

are before refunds are issued and include penalties and interest in addition to taxes collected. The FY 2021 Cost to Collect

$100 was 33 cents, compared to 35 cents for FY 2020. Total operating costs were approximately $13.7 billion while gross

collections were approximately $4.1 trillion. Operational efficiencies and economic activity contributed to the lower cost to

collect.

IRS - 51

FY 2023 Changes by Budget Activity

Dollars in thousands

Exam and Collections

FTE

FY 2022 Annualized CR (ACR)

Changes to Base:

Maintaining Current Levels (MCLs)

Pay Annualization (2.7% average pay raise)

Pay Raise (4.6% average pay raise)

Non-Pay

Base Adjustment

Adjustment to Reach Current Operating Levels

Subtotal FY 2023 Changes to Base

FY 2023 Current Services

Amount

31,615

$4,160,748

318

31,933

$169,465

27,100

139,447

2,918

206,676

$206,676

$376,141

$4,536,889

Program Increases:

Putting Taxpayers First

129

48,365

Total FY 2023 Request

129

2,269

2,398

34,331

48,365

298,321

$346,686

$4,883,575

Dollar/FTE Change FY 2023 Request over FY 2022 ACR

Percent Change FY 2023 Request over FY 2022 ACR

2,716

8.59%

$722,827

17.37%

Taxpayer Experience Strategy

Ensure Fairness of the Tax System

Subtotal FY 2023 Program Increases

This table does not include the proposed technical adjustment that would move certain support activities from Operation Support

and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment

would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer

Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

2.1.4 – Budget and Performance Report and Plan

Dollars in thousands

Exam and Collections

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

Resource Level

Actual

Annualized CR

Request

$3,901,041

450

$3,875,098

3,289

$3,878,387

$3,933,597

249

2,454

$3,936,300

$3,987,323

1,719

$3,901,491

$3,907,290

240

$3,907,572

Appropriated Resources1

Reimbursable Resources2

User Fees2

Budget Activity Total

$3,989,042

$4,160,748

2,916

$4,163,718

$4,883,575

3,062

$4,886,637

The FY 2016 - FY 2020 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

The FY 2016 - FY 2020 columns represent realized resources for reimbursables and user fees.

Exam and Collections

Measures

FY 2017

Actual

FY 2018

Actual

FY 2019

Actual

FY 2020

Actual

FY 2021

Actual

FY 2021

Target

FY 2022

Target

FY 2023

Target

1,941

2,307

2,108

2,693

2,227

Indicator

Exam Starts - Partnerships (new FY21) (Ot, L)

10,221

9,033

5,823

4,106

4,327

Indicator

Exam Starts - Large Corporations (new FY21) (Ot, L)3

2,577

2,396

2,009

1,700

1,490

Indicator

Exam Starts - High Income Individuals (new FY21) (Ot, L)3

Examination Efficiency - Individual (E)

Time to Start Compliance Resolution (new FY20) (E, L)

121

131

109

108

111

100

114

58.8%

60.1%

60.9%

66.3%

66.0%

Indicator

Time to Resolve Compliance Issue After Filing (new FY20) (E,L)3

491

494

469

491

484

Indicator

Repeat Non-Compliance Rate (new FY20) (Oe, L)3

29.2%

30%

31.4%

35.6%

30.7%

Indicator

Collection Coverage - Units (Ot)

42.2%

41.6%

41.3%

34.9%

41.2%

33.0%

36.5%

32.1%

Cost to Collect $100 (E)

$0.34

$0.33

$0.35

$0.33

Indicator

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Strategic Goal Measure

Historical data provided for comparison.

IRS - 52

2E – Regulatory

($192,953,000 in direct appropriations and an estimated $866,000 from reimbursable programs): This budget activity 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. The activities include:

•

Tax Law Interpretation and Published Guidance interprets tax law through published guidance, technical advice,

and other technical legal services.

General Legal Services provides advice to the IRS on non-tax legal issues, including procurement, personnel, labor

relations, equal employment opportunity, fiscal law, tort claims and damages, ethics, and conflict of interest.

Rulings and Agreements applies the tax law to specific taxpayers in the form of pre-filing agreements,

determination letters, advance pricing agreements, and other pre-filing determinations and advice.

International Regulatory Legal Support supports Counsel’s work in tax law interpretation and rulings and

agreements related to international issues.

Return Preparer Strategy provides staffing, training, and direct support associated with the Return Preparer

Strategy.

Office of Professional Responsibility identifies, communicates, and enforces Treasury Circular 230 standards of

competence, integrity, and conduct of those who represent taxpayers before the IRS, including attorneys, Certified

Public Accountants (CPAs), enrolled agents, enrolled actuaries and appraisers, and other professionals.

IRS - 53

Description of FY 2021 Performance - Regulatory

In FY 2021, IRS published 196 items: 136 Priority Guidance Plan (PGP) projects and 60 ministerial rulings. Ministerial

projects are publications that only involve ministerial matters (such as applicable federal interest rates and monthly bond

factor amounts). They are usually published on an annual basis. Many items published in FY 2021 involved complex and

novel issues. For example, two of the published items pertain to a provision added by the Tax Cuts and Jobs Act (TCJA)

creating the deduction for qualified business income and how that applies to cooperative organizations. Another item

addressed the new unrelated business income tax provision of the TCJA providing that the tax will be computed separately

for each trade or business. Over one hundred items were published to implement the Families First Coronavirus Response

Act (FFCRA), the Coronavirus Aid, Relief, and Economic Security Act (CARES), the Consolidated Appropriations Act,

2021, and the American Rescue Plan Act (ARPA) and provided relief in response to the COVID-19 pandemic emergency,

including several items relating to employer tax credits - the Credit for Sick and Family Leave, the Employee Retention

Credit, and Paid Leave Credit for Vaccines. The 2021-2022 PGP, published on September 9, 2021, and covering July 2021

through June 2022, lists 193 projects.

The Office of Professional Responsibility (OPR) remains firmly committed to educating tax professionals about their

responsibilities and limitations under Circular 230, and their ethical obligations to taxpayers and tax administration. During

Fiscal Year 2021, the OPR’s primary education and outreach efforts were directed at minimizing the number of practitioners

who diverted from their ethical obligations. To the extent practitioners failed to adhere to the tax practice ethics, the OPR

timely applied the appropriate level of discipline that put the practitioner back-on-track regarding competence and integrity in

their tax practice.

The OPR performed its outreach activities through presentations conducted in-person and virtually through on-line webinars,

telephonically, and via video conferencing platforms. The OPR educated tax professionals (mainly tax return preparers)

about Circular 230 provisions at numerous events, including the IRS Nationwide Tax Forums. The Nationwide Tax Forums

are an integral part of OPR’s external outreach efforts as thousands of tax professionals attend these forums. These outreach

events helped ensure taxpayers received competent and ethical representation before the agency.

IRS - 54

FY 2023 Changes by Budget Activity

Dollars in thousands

Regulatory

FY 2022 Annualized CR (ACR)

FTE

Amount

1,024

$176,595

Changes to Base:

Maintaining Current Levels (MCLs)

$7,264

1,173

6,033

Pay Annualization (2.7% average pay raise)

Pay Raise (4.6% average pay raise)

Non-Pay

Base Adjustment

Adjustment to Reach Current Operating Levels

Subtotal FY 2023 Changes to Base

FY 2023 Current Services

Program Increases:

Putting Taxpayers First

Taxpayer Experience Strategy

Ensure Fairness of the Tax System

Subtotal FY 2023 Program Increases

5,504

$5,504

$12,768

1,034

$189,363

2,437

1,153

Total FY 2023 Request

1,053

$3,590

$192,953

Dollar/FTE Change FY 2023 Request over FY 2022 ACR

2.83%

$16,358

9.26%

Percent Change FY 2023 Request over FY 2022 ACR

This table does not include the proposed technical adjustment that would move certain support activities from Operation Support

and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment

would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer

Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

2.1.5 – Budget and Performance Report and Plan

Dollars in thousands

Regulatory

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

FY2023

Resource Level

Actual

Annualized CR

Request

Appropriated Resources1

Reimbursable Resources2

User Fees2

Budget Activity Total

$131,662

160

$170,222

593

$174,624

412

$157,374

252

$132,506

222

$176,595

825

$192,953

866

9,537

$141,359

$170,815

$175,036

$157,626

$132,728

$177,420

$193,819

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.

IRS - 55

Operations Support

Appropriation Description

The Operations Support appropriation as currently defined - funds rent payments; facilities services; printing; postage;

physical security; headquarters policy and management activities such as corporate support for strategic planning;

communications and liaison; finance; human resources; equity, diversity, and inclusion; research and statistics of income; and

necessary expenses for information systems and telecommunication support, including development, security, and

maintenance of the IRS’s information systems.

The Operations Support budget request for FY 2023 is $4,543,268,000 in direct appropriations and 11,923 FTE, excluding

the proposed technical adjustment. This is an increase of $615,166,000 or 15.66 percent, and 291 FTE more than the FY

2022 ACR level of $3,928,102,000 and 11,631 FTE.

IRS - 56

2.1 – Budget Adjustments Table

Dollars in thousands

Operations Support

Summary of Proposed FY 2023 Request

FTE

FY 2022 Annualized CR (ACR)

11,631

Amount

$3,928,102

Changes to Base:

Maintaining Current Levels (MCLs)

$119,339

Pay Annualization (2.7% average pay raise)

12,812

Pay Raise (4.6% average pay raise)

65,928

Non-Pay

40,599

Base Adjustment

$115,991

Adjustment to Reach Current Operating Levels

115,991

Subtotal FY 2023 Changes to Base

$235,330

FY 2023 Current Services

11,631

$4,163,432

229

146,805

Taxpayer Experience Strategy

229

146,805

Ensure Fairness of the Tax System

98,396

Program Changes:

Program Increases

Putting Taxpayers First

User Authentication

Enhance Taxpayer Service

84,945

Critical IT Operations

39,521

Focused Strategies for Reaching Underserved Communities

10,169

Subtotal FY 2023 Program Increases

292

$379,836

Total FY 2023 Budget Request

11,923

$4,543,268

See footnotes in 1.1 -- Appropriations Detail Table

This table does not include the proposed technical adjustment that would move certain support activities from Operation

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations.

The adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and

increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

IRS - 57

2.2 – Object Classification Obligations

Dollars in thousands

Operations Support

Object Classification

11.1 Full-Time Permanent Positions

FY 2021

Operating Plan

FY 2022

Annualized CR

1,339,823

FY 2023

Request

1,346,193

1,433,106

11.3 Other than Full-Time Permanent Positions

5,350

4,861

5,062

11.5 Other Personnel Compensation

33,940

40,005

43,150

181

750

781

11.9 Personnel Compensation (Total)

1,379,294

1,391,809

1,482,099

12.1 Personnel Benefits

483,805

506,294

537,789

$1,863,129

$1,898,139

$2,019,926

11.8 Special Personal Services Payments

13.0 Benefits to Former Personnel

Total Personnel and Compensation Benefits

21.0 Travel

7,938

9,026

11,925

22.0 Transportation of Things

14,036

14,669

16,012

23.1 Rental Payments to GSA

579,736

609,019

634,381

23.2 Rent Payments to Others

6,914

23.3 Communications, Utilities, & Misc.

311,545

291,154

338,662

24.0 Printing & Reproduction

19,746

19,656

22,269

25.1 Advisory & Assistance Services

638,496

428,418

643,673

25.2 Other Services

29,188

32,621

51,210

25.3 Purchase of Goods & Services from Govt. Accounts

56,744

69,013

76,711

25.4 Operation & Maintenance of Facilities

199,037

202,776

223,729

25.6 Medical Care

14,972

17,605

20,045

25.7 Operation & Maintenance of Equipment

66,088

44,227

53,530

26.0 Supplies and Materials

7,240

5,143

7,370

31.0 Equipment

255,972

239,949

346,253

32.0 Land and Structures

32,645

45,987

76,858

676

663

676

Total Non-Personnel

$2,240,973

$2,029,963

$2,523,342

New Appropriated Resources

$4,104,102

$3,928,102

$4,543,268

886,713

918,659

1,039,852

42.0 Insurance Claims & Indemnities

Budget Activities:

Infrastructure

Shared Services & Support

1,024,654

1,109,740

1,200,105

Information Services

2,192,735

1,899,703

2,303,311

$4,104,102

$3,928,102

$4,543,268

12,037

11,631

11,923

New Appropriated Resources

FTE

See footnotes in 1.1 -- Appropriations Detail Table

Note 1: This table does not include the proposed technical adjustment that would move certain support activities from Operations

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment

would reduce the Operations Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer Services

appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Note 2: This table does not include the $15 million in the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), $750.7 million

under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-36), the $509 million provided in the Consolidated

Appropriations Act, 2021 (P.L. 116-260), the $1.86 billion provided by the American Rescue Plan (ARP) (P.L. 117-2)

IRS - 58

2.3 – Appropriation Detail Table

Dollars in thousands

Change

% Change

FY 2022 to FY 2023

Request

FY 2022 to FY 2023

Request

FTE

Operations Support

Appropriated Resources

FY 2021

Operating Plan

FTE

FY 2022

Annualized CR

AMOUNT

FTE

FY 2023

Request

AMOUNT

FTE

AMOUNT

New Appropriated Resources:

Infrastructure

886,713

918,659

1,039,852

121,193

13.19%

Shared Services and Support

5,122

1,024,654

5,067

1,109,740

5,183

1,200,105

116

90,365

2.29%

8.14%

Information Services

6,915

2,192,735

6,564

1,899,703

6,740

2,303,311

176

403,608

2.68%

21.25%

12,037

$4,104,102

11,631

$3,928,102

11,923

$4,543,268

292

$615,166

2.51%

15.66%

55,072

55,000

57,751

2,751

5.26%

5.00%

335,410

261,833

Subtotal New Appropriated Resources

Other Resources:

Reimbursables

Offsetting Collections - Non Reimbursables

User Fees

258

Recovery from Prior Years

408,054

11,849

5,218

Recoveries Paid

Unobligated Balances from Prior Years

166

178,232

540,897

(73,577)

-21.94%

5,218

214,869

(326,028)

46.43%

-60.28%

Transfers In/Out

24,428

28,292

37,602

9,310

25.93%

32.91%

Subtotal Other Resources

Resources from Other Accounts

257

$677,893

146

$964,843

170

$577,299

($387,544)

16.44%

-40.17%

Total Budgetary Resources

12,294

$4,781,995

11,777

$4,892,945

12,093

$5,120,567

316

$227,622

2.68%

4.65%

See footnotes in 1.1--Appropriations Detail Table

The new appropriated resources in this table do not include the proposed technical adjustment that would move certain support activities from Operation Support and charge the full

cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment would reduce the Operation Support appropriation by $709.5 million for rent

and CFO adjustments and increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.6 million.

2F – Infrastructure

($1,039,852,000 in direct appropriations and an estimated $1,041,000 from reimbursable programs): This budget activity

funds administrative services related to space and housing, rent and space alterations, building services, maintenance, guard

services, and non-IT equipment. The program activities include:

•

Building Delegation oversees and manages the IRS GSA-delegated buildings, including cleaning, maintenance,

utilities, protection, administrative, and recurring and one-time repair costs.

Rent provides resources for all IRS rent needs.

Space and Housing/Non-IT Equipment provides management of all IRS building services, maintenance, space

alterations, guard services, custodial overtime, utility service needs, and non-IT equipment.

Security covers all physical security costs, including guard services, security equipment and maintenance,

countermeasures, Homeland Security Presidential Directive 12 (HSPD-12) and Treasury Enterprise Identity

Credential and Access Management (TEICAM).

Description of FY 2021 Performance - Infrastructure

Rent

The Rentable Square Feet per Person indicator is the amount of rentable square feet the IRS maintains per person requiring

space. After payroll, rent is the IRS’s largest operating expense; therefore, the IRS continues to take steps to reduce its total

office space. Through FY 2021, the Rentable Sq. Ft. per Person was 278 -- the same level as FY 2020. Rentable Square Feet

per Person is driven in the positive direction by either a decrease in square footage, increase in staffing or a combination of

both. In FY 2021 there was a slight decrease in both staffing and rentable square footage, leaving Rentable Square Feet per

Person unchanged. The IRS continues to release excess office space through building closures and consolidations; more than

IRS - 59

two million rentable square feet has been released since FY 2017. The IRS continues to look to incorporate new hires into

existing space, where possible. The IRS target for FY 2022 is 270 sq. ft. and the FY 2023 target is 260 sq. ft.

Security and Safety

Security of IRS facilities and providing a secure and safe environment for employees are of utmost importance to the IRS. In

FY 2021, the IRS worked diligently to implement a physical security strategy, which included the accomplishment of four

goals:

•

Providing security related tools, training, mechanisms, and processes to improve workforce effectiveness, agility,

and retention;

Implementing and monitoring the effectiveness of physical security policies, procedures, and internal controls by

crafting effective management tools to ensure appropriate monitoring of all aspects of the physical security

programs;

Recognizing varying levels of security related performance and ensured employee accountability;

Coordinating among all the functional areas involved in physical security. The security related improvements

reduced burden, enhanced monitoring efficiency and increased data reporting reliability of security programs for

program owners and managers.

At the onset of the COVID-19 pandemic in March 2020, the IRS took unprecedented actions to protect the health and safety

of its employees and the taxpaying public. This included closing Submission Processing Centers, Taxpayer Assistance

Centers (TACs), and other offices nationwide. At the beginning of FY 2021, many employees remained on health and safety

leave, resulting in a significant amount of unopened mail, tax return processing delays, and correspondence. By December

2020, the IRS had resumed normal mail operations, and by May 2021, TACs were open and accepting face-to-face

appointments. The work performed at IRS Submission Processing Centers is not conducive to a remote telework

environment.

Throughout FY 2021, the IRS continued to improve its workspace modifications to enhance safety in IRS facilities, which

included increased and widespread availability of hand sanitizer, surface sanitizing/disinfecting wipes, and both disposable

masks and reusable masks. IRS modified custodial contracts for the provision of additional and above standard cleaning

services. Modifications were made to heating, ventilation, and air conditioning operations to increase outside air and filter

efficiencies, where technically feasible, and installed acrylic shields in workstations, when required. IRS developed and

posted specific pandemic signage and placed them outside IRS entrances to encourage employee COVID-19 symptom selfscreening. IRS ensured appropriate spacing of seating in open work and public gathering areas to enforce social distancing,

and limited occupancy in bathrooms; elevators; and meeting, training, and break rooms.

IRS - 60

FY 2022 Changes by Budget Activity

Dollars in thousands

Infrastructure

FTE

Amount

FY 2022 Annualized CR (ACR)

$918,659

Changes to Base:

Maintaining Current Levels (MCLs)

$18,380

Pay Annualization (2.7% average pay raise)

Pay Raise (4.6% average pay raise)

Non-Pay

18,367

Base Adjustment

Adjustment to Reach Current Operating Levels

Subtotal FY 2023 Changes to Base

$18,380

FY 2023 Current Services

$937,039

Program Increases:

Putting Taxpayers First

11,208

Taxpayer Experience Strategy

Ensure Fairness of the Tax System

11,208

42,231

Enhance Taxpayer Service

41,727

Critical IT Operations

1,044

Focused Strategies for Reaching Underserved Communities

6,603

Subtotal FY 2023 Program Increases

$102,813

Total FY 2023 Request

$1,039,852

Dollar/FTE Change FY 2023 Request over FY 2022 ACR

$121,193

Percent Change FY 2023 Request over FY 2022 ACR

13.19%

This table does not include the proposed technical adjustment that would move certain support activities from Operation Support

and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment

would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer

Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

2.1.6 – Budget and Performance Report and Plan

Dollars in thousands

Infrastructure

Resource Level

FY 2017

Actual

FY 2018

FY 2019

Actual

FY 2020

Actual

FY 2021

FY 2022

FY 2023

Actual

Annualized

Request

$856,655 $870,360 $891,140 $867,354 $885,606

$918,659 $1,039,852

Appropriated Resources1

Reimbursable Resources2

634

662

681

747

854

991

1,041

User Fees2

999

$857,289 $871,022 $892,820 $868,101 $886,460

$919,650 $1,040,893

Budget Activity Total

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and interappropriation transfers.

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.

Infrastructure

Measure

Rentable Square Feet per Person (Ot)

FY 2017

Actual

FY 2018

Actual

FY 2019

Actual

FY 2020

Actual

FY 2021

Actual

FY 2021

Target

FY 2022

Target

FY 2023

Target

297

301

298

278

280

270

260

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Strategic Goal Measure

IRS - 61

2G – Shared Services and Support

($1,200,105,000 in direct appropriations, and an estimated $31,919,000 from reimbursable programs): This budget activity

funds policy management, IRS-wide support for research, strategic planning, communications and liaison, finance, human

resources, and equity, diversity, and inclusion programs. It also funds printing and postage, business systems planning,

security, legal services, and procurement. The program activities include:

•

National Headquarters Management and Administration directs the management activities of strategic planning,

communications and liaison, finance, human resources, equity, diversity and inclusion programs, business systems

planning, embedded training, and the Treasury Franchise Fund. It sets policies and goals, provides leadership and

direction for the IRS, and builds partner relationships with key stakeholders (Congress, GAO, and OMB). It

provides policy guidance for conducting planning and budgeting strategies, conducting analyses of programs and

investments to support strategic decision-making, and developing and managing human resources. It also includes

official reception and representation expenses.

Facilities Management & Security Services provides facilities and security services to deliver a safe, secure, and

optimal work environment to IRS employees.

Procurement supports the procurement function of the IRS.

Equity, Diversity, and Inclusion Field Services provides staffing, training, and direct support to plan and manage

the IRS’s Equity, Diversity, and Inclusion program.

Communications and Liaison coordinates local government and liaison relationships; handles congressional, state,

and national stakeholder relationships and issues; coordinates cross-cutting issues, including managing audits and

legislative implementation; handles national media contacts and local media relationships; and ensures IRS-wide

compliance with disclosure and privacy laws.

Employee Support Services plans and manages financial services, including relocation, travel, purchase cards,

corporate express, and employee clearances.

Treasury Complaint Centers plan and manage the Treasury Complaint centers.

Shared Support not provided by Facilities Management & Security Services provides resources for shared crossfunctional support, such as postage meters, shredders, courier services, and post office boxes.

Printing and Postage – Media and Publications provides operating divisions with printing and postage, including

shipping of taxpayer and internal-use materials.

Statistics of Income provides resources for researching annual income, financial, and tax data from tax returns filed

by individuals, corporations, and tax-exempt organizations.

Research provides resources for market-based research to identify compliance issues, for conducting tests of

treatments to address noncompliance, and for the implementation of successful strategies to address taxpayer

noncompliance behavior.

Protection of Sensitive Information manages and oversees the staffing, training, equipment, and direct support for

the protection of IRS employees, facilities, and assets, and the protection and proper use of identity information.

W&I Business Modernization Support provides staffing, training, and support for W&I’s enterprise-wide business

modernization efforts, including re-engineered business processes.

Benefit Payments provides resources to fund Workers’ Compensation benefits and Unemployment Compensation

for federal employee payments.

Shared Services provides additional services, such as the Public

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