Congressional Budget (2024)
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Fiscal Year
2025
Congressional Budget
Justification & Annual
Performance
Report and Plan
Publication 4450 (Rev. 2-2024) Catalog Number 39720Z
Department of the Treasury Internal Revenue Service
www.irs.gov
IRS-i
Table of Contents
Commissioner’s Message .............................................................................................................. 1
Section I – Budget Request ........................................................................................................... 3
A – Mission Statement............................................................................................................... 3
1.1 – Appropriations Detail Table ............................................................................................ 3
1.2 – Inflation Reduction Act Implementation ....................................................................... 7
B – Summary of the Request .................................................................................................... 8
1.3 – Budget Adjustments Table .............................................................................................. 9
C – Base Adjustment and Program Changes Description ..................................................... 9
Maintaining Current Levels ..................................................................................................... 9
Pay Annualization (5.2%) ........................................................................................................ 9
Pay Raise (2.0%) ..................................................................................................................... 9
Non-Pay ................................................................................................................................... 9
Program Decrease...................................................................................................................... 9
Staff Attrition to Offset Unfunded FY 2025 MCLs................................................................... 9
1.4 – Object Classification (Schedule O) Obligations ........................................................... 10
D – Appropriations Language and Explanation of Changes............................................... 11
Section II – Budget and Performance Plan............................................................................... 19
Taxpayer Services .................................................................................................................... 22
2.1 – Budget Adjustments Table ........................................................................................... 26
2.2 – Object Classification Obligations ................................................................................ 27
2.3 – Appropriation Detail Table .......................................................................................... 28
2A – Pre-Filing Taxpayer Assistance and Education ......................................................... 28
2.1.1 – Budget and Performance Report and Plan .............................................................. 31
2B – Filing and Account Services ........................................................................................ 31
2.1.2 - Budget and Performance Report and Plan .............................................................. 35
Enforcement ............................................................................................................................. 36
2.1 – Budget Adjustments Table ........................................................................................... 40
2.2 – Object Classification Obligations ................................................................................ 41
2.3 – Appropriation Detail Table .......................................................................................... 42
2C – Investigations................................................................................................................ 42
2.1.3 – Budget and Performance Report and Plan .............................................................. 45
2D – Exam and Collections .................................................................................................. 45
2.1.4 – Budget and Performance Report and Plan .............................................................. 51
2E – Regulatory .................................................................................................................... 52
2.1.5 – Budget and Performance Report and Plan .............................................................. 53
Technology and Operations Support ..................................................................................... 54
2.1 – Budget Adjustments Table ........................................................................................... 56
2.2 – Object Classification Obligations ................................................................................ 57
2.3 – Appropriation Detail Table .......................................................................................... 58
2F – Infrastructure ............................................................................................................... 58
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2.1.6 – Budget and Performance Report and Plan .............................................................. 60
2G – Shared Services and Support ....................................................................................... 60
2.1.7 – Budget and Performance Report and Plan .............................................................. 64
2H – Information Services ................................................................................................... 64
2.1.8 – Budget and Performance Report and Plan .............................................................. 68
Business Systems Modernization ........................................................................................... 69
2.1 – Budget Adjustments Table ........................................................................................... 70
2.2 – Object Classification Obligations ................................................................................ 71
2.3 – Appropriation Detail Table .......................................................................................... 71
2I – Business Systems Modernization .................................................................................. 72
2.1.9 – Budget and Performance Report and Plan .............................................................. 75
B – Business Systems Modernization ..................................................................................... 76
C – Changes in Performance Measures ................................................................................. 83
Section III – Supplemental Information ................................................................................... 84
3.1 – Summary of Capital Investments.................................................................................. 84
3.2 – IRS Performance Measures Table ................................................................................ 92
3.3 – Return on Investment (ROI) for IRS Major Enforcement Programs ....................... 94
3.4 – Policy Proposal to Extend Inflation Reduction Act Funding ..................................... 97
Section IV – Appendix ................................................................................................................ 99
4.1 – Summary of IRS FY 2025 Cybersecurity Budget Request ......................................... 99
4.2 – Summary of IRS FY 2025 Budget Request .................................................................. 99
IRS-ii
Commissioner’s Message
The IRS is embarking on a once-in-a-generation endeavor to envision and
realize the future of tax administration. As the next few years will be crucial
for this journey, we are focusing on several major goals, including:
o Ensuring taxpayers can easily contact the IRS – whether in person,
on the phone or online – and get help navigating complex tax laws
and accessing the credits they deserve,
o Identifying the growing number of taxpayers with complex returns
– including certain wealthy individuals, large corporations, and
complex partnerships – who are shielding income to evade their tax
responsibility and collecting from them what is owed, and
o Addressing the growing risk of tax scams and schemes by
protecting honest taxpayers from them and rooting out the nefarious actors that perpetrate
them.
The IRS has many other goals and objectives supporting this effort as part of our Strategic Operating
Plan. This includes making dramatic improvements to our Information Technology (IT)
infrastructure and design and delivering modern technology platforms that center around data and
applications. These efforts will support all our transformation work.
Achieving this ambitious agenda will require that we rebuild areas in the IRS that have suffered from
more than a decade of underfunding that preceded the Inflation Reduction Act. A critical change we
are making involves providing our workforce with the right tools – including training, technology,
and smarter processes – so we are ready now and, in the future, to meet our core mission of
supporting taxpayers and the nation.
The Strategic Operating Plan outlines dozens of initiatives to achieve these goals – from call center
modernization to enterprise digitization to protecting against emerging scams to revamping employee
onboarding processes – and we have launched hundreds of associated projects to implement the plan.
These efforts are already starting to make transformational changes that will provide significant benefits
over the next decade for taxpayers, tax professionals and the tax system. A few examples include:
•
•
•
•
•
We cut phone wait times almost 90 percent (from 28 min to 3 min), answered 3 million more calls,
and provided service to 140,000 more taxpayers in-person in Filing Season 2023 than in Filing
Season 2022.
We achieved a telephone Level of Service (LOS) of 87 percent throughout the 2023 filing season.
We processed 750k+ more individual federal tax returns than in Filing Season 2022, scanned 225
times more forms than in 2022, made 51 additional forms and letters available for online response,
and enabled a new direct-deposit refund option for taxpayers with amended returns.
We opened or reopened 54 Taxpayer Assistance Centers.
We cleared the backlog of unprocessed 2022 individual tax returns with no errors.
IRS-1
While We Seize this Moment, We Also Have to Look to the Future
The Fiscal Responsibility Act of 2023 (FRA) introduced uncertainty around our future funding by
immediately rescinding $1.4 billion of IRA appropriations funding and proposing an additional
$20.2 billion cut (assumed to be enacted in FY 2024 in this request). The IRS estimates this change
will add to the United States’ deficit by more than $100 billion. Additional rescissions of IRA
funding would further undermine the nation’s financial strength.
I am also concerned with funding levels in Taxpayer Services. At the current pace, without the new
investments from the proposed mandatory funding, the IRS will exhaust IRA Taxpayer Services
funds by FY 2026, leaving a calamitously large Taxpayer Services funding gap. Additionally, failing
to sustain the IRA investment in technology and enforcement would force the IRS to significantly
scale back its progress, resulting in a less fair tax system and increasing the deficit by tens of billions
of dollars annually.
Building on the Successes of IRA is Good for the United States
The substantial, multi-year funding provided in the IRA fueled our recent successes. For these
improvements to continue and accelerate, however, a consistent, reliable funding stream remains
critical for the agency – both for our annual appropriations and maintaining the IRA funding.
We are requesting new mandatory appropriations of $104 billion over the 10-year budget window.
This funding will allow us to fully realize the vision set forth in the IRA Strategic Operating Plan
(SOP), sustain the dramatic improvements in taxpayer service we achieved in FY 2023, modernize
our current IT portfolio, and sustain the rebuilding of our enforcement workforce. This investment
will pay for itself several times over, yielding an estimated $341 billion in revenue over the 10-year
period with enhanced enforcement on high-income, high-wealth taxpayers. In addition to the
mandatory funding request, the IRS is also seeking more flexibility with our resources. Most likely,
it will require a combination of both to fully ensure we are most effectively serving taxpayers and
meeting the objectives of the Administration.
The decision about whether to adequately fund the agency comes down to a fundamental choice:
Whether or not we will have an IRS that:
• taxpayers can easily interact with to meet their tax responsibilities or resolve issues if they arise,
• ensures fairness in the tax system through its enforcement activities,
• quickly and effectively addresses tax scams that exploit vulnerable populations, and
• has updated IT infrastructure and modern technology platforms capable of supporting our
transformation work.
The IRS is a very different place from a year ago because of IRA. With the stable funding base,
mandatory proposal, and additional flexibilities included in this request, much more is on the way.
With Congress’s support, I am confident that we can meet our ambitious goals and transform our
agency to be the tax administrator the American people deserve.
–Danny Werfel
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
FY 2023
Appropriated Resources
New Appropriated Resources
Taxpayer Services
Pre-filling Taxpayer Assistance and Education
Filing and Account Services
Enforcement
Investigations
Exam and Collections
Regulatory
Technology and Operations Support3
Infrastructure
Shared Services and Support
Information Services
Business System Modernization
Subtotal New Appropriated Resources
Other Resources 4
Reimbursables
Offsetting Collections (Non-reimbursable)
User fees
Recoveries from Prior Years
Unobligated Balances from Prior Years
567
IRA Funding Usage
Transfers In/Out
Resources from Other Accounts8
Subtotal Other Resources
Total Budgetary Resources
Operating Plan1 2
FTE
AMOUNT
27,880
$2,880,606
4,447
763,472
23,433
2,117,134
31,963
$5,165,741
3,076
730,488
27,988
4,263,263
899
171,990
11,175
$4,122,707
894,403
5,173
1,157,249
6,002
2,071,055
116
$150,000
71,134
$12,319,054
699
86
1,843
13,661
717
17,006
88,140
168,000
33,836
31,827
53,633
884,175
3,396,142
119
161,471
$4,729,203
$17,048,257
FY 2024
Annualized CR
FTE
AMOUNT
24,737
$2,780,606
4,200
749,814
20,538
2,030,792
30,576
$5,437,622
2,822
757,402
26,926
4,489,141
828
191,079
10,443
$4,100,826
919,454
4,327
1,111,964
6,115
2,069,408
FY 2025
Request
FTE
AMOUNT
23,961
$2,780,606
4,076
749,814
19,885
2,030,792
29,765
$5,437,622
2,773
757,402
26,212
4,489,141
780
191,079
10,282
$4,100,826
919,454
4,166
1,111,964
6,115
2,069,408
FY 2024 to FY 2025
Change
% Change
FTE
AMOUNT
FTE AMOUNT
(777)
-3%
(124)
-3%
(653)
-3%
(811)
-3%
(49)
-2%
(714)
-3%
(48)
-6%
(161)
-2%
(161)
-4%
65,756
$12,319,054
64,008
$12,319,054
(1,749)
-3%
652
176,400
35,625
603,100
53,635
259,000
7,244,826
119
270,538
$8,643,243
$20,962,297
685
211,050
50,556
303,100
61,589
263,880
9,313,255
104
270,538
$10,474,072
$22,793,126
33
71
16,314
918
17,955
83,711
1
56
25,719
469
26,929
90,937
(15)
34,650
14,931
(300,000)
7,954
4,880
9,405
2,068,429
(15)
9,423
7,674
$1,830,829
$1,830,829
5%
-21%
58%
-49%
50%
9%
20%
42%
-50%
15%
2%
29%
-13%
21%
9%
The FY 2023 Operating Plan does not include COVID supplemental funding, and includes an Inter-Appropriations Transfer (IAT) from
Enforcement ($272 million) to Taxpayer Services ($100 million), Operations Support ($22 million), and Business Systems Modernization
($150 million).
2
FY 2023 Enacted may differ slightly from the amounts reported in the IRS FY 2023 Operating Plan due to timing of legislative actions and
agency decisions.
3
The IRS is requesting to rename the Operations Support appropriation to Technology and Operations Support, as this title more accurately
reflects its critical role of funding IRS technology, which now represents the single largest component of the appropriation.
4
FY 2023 Other Resources represent actuals.
5
96 percent of the IRA funded estimated FY 2023 FTE levels support non-Enforcement activities. FY 2023 IRA Funding Usage includes
amounts for Taxpayer Services ($889 million and 10,518 FTE), Enforcement ($299 million and 495 FTE), Technology and Operations
Support ($1,474 million and 2,317 FTE), Business Systems Modernization ($723 million and 327 FTE), and Direct eFile ($12 million
and 4 FTE).
6
84 percent of the IRA funded estimated FY 2024 FTE levels support non-Enforcement activities. FY 2024 IRA Funding Usage includes
amounts for Taxpayer Services ($969 million and 7,279 FTE), Enforcement ($1,047 million and 4,088 FTE), Technology and Operations
Support ($3,258 million and 2,944 FTE), Business Systems Modernization ($1,789 million and 193 FTE), and Energy Security tax credits
($180 million and 1,810 FTE).
7
72 percent of the IRA funded estimated FY 2025 FTE levels support non-Enforcement activities. FY 2025 IRA Funding Usage includes
amounts for Taxpayer Services ($1,323 million and 12,562 FTE), Enforcement ($2.317 million and 7,239 FTE), Technology and Operations
Support ($3,565 million and 3,808 FTE), Business Systems Modernization ($1,929 million and 300 FTE), and Energy Security tax credits
($180 million and 1,810 FTE).
8
Resources from Other Accounts reflect planned spending from Private Collection Agency retained earnings.
IRS-3
Introduction
The IRS Fiscal Year (FY) 2025 Budget Request (Budget) is $12.3 billion, in annual
appropriations, equal to a potential FY 2024 Annualized Continuing Resolution (CR) and the FY
2023 Enacted level. The IRS is implementing its plans for transformative change with the
significant resources provided by IRA. To support ongoing transformative efforts funded through
the IRA, annual discretionary appropriations need to provide sufficient recurring “base” resources.
Without additional funding, telephone level of service (LOS) is expected to see a drastic decline in
FY 2026, when only about one in every ten taxpayers will be able to have their calls answered.
The budget includes proposals to expand the IRS’s transfer authority and extend IRA resources
through FY 2034 to sustain completed improvements.
The IRA is already yielding tangible benefits for taxpayers. During filing season 2023, the IRS
was able to achieve an 87 percent level of service on its main customer phone line, a dramatic
reversal from 15.5 percent the year before. Wait times to speak with a customer service agent fell
to 3 minutes on average, compared to 28 minutes in filing season 2022. Since the beginning of
2023 the IRS opened or reopened 54 Taxpayer Assistance Centers (TACs) to provide more inperson help to taxpayers, with more service improvements being implemented in filing season
2024. In addition, the IRS launched the Paperless Processing Initiative (PPI), which has allowed
taxpayers to digitally submit all correspondence and responses to notices, and the Simple Notice
Initiative, which will ensure the 170 million notices it sends to taxpayers each year are easier to
understand. In addition, the IRS has collected more than $500 million from high-income
individuals who were delinquent on their tax debt and launched new enforcement initiatives to
ensure large corporations and complex partnerships pay taxes owed. These are just a few of the
significant improvements made possible by the combination of IRA funding and IRS base funding.
However, with no anticipated
discretionary increases for
inflationary requirements in FY
2024 and FY 2025, the IRS will be
required to further extend its
reliance on IRA resources to fund
base needs. IRA resources are
limited, and the IRS will likely use
them entirely before the funding
expires in FY 2031. In addition, the
authorizing language does not
provide the flexibility to realign the
IRA funds across appropriations.
This will have the most immediate
impact on the Taxpayer Services
(TS) appropriation, with IRA TS resources expected to run out completely by FY 2026. As the
figure illustrates, the IRS is spending much more on Taxpayer Services than is provided in annual
appropriations, with IRA funding heavily supplementing telephone and in person service. Without
additional funding or additional flexibility to realign between appropriations, LOS is expected to
see a drastic decline in FY 2026 and fall even further in FY 2027. In this scenario, the vast
IRS-4
majority of taxpayers would be unable to reach an IRS representative for assistance and millions of
pieces of correspondence would not be answered timely.
To address this issue, the Budget also includes a mandatory proposal that will avert the IRA
funding “cliffs,” after which IRA funds are exhausted for a given appropriation and will extend
IRA funding through FY 2034. This proposal would provide $104 billion over the 10-year budget
window and is estimated to generate an additional $341 billion in revenue. It will ensure that the
IRS’s transformation efforts to improve service, modernize technology, and ensure high-income
taxpayers, large corporations, and complex partnerships pay the taxes they owe, as described in the
Strategic Operating Plan, can continue.
Technology and Operations Support
With this Budget, the IRS requests Congress change the name of the “Operations Support”
appropriation to “Technology and Operations Support.” In part this is an acknowledgement of the
current reality – that IT is the largest component of “Operations Support.” It is also an adjustment
to reflect the fact that technology work which may previously have been funded through
discretionary appropriations for Business Systems Modernization (BSM) will now be funded in the
new Technology and Operations Support (TOS) appropriation. Due to Business Systems
Modernization discretionary funding constraints in FY 2023, the IRA became the primary source
of BSM funding. Though the IRA BSM resources were substantial, they alone are not sufficient to
fulfill the planned requirements for IRS technology transformation through FY 2031. When the
IRA BSM funding is exhausted, the TOS resources will be the sole funding source for both
operations and maintenance (O&M) and IT transformation. If BSM funding is not approved, as
requested in the Mandatory Proposal, TOS appropriations would have to provide an additional $3
billion for modernization through FY 2031. IRA is already supplementing TOS discretionary
resources by roughly $1 billion per year for O&M (greater than $7 billion through FY 2031).
Absent the mandatory proposal, these pressures on TOS funding will only allow the IRS to
partially modernize, leaving a sizeable legacy technology footprint that will prevent the IRS from
enabling a real-time tax processing system that provides taxpayers with instant account updates,
faster refund processing and payment posting, and near real-time status updates. Outdated legacy
technology will operate inefficiently and with greater risks of outages affecting taxpayers and IRS
employees, while the cost of operating and maintaining IRS technology will continue to rise as
the IRS continues to manage both modern and legacy systems.
This Budget Addresses IRS’s Operational Risks
In addition to steady discretionary resources, this budget requests Congress expand transfer
authority to allow IRS to mitigate many of these issues. The flexibility provided by a transfer
authority change will allow the IRS to allocate its existing resources to fill funding gaps, as well
as make the IRS more nimble in responding as issues arise in the future. Addressing the potential
exhaustion of IRA resources requires a combination of supportive discretionary funding and
enhanced flexibility for transfers.
Without implementing these approaches, including the mandatory funding proposal, the IRS will
experience a series of avoidable crises over the next several years as discretionary funding once
again becomes the primary source for the IRS’s expanding requirements. The consequences of
IRS-5
not solving these problems cannot be overstated: taxpayers would ultimately find it next to
impossible to contact the IRS for live assistance, millions of taxpayer calls would go unanswered,
refund processing would be slowed, and fewer taxpayers would be able to get in-person help. In
addition, IRA resources have allowed the IRS to increase its Enforcement staffing, for example,
from 33,183 FTE in FY 2023 (actuals) to a targeted 37,004 FTE in FY 2025. This additional staff
will allow the IRS to ensure large corporations, complex partnerships, and high-income
individuals pay the taxes they owe. An abrupt and severe decline in the IRS’s Enforcement
budget beginning in fiscal year 2030, however, would force the IRS to significantly scale back
these efforts. Returning to low audit rates for high-end taxpayers would mean a less fair tax
system, while increasing the deficit by tens of billions annually. Tax scams and cheating would
become more widespread, and crucial technology improvements to improve data security, create
efficiencies, and deliver new tools for taxpayers would be stalled. The Administration’s
mandatory proposal, especially, addresses these issues.
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1.2 – Inflation Reduction Act Implementation
The IRS Inflation Reduction Act (IRA) SOP, published in April 2023, guides the IRS’s
resources, programs, and operational decisions. The table below outlines IRS actual and planned
spending of IRA funding. These funds are being used to strategically add staff, especially for
service and compliance priorities, fund IT transformation, cover base shortfalls due to limited
discretionary levels. and allow the IRS to undertake a wide variety of projects to transform how
the IRS performs its mission.
Dollars in Thousands
*Reflects the $1.4 billion recission per the Fiscal Responsibility Act, P.L. 118-5.
Note: While Taxpayer Services and BSM funding are expected to run out in FY 2025 or shortly thereafter, Enforcement and Operations Support
IRA spending is expected to continue into the future.
More information on the SOP can be found on page 20.
More information on IRA Taxpayer Services can be found on page 22.
More information on IRA Enforcement can be found on page 36.
More information on IRA Operations Support can be found on page 54.
More information on IRA Business Systems Modernization can be found on page 69.
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B – Summary of the Request
The IRS is responsible for administering the Nation’s tax system and meeting the needs of U.S.
taxpayers by helping them understand their tax responsibilities and enforcing the law with
integrity and fairness. The IRS’s core operations include collection of individual and corporate
taxes, examination of returns, taxpayer assistance, oversight of tax-exempt organizations,
administering multiple refundable tax credits, and other specialized programs.
In FY 2023, the IRS collected more than $4.7 trillion in taxes (gross receipts before tax refunds),
nearly all the revenue that supports the Federal government’s operations. With the U.S. tax base
becoming more complex, one key responsibility of the IRS is to make it easier for taxpayers to
understand and meet their tax obligations.
FY 2025 Budget Request and Priorities
The FY 2025 discretionary budget request is $12.3 billion, equal to the FY 2023 Enacted Budget
level. It contains various proposals that will increase financial flexibility for the IRS and support
hiring efforts as the IRS continues to implement its transformation plans with IRA resources.
These proposals include:
•
•
•
Increase IRS transfer authority so all available resources can be used most effectively, and
Expand Direct Hire Authority, which streamlines the hiring process, so that it can be used
to accelerate hiring for new staff brought on to the IRS with IRA resources, and
Extend the IRA investment into the future with a mandatory funding policy proposal
Collectively, these proposals will ensure that the IRS is making the best use of both its
discretionary and IRA funding so that the IRS’s transformation efforts can have the greatest
impact. In FY 2025, the IRS will utilize IRA resources to build on recent successes and deliver
key results for taxpayers.
IRS-8
1.3 – Budget Adjustments Table
Dollars in Thousands
FY 2024 Annualized CR
Changes to Base:
Maintaining Current Levels (MCLs):
Pay Annualization (5.2% average pay raise)
Pay Raise (2.0% average pay raise)
Non-Pay (2.2% non-pay inflation)
Program Decrease
Staff Attrition to Offset Unfunded FY 2025 MCLs
Subtotal Changes to Base
FY 2025 Current Services
Total FY 2025 Request
FTE
65,756
Amount
$12,319,054
$329,551
$118,950
$139,036
$71,565
($329,551)
($329,551)
(1,748)
(1,748)
(1,748)
64,008 $12,319,054
64,008 $12,319,054
See footnotes in 1.1 - Appropriations Detail Table.
C – Base Adjustment and Program Changes Description
Maintaining Current Levels………………………………………. +$329,551,000 / 0 FTE
Pay Annualization (5.2%) +$118,950,000 / 0 FTE
Funds are requested for annualization of the January 2024 5.2 percent average pay raise.
Pay Raise (2.0%) +$139,036,000 / 0 FTE
Funds are requested for a 2.0 percent average pay raise in January 2025.
Non-Pay (2.2%) +$71,565,000 / 0 FTE
Funds are requested for 2.2 percent increase in non-labor expenses such as travel, contracts, rent,
supplies, and equipment due to inflation.
Program Decrease…………………………………………… -$329,551,000 / -1,748 FTE
Staff Attrition to Offset Unfunded FY 2025 MCLs -$329,551,000 / -1,748 FTE
The IRS will be forced to use IRA supplemental funds to offset the cost of increased MCLs in
the base discretionary budget. Using supplemental funds to pay for activities that should be
funded from the base creates operational risk for the IRS.
IRS-9
1.4 – Object Classification (Schedule O) Obligations
Dollars in Thousands
Object Classification
11.1 - Full-time permanent
11.3 - Other than full-time permanent
11.5 - Other personnel compensation
11.8 - Spec. personal serv. paym'ts
11.9 - Personnel Compensation (Total)
12.1 - Personnel benefits
13.0 - Benefits for former personnel
Total Personnel and Compensation Benefits
21.0 - Travel and transportation of persons
22.0 - Transportation of things
23.1 - Rental payments to GSA
23.2 - Rental payments to others
23.3 - Communications, utilities, and miscellaneous
24.0 - Printing and reproduction
25.1 - Advisory and assistance services
25.2 - Other services from non-Federal sources
25.3 - Other goods and services from Federal sources
25.4 - Operation and maintenance of facilities
25.6 - Medical care
25.7 - Operation and maintenance of equipment
26.0 - Supplies and materials
31.0 - Equipment
32.0 - Land and structures
41.0 - Grants, Subsidies
42.0 - Insurance Claims & Indemn
91.0 - Unvouchered Expenses
Total Non-Personnel
New Budgetary Resources
FTE
FY 2023
Operating
Plan
6,225,129
65,702
443,566
56,072
6,790,468
2,524,535
12,522
$9,327,525
128,166
25,137
578,392
1,146
241,153
39,924
983,205
120,722
203,616
191,358
22,782
54,655
26,978
237,351
47,573
79,000
2,371
8,000
$2,991,529
$12,319,054
71,134
Amounts reflect obligations of annually appropriated discretionary resources.
See footnotes in 1.1 - Appropriations Detail Table.
IRS-10
FY 2024
FY 2025
Annualized
CR
Request
6,074,740
6,074,740
92,754
92,754
384,296
384,296
99,204
99,204
6,650,994
6,650,994
2,491,426
2,491,426
12,483
12,483
$9,154,903 $9,154,903
124,511
124,511
25,548
25,548
606,708
606,708
1,019
1,019
253,389
253,389
39,206
39,206
988,882
988,882
182,576
182,576
230,160
230,160
192,086
192,086
16,567
16,567
47,540
47,540
37,100
37,100
267,587
267,587
59,999
59,999
79,000
79,000
4,273
4,273
8,000
8,000
$3,164,151 $3,164,151
$12,319,054 $12,319,054
65,756
64,008
D – Appropriations Language and Explanation of Changes
Appropriations Language
Explanation of Changes
TAXPAYER SERVICES
For necessary expenses of the Internal
Revenue Service to provide taxpayer services,
including pre-filing assistance and education,
filing and account services, taxpayer
advocacy services, and other services as
authorized by 5 U.S.C. 3109, at such rates as
may be determined by the Commissioner,
$2,780,606,000, of which not to exceed
$100,000,000 shall remain available until
September 30, 2026, 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 lowincome taxpayer clinic grants, including
grants to individual clinics of up to $200,000,
of which not less than $55,000,000, to remain
available until September 30, 2026, shall be
available for the Community Volunteer
Income Tax Assistance Matching Grants
Program for tax return preparation
assistance, and of which not less than
$236,000,000 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 $7,000,000 shall be for identity theft and
refund fraud casework.
ENFORCEMENT
For necessary expenses for tax enforcement
activities of the Internal Revenue Service to
determine and collect owed taxes, to provide
legal and litigation support, to conduct
criminal investigations, to enforce criminal
statutes related to violations of internal
revenue laws and other financial crimes, to
purchase and hire passenger motor vehicles
(31 U.S.C. 1343(b)), and to provide other
services as authorized by 5 U.S.C. 3109, at
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such rates as may be determined by the
Commissioner, $5,437,622,000; of which not
to exceed $250,000,000 shall remain
available until September 30, 2026; of which
not less than $60,257,000 shall be for the
Interagency Crime and Drug Enforcement
program; and of which not to exceed
$35,000,000 shall be for investigative
technology for the Criminal Investigation
Division: Provided, That the amount made
available for investigative
technology for the Criminal Investigation
Division shall be in addition to amounts
made available for the Criminal Investigation
Division under the "Technology and
Operations Support" heading.
TECHNOLOGY AND OPERATIONS
SUPPORT
For necessary expenses to operate the
Internal Revenue Service to support taxpayer
services and enforcement programs,
including rent payments; facilities services;
printing; postage; physical security;
headquarters and other IRS-wide
administration activities; research and
statistics of income; telecommunications;
information technology development,
enhancement, operations, maintenance and
security; the hire of passenger motor vehicles
(31 U.S.C. 1343(b)); the operations of the
Internal Revenue Service Oversight Board;
and other services as authorized by 5 U.S.C.
3109, at such rates as may be determined by
the Commissioner; $4,100,826,000, of which
not to exceed $275,000,000 shall remain
available until September 30, 2026; 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, 2027, for research; and of
which not to exceed $20,000 shall be for
With the FY 2023 Enacted Budget not
providing any BSM resources, the IRS
remains committed to delivering the required
technological portfolio that will foster
modernization mandates.
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official reception and representation
expenses: Provided, That
not later than 30 days after the end of each
quarter, the Internal Revenue Service shall
submit a report to the Committees on
Appropriations of the House of
Representatives and the Senate and the
Comptroller General of the United States
detailing major information technology
investments in the Internal Revenue Service
portfolio, including detailed, plain language
summaries on the status of plans, costs, and
results; prior results and actual expenditures
of the prior quarter; upcoming deliverables
and costs for the fiscal year; risks and
mitigation strategies associated with ongoing
work; reasons for any cost or schedule
variances; and total expenditures by fiscal
year: Provided further, That the Internal
Revenue Service shall include, in its budget
justification for fiscal year 2026, a summary
of cost and schedule performance information
for its major information technology systems.
ADMINISTRATIVE PROVISIONSINTERNAL REVENUE SERVICE
(INCLUDING TRANSFER OF FUNDS)
SEC. 101. Not to exceed 8 percent of any
funds available in this act or any other
provision of law to the Internal Revenue
Service may be transferred to any other
Internal Revenue Service appropriation upon
the advance notification to the Committees on
Appropriations of the House of
Representatives and the Senate.
SEC. 102. The Internal Revenue Service shall
maintain an employee training program,
which shall include the following topics:
taxpayers' rights, dealing courteously with
taxpayers, cross-cultural relations, ethics,
and the impartial application of tax law.
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SEC. 103. The Internal Revenue Service shall
institute and enforce policies and procedures
that will safeguard the confidentiality of
taxpayer information and protect taxpayers
against identity theft.
SEC. 104. Funds made available by this or
any other Act to the Internal Revenue Service
shall be available for improved facilities and
increased staffing to provide sufficient and
effective 1–800 help line service for
taxpayers. The Commissioner shall continue
to make improvements to the Internal
Revenue Service 1–800 help line service a
priority and allocate resources necessary to
enhance the response time to taxpayer
communications, particularly with regard to
victims of tax-related crimes.
SEC. 105. The Internal Revenue Service shall
issue a notice of confirmation of any address
change relating to an employer making
employment tax payments, and such notice
shall be sent to both the employer's former
and new address and an officer or employee
of the Internal Revenue Service shall give
special consideration to an offer-incompromise from a taxpayer who has been
the victim of fraud by a third-party payroll tax
preparer.
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
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be obligated or expended on conferences that
do not adhere to the procedures, verification
processes, documentation requirements, and
policies issued by the Chief Financial Officer,
Human Capital Office, and Agency-Wide
Shared Services as a result of the
recommendations in the report published on
May 31, 2013, by the Treasury Inspector
General for Tax Administration entitled
"Review of the August 2010 Small
Business/Self-Employed Division's
Conference in Anaheim, California"
(Reference Number 2013–10–037).
SEC. 109. None of the funds made available
in this Act to the Internal Revenue
Service may be obligated or expended—
(1) to make a payment to any employee under
a bonus, award, or recognition
program; or
(2) under any hiring or personnel selection
process with respect to re-hiring a former
employee; unless such program or process
takes into account the conduct and Federal
tax compliance of such employee or former
employee.
SEC. 110. None of the funds made available
by this Act may be used in contravention of
section 6103 of the Internal Revenue Code of
1986 (relating to confidentiality and
disclosure of returns and return information).
SEC. 111. The Secretary of the Treasury (or
the Secretary's delegate) may use funds made
available to the Internal Revenue Service in
this Act or any other provision of law to
appoint, without regard to sections 3304 and
3309 through 3319 of Title 5, United States
Code, qualified candidates to positions in the
competitive service in occupations for which
the Secretary of the Treasury (or the
Secretary's delegate)(“the Secretary”) has
determined in writing that there is a critical
hiring need or severe shortage of highly
qualified candidates: Provided, That the
These changes will allow the IRS to utilize
Direct Hire Authority (DHA) with IRA
resources.
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Secretary shall consult with the Office of
Personnel Management (OPM) on the
positions to recruit (including quantity), as
well as candidate recruitment, assessment,
and selection policies; issue guidance to
human resources practitioners in the Internal
Revenue Service on use of this authority; use
OPM qualification standards in all
appointments made; and exercise this
authority consistent with the requirements in
any collective bargaining agreement between
the Internal Revenue Service and a labor
organization which has been granted
exclusive recognition under Chapter 71 of
Title 5, United States Code: Provided further,
That no later than 180 days after expiration
of this authority, the Secretary shall, in
consultation with the Director of OPM,
provide a report to Congress that includes
demographic data of individuals hired
pursuant to this authority; salary information
of individuals hired pursuant to this
authority; and how IRS exercised this
authority consistent with merit systems
principles: Provided further, That the
appointment authority under this section shall
expire September 30, 2027.
SEC. 112. Notwithstanding section 1344 of
title 31, United States Code, funds
appropriated to the Internal Revenue Service
in this Act may be used to provide passenger
carrier transportation and protection between
the Commissioner of Internal Revenue's
residence and place of employment.
SEC. 113 The Secretary of the Treasury (or
the Secretary's delegate) may use funds made
available to the Internal Revenue Service in
this Act or any other provision of law, subject
to such policies as the Secretary (or the
Secretary's delegate) may establish, to take
such personnel actions as the Secretary (or
the Secretary's delegate) determines
necessary to administer the Internal Revenue
Code of 1986, including (1) in addition to the
Streamlined Critical Pay authority gives the
IRS a management tool to quickly recruit and
retain employees with high levels of expertise
in technical or professional fields that are
crucial to the success of the IRS’s
transformative efforts by allowing for higher
base salaries for these hires than would
otherwise be possible. The current authority
will expire in 2025.
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authority under section 7812(1) of the
Internal Revenue Code of 1986, appointing
not more than 200 individuals to positions in
the Internal Revenue Service under
streamlined critical pay authority subject to
the requirements and conditions under
section 9503 of title 5, United States Code,
except that subsection 9503(a)(3) of such title
shall not apply; and (2) appointing not more
than 300 individuals to positions in the
Internal Revenue Service at any one time for
which (A) the rate of basic pay may be
established by the Secretary of the Treasury
(or the Secretary's delegate) at a rate that
does not exceed the salary set in accordance
with section 104 of title 3, United States
Code; and (B) the total annual compensation
paid to an employee in such a position,
including allowances, differentials, bonuses,
awards, and similar cash payments, may not
exceed the maximum amount of total annual
compensation payable at the salary set in
accordance with section 104 of title 3, United
States Code: Provided, That the authority
provided under this paragraph shall expire on
September 30, 2031.
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E – Legislative Proposals
For information on a complete list of the Administration’s FY 2025 legislative proposals for
improving tax administration and compliance and for sustaining the IRA funding through FY
2034, please follow this link: https://home.treasury.gov/policy-issues/tax-policy/revenueproposals
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Section II – Budget and Performance Plan
A – Strategic Alignment
Alignment to Treasury Strategic Plan and President’s Management Agenda (PMA)
The IRS IRA Strategic Operating Plan aligns to the Treasury Strategic Plan FY 2022-2026
and the President’s Management Agenda.
The following shows IRS’s alignment to the Treasury Strategic Plan:
IRS co-leads one objective with the Office of Tax Policy.
Goal 1: Promote Equitable Economic Growth and Recovery
• Objective 1.1 Tax Administration and Policy (IRS co-leads this objective)
IRS supports four goals and eight objectives with other Treasury Department Offices and Bureaus:
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 4.2 Climate Incentives and Investment
• 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
The IRS aligns to the three PMA priorities:
• PMA Priority 1: Strengthening and Empowering the Federal Workforce.
• PMA Priority 2: Delivering Excellent, Equitable, and Secure Federal Services and Customer
Experience.
• PMA Priority 3: Managing the Business of Government.
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IRA Strategic Operating Plan
The IRS IRA SOP, published in April 2023, guides the IRS’s resources, programs and operational
decisions. The SOP’s transformation objectives are:
1. Better Taxpayer Experience: Dramatically improve services to help taxpayers meet their
obligations and receive the tax incentives for which they are eligible.
2. Faster Issue Resolution: Quickly resolve taxpayer issues when they arise.
3. Smarter Enforcement: Focus expanded enforcement on taxpayers with complex tax
filings and high-dollar noncompliance to address the tax gap.
4. Advanced Technology and Analytics: Deliver cutting-edge technology, data, and
analytics to operate more effectively.
5. Empowered Employees: Attract, retain, and empower a highly skilled, diverse workforce
and develop a culture that is better equipped to deliver results for taxpayers.
The SOP provides a vision for the future of Federal tax administration, which can be summarized
as follows:
•
•
•
A world class customer service operation where taxpayers can engage with the IRS in a
fully digital manner if they choose, where helpful tools for taxpayers to navigate the
complexity of our tax laws are deployed and then refreshed and updated regularly based
on taxpayer feedback, and where our customer service workforce is maintained at the right
size and with the right resources and training to always be ready to meet taxpayer demand
for assistance.
New capacities, including specialized skills, in place to decompose the complex filings of
high-income taxpayers and large corporations and partnerships so Americans have
confidence that all taxpayers, regardless of means, are doing their part to meet their
responsibilities under the tax laws.
An organization and infrastructure rooted in modern technology that provides taxpayers
increased confidence that data is secure and that the IRS is prepared to more rapidly meet
new requirements and responsibilities that may emerge in the future.
While the SOP provided the vision the IRS needs to achieve its transformation over a 10-year
period, the IRS worked to create a framework to help it determine how best to prioritize the
transformative initiatives identified in the SOP in the context of practical limitations related to
procurement, IT, and human resources. Doing so will help the IRS better track, manage, and
execute progress against those priorities. The resulting work identified the highest priority areas
of focus through filing season 2025, with a second sprint to cover efforts through filing season
2026.
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The following represent the areas of focus from this work:
•
•
•
•
•
•
•
•
Digitalization: Digitize paper upon
receipt by the IRS and enable IRS
employees to perform their work
digitally.
Fairness in Enforcement: Expand
enforcement efforts for complex taxpayer
segments while simultaneously ensuring
taxpayers at all levels receive appropriate
fairness to include the outreach and
support necessary to ensure taxpayers
receive the benefits for which they are
eligible.
Live Assistance: Ensure when taxpayers
need answers from the IRS, we are
available.
Notifications & Scams:
o The IRS provides taxpayers with clear and concise notices.
o The IRS is stepping in to disrupt and dismantle scams while providing support to
victims.
Self Service & Online Accounts: Taxpayers will have the option to address all of their
tax-related needs with the IRS online if they choose.
Employee Tools and Experience: Enable a fully equipped, empowered, and engaged IRS
workforce ready to serve taxpayers.
Foundational Technology: Modernize the IRS foundational technology to meet the needs
of taxpayers and IRS employees.
Human Capital: Attract, retain, and empower a highly skilled, diverse workforce that is
better equipped to deliver results for taxpayers.
These priority items track to initiatives in the SOP and ensure progress can be made towards the
SOP’s vision.
Agency Priority Goal (APG)
In FY 2023, the IRS supported the Bureau of Fiscal Service’s (BFS) Improving the Payment
Experience APG. The IRS continued to partner with BFS and collaborated with tax industry to
promote direct deposit for tax refunds. The tax refund electronic payment rate was 79.7 percent,
just below the target of 81 percent. While 79.7 percent is under the FY 2023 target, it is above the
pre-pandemic fiscal year-end rates. With reduced taxpayer filings from lower income taxpayers
who needed urgent financial assistance during the pandemic, the IRS individual tax refund EFT
rate was lower than during pandemic years, despite new programming allowing taxpayers to
choose direct deposit for e-filed amended returns.
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Taxpayer Services
Appropriation Description
The Taxpayer Services appropriation provides funding for taxpayer service activities and
programs. This includes producing forms and publications, processing tax returns and related
documents, offering filing and account services, phone and in-person taxpayer assistance, and
providing taxpayer advocacy services. Hiring and equity, diversity, and inclusion costs for
Taxpayer Services employees will now be paid from this appropriation. Notification of this change
was included in the FY 2024 Budget.
The Taxpayer Services budget request for FY 2025 is $2,780,606,000 in direct appropriations
funding 23,961 FTE. This amount is the same as the FY 2024 Annualized CR level, and funds 777
fewer FTE, 3.14 percent lower than the FY 2024 Annualized CR level, due to absorbing unfunded
pay increases and inflation. For FY 2025, the IRS expects to use an estimated $1,322,584,000 to
fund 12,562 FTE in Taxpayer Services with IRA resources.
The IRS uses base resources to fund its Taxpayer Services operations, as described above. Much of
the expected funding from IRA is needed to supplement those base operations to provide adequate
telephone, online, and in-person service to taxpayers. Base funding alone in FY 2025 will not fund
an adequate level of service. By FY 2026, the IRS projects that IRA Taxpayer Services resources
will be entirely consumed. Additional discretionary or mandatory (as shown in the policy proposal
on page 97) resources will be needed to maintain the level of service that taxpayers deserve.
Reducing the IRS’s discretionary appropriations would further deplete IRA resources and hasten
the onset of significant level of service reductions.
FY 2023 IRA Achievements
The IRS was only able to achieve significant improvements in FY 2023 for taxpayers with a
substantial increase in funding due to the IRA—increasing the amount available for Taxpayer
Services by over 30 percent. Some notable achievements include:
•
•
•
•
•
Expanded the customer callback option to cover 95 percent of all taxpayers seeking live
assistance.
Cut phone wait times almost 90 percent, answered 3 million more calls, and serviced
140,000 more taxpayers in person during the 2023 filing season.
Achieved a telephone level of service of 87 percent through the 2023 filing season.
Expanded the Document Upload Tool to allow taxpayers to response to nearly all notices
and letters that require a response, providing an alternative to responding by mail or fax.
The IRS opened or reopened 54 Taxpayer Assistance Centers and began a series of
Community Assistance Visits in underserved and rural communities.
The IRS is accelerating and expanding its work through the FY 2024 and FY 2025 priorities
identified below. Please note that these activities are focused on Taxpayer Service related
outcomes, but may involve funding from several appropriations, for example Information
Technology work funded from both TOS and/or BSM.
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FY 2024 IRA Priorities
Live Assistance: Ensure when taxpayers need answers from the IRS, we are available.
The IRS is committed to maintaining the significantly improved phone service achieved in filing
season 2023 and will again reach 85 percent Level of Service on the agency's main taxpayer
helpline during filing season 2024. The IRS will also achieve an average call wait time of 5
minutes or less on the agency's main taxpayer helpline during filing season.
As part of expanded taxpayer service efforts, nearly 250 IRS Taxpayer Assistance Centers
around the country will extend their weekly office hours to give taxpayers additional time to get
the help they need during the filing season, increasing the hours available at Taxpayer Assistance
Centers by more than 8,500 hours.
Digitalization: Digitize paper as soon as it is received by the IRS and stand-up the tools and
processes that allow IRS employees to perform their work in a fully digital manner.
In FY 2024, the IRS will continue realizing goals outlined in the Paper Processing Initiative by
enabling taxpayers to go paperless through expanded e-filing, digital submission of non-tax
forms and digitally processing paper submissions.
The IRS will also provide the option for taxpayers to e-file additional tax forms, enabling
approximately 4 million additional tax documents to be digitally filed every year. In addition,
certain IRS forms will have modern, mobile-friendly formats that make them easier for taxpayers
to complete and submit electronically.
For Filing Season 2024, the IRS will have replaced scanning equipment that is older than 5 years
as well as the automated mail sorter machines in the six highest-volume locations, streamlining
the process of mail sorting, opening, and scanning, which will help lay the groundwork for
turning the IRS into a digital agency.
Self Service & Online Accounts: Taxpayers will have the option to address all of their taxrelated needs with the IRS online if they choose.
In filing season 2024, the IRS will deliver these key Individual Online Account capabilities:
• Enable Individuals to Schedule and Cancel Payments: Allows individual taxpayers to
identify a future date when their payment will be processed and credited against their
outstanding balance or for estimated payments. Individual taxpayers can also cancel the
scheduled payment in advance of the transaction date.
• Enable Individuals to View Cancelled and Returned Payments: Allows individual
taxpayers to see their scheduled payments that have been cancelled and payments that
have been returned.
In filing season 2024, the IRS will deliver these key Business Tax Account capabilities:
• Expand Sole Proprietorships and, Single Member LLCs Online Account Functionality:
Expands Business Tax Account functionality to allow a sole proprietor to take additional
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•
actions such as viewing business balance due, business tax records, viewing select digital
notices, requesting a tax compliance check, registering for clean energy credits (if
eligible), and giving account access to their employees.
Expand Partnerships and S-Corps (Access to Online Accounts): Expands Business Tax
Account to allow an authorized individual partner or shareholder to view business
balance due, business transcripts and business name on file.
In filing season 2024, the IRS will deliver these key Tax Pro Online Account capabilities:
• Enable Individual tax professionals to:
o Initiate Power of Attorney (POA) / Tax Information Authorization (TIA) for
business clients (already possible to do this for individual clients)
o View balance due of authorized clients
o View payment activity (pending and scheduled)
o Make payments on behalf of individual clients
Taxpayers will also benefit from important new updates to the Where's My Refund? tool, to
allow taxpayers to see more detailed refund status messages in plain language, and they will also
ensure Where's My Refund? works seamlessly on mobile devices.
Finally, the IRS launched a Direct File pilot in filing season 2024, providing certain taxpayers
with the choice to e-file their federal tax return for free, directly with the IRS.
FY 2025 IRA Priorities
Digitalization: Digitize paper as soon as it is received by the IRS and stand-up the tools and
processes that allow IRS employees to perform their work in a fully digital manner.
In FY 2025, the IRS will scan at point of entry virtually all paper-filed tax and information
returns. It will also digitally extract data from scanned tax return forms and route it through IRS
systems for quicker processing. In addition, the IRS will scan for digital processing
approximately half (~125 million) of all paper-submitted correspondence, forms, and notice
responses. Taken together, filing season 2025 will be a key turning point in creating a fully
digital IRS, creating positive effects in how the IRS manages taxpayer service and compliance
efforts across the enterprise.
Towards that end, the IRS will digitally transform major IRS process workflows to support filing
season 2025 operations and expand the use of robotic process automation (RPA) to streamline
time intensive, manual processes.
The IRS will also continue efforts begun in FY 2024 to scan historic paper documents, making
scanned documents available for future search.
Live Assistance: Ensure when taxpayers need answers from the IRS, we are available.
When taxpayers call the IRS, they should reach an agent in a timely manner and have high
levels of satisfaction with the interaction. In filing season 2025, the IRS remains committed to
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maintaining the significantly improved phone service achieved in filing season 2023 and
planned for filing season 2024 by reaching 85 percent Level of Service and achieving an
average call wait time of 5 minutes or less on the agency's main taxpayer helpline. The IRS
will also complete the transition into a future state that can improve efficiency through
improved forecasting, scheduling, and “just in time” ability to effectively manage taxpayer
service through telephone, written, online, and in-person services. This more agile service
model will provide taxpayers the ability to communicate their needs through multiple service
channels and to receive rapid acknowledgement of actions taking place to resolve their account
issues.
Simultaneous to these call center improvements, the IRS will improve over the prior year in
overage volume for individual amended returns. Overage volume refers to the count of cases
that have been open in inventory over an established aging criteria (e.g., 45 days for amended
Form 1040X returns).
In addition to these changes, IRS agents and officers will be able to take payments over the
phone or in-person using modern channels (e.g., credit/debit cards) and use taxpayer identity
authentication via a chatbot to pre-authenticate a live phone callback without having to
reauthenticate.
Self Service & Online Accounts: Taxpayers will have the option to address all of their taxrelated needs with the IRS online if they choose.
In filing season 2025, the IRS will deliver these key Individual Online Account capabilities:
• In support of the Simple Notice Initiative, view digital copies of most notices and
letters online.
• Allow individual taxpayers to access digital, mobile, and adaptive forms.
• Provide status updates within Online Account, such as changes in refund status.
• Expand secure 2-way messaging within Online Account.
In filing season 2025, the IRS will deliver these key Business Tax Account capabilities:
• Provide additional Business Tax Account functionality for Partnerships and S-Corps,
such as the ability to take actions through their account.
• In support of the Simple Notice Initiative, view digital copies of most notices and
letters online.
• Make balance due payments.
• View payments history, scheduled/cancelled payments.
In filing season 2025, the IRS will deliver these key Tax Pro Online Account capabilities:
• Link a business Centralized Authorization File (CAF) enables tax professionals that
work for businesses, such as large accounting firms, to access their authorized clients’
account with the different permission types based on their level of authority within the
company.
• Initiate Power of Attorney (POA) / Tax Information Authorization (TIA) for individual
clients.
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•
•
Enable authorized tax professionals to make payments on behalf of sole proprietor.
Enable authorized tax professionals to make and modify payments on behalf of
individual clients.
Stacked on top of the changes made in filing season 2024, these key changes enabled by the
IRA funding will create an IRS that meets taxpayer expectations for interacting with other
financial institutions – namely, the ability to see your financial status and resolve issues online.
2.1 – Budget Adjustments Table
Dollars in Thousands
See footnotes in 1.1 - Appropriations Detail Table.
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2.2 – Object Classification Obligations
Dollars in Thousands
1
The FY 2023 Operating Plan does not include COVID supplemental funding, and includes an Inter-Appropriations Transfer (IAT) from
Enforcement ($27 million) to Taxpayer Services ($100 million), Operations Support ($22 million), and Business Systems Modernization
($150 million).
Amounts reflect obligations of annually appropriated discretionary resources.
See footnotes in 1.1 - Appropriations Detail Table.
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2.3 – Appropriation Detail Table
Dollars in Thousands
1
The FY 2023 Operating Plan does not include COVID supplemental funding, and includes an Inter-Appropriations Transfer (IAT) from
Enforcement ($27 million) to Taxpayer Services ($100 million), Operations Support ($22 million), and Business Systems Modernization
($150 million).
See footnotes in 1.1 - Appropriations Detail Table.
2A – Pre-Filing Taxpayer Assistance and Education
($749,814,000 in direct appropriations, an estimated $105,000 in reimbursable programs, and an
estimated $166,932,000 in IRA funding): This budget activity funds services 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 researches customers’ needs; develops and
manages educational programs; establishes partnerships with stakeholder groups; and
disseminates tax information to taxpayers and the general 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,
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•
communications and liaison, finance, human resources, equity, diversity and inclusion,
business modernization, and embedded training.
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.
Description of FY 2023 Performance – Pre-Filing and Taxpayer Assistance
In FY 2023, the Timeliness of Critical Individual Filing Season (CIFS) Tax Products to the
Public (i.e., tax forms, schedules, instructions, and publications) was 96.4 percent, which
exceeded the target of 83 percent and was the same compared to FY 2022 performance. In FY
2023, 80 of 83 CIFS tax products were made available to the public timely. Critical tax product
timeliness is regarded as tax products that are made available to the public seven calendar days
before the official IRS start of the (individual) filing season. IRS prioritized work on the release
of critical products, especially forms and instructions, over other products and granted overtime,
credit, and compensatory time during workdays, weekends, and holidays. The IRS expects to
achieve a target of 89 percent for FY 2024 and FY 2025.
In FY 2023, the Timeliness of Critical Tax Exempt/Government Entities (TE/GE) and Business
(CTB) Filing Season Tax products to the Public was 86.5 percent, above the target of 85 percent
and a 9.9 percent decrease compared to FY 2022. In FY 2023, 64 of 74 tax products were available
to the public timely. IRS prioritized work on the release of critical products, especially forms and
instructions, over other products and granted overtime, credit, and compensatory time during
workdays, weekends, and holidays. The IRS expects to achieve a target of 87 percent for FY 2024
and FY 2025.
The Enterprise Self-Assistance Participation Rate (ESAPR) represents the percentage of taxpayer
assistance requests resolved using self-assisted automated services. The ESAPR of 94.2 percent
exceeded the target of 94 percent. In FY 2023, the total self-assisted services of 1.6 billion was 7.6
percent higher than FY 2022 of 1.5 billion, total assisted services of 99.4 million was 2 percent
above the FY 2022 of 97.5 million, and total services were 1.7 billion which was 7.3 percent higher
than prior year of 1.6 billion. Using self-assisted services, taxpayers made over 212 million
electronic payments, received completed information from the Where’s My Refund? tool over 303
million times, and accessed their Online Accounts during nearly 64.4 million sessions. The IRS
expects to achieve a target ESAPR of 94 percent for FY 2024 and FY 2025.
IRS-29
IRS-30
FY 2025 Changes by Budget Activity
Dollars in Thousands
Pre-Filing Taxpayer Assistance and Education
Summary of Proposed FY 2025 Request
FY 2024 Annualized CR
Changes to Base:
Maintaining Current Levels (MCLs):
Pay Annualization (5.2% average pay raise)
Pay Raise (2.0% average pay raise)
Non-Pay (2.2% average pay raise)
Program Decrease
Staff Attrition to Offset Unfunded FY 2025 MCLs
Subtotal Changes to Base
FY 2025 Current Services
FY 2025 President's Budget Request
Amount
$749,814
$19,276
8,078
9,441
1,757
($19,276)
(19,276)
$749,814
$749,814
FTE
4,200
(124)
(124)
(124)
4,076
4,076
See footnotes in 1.1 - Appropriations Detail Table.
2.1.1 – Budget and Performance Report and Plan
Dollars in Thousands
Pre-Filing Taxpayer Assistance & Education
Resource Level
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
Actual
Actual
Actual
Actual
Actual
FY 2024
FY 2025
Annualized
Request
CR
1
$640,379 $621,907 $632,893 $658,344 $763,472 $749,814 $749,814
Appropriated Resources
260
118
578
142
75
100
105
Reimbursable Resources2
Inflation Reduction Act Resources
16,774
122,342
166,932
Budget Activity Total
$640,639 $622,025 $633,471 $658,486 $780,321 $872,256 $916,851
1
The FY 2019 - FY 2023 appropriated resources represent the approved operating plan including any inter-BAC transfers and InterAppropriation Transfers.
2
The FY 2019 - FY 2023 columns represent realized resources for reimbursables.
*FY 2024 and FY 2025 targets assume all sources of available funding.
2B – Filing and Account Services
($2,030,792,000 in direct appropriations, $46,095,000 from reimbursable programs, $303,100,000
from user fees, and an estimated $1,155,652,000 in IRA funding): This budget activity funds
programs 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, with 91.7 percent of individual returns filed electronically during the
2023 filing season—an increase of 2.2 percent over 2022. The program activities include:
•
Filing and Account Services Management administers filing and account services programs.
IRS-31
•
•
•
•
•
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 Technology and Operations Support.
Electronic Tax Administration (ETA) markets and administers electronic tax administration
products and services.
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.
Description of FY 2023 Performance – Filing and Account Services
In FY 2023, Customer Accuracy—Tax Law, which is the percent of correct answers given by a
live assistor on toll-free tax law inquiries, was 91.4 percent, which was above the target of 87
percent. The 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 meeting with field sites, promoting
coding consistency of product reviews, and providing training to managers and employees to ensure
quality service to customers. The IRS set the Tax Law Accuracy target at 89 percent for FY 2024
and FY 2025.
In FY 2023, Customer Accuracy – Accounts, which is the percent of correct answers given by a
live assistor on toll-free account inquiries, was 89.2 percent, which was above the target of 87
percent. The 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 meeting with field sites, promoting
coding consistency of product reviews, and providing training to managers and employees to ensure
quality service to customers. The IRS set the Accounts Accuracy target at 89 percent for FY 2024
and FY 2025.
The Customer Service Representative (CSR) Level of Service (LOS) measures the relative
success rate of taxpayers wanting to speak with an assistor. In FY 2023, from October 1, 2022, to
September 30, 2023, CSR LOS was 51.8 percent, which was 13.6 percent below the target of 60
percent and an increase of 197.8 percent over the prior year actual level of service of 17.4 percent.
During the filing season, which ran from January 23, 2023, through April 21, 2023, the telephone
level of service on individual toll-free lines was 87 percent, meeting the Treasury Secretary’s
directive for IRS to achieve at least an 85 percent LOS during the filing season.
Customer service representatives answered around 17.9 million calls in FY 2023, and the average
wait time was 10.1 minutes, which was less than half the average of 26.0 minutes in FY 2022.
IRS-32
During the filing season, wait time was 3 minutes, compared to 28 minutes during filing season
2022.
Accounts Management Customer service representatives answer the phones and reply to written
correspondence from taxpayers. Accounts management telephone demand fell 52.3 percent, from
81.3 million calls in FY 2022 to 38.8 million calls in FY 2023. Around 8.5 million taxpayers were
offered a callback and 64 percent accepted. This resulted in around 2.4 million hours saved for the
taxpayer, providing a better experience during FY 2023.
In addition to live assistors, the IRS also provides phone service to taxpayers using automation.
During FY 2023, over 18 million taxpayers received the answer to their questions through
automation. IRS implemented a new measure in FY 2023 called LOS(A), which is defined as the
relative success rate of taxpayers that call seeking assistance and receive a response to their inquiry
by a live assistor or through automated responses. In FY 2023, LOS(A) was 66.4 percent.
The following table displays the LOS on multiple phone service lines. The two major phone service
lines are the Accounts Management line and the Automated Collection System (ACS) line.
Enterprise includes calls answered across the Service, including telephone lines serving individuals,
small business/self-employed, large business and international, and tax-exempt and government
entities.
The IRS is committed to continuing to deliver an improved experience for taxpayers. For FY 2024,
the IRS is again striving to achieve an 85 percent LOS during the 2024 individual filing season and a
60 percent LOS for all of FY 2024 and FY 2025 as CSRs continue to balance answering phones with
processing the elevated paper inventory.
Additionally, IRS has two inventory indicators, which provide a broader picture of the CSRs whose
daily priorities include both answering phones and processing paper inventory. Total Ending
IRS-33
Inventory (thousands) in Accounts Management increased from 2,156 in FY 2022 to 2,923 in FY
2023, mainly due to an increase in amended business returns received. Percent of Closures to
Receipts was 93.8 percent.
The Taxpayers Satisfied with the IRS indicator – the former 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 2023 result for Taxpayers Satisfied with the IRS is not yet
available and will be reported later this year.
FY 2025 Changes by Budget Activity
Dollars in Thousands
Filing and Account Services
Summary of Proposed FY 2025 Request
FY 2024 Annualized CR
Changes to Base:
Maintaining Current Levels (MCLs):
Pay Annualization (5.2% average pay raise)
Pay Raise (2.0% average pay raise)
Non-Pay (2.2% average pay raise)
Program Decrease
Staff Attrition to Offset Unfunded FY 2025 MCLs
Subtotal Changes to Base
FY 2025 Current Services
FY 2025 President's Budget Request
See footnotes in 1.1 - Appropriations Detail Table.
IRS-34
Amount
$2,030,792
$58,605
23,107
27,008
8,490
($58,605)
(58,605)
$2,030,792
$2,030,792
FTE
20,538
(653)
(653)
(653)
19,885
19,885
2.1.2 - Budget and Performance Report and Plan
Dollars in Thousands
1
2
The FY 2019 - FY 2023 appropriated resources represent the approved operating plan including any inter-BAC transfers and
Inter-Appropriation Transfers.
The FY 2019 - FY 2023 columns represent realized resources for reimbursables and user fees.
*FY 2024 and FY 2025 targets assume all sources of available funding.
1
The CSR LOS includes toll-free telephone lines answered by Accounts Management assistors only.
2
Historical data provided for comparative purposes.
3
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. For 2023, there will be updates to the methodology. The final results are undergoing review and
are not yet available.
IRS-35
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 statutes relating to detection and investigation of criminal violations of the internal
revenue laws; identification of underreporting of tax obligations; securing of unfiled tax returns; and
collection of unpaid accounts. Hiring and equity, diversity, and inclusion costs for Enforcement
employees will now be paid from this appropriation. Notification of this change was included in the
FY 2024 Budget; see page 5 for more information. With these funds, the IRS is committed to not
increasing audit coverage for small businesses and households below the $400,000 threshold a year
compared to historic levels.
The Enforcement budget request for FY 2025 is $5,437,622,000 in direct appropriations funding
29,765 FTE. This amount is the same as the FY 2024 Annualized CR level, and funds 811 fewer
FTE, 2.65 percent lower than the FY 2024 Annualized CR level of 30,576 FTE. For FY 2025, the
IRS expects to use an estimated $2,316,841,000 and fund 7,239 FTE in Enforcement with IRA
resources.
The IRS will continue ongoing efforts to protect against Employee Retention Credit (ERC) abuse.
To protect taxpayers from scams following concerns about aggressive ERC marketing from tax
professionals and others, the IRS announced a moratorium on processing new ERC claims in
September and has shifted focus to review ERC claims for compliance concerns, including
intensifying audit work and criminal investigations on promoters and businesses filing dubious
claims. These efforts include utilizing new technology to capture data from over 1 million paperfiled claims received in the months leading up to and after the moratorium for improved data
analysis on preventing erroneous claims from being paid. Thousands of audits are currently in the
pipeline with thousands more about to be started, nine open promoter investigations with another
123 under review, and 352 criminal investigations initiated involving more than $2.9 billion in
potentially fraudulent ERCs in tax years 2020 – 2023. Additionally, IRS Criminal Investigation will
host a series of educational sessions to ensure that tax professionals have the latest information about
ERC claims and understand ERC eligibility. The IRS will also continue to administer the ERC
Voluntary Disclosure Program and withdrawal program for pending ERC claims for businesses that
filed a claim and received a payment in error.
The IRS uses base resources to fund its compliance operations, as described above. IRA resources
fund an expanded compliance workforce, which allows the IRS to target the growing number of
wealthy taxpayers who are evading their tax responsibility and address the growing risk of tax scams
and schemes. Base funding alone in FY 2025 will not fund this expanded workforce, as evidenced by
recent historically low audit coverage rates. Reducing the IRS’s discretionary appropriations would
deplete IRA resources and result in uncollected Enforcement revenue.
IRS-36
FY 2024 IRA Priorities
Fairness in Enforcement: Expand enforcement efforts for complex taxpayer segments while
simultaneously ensuring taxpayers at all levels receive appropriate fairness to include the
outreach and support necessary to ensure taxpayers receive the benefits for which they are
eligible.
During FY 2024, the IRS will expand its enforcement presence through hiring in critical staffing
areas such as revenue agents, revenue officers, and tax specialists to expand compliance for large
corporations, complex partnerships, and high-wealth individual taxpayers to ensure they pay the
taxes they owe.
The IRS recently expanded its large partnership compliance program, opening examinations of 76 of
the largest partnerships in the U.S. that represent a cross section of industries including hedge funds,
real estate investment partnerships, publicly traded partnerships, large law firms, and other
industries. On average, these partnerships each have more than $10 billion in assets.
The IRS will continue greater focus on partnership issues through compliance letters and recently
began mailing around 500 partnerships with over $10 million in assets that had discrepancies on
balance sheets which is an indicator of potential non-compliance. Depending on the response, the
IRS will add these to the audit stream for additional work.
The IRS will continue to expand efforts involving digital assets, including work through the John
Doe summons effort and the release of proposed regulations on broker reporting. The IRS projects
more digital asset cases will be developed for further compliance work during this fiscal year. A
John Doe summons is an investigative tool used to determine the identity of unknown individuals
who the IRS has reason to believe have been violating tax law. The summons requires a third
party—such as a crypto exchange, bank, or credit card company—to provide certain information to
the IRS.
The IRS will place more scrutiny on Report of Foreign Bank and Financial Accounts (FBAR)
violations. High-income taxpayers from all segments continue to utilize Foreign Bank accounts to
avoid disclosure and related taxes. IRS analysis of multi-year filing patterns has identified hundreds
of possible FBAR non-filers with account balances that average over $1.4 million. The IRS plans to
audit the most egregious potential non-filer FBAR cases during this fiscal year.
The IRS is increasing compliance efforts on the U.S. subsidiaries of foreign companies that
distribute goods in the U.S. and do not pay their fair share of tax on the profit they earn of their U.S.
activity. These foreign companies report losses or exceedingly low margins year after year through
the improper use of transfer pricing to avoid reporting an appropriate amount of U.S. profits. To
crack down on this strategy, in FY 2024 the IRS is sending compliance alerts to more than 180
subsidiaries of large foreign corporations to reiterate their U.S. tax obligations and incentivize selfcorrection.
The IRS is expanding its Large Corporate Compliance (LCC) program, which focuses on
noncompliance by using data analytics to identify large corporate taxpayers for audit. LCC includes
IRS-37
the largest and most complex corporate taxpayers with average assets of more than $24 billion and
average taxable income of approximately $526 million per year. As new accountants come on board
in 2024, the IRS is expanding the program by starting an additional 60 audits of the largest corporate
taxpayers selected using a combination of artificial intelligence and subject matter expertise in areas
such as cross-border issues and corporate planning and transactions.
As part of the agency’s increased focus on the tax issues applicable to partnerships and partners, the
IRS has been increasing compliance to ensure that Self-Employment Contributions Act (SECA)
taxes are being properly reported and paid by wealthy individual partners who provide services and
have inappropriately claimed to qualify as “limited partners” in state law limited partnerships (such
as investment partnerships) not subject to SECA tax. The IRS efforts to date include more than 80
audits of wealthy individuals. Additionally, in November 2023, the Tax Court issued an opinion in
Soroban Capital Partners LP v. Commissioner that agreed with the IRS’s position that the limited
partner exception to SECA tax does not apply to a partner who is “limited” in name only. As a result,
partners who actively participated in the state law limited partnership must report their partnership
share as net earnings from self-employment subject to SECA tax.
The IRS has ramped up efforts to pursue high income, high wealth individuals who have either not
filed their taxes or failed to pay recognized tax debt, with dozens of Revenue Officers focused on
these high-end collection cases. These efforts are concentrated among taxpayers with more than $1
million in income and more than $250,000 in recognized tax debt. In an initial success, the IRS
collected $38 million from more than 175 high-income earners. The IRS last fall began contacting
about 1,600 new taxpayers in this category that owe hundreds of millions of dollars in taxes. The
IRS has assigned over 900 of these 1,600 cases to revenue officers, with over $482 million collected
so far. This brings the total recovered from millionaires through these new initiatives to $520
million.
The IRS is committed to ensuring that IRS functions execute their work fairly and equitably. The
IRS will substantially reduce the number of correspondence audits focused on refundable credits,
including the Earned Income Tax Credit (EITC), and implementing an initial round of changes to the
EITC audit selection processes that should improve the accuracy of exam outcomes and further
reduce disparities.
Notifications & Scams: The IRS provides taxpayers with clear and concise notices and steps to
disrupt and dismantle scams while providing support to victims.
The IRS will coordinate with a variety of partners to help prevent taxpayers, including seniors and
veterans, from falling victim to scams and working to assist those who do.
Throughout FY 2024 the IRS will work to increase the number of notices viewable for individual
taxpayers in their online account. This effort will allow taxpayers to validate that the paper notice
they received was legitimately sent from the IRS and not a scammer.
IRS-38
FY 2025 IRA Priorities
Fairness in Enforcement: Expand enforcement efforts for complex taxpayer segments while
simultaneously ensuring taxpayers at all levels receive appropriate fairness to include the
outreach and support necessary to ensure taxpayers receive the benefits for which they are
eligible.
In filing season 2025, the IRS will continue building upon the FY 2024 expanded enforcement
efforts to ensure that high-income individuals, large corporations, and complex partnerships are
accountable to pay the full amount of taxes they owe.
The IRS will establish a new organization to focus on large and complex pass-through entities. The
new Pass-Through organization will reside in the IRS Large Business and International (LB&I)
division. It will include employees currently in LB&I as well as the Small Business/Self Employed
division and newly hired employees.
In filing season 2025, the IRS will also identify and implement other strategic options for rapidly
increasing enforcement activities, including non-audit activities, to supplement hiring and training
activities.
By applying improved data and analytics practices, the IRS will also design and implement initial
reforms to enforcement practices to improve fairness.
In addition, the IRS will move even more towards a centralized, data-backed case selection and
compliance planning function to more effectively identify and act upon high-priority compliance
cases, with a focus on large corporations, complex partnerships, and high-wealth individual
taxpayers to ensure they pay the taxes they owe.
Notifications & Scams: The IRS provides taxpayers with clear and concise notices and steps in to
disrupt and dismantle scams while providing support to victims.
In filing season 2025, the IRS will work with tax software providers to protect and identify taxpayers
potentially falling victim to common scams, looking for ways to enable providers to potentially
further disrupt scams. It will also begin implementing new analytics and processes using IRS
sourced information to identify tax return scams prior to issuing refunds.
In filing season 2025, as part of the Simple Notice Initiative, the IRS will redesign up to 200 notices,
accounting for 70 percent of total volume (e.g., updated language, shortened notices, updated visual
format). The IRS will also initiate technology and/or business process changes required to flexibly
generate notices.
IRS-39
2.1 – Budget Adjustments Table
Dollars in Thousands
See footnotes in 1.1 - Appropriations Detail Table.
IRS-40
2.2 – Object Classification Obligations
Dollars in Thousands
1
The FY 2023 Operating Plan does not include COVID supplemental funding, and includes an Inter-Appropriations Transfer (IAT) from
Enforcement ($27 million) to Taxpayer Services ($100 million), Operations Support ($22 million), and Business Systems Modernization
($150 million).
Amounts reflect obligations of annually appropriated discretionary resources.
See footnotes in 1.1 - Appropriations Detail Table.
IRS-41
2.3 – Appropriation Detail Table
Dollars in Thousands
1
The FY 2023 Operating Plan does not include COVID supplemental funding, and includes an Inter-Appropriations Transfer (IAT) from
Enforcement ($27 million) to Taxpayer Services ($100 million), Operations Support ($22 million), and Business Systems Modernization
($150 million).
2
Because this table is limited to Enforcement, the FY 2024 and FY 2025 IRA Funding Usage FTE percentage change reflects only the Enforcement
increase. The FY 2025 IRA Funding Usage FTE in Enforcement represents 24 percent of the total discretionary request FTE.
See footnotes in 1.1 - Appropriations Detail Table.
2C – Investigations
($757,402,000 in direct appropriations, an estimated $89,526,000 from reimbursable programs, and
an estimated $443,881,000 in IRA funding): 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 supports the Stolen Identity Refund Fraud (SIRF) inherent risks while focusing
on high impact tax investigations, prosecutions to maximize deterrence and stopping
fraudulent refunds from being issued through CI's collaboration with internal and external
business partners.
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
activity includes the investigation and prosecution of tax and money-laundering violations
associated with narcotics organizations.
Criminal Tax Legal Support provides legal advice and support from IRS Counsel to CI.
IRS-42
•
•
International Investigations provides policy, guidance, strategic planning, and investigative
support impacting international investigations, travelers and personnel stationed abroad.
International investigations involve U.S. citizens residing abroad, non-resident aliens,
expatriates, and other international issues. This activity includes support for international
programs/investigations such as Foreign Account Tax Compliance Act (FATCA),
Organization for Economic and Cooperation Development (OECD), Joint Chiefs of Global
Tax Enforcement (J5), International Fraud Referrals/Schemes, transnational organized crime,
narcotics, and counterterrorism.
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 additional activity also supports security program management that protects the
safeguarding of all data and systems within CI and adhering to all federal regulatory security
compliance mandates and local security policies.
Description of FY 2023 Performance – Investigations
IRS Criminal Investigation (CI) is the law enforcement arm of the IRS. CI special agents are sworn
federal law enforcement officers and the only federal law enforcement agency with jurisdiction to
investigate federal income tax crimes. CI special agents investigate tax crimes and other financial
crimes like money laundering, sanction violations, terrorist financing, identity theft, narcotics,
national security, human trafficking, child exploitation, and cybercrime. CI special agents conduct
interviews, execute search warrants and criminal arrests as part of their official duties. CI 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.
Criminal Investigations Completed by CI in FY 2023 were 2,584, exceeding the year-end target of
2,500 by 3.4 percent. Year-end results reflect an increase of 1.3 percent compared to FY 2022.
Prosecution recommendations for cases related to legal activities and cases related to narcotics
activities decreased 13.1 percent and 3.0 percent, respectively, while cases related to illegal activities
increased 11.3 percent when compared to the same period in FY 2022.
IRS-43
Legal source cases include people that earn their income legally, but willfully violate the tax laws
(tax evasion). Illegal source cases include embezzlement, mortgage fraud, telemarketing fraud, and
money laundering. Narcotics cases are like illegal cases; however, these cases are specific to profits
and financial gains of organized drug groups involved in narcotics, narcotics trafficking, and money
laundering. CI continues to utilize proven case development strategies, expand case development
efforts, and leverage interagency partnerships to identify, initiate and complete significant criminal
investigations in all program areas. IRS set a target of 2,500 for FY 2024 and FY 2025.
The Conviction Rate, for FY 2023 of 88.4 percent was 3.9 percent below the year‐end target of 92.0
percent. Additionally, the FY 2023 number of convictions was 1,508, a 3.6 percent decrease
compared to FY 2022. The IRS set the Conviction Rate targets for FY 2024 and FY 2025 at 92.0
percent.
IRS-44
FY 2025 Changes by Budget Activity
Dollars in Thousands
Investigations
Summary of Proposed FY 2025 Request
FY 2024 Annualized CR
Changes to Base:
Maintaining Current Levels (MCLs):
Pay Annualization (5.2% average pay raise)
Pay Raise (2.0% average pay raise)
Non-Pay (2.2% average pay raise)
Program Decrease
Staff Attrition to Offset Unfunded FY 2025 MCLs
Subtotal Changes to Base
FY 2025 Current Services
FY 2025 President's Budget Request
Amount
$757,402
$20,560
8,178
9,559
2,823
($20,560)
(20,560)
$757,402
$757,402
FTE
2,822
(49)
(49)
(49)
2,773
2,773
See footnotes in 1.1 - Appropriations Detail Table
2.1.3 – Budget and Performance Report and Plan
Dollars in Thousands
Investigations
Resource Level
FY 2019
FY 2020
FY 2021
FY 2022 FY 2023
FY 2024
Annualized
Actual
Actual
Actual
Actual
Actual
CR
$595,686 $619,227 $630,093 $700,876 $730,488
$757,402
FY 2025
Request
1
$757,402
Appropriated Resources
2
27,749
41,233
1,950
37,092
45,542
85,263
89,526
Reimbursable Resources
Inflation Reduction Act Resources
35,548
200,716
443,881
$623,435
$660,460
$632,043
$737,968
$811,578
$1,043,381
$1,290,809
Budget Activity Total
1
The FY 2019- FY 2023 appropriated resources represent the approved operating plan including any inter-BAC transfers and InterAppropriation Transfers.
2
The FY 2019 - FY 2023 columns represent realized resources for reimbursables.
*FY 2024 and FY 2025 targets assume all sources of available funding.
1
The impact of hiring on performance is not immediate due to required academy and on-the-job training (6+ months) as well as the average
cycle time it takes to complete an investigation (400-500 days).
2D – Exam and Collections
($4,489,141,000 in direct appropriations, an estimated $3,960,000 in reimbursable programs, and
an estimated $1,796,363,000 in IRA funding): This budget activity funds programs that enforce the
tax laws 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-45
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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 Under Reporter
(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 CI of tax evasion operations. Fraud technical advisors and revenue agents provide
investigative leads and referrals to federal, state, and local law enforcement agencies.
Appeals provides 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, nonresident aliens, expatriates, 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 non-compliant behavior.
Unit General Management and Administration provides staffing, training, and direct support
for the unit headquarters management activities of strategic planning, communications and
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liaison, finance, human resources, Equal Employment Opportunity (EEO) and diversity, and
business systems planning and embedded training.
Earned Income Tax Credit (EITC) Management and Administration supports headquarters
management associated with administering EITC program service wide.
Integrity and Verification Operations supports IRS civil fraud detection and prevention
efforts in a pre-refund environment including monitoring program performance and
developing policy, procedures, and guidance for processing civil revenue protection
program(s).
ID Theft Victim's Assistant sole responsibility will have end-to-end responsibility and
accountability for IDT victim assistance policy and operations which will include paper
inventories from tax-related ID Theft, the Identity Theft Protection Specialized Unit (IPSU)
and Return Preparer Misconduct.
Whistleblower Office provides staffing, training, and direct support to process, assess, and
analyze tips from individuals who identify tax problems in the course of their daily personal
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 and 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) to include 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 2023 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. Even with
improved taxpayer service, some taxpayers will not comply. IRS will focus expanded enforcement
on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap. The
IRS is committed to not increasing audit coverage for small businesses and households below the
$400,000 threshold a year compared to historic levels. The performance metrics IRS uses to gauge
the Examination program’s performance are discussed below.
Exam Starts – High Income Individual was established in FY 2021 to monitor resources
associated with examinations of individual return filers reporting over $10M of Total Positive
Income (TPI). In FY 2023, targets were set for the first time for this measure, and historical data is
provided for comparative purposes. The IRS started 4,326 new high-income individual tax return
examinations in FY 2023, surpassing the target of 3,817 by 509 starts. The agency is expanding
enforcement for high-income and high-wealth individuals by pursing non-compliance through a
variety of mechanisms, including audits and non-audit contacts since income alone is not the only
indicator of risk or complexity. Future estimates reflect that it takes several years of specializing in
enterprise exams using a holistic approach to conduct the most complex audits and it typically takes
3-5 years of experience before examiners can identify and address the more difficult transactions.
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Compared to the same period in FY 2022, Exam Starts - High Income Individuals increased 19.3
percent. IRS expects to start 4,398 cases in FY 2024 and 3,848 in FY 2025.
Exam Starts – Partnerships was established in FY 2021 to monitor resources associated with the
examination of partnership returns. In FY 2023, targets were set for the first time for this measure,
and historical data is provided for comparative purposes. In FY 2023, IRS started exams on 6,709
partnerships, which was a 112 percent increase from FY 2022 but below the target of 8,852 due to
new hires starting a lower-than-expected number of returns. This was a result of delayed phases of
training and additional time given to trainees to start partnership returns.
During FY 2023 SBSE Field Exam had a backlog of new hires from prior years go through training
which increased the number of partnerships starts for the fiscal year. The number of trainees needing
this specific training is expected to level off in FY 2024 and the Starts targets in FY 2024 and FY
2025 reflect correspondingly lower estimates.
Additionally, because it takes between 3 and 5 years, before an examiner can address the more
difficult cases and start contributing to this measure, new hires that have recently come on board in
the past year will not have a significant immediate impact on exam starts. Finally, when staff shift
from case work to serve as trainers for newly onboarded staff, there is a resulting reduction in near
term productivity.
In FY 2024 IRS expects to start 4,074 cases and 5,215 in FY 2025.
Exam Starts – Large Corporations was established in FY 2021 to monitor resources associated
with examinations of large corporate returns reporting assets of $250 million and above. In FY 2023
targets were set for the first time for this measure, and historical data is provided for comparative
purposes. In FY 2023, the IRS started 1,400 new large corporation tax return examinations,
exceeding its target of 1,121 and reflecting a 2.6 percent increase compared to FY 2022. The
increase in FY 2023 was driven in part by specific Net Operating Loss cases that were tied to a
temporary provision in the CARES Act and are expected to decrease in the coming years. In FY
2024 and FY 2025, the anticipated hiring efforts for both revenue agents and specialists will require
shifting seasoned agents offline to support new hire training as on the job instructors, resulting in
near term decreases in exam starts for large corporations. The FY 2024 target is 1,250 and the FY
2025 target is 1,375.
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Exam Efficiency – Individual is the sum of all individual 1040 returns closed divided by the total
Full-Time Equivalent (FTE) expended in relation to those individual returns. Total exam closures
decreased 17.2 percent compared to FY 2022 and FTEs decreased 18.8 percent. Exam Efficiency –
Individual was 103, exceeding the target of 92. The FY 2024 target is set at 106 and the FY 2025
target is 107.
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 was added for FY 2020 and
historical data is provided for comparative purposes. This indicator reflects the effect of expedited
issue detection and more integrated enforcement approaches. For FY 2023, the percent of individual
enforcement cases started within 6 months was 72 percent, a 5.9 percent increase from FY 2022.
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 was added for FY 2020 and historical data is
provided for comparative purposes. This indicator reflects the complete life cycle from return filing
to resolution. For FY 2023, the overall Time to Resolve Compliance Issue After Filing was 372
days, a 7.9 percent decrease compared to FY 2022.
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Repeat Non-Compliance Rate is the percentage of individual taxpayers with repeat noncompliance two years after the initial tax year for filing, payment or reporting compliance. This
indicator was added for FY 2020 and historical data is provided for comparative purposes. Instances
of payment repeat non-compliance were lower in FY 2023 in part due to lower penalty issuances
during COVID for Tax Years 2019 and 2020. For FY 2023, the Repeat Non-Compliance Rate was
18.9 percent compared to 28.1 percent for FY 2022.
Description of FY 2023 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 34.9 percent,
exceeding the FY 2023 target of 33.4 percent. Based on projected case closures, the target will be set
at 40.7 percent in FY 2024 and 39.1 percent in FY 2025.
The Cost to Collect $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 2023 Cost to Collect $100 was
34 cents, compared to 29 cents for FY 2022. Total operating costs in FY 2023 were approximately
$16.1 billion while gross collections were approximately $4.7 trillion. Gross collections decreased
approximately 4 percent in FY 2023.
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FY 2025 Changes by Budget Activity
Dollars in Thousands
Exam and Collections
Summary of Proposed FY 2025 Request
FY 2024 Annualized CR
Changes to Base:
Maintaining Current Levels (MCLs):
Pay Annualization (5.2% average pay raise)
Pay Raise (2.0% average pay raise)
Non-Pay (2.2% average pay raise)
Program Decrease
Staff Attrition to Offset Unfunded FY 2025 MCLs
Subtotal Changes to Base
FY 2025 Current Services
FY 2025 President's Budget Request
Amount
$4,489,141
$124,244
53,476
62,505
8,263
($124,244)
(124,244)
$4,489,141
$4,489,141
FTE
26,926
(714)
(714)
(714)
26,212
26,212
See footnotes in 1.1 - Appropriations Detail Table.
2.1.4 – Budget and Performance Report and Plan
Dollars in Thousands
1
The FY 2019 - FY 2023 appropriated resources represent the approved operating plan including any inter-BAC transfers and
Inter-Appropriation Transfers.
2
The FY 2019 - FY 2023 columns represent realized resources for reimbursables and user fees.
*FY 2024 and FY 2025 targets assume all sources of available funding.
1
Historical data provided for comparison.
2
This measure was an indicator in FY 2022 and transitioned to a measure with a target starting in FY 2023.
3
Audits of high-income individuals may take a revenue agent upwards of 250 hours to complete.
4
Due to the timing of hiring and the start date of the lengthy training cycle, the impact of hiring on performance is not immediate.
5
The impact of hiring on performance is not immediate due to required training for new Revenue Agents and the average case cycle time of
about 36 months for these large corporations.
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2E – Regulatory
($191,079,000 in direct appropriations, an estimated $120,000 in reimbursable programs, and an
estimated $76,597,000 in IRA funding): 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 activity provides staffing, training, and direct support associated
with the Return Preparer Strategy initiative.
• 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.
Description of FY 2023 Performance – Regulatory
•
In FY 2023, the IRS published 115 Priority Guidance Plan (PGP) projects and 56 ministerial rulings.
Ministerial projects are publications that only involve matters such as applicable Federal interest
rates and monthly bond factor amounts. Many items published in FY 2023 involved complex and
novel issues. Forty-two of the published items pertain to implementing the Inflation Reduction Act
of 2022, including guidance on the application criteria and process for the increase in the energy
credit for solar and wind facilities in low-income communities and the pre-election registration
requirements for certain tax credit elections. Six of the published items pertain to implementing the
Consolidated Appropriations Act of 2023 and the SECURE 2.0 Act of 2022, including guidance
regarding supervisory approval of penalties. The 2023-2024 PGP was published on September 29,
2023, and covers July 2023 through June 2024, listing 237 projects.
In FY 2023, the IRS made 119,491 Exempt Organizations (EO) Determinations, of which 117,595
were for new organizations applying for exempt status. In FY 2022, IRS made 136,708 total
determinations of which 134,621 were for new organizations. In FY 2023, IRS closed 2,464 EO
examinations, which is less than the 3,270 closures in FY 2022. IRS completed 1,367 Employee Plan
(EP) Determinations on pension plans in FY 2023, which was a 7 percent increase from the 1,276
closures in FY 2022. In FY 2023, IRS closed 3,992 EP examinations, which was a 1 percent increase
from the 3,944 closed in FY 2022.
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FY 2025 Changes by Budget Activity
Dollars in Thousands
Regulatory
Summary of Proposed FY 2025 Request
FY 2024 Annualized CR
Changes to Base:
Maintaining Current Levels (MCLs):
Pay Annualization (5.2% average pay raise)
Pay Raise (2.0% average pay raise)
Non-Pay (2.2% average pay raise)
Program Decrease
Staff Attrition to Offset Unfunded FY 2025 MCLs
Subtotal Changes to Base
FY 2025 Current Services
FY 2025 President's Budget Request
Amount FTE
$191,079 828
$5,279
2,256
2,637
386
($5,279) (48)
(5,279) (48)
(48)
$191,079 780
$191,079 780
See footnotes in 1.1 - Appropriations Detail Table.
2.1.5 – Budget and Performance Report and Plan
Dollars in Thousands
1
The FY 2019 - FY 2023 appropriated resources represent the approved operating plan including any inter-BAC transfers and
Inter-Appropriation Transfers.
2
The FY 2019 - FY 2023 columns represent realized resources for reimbursables.
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Technology and Operations Support
Appropriation Description
The Technology and Operations Support appropriation funds rent payments; facilities services;
printing; postage; physical security; headquarters policy and management activities; 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 Technology and Operations Support budget request for FY 2025 is $4,100,826,000 in direct
appropriations funding 10,282 FTE. This is the same amount as the FY 2024 Annualized CR level,
and funds 161 fewer FTE, 1.54 percent lower than the FY 2024 Annualized CR FTE of 10,443. For
FY 2025, the IRS expects to use an estimated $3,564,800,000 to fund 3,808 FTE in Technology and
Operations Support with IRA resources.
The IRS uses base resources to fund its technology and support operations, as described above. A
significant portion of the expected funding from IRA is needed to supplement those base operations,
especially in technology. Base funding alone in FY 2025 will not fully fund IT operations and
maintenance. The IRS is funding IT development for transformation in both the Technology and
Operations Support and Business Systems Modernization discretionary and IRA appropriations.
However, when IRA Business Systems Modernization resources are entirely consumed by FY 2026,
this appropriation will be the primary source of technology modernization funds. All maintenance
for completed IT development is funded from the Technology and Operations Support appropriation.
Reducing the IRS’s discretionary appropriations would deplete IRA resources and diminish the
IRS’s ability to transform its technology and maintain its modernized systems.
FY 2023 IRA Achievements
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The IRS launched the first phase of business tax account that, over time, will allow
businesses to check payment history, make payments, view notices, authorize powers of
attorney and conduct other business with the IRS.
The IRS offered new voice and chatbots to help taxpayers with a wide range of issues,
including securing account transcripts, getting answers to questions about balances due and
getting help from the Taxpayer Advocate Service. Whether people call the IRS or visit
online, there are new self-service options available around-the clock.
During business hours, many of the IRS voice and chatbots provide an option to connect with
a live assistor if needed. In all, the IRS has nine taxpayer-facing voicebots in operation today,
in addition to 10 chatbots. To date, taxpayers with balances due have messaged online with
Collection chatbots more than 1.6 million times.
Expanded Tax Pro Account capabilities by offering tax professionals access to new services
to help their clients, including processing of power of attorney and tax information
authorization requests, linking Centralized Authorization File numbers, and viewing clients’
balance due amounts.
Opened a free portal for businesses to electronically prepare, file and distribute Form 1099
information returns through a new modernized intake platform and user interface. The
Information Returns Intake System (IRIS) has processed over 8.3 million forms during Filing
Season 2024 as of February 11.
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Implemented streamlined hiring processes to provide applicants with an improved experience
and ability to apply for multiple positions through one job posting. Restructured internal
talent acquisition support to improve the experience for IRS hiring managers and applicants.
Diversified pipelines for new talent by expanding relationships with Historically Black
Colleges and Universities (HBCU) and opening new IRS offices in the Mississippi Delta and
Puerto Rico to provide meaningful job opportunities in underserved communities.
FY 2024 IRA Priorities
Employee Tools and Experience: Enable a fully equipped, empowered, and engaged IRS
workforce ready to serve taxpayers.
In FY 2024, the IRS will provide its employees with modern laptops, smart phones, and software to
help ensure employees have the basic tools needed to deliver effective and efficient results to
taxpayers.
Also in FY 2024, the IRS will ensure management training processes to ensure that permanent,
temporary, and seasonal managers receive foundational leadership courses in a timely manner.
Human Capital: Attract, retain, and empower a highly skilled, diverse workforce that is better
equipped to deliver results for taxpayers.
In FY 2024, the IRS will establish additional approaches to reach and develop new pipelines of
talent, enhance workforce planning, and improve hiring capabilities to support critical staffing needs.
Improvements to the hiring process will expedite the average time to hire and support meeting the
IRS’s significant hiring targets for taxpayer service, enforcement, data analytics, and IRS operations.
In addition, the IRS will expand an improved employee orientation proof-of-concept to all IRS
campus locations that will provide a smooth and consistent onboarding experience to establish trust,
strengthen accountability, and improve the overall new hire experience for IRS employees. The IRS
will analyze data from an IRS “Health of the Workforce” dashboard to develop cross-cutting
initiatives to enhance IRS culture and develop an IRS “Employer Value Proposition” to highlight
how prospective employees can benefit through an IRS career.
Also in FY 2024, the IRS will launch IRS University (IRSU) to better provide IRS employees with
developed curricula, “just-in-time” courses, continuous learning, and professional development.
FY 2025 IRA Priorities
Employee Tools and Experience: Enable a fully equipped, empowered, and engaged IRS
workforce ready to serve taxpayers.
In filing season 2025, certain employee groups will have near real-time access to taxpayer data to
better service taxpayers through the initial deployment of Taxpayer 360 capabilities.
By filing season 2025, all Form 1040 examinations will be worked through the modern enterprise
case management (ECM) system with additional IRS processes leveraging a common enterprise case
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management platform. Coupled with automated case creation and assignment for examinations, the
IRS will begin to manage work through an integrated cross-divisional case management system,
improving workflows and reducing the end-to-end case cycle time.
In FY 2025, the IRS will implement a holistic update to its call center (Customer Service
Representatives and Contact Representatives) and Revenue Agent training programs to ensure
employees and managers receive the appropriate training to enable effective and efficient
performance of their responsibilities.
Human Capital: Attract, retain, and empower a highly skilled, diverse workforce that is better
equipped to deliver results for taxpayers.
In addition to building off the FY 2024 improvements in IRS workforce planning, hiring, and
training processes, the IRS will make progress in FY 2025 towards joining legacy processes for
strategic workforce planning into a streamlined human capital technology platform for the
management of employee data.
2.1 – Budget Adjustments Table
Dollars in Thousands
See footnotes in 1.1 - Appropriations Detail Table.
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2.2 – Object Classification Obligations
Dollars in Thousands
1
The FY 2023 Operating Plan does not include COVID supplemental funding, and includes an Inter-Appropriations Transfer (IAT) from
Enforcement ($27 million) to Taxpayer Services ($100 million), Operations Support ($22 million), and Business Systems Modernization
($150 million).
Amounts reflect obligations of annually appropriated discretionary resources.
See footnotes in 1.1 - Appropriations Detail Table.
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2.3 – Appropriation Detail Table
Dollars in Thousands
1
The FY 2023 Operating Plan does not include COVID supplemental funding, and includes an Inter-Appropriations Transfer (IAT) from
Enforcement ($27 million) to Taxpayer Services ($100 million), Operations Support ($22 million), and Business Systems Modernization
($150 million).
See footnotes in 1.1 - Appropriations Detail Table.
2F – Infrastructure
($919,454,000 in direct appropriations and an estimated $179,362,000 in IRA funding): 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:
•
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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
Enterprise Systems and Identity Management.
IRS-58
Description of FY 2023 Performance - Infrastructure
Rent
Rentable Square Feet per Person is the amount of rentable square feet the IRS maintains per
person requiring space. After payroll, rent is one of the IRS’s largest operating expenses; therefore,
the IRS continues to take steps to closely monitor and right-size its total office space.
Through FY 2023, the Rentable Sq. Ft. per Person was 248, which is 6.1 percent lower than the prior
year. Rentable Square Feet per Person is driven in the positive direction by either a decrease in
square footage, an increase in staffing, or a combination of both. In FY 2023, total rentable square
feet increased marginally and staffing increased 6.7 percent. The FY 2024 target is 238 and the FY
2025 target is 221.
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 2023, the IRS maintained a high-level emphasis on physical security of its facilities,
employees, and visitors. Noteworthy examples included:
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Continued management and oversight of physical security countermeasures by leveraging
technology and incorporating new tools that allow the IRS to better manage security postures
at facilities. Physical security countermeasures are deployed based on requirements and
recommendations set forth by the Department of Homeland Security and the Interagency
Security Committee (ISC).
Completed the Out-Of-Cycle Security Review on all IRS facilities. This effort focused on
enhancing security equipment and accessing control systems, intrusion detection systems,
video surveillance systems, and exterior security countermeasures.
Introduced high-quality security training sessions to all IRS employees virtually and inperson and continued to issue systematic and consistent communications surrounding
security procedures, protocols, and safety tips.
Developed the Physical Security Training Program (PSTP) that was certified by the ISC as
meeting the ISC standards on physical security within the federal sector for nonmilitary. Since the creation of PSTP in late 2021, training sessions were attended by 150
Physical Security Specialists (PSS) and support staff. Additionally, the IRS-developed PSTP
was open to employees from external federal agencies affording PSS the opportunity to
network and maximize their efforts securing federal facilities nationwide.
Created the Security Requirement Training (SRT) to standardize reporting on core security
deliverables associated with the IRS physical security program.
IRS-59
FY 2025 Changes by Budget Activity
Dollars in Thousands
See footnotes in 1.1 - Appropriations Detail Table
2.1.6 – Budget and Performance Report and Plan
Dollars in Thousands
1
The FY 2019 - FY 2023 appropriated resources represent the approved operating plan including any inter-BAC transfers and
Inter-Appropriation Transfers.
2
The FY 2019 - FY 2023 columns represent realized resources for reimbursables and user fees.
*FY 2024 and FY 2025 targets assume discretionary and IRA funding.
2G – Shared Services and Support
($1,111,964,000 in direct appropriations and an estimated $607,286,000 in IRA funding): 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, and business systems planning, and embedded training. It sets
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•
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•
•
•
•
•
•
policies and goals, provides leadership and direction for the IRS, and builds partner
relationships with key stakeholders (Congress, U.S. Government Accountability Office
(GAO), and the Office of Management and Budget (OMB) and the Oversight Board). 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 and Security Services provides facilities and security services to
deliver a safe, secure, and optimal work environment for IRS employees and customers.
Procurement supports the procurement function of the IRS.
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.
Shared Support provides resources for shared cross-functional support such as copiers,
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 treatments of taxpayer non-compliant behavior.
Protection of Sensitive Information manages and oversees the staffing, training, equipment,
and direct support for the protection of IRS employees, facilities, assets, and the protection
and proper use of identity information.
Benefit Payments provides resources to fund Workers’ Compensation benefits and
Unemployment Compensation for federal employee payments.
Shared Services provides additional services, including the Public Transit Subsidy.
Description of FY 2023 Performance – Shared Services and Support
Through support activities that include management and administration of human resources,
protection and use of identity information, and research, Technology and Operations Support
continues to provide shared services to all IRS programs.
Human Capital
The future of the IRS depends on a workplace culture that empowers employees to improve the
taxpayer experience and uphold the tax code fairly. In FY 2023, IRS was provided additional
funding from the Inflation Reduction Act (IRA). The Human Capital Office worked quickly to fully
execute its aggressive FY 2023 hiring plan completing over 31,000 hiring actions. In addition, the
Office of Personnel Management (OPM) approved the Service’s two requests for Direct Hire
Authority to fill critical positions (effective November 8, 2022 through November 30, 2024), which
greatly assisted in reaching hiring goals.
IRS-61
Protection and Proper use of Identity Information
“Improving public warnings about scams that threaten taxpayers remains a priority for the IRS. The IRS
is on the side of taxpayers and is working to protect hard-working people from scammers or fraudsters
who try to use the tax system for their schemes. Whether it is promising people inflated amounts of
Earned Income Tax Credit, a credit designed to help workers with modest incomes, or tricking people
into tax-related identity theft, protecting taxpayers is a critical component to ensuring the success of the
nation's tax system.”1
The Security Summit, a public-private sector partnership between the IRS, state revenue
departments, software developers, tax professionals, and financial services groups, is now in its ninth
year of establishing repetitive iterative processes that support taxpayer security initiatives. The
annual Security Summit Co-Leads meeting between the IRS, Industry, and States was held in person
in December 2023. As a result of the Security Summit workgroup efforts, the IRS is preventing more
identity theft than previous years and investigatory leads related to identity theft continue to increase.
The Security Summit continues to protect taxpayers by combating ID theft tax refund fraud through
enhanced communication and information sharing between and among the parties involved in the
electronic transmission and processing of federal and state income tax return filings.
Research
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Redesigned 90 Individual Computer Paragraph notices by improving clarity and simplicity,
reducing length, removing non-mandatory inserts, and applying behavioral insights and plain
language principles. These notices will be digitized and added to Online Account.
Developed advanced deep learning models aimed at detecting fraud within the IRS Online
Accounts and the Centralized Authorization File system. These efforts will protect taxpayers
from unauthorized access to their accounts and release of personal tax return information.
Updated tax gap projections and applied insights from tax gap research to initiate exam pilots
for improving capabilities to work high income enterprise audits.
Improved analytics established to improve case selection, allowing analysts to choose
enforcement treatments that maximize opportunities to improve and sustain taxpayer
compliance while ensuring fairness in selection.
Established a multidisciplinary working group to develop training, tools, and an evaluation
framework for ensuring analytics, including Artificial Intelligence (AI), are trustworthy.
Delivered results via cutting-edge tools and hardware to model, analyze, and process very
large complex relationship structures (graphs). The value of this research is in the algorithms
developed that help search through complex and deep graphs and tax data, in record time.
Developed prototype model of the indirect effects of filing and payment compliance
treatments to support workload planning, treatment stream alignment, and budget
formulation.
Developed a graph-based tool to explore relationships between entities within exempt
organizations. This tool visualizes risky networks and helps agents more quickly detect
1 Internal Revenue Service. (2023) Agency Financial Report (Publication 5456), Introduction page v, "Tax Scams and Fraud"
https://core.publish.no.irs.gov/pubs/pdf/p5456--2023-11-00.pdf.
IRS-62
•
issues associated with improper activities and identify others connected to the respective
network.
Established analytics enabling early warning of potential risks leading to expanded
collaborative opportunities to mitigate Emerging Schemes. Protocols have been successfully
developed to allow IRS analysts to share information about identity theft, attempted fraud,
and to identify solutions and determine treatment paths. This sharing of real time data
resulted in enhanced revenue protection for many high-profile schemes.
FY 2025 Changes by Budget Activity
Dollars in Thousands
Shared Services and Support
Summary of Proposed FY 2025 Request
FY 2024 Annualized CR
Changes to Base:
Maintaining Current Levels (MCLs):
Pay Annualization (5.2% average pay raise)
Pay Raise (2.0% average pay raise)
Non-Pay (2.2% average pay raise)
Program Decrease
Staff Attrition to Offset Unfunded FY 2025 MCLs
Subtotal Changes to Base
FY 2025 Current Services
FY 2025 President's Budget Request
See footnotes in 1.1 - Appropriations Detail Table
IRS-63
Amount
$1,111,964
$28,692
8,875
10,373
9,444
($28,692)
(28,692)
$1,111,964
$1,111,964
FTE
4,327
(161)
(161)
(161)
4,166
4,166
2.1.7 – Budget and Performance Report and Plan
Dollars in Thousands
*FY 2024 and FY 2025 targets assume discretionary and IRA funding.
1
The FY 2019 - FY 2023 appropriated resources represent the approved operating plan including any inter-BAC transfers and Inter-Appropriation
Transfers.
2
The FY 2019 - FY 2023 columns represent realized resources for reimbursables and user fees.
2H – Information Services
($2,069,408,000 in direct appropriations and an estimated $2,778,152,000 in IRA funding): This
budget activity funds staffing, equipment, and related costs to manage, maintain, and operate the
information systems critical to the support of tax administration programs. This includes the design
and operation of security controls and disaster recovery planning. This budget activity funds the
development and maintenance of the millions of lines of programming code that support all aspects
and phases of tax processing and the operation and administration of mainframes, servers, personal
computers, networks, and a variety of management information systems. The program activities
include:
•
•
•
IT IMF Modernization provides oversight and integration for the Individual Master File
(IMF) Modernization and CADE 2 programs which will fully modernize individual taxpayer
account management functions and distribution of individual taxpayer account data. It
enables a coordinated, cross-functional project and release planning, implementation and
performance assessment effort which will ultimately decommission legacy IMF, simplify
how individual taxpayer account data is shared with IRS downstream systems, and support
adoption of modernized solutions for downstream systems and end users.
Enterprise Program Management Office provides oversight and project integration into daily
IT processes for large-scale development, modernization, and enhancement projects. It
enables a coordinated, cross-functional project planning, implementation and performance
assessment effort aimed at improving IT systems quality, cost, and delivery schedule.
Cybersecurity protects taxpayer information and the IRS’s electronic systems, services, and
data from internal and external cyber security related threats. The program operates a
24x7x365 Computer Security Incident Response Center to provide detection, prevention,
monitoring, analysis, and reporting of security incidents and threats. The program reduces
online fraud and prevents critical data loss. It is responsible for performing security risk
assessments, tracking compliance, monitoring security risk remediation activities, performing
comprehensive security control testing, managing the system certification and accreditation
process, and coordinating the enterprise continuous monitoring process. The program also
IRS-64
•
•
•
•
•
•
•
•
provides security policy management and interpretation, delivers security engineering
services, and implements cybersecurity and data protection solutions.
Management Services provides for the design, development, delivery, and evaluation of a
wide range of human resource programs for the IT organization. These programs include
workforce planning, recruitment and retention, career management, performance
management, labor/employee relations, position management, workplace improvement,
succession management and service-wide IT training and education.
National Headquarters (NHQ) IT Management provides for the management and oversight of
investments in IT for the Chief of Staff and Research, Analysis and Statistics (RAS). The
program allows NHQ to manage and leverage IT solutions that are responsive to IRS-wide
management, tax compliance, enforcement, and strategic and tactical research projects.
IT Executive Oversight includes the immediate Office of the Chief Technology Officer, as
well as the direct reports for Equity, Diversity and Inclusion, and the Director, Stakeholder
Management (including Communications Services and Program Oversight). The program
provides executive direction for the IT organization, enabling IT to be a customer-focused
supplier of IT solutions that are responsive to customer business priorities and meet
functional and operational needs effectively.
Applications Development performs the analysis, design, development, testing, and
implementation of approximately 85,000 application programs supporting critical tax
processing, management information reporting and financial management support systems
for the IRS. This program also supports external trading partner data exchanges with federal
government agencies, state and local governments, and other third-party entities. The
program controls application source code and deploys applications to the production
environment.
Enterprise Operations designs, develops, and maintains IT that supports critical tax
processing, management information reporting and financial management support systems
for the IRS. The program supports data exchanges with external organizations, such as other
federal agencies, state and local governments, and external entities (e.g., employers and
banks), and includes a comprehensive disaster recovery capability to ensure continued
operations in the event of a major interruption of service.
Enterprise Network provides telecommunications service delivery to all customer segments,
including management of day-to-day operations of the telecommunications environment.
This includes the operation of equipment and services to meet business user needs and the
execution of routine changes for scheduled and unscheduled modifications to the
telecommunications infrastructure and applications. It addresses all phases of engineering,
acquisition, implementation, and operation of telecommunications systems and services,
including voice, video, and data communications.
Enterprise Services plans and manages service and delivery methods used across the IT
project reporting, enterprise life cycle management, release management, systems
engineering, dashboard reporting, and internal management.
End User and Network Services maintains the IRS automated business processes at
headquarters and field sites, effectively allowing the IRS to fulfill its missions. The support
IRS-65
•
•
•
includes technical systems and applications software support to end users and maintaining
legacy operations, local and corporate systems administration activities, email, and domain
user account maintenance. This activity monitors IRS network and systems administration by
utilizing automated management tools. It performs asset management activities, and
maintenance of the voice and data infrastructure at the Territories’ offices.
Strategy and Planning provides the management and financial oversight of investments in IT,
demand analysis, project reporting, portfolio management, and other IT operational priorities.
Enterprise Infrastructure Currency funds the replacement of IRS IT infrastructure that has
reached or surpassed its useful life cycle. The IRS centralizes the resources achieved through
efficiencies in various parts of IT to ensure that replacement of the aging infrastructure is
addressed corporately.
The Treasury Franchise Fund is a centralized functional area for separating from the
Information Services base budget the resources required to pay Treasury billings for shared
services.
To continue to help accelerate its technological transformation and improve its digital services
offerings (e.g., direct file), the IRS continues its work with the U.S. Digital Service.
Description of FY 2023 Performance – Information Services
The Percent of Aged Hardware is a measure that shows the quantity of IT hardware in operation past its
useful life as a percentage of total hardware in use. The Percent of Aged Hardware increased from 7.1
percent at the end of FY 2022 to 19.9 percent in FY 2023. Contributing to the increase in aged hardware
were approximately 11,000 workstations which were originally purchased in FY 2018, and more than
2,000 routers and switches that were originally purchased in FY 2017. These reached aged status
simultaneously late in FY 2023. This represents an increase of more than 14,000 aged assets while total
hardware decreased by over 4,000 during the fiscal year. The major driver in meeting the 20 percent
target was the focus on hardware selections and timely hardware refresh implementations. For FY 2024,
IT will continue with risk-based management to prioritize funding of assets with the highest risk values.
IRS-66
For FY 2024 and FY 2025, the IRS will set a target of 20 percent in line with industry standards.
Percent of Aged Infrastructure
150000
100000
50000
31.0%
16.0%
9.3%
7.1%
2021
2022
19.9%
0
2019
2020
Amount of Aged Infrastructure
IRS-67
Total Infrastructure
2023
FY 2025 Changes by Budget Activity
Dollars in Thousands
Information Services
Summary of Proposed FY 2025 Request
FY 2024 Annualized CR
Changes to Base:
Maintaining Current Levels (MCLs):
Pay Annualization (5.2% average pay raise)
Pay Raise (2.0% average pay raise)
Non-Pay (2.2% average pay raise)
Program Decrease
Staff Attrition to Offset Unfunded FY 2025 MCLs
Subtotal Changes to Base
FY 2025 Current Services
FY 2025 President's Budget Request
Amount
$2,069,408
FTE
6,115
$52,664
14,977
17,505
20,182
($52,664)
(52,664)
$2,069,408
$2,069,408
6,115
6,115
FY 2022
FY 2023
See footnotes in 1.1 - Appropriations Detail Table.
2.1.8 – Budget and Performance Report and Plan
Dollars in Thousands
Information Services
FY 2019
FY 2020
FY 2021
Resource Level
Actual
Actual
Actual
Appropriated Resources
$2,126,973 $1,972,916 $2,061,216
Reimbursable Resources
27,153
36,456
26,344
User Fees
222,399
374,671
408,054
Inflation Reduction Act Resources
Budget Activity Total
$2,376,525 $2,384,043 $2,495,614
1
FY 2024
FY 2025
Annualized
Actual
Actual
Request
CR
$2,043,098 $2,071,055 $2,069,408 $2,069,408
27,036
291,706
48,676 1,266,646 2,784,981 2,778,152
$2,410,516 $3,337,701 $4,854,389 $4,847,560
The FY 2019- FY 2023 appropriated resources represent the approved operating plan including any inter-BAC transfers and Inter-Appropriation
Transfers.
2
The FY 2019 - FY 2023 columns represent realized resources for reimbursables and user fees.
*FY 2024 and FY 2025 targets assume all sources of available funding.
1
Target based on industry standard.
IRS-68
Business Systems Modernization
Appropriation Description
Prior to FY 2023, the Business Systems Modernization (BSM) appropriation provided resources for
the planning and capital asset acquisition of IT to modernize the IRS business systems. This
appropriation received no discretionary funding in FY 2023, and no appropriated resources are being
requested for the Business Systems Modernization appropriation in FY 2025. For FY 2025, the IRS
expects to use an estimated $1,929,000,000 to fund 300 FTE in Business Systems Modernization
with IRA resources.
The IRS is funding IT development for transformation in both the Technology and Operations
Support and Business Systems Modernization IRA appropriations. However, when IRA Business
Systems Modernization resources are entirely consumed by FY 2026, the Technology and
Operations Support appropriation will be the primary source of technology modernization funds.
Without additional mandatory resources (as shown in the policy proposal on page 97), the IRS’s
ability to transform its technology would be diminished.
FY 2024 IRA Priorities
Foundational Technology: Modernize the IRS foundational technology to meet the needs of
taxpayers and IRS employees.
In FY 2024, the IRS will continue to modernize its foundational technology with progress in the
following areas:
•
•
•
•
•
•
•
Expand the functionality of the new free Information Returns filing portal (Information
Returns Intake System – IRIS) by expanding the number of information returns, bulk-filing
capabilities, and paper processing capabilities.
Initiate modern individual core tax processing in parallel with the Individual Master File as
the last major step toward replacing the core components of the legacy IMF system.
Initiate a new operating model, with increased partnership between the IT team and the rest
of the IRS organization, that allows IRS to deliver better products, tools, and improvements
more quickly.
Create efficiencies by replacing high-volume manual processes through the delivery of
attended and unattended BOTS built on the robotic process automation (RPA) platform.
Deliver an enterprise data platform for use across service, compliance, and operations with
easily consumable services.
Expand and upgrade the network to accommodate the anticipated increase in size of the IRS
workforce and increased consumption patterns with our introduction of new digital services
for taxpayers.
Further protect IRS data through cybersecurity enhancements by implementing multifactor
authentication, data-at-rest encryption, and advanced logging and audit trail protections.
IRS-69
FY 2025 Priorities
Foundational Technology: Modernize the IRS foundational technology to meet the needs of
taxpayers and IRS employees.
In FY 2025, the IRS will process filing season 2025 individual tax returns using modern language,
allowing 60+ year old legacy code for core tax logic (posting, settlement, and analysis) to be
primarily retired.
The agency will also deliver the modernized Business Masterfile database, enabling taxpayers to
access and update data via Business Online Accounts, and stand-up Universal Data Hub to enable
self-service reporting and advanced analytics for tax administration data.
In addition, the IRS will improve IT Service Delivery by leveraging a common platform to track
asset, workflow, demand, incident, and risk management activities.
2.1 – Budget Adjustments Table
No appropriated resources are being requested for the Business Systems Modernization
appropriation in FY 2025.
IRS-70
2.2 – Object Classification Obligations
Dollars in Thousands
1
The FY 2023 Operating Plan does not include COVID supplemental funding, and includes an
Inter-Appropriations Transfer (IAT) from Enforcement ($27 million) to Taxpayer Services ($100 million),
Operations Support ($22 million), and Business Systems Modernization ($150 million).
Amounts reflect obligations of annually appropriated discretionary resources.
See footnotes in 1.1 - Appropriations Detail Table
2.3 – Appropriation Detail Table
Dollars in Thousands
1
The FY 2023 Operating Plan does not include COVID supplemental funding, and includes an Inter-Appropriations Transfer (IAT) from
Enforcement ($27 million) to Taxpayer Services ($100 million), Operations Support ($22 million), and Business Systems Modernization
($150 million).
Note: Though there were no discretionary appropriated resources in BSM in FY 2023, an inter-appropriations transfer provided $150 million.
See footnotes in 1.1 - Appropriations Detail Table
IRS-71
2I – Business Systems Modernization
($0 in direct appropriations and an estimated $1,929,000,000 in IRA funding): This budget activity
funds the planning and capital asset acquisition of information technology (IT) systems, including
labor and related contractual costs. No appropriated resources are being requested for the Business
Systems Modernization appropriation in FY 2025. For FY 2025, the IRS expects to use an estimated
$1,929,000,000 to fund 300 FTE in Business Systems Modernization with IRA resources.
Description of FY 2023 Performance – Business Systems Modernization
The IRS’s modernization efforts focus on building and deploying advanced information technology
systems, processes, and tools to improve efficiency and productivity. Although IRS did not receive
BSM resources in the FY 2023 budget, IRS transferred $150 million from Enforcement last year,
utilized multi-year funds remaining from FY 2021 and FY 2022 (BSM was a 3-year account), and
also used IRA BSM funds. Major IT investments are measured by the proportion of projects within
+/- 10 percent of budgeted cost and schedule variance. The FY 2024 and FY 2025 targets for both
measures are 90 percent.
Percent of Major IT Investments within +/- 10 percent Cost Variance at the Investment
Level: Twelve of 14 major investments (85.7 percent) were within the cost variance threshold in
FY 2023. Both investments that were out of the variance, listed below, underspent by more than 10
percent.
• Authentication, Authorization and Access
• Integrated Data Retrieval System
Percent of Major IT Investments within +/- 10 percent Schedule Variance at the Investment
Level: Thirteen of 14 major investments (92.8 percent) were within the schedule variance threshold
at the close of FY 2023. Shown below is the investment that was behind schedule by more than 10
percent in FY 2023.
• e-Services
The IRS will continue to effectively manage our major IT investments and closely monitor cost and
schedule variance throughout FY 2024.
Major IT (BSM and Non-BSM) Investments*
Fiscal Year
Percent within +/- 10%
Cost Variance
Percent within +/- 10%
Schedule Variance
85.7%
92.8%
%
* Source: as reported in Treasury’s SharePoint %
Information
2023
Knowledge Exchange (SPIKE) System.
IRS-72
The IRS is changing from many perspectives, and that includes the agency’s approach to improving
the taxpayer experience and tax administration overall through technology-enabled transformation.
In FY 2023, the IRS upgraded technology in ways that resulted in a dramatically improved 2023
filing season thanks to IRA investments. This included upgrading components of the IT
infrastructure to reduce risk, enhancing cybersecurity and providing a wide range of online services
for taxpayers and employees.
An Improved Taxpayer Experience: The IRS continued to expand the functionality of online
account services for individual taxpayers, tax professionals and business taxpayers:
•
•
•
•
New online portal for business filers: Launched a new online portal that enables businesses to
file Form 1099 series information returns and expanded functionality to enable bulk filers to
transmit hundreds of thousands of 1099s at once. The portal simplifies filing for those issuing
1099s and helps recipients receive information timely and helped reduce the millions of
paper Forms 1099 that may have otherwise been filed on paper in 2023.
Online account for individuals: Enhanced capabilities for individual online account,
including launching virtual assistance and live chat. Taxpayers can now validate their bank
accounts and save multiple accounts, eliminating the need to re-enter bank account
information every time they make a payment. This feature launched at the end of September
2023.
Tax professional account: Enhanced capabilities for tax professionals' online accounts,
helping practitioners manage their active client authorizations on file with the Centralized
Authorization File (CAF) database, which stores the information on individuals authorized to
act on a taxpayer's behalf. Tax professionals can now use their Tax Pro Account to send
power of attorney and tax information authorization requests directly to a taxpayer's
individual IRS Online Account.
Business tax account: Launched the first phase of business tax account that over time will
allow business taxpayers to check their tax payment history, make payments, view notices,
authorize powers of attorney and conduct other business with the IRS.
Contact Center Modernization: Expanded customer callback and use of voice and chatbot
technology:
•
•
Expanded the availability of its customer callback option to cover up to 95 percent of callers
seeking live assistance. The expansion included adding the customer callback option to an
additional 73 toll-free applications, bringing the total number of applications with an option
for customer callback to 116 taxpayer-facing applications.
Offered new voice and chatbots to help taxpayers with a wide range of issues, including
securing account transcripts, getting answers to questions about balances due and getting help
from the Taxpayer Advocate Service. The IRS has nine taxpayer-facing voicebots in
operation today, in addition to 10 chatbots.
IRS-73
Core IT Systems Modernization: Modernizing legacy systems to enable better service and reduce
risk:
•
The IRS is focused on modernizing foundational IT systems that support mission critical
functions such as the Individual Master File (IMF), the Business Master File (BMF) and
Enterprise Case Management (ECM). In FY 2023, all three major IT programs made
progress:
o
Individual Master File: Met the planned milestones in FY 2023 for enabling the full
retirement of the IMF system within five years. IMF is the authoritative data source
for individual tax account data with connections to multiple ancillary functions and
systems. IMF feeds more than 250 downstream systems, includes more than 400
processing runs and is comprised of roughly 2 million lines of code.
o
Business Master File: Unlike IMF modernization, which has been an active program
for several years, the IRS initiated the BMF modernization program in FY 2023
thanks to funding from the Inflation Reduction Act. BMF is the authoritative data
source for business tax account data and like the IMF, maintains connections to
multiple ancillary functions and systems. BMF feeds nearly 90 downstream systems,
includes more than 350 processing runs and is comprised of roughly 1.2 million lines
of code.
o
Enterprise Case Management: Consolidating legacy case management systems
through a standard case management platform known as Enterprise Case
Management, which is already live and in-use. Over 2,600 IRS employees are now
using the ECM platform across five applications, including for grants management,
internal employee harassment claims, and the reporting of alleged tax law violations
(Form 3949-A).
FY 2025 Changes by Budget Act
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