# IRS offers tools and applications to help people > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3Af5c9370904277107 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text 2024 AGENCY FINANCIAL REPORT IRS offers tools and applications to help people understand and meet their tax responsibilities YOUR ACCOUNT Access your individual, business, or tax pro account. Go to your account (www.irs.gov/youraccount) WHERE'S MY REFUND Find the status of your last return and check on your refund. Check your refund status (www.irs.gov/wheres-my-refund) PAY DIRECTLY FROM YOUR BANK ACCOUNT Make a payment Look up a payment Use Direct Pay to securely pay your taxes from your checking or savings account. Pay your taxes (www.irs.gov/directpay) TAXPAYER ASSISTANCE CENTER LOCATOR Find your local office and see what services are available. Contact your local IRS office (www.irs.gov/tac) Visit IRS.gov for additional resources Table of Contents About This Report ii Message from the Commissioner iii 1 MANAGEMENT'S DISCUSSION AND ANALYSIS About the IRS 2 Performance Overview 5 Enterprise Risk Management 30 Analysis of Financial Statements 31 Analysis of Systems, Controls, and Legal Compliance 41 Forward-Looking Information 48 51 FINANCIAL INFORMATION Message from the Chief Financial Officer 52 Independent Auditor's Report 54 Enclosure: IRS Response to the Independent Auditor's Report 62 Financial Statements 63 Notes to the Financial Statements 70 Required Supplementary Information 99 105 OTHER INFORMATION Section A: Summary of Financial Statement Audit and Management Assurances 106 Section B: Tax Burden, Tax Gap, and Tax Expenditures 108 Section C: Management and Performance Challenges 113 Section D: Grants Program 141 Section E: Refundable Tax Credits and Other Outlays and Social Security and Medicare Taxes 142 151 APPENDICES Appendix A: Glossary of Acronyms 152 Appendix B: Awards and Acknowledgements 153 Appendix C: Contact Information and Accessibility 154 Cover/InsIDe Cover | IRS FY 2024 AGENCY FINANCIAL REPORT C ABOUT THIS REPORT This Agency Financial Report presents the Internal Revenue Service’s (IRS) financial information in relation to its mission and entrusted resources for the fiscal year (FY) 2024 reporting period (October 1, 2023 to September 30, 2024). It highlights select accomplishments and challenges in implementing programs that promote the IRS’s mission. This financial report is available on www. irs.gov/about-irs/irs-financial-reports. The IRS, as a bureau within the Department of the Treasury (Treasury), presents this report in accor­ dance with Office of Management and Budget’s Circular A-136, Financial Reporting Requirements. This report includes Circular A-136 core principles and requirements applicable to a component entity. This report is titled Agency Financial Report to be consistent with similar reports in the federal government. How This Report is Organized The Agency Financial Report consists of the following sections: section 1: Management’s Discussion and Analysis (Unaudited) Provides a high-level overview of the IRS’s history, mission, and organizational structure; strategic framework; programmatic performance; enterprise risks; analysis of financial statements; analysis of systems, controls, and legal compliance; management assurances related to the IRS’s internal controls; and forward-looking information. United States (U.S.) generally accepted accounting principles issued by the Federal Accounting Standards Advisory Board require the Management’s Discussion and Analysis be presented as required supplementary information to the financial statements. section 2: Financial Information Includes a message from the Chief Financial Officer (CFO), Independent Auditor’s Report and IRS response, audited financial statements and accompanying notes, and unaudited required supple­ mentary information. section 3: other Information (Unaudited) Contains a summary of the Financial Statement Audit and Management Assurances; Tax Burden, Tax Gap, and Tax Expenditures; Management and Performance Challenges; Grants Programs; and Refundable Tax Credits and Other Outlays and Social Security and Medicare Taxes. Treasury reports on Payment Integrity and Climate–Related Financial Risk in its Agency Financial Report (home. treasury.gov/about/budget-financial-reporting-planning-and-performance/agency-financial-report). For information on Payment Integrity, see PaymentAccuracy.gov (www.paymentaccuracy.gov). ii IntroDUCtIon | IRS FY 2024 AGENCY FINANCIAL REPORT MESSAGE FROM THE COMMISSIONER On behalf of my dedicated colleagues at the IRS, I am pleased to present the IRS Agency Financial Report for FY 2024. This report provides an assessment of the IRS’s financial status and demonstrates how the IRS effectively used entrusted resources in support of our mission to provide America’s taxpayers top-quality service with integrity and fairness to all. The funding provided by the Inflation Reduction Act of 2022 (IRA) has given us a unique opportunity – a once-in-a-generation chance – to envision and realize a future of tax administration that meets the evolving needs of taxpayers and the nation. My commitment to invest this funding responsibly and drive critically needed agency improve­ ments is focused around three central themes: 1. Ensuring taxpayers can easily contact the IRS to get help navigating complex tax laws and accessing the credits for which they are eligible, whether in person, on the phone, or online. 2. Identifying the growing number of taxpayers with complex returns — including certain high- income and high-wealth individuals, large corporations, and complex partnerships — who are shielding income to evade their tax responsibility and collect from them what is owed. 3. Addressing the growing risk of tax scams and schemes, protecting honest taxpayers from them, and rooting out the nefarious actors that perpetrate them. This transformation is driven by a detailed Strategic Operating Plan FY 2023-2031 (SOP) that guides dramatic improvements to our information technology infrastructure to deliver modern technology platforms that center around data and applications, strengthens compliance, and delivers improved service to taxpayers and tax professionals. Our 2024 IRA Strategic Operating Plan Annual Update provides details about our successes in the first year of implementation. In our 2024 IRA Strategic Operating Plan Annual Update Supplement (SOP Annual Update Supplement), we look to the future and lay out in more detail the vision, plan, and resources required to continue implementing the SOP. The SOP, Strategic Operating Plan Annual Update, and SOP Annual Update Supplement can be found at www.irs.gov/strategicplan. I am proud of the transformation work we have done in FY 2024, and I am committed to completing the additional work that remains on many fronts: maintaining the outstanding level of service for our main phone line and closing gaps on other lines, expanding digital options for all taxpayers, further strengthening data security, and increasing support for vulnerable populations by such actions as increasing access to the Earned Income Tax Credit and other refundable credits, as well as protecting and supporting scam victims. IntroDUCtIon | IRS FY 2024 AGENCY FINANCIAL REPORT iii Key Areas of Focus: 2024 Filing Season: We had several ambitious transformation goals at the start of the filing season, and because of the hard work of IRS employees, we either met or exceeded our goals. We exceeded our goal to provide an 85% level of service on our main toll-free phone line during the filing season, reaching nearly 88%, which means most callers routed to live assistors were able to connect and receive support without needing to make multiple calls just to get their question answered. We significantly exceeded our goal of an average call wait time of five minutes or less on our main taxpayer helpline, with calls being answered in about three minutes. Taxpayers had the ability to opt for a call back if the projected wait time on the phone was more than 15 minutes, saving taxpayers over 1.5 million hours of hold time. We increased self-service support in areas such as the Where’s My Refund? (www.irs.gov/ wheres-my-refund) and Where’s My Amended Return? (www.irs.gov/wmar) to help taxpayers get quicker answers on the status of their refund or amended return. The improved Where’s My Refund? tool also allows taxpayers to see more detailed refund status messages and works seamlessly on mobile devices. For those who needed in-person assistance, we provided more help at our Taxpayer Assistance Centers. We exceeded our goal to deliver 8,500 more hours of in-person assistance than we did during the 2023 filing season by providing 13,000 more hours. We also expanded hours at more than 240 Taxpayer Assistance Centers around the country during the filing season and provided special Saturday hours in more than 70 locations. Evening and Saturday hours made it more convenient for thousands of taxpayers to get help during a time that fits their schedule. We achieved our goals, but have more work to do in terms of providing service to tax professionals, such as improving functionality on the Practitioner Priority Line. While our service has improved, we will continue our focus on providing quality service to the practitioner community. Direct File: During the 2024 filing season, the IRS conducted a limited-scope pilot of a system that allowed eligible taxpayers in 12 states to prepare and file a free, online tax return directly with the IRS. This pilot, called Direct File, served as an important innovation in our ongoing efforts to lead the agency into a digital, taxpayer-focused future. Hundreds of thousands of taxpayers successfully signed into the system, and more than 140,000 tax returns were filed through Direct File, which is an impressive number given the limited scope of the pilot. Users gave the new option positive reviews, citing the ease and convenience of the tool. A General Services Administration Touchpoints survey of more than 15,000 Direct File users found 90% of respondents ranked their experience with Direct File as Excellent or Above Average. Based on the operational success and positive feedback, in May 2024, the IRS announced that Direct File would be expanded and made permanent. We were honored to receive an Innovation of the Year award from FEDSCOOP for the Direct File pilot. This award celebrates cutting-edge, innovative applications of technology that have disrupted traditional government operations and processes leading to an enhanced impact on mission and service delivery. iv IntroDUCtIon | IRS FY 2024 AGENCY FINANCIAL REPORT Digitalization: We’re making critical progress in several areas toward greater digitalization. Digiti­ zation of paper-filed tax returns is a cornerstone of the IRS’s modernization efforts. The IRS replaced outdated scanning equipment and is installing automated mail-sorter machines in the six highest-volume IRS locations. Once digitized, tax return data is processed throughout the IRS in a digitally optimized manner. Historical documents are also digitized and made digitally available for both taxpayers and IRS employees. Online Services: As a result of expanded capabilities of the IRS Individual Online Account and Tax Pro Account this past filing season, taxpayers and tax professionals were able to perform more types of transactions in their accounts. We also launched a Business Tax Account to make inter­ acting with the IRS easier for small business owners. We’re continuing to expand the types of businesses eligible to use this account and the types of transactions they can perform. Compliance Efforts: The IRS has increased compliance efforts on those posing the greatest risk to the nation's tax system, whether it's those trying to avoid paying the correct tax amount or promoters aggressively peddling abusive schemes. In our High Wealth, High Balance Due Taxpayer Field Initiative, the IRS intensified work on taxpayers with total positive income above $1 million who have more than $250,000 in recognized tax debt. As a result of an increase in the number of revenue officers focusing on these high-end collection cases, in FY 2024, we recovered more than $1 billion in delinquent tax debt. We also opened audits on 76 of the largest partnerships in the U.S. that included a cross-section of industries, including hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms, and other industries. As part of our stepped-up efforts in the partnership area, we recently issued guidance to close tax loopholes that have led to abusive partnership transactions. We also created a new dedicated team in the Office of Chief Counsel that will focus on developing more guidance in this area. Tax Scams and Fraud: When it comes to protecting taxpayers from scams, the IRS is always on the side of the taxpayer. We continued to issue public warnings about scams that threatened taxpayers such as one that promises inflated Earned Income Tax Credit amounts and another that attempts to trick people into tax-related identity theft. We also continued to see a significant increase in scams and marketing related to the Employee Retention Credit, a credit designed to support eligible businesses adversely affected by the Coronavirus Disease 19 (COVID-19) pandemic. Promoters aggressively marketed this program to businesses that may not have been eligible to claim these credits, putting them at financial risk and requiring the IRS to devote extra staff to process the large influx of new and often fraudulent claims. We will continue civil and criminal enforcement efforts of these unscrupulous promoters. We entered a new phase of our work in this area in FY 2024, completing a detailed review of more than one million claims. In FY 2024, the IRS denied billions of dollars in improper claims, and that process will continue into FY 2025. At the same time, we began additional work to issue payments to help taxpayers without any red flags on their claims, so small businesses with legitimate claims can receive the assistance to which they are entitled. IntroDUCtIon | IRS FY 2024 AGENCY FINANCIAL REPORT v Investing in the IRS Workforce: The IRS’s greatest asset is our workforce, and we continue to focus on increasing our staffing to better serve America's taxpayers. In addition to new hires for in-person and telephone support, IRA resources enabled increased staffing in other areas, including Submission Processing, Information Technology, and Enforcement. In FY 2024, we began to heavily recruit revenue agents, who are responsible for auditing the most complex filers, including high-income and high-wealth individuals, large corporations, and complex partnerships. Exhibiting Financial Stewardship: I am proud to share that the IRS achieved an unmodified financial statement audit opinion for the 25th consecutive year, marking a significant milestone in our commitment to financial integrity. Additionally, we successfully addressed a long-standing significant deficiency in Information System Controls, underscoring our dedication to public stewardship and excellence in financial management. The IRS continues to strengthen management controls and is making progress toward addressing the remaining unpaid assess­ ments significant deficiency in internal control over financial reporting to meet all U.S. financial systems compliance and conformance objectives, which is outlined in the Management’s Discussion and Analysis – Analysis of Systems, Controls, and Legal Compliance. Looking back on FY 2024, it’s clear that the IRS is in a better place. But there is much more to do, and I am confident that even more can be accomplished across the IRS in support of taxpayers, our employees, and the nation. I am committed to ensuring that the IRS will continue to improve the taxpayer experience and increase the efficiency and effectiveness of its operations, but our progress depends on adequate discretionary budget support and continued transformation funding. I am proud to lead this work in collaboration with my colleagues, valued partners in the tax community, and national, state, and local partners to provide an effective and efficient tax system that is fair and equitable for all. Sincerely, IRS Transformation Vision Daniel I. Werfel Commissioner of Internal Revenue November 1, 2024 Click this Qr code or scan it with your smart device to watch an update from Commissioner Werfel vi IntroDUCtIon | IRS FY 2024 AGENCY FINANCIAL REPORT MANAGEMENT'S DISCUSSION AND ANALYSIS ABOUT THE IRS The IRS is a bureau of the Treasury. The IRS carries out the responsibilities of the Secretary of the Treasury under Internal Revenue Code Section 7801. The Secretary has full authority to administer and enforce the Internal Revenue Code and has the power to create an agency to enforce these laws. Internal Revenue Code Section 7803 provides for the appointment of a Commissioner of Internal Revenue to administer and supervise the execution and application of the Internal Revenue Code. The IRS is one of the world’s largest tax administrators. In FY 2024, the IRS collected about $5.1 trillion in taxes, which represents nearly all the revenue that supports the federal government’s operations. Some Key Tax Statistics in FY 2024 Include: 267M $5.1T $3,143 $98.7B FEDERAL TAX RETURNS AND FORMS PROCESSED COLLECTED IN GROSS TAXES AVERAGE INDIVIDUAL REFUND ENFORCEMENT REVENUE COLLECTED Note: These statistics are from October 1, 2023, through September 30, 2024. The Average Individual Refund amount includes refunds issued in FY 2024 for all tax years. History The IRS is one of the oldest bureaus in the U.S. Government. Article 1, Section 8 of the Consti­ tution gave the federal government the "Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States…” In 1862, President Lincoln and the Congress established the Bureau of Internal Revenue and the nation’s first income tax. In 1953, the Bureau of Internal Revenue’s name changed to the Internal Revenue Service. Visit the IRS History Timeline at www.irs.gov/irs-history-timeline. Internal Revenue Service Building, 1111 Constitution Ave. N.W., Washington D. C. 2 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT Mission and Organization The IRS's mission is to provide America's taxpayers top-quality service by helping them under­ stand and meet their tax responsibilities while enforcing the law with integrity and fairness to all. This mission statement describes the IRS’s role — and the public's expectation — about how the IRS should perform that role. • In the U.S., the Congress passes tax laws and requires taxpayers to comply. • The taxpayer’s role is to understand and meet their tax obligations. • The IRS’s role is to help willing taxpayers with the tax law, while ensuring that the minority who are unwilling to comply pay their fair share. The IRS’s core operations include collecting taxes, processing tax returns, assisting taxpayers, enforcing tax laws, and investigating tax crimes. The extensive IRS portfolio also includes tax-exempt organizations, tax-exempt bonds, refundable tax credits, and other specialized programs. In FY 2024, the IRS made structural changes at the top of its organization designed to help with transformation efforts. The IRS’s organizational structure continues to closely resemble the private sector model of organizing around customers with similar needs. The new organizational structure features a single Deputy IRS Commissioner and four new IRS chief positions, which are: Chief Taxpayer Services – has responsibility for oversight and delivery of customer service (including telephone and face-to-face assistance) and tax return processing for all of America's taxpayers as well as compliance activities for taxpayers. This organization was formerly the Wage and Investment division. Chief Tax Compliance Officer – has responsibility for oversight of the IRS compliance operations in the following organizations: Large Business and International, Small Business/Self Employed, Tax Exempt and Government Entities, IRS Criminal Investigation, Office of Professional Responsi­ bility, Return Preparer Office, Whistleblower Office, and Enterprise Case Management. Chief Information Officer – has responsibility for oversight and delivery of information technology services and solutions that drive effective tax administration to ensure public confi­ dence and to meet complex legislative requirements, operate a world-class tax administration agency, and deliver technology services and solutions to employees and the public. Chief Operating Officer – has responsibility for oversight of a variety of key operations support offices, including the: Human Capital Office, CFO, Procurement, Facilities Management and Security Services, Privacy Governmental Liaison and Disclosure, Office of the Chief Risk Officer, and Research, Applied Analytics and Statistics. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 3 IRS Organizational Structure Direct File office of Chief Counsel Commissioner of Internal Revenue national taxpayer Advocate office of equity, Diversity & Inclusion Chief of staff Independent office of Appeals Communications and liaison Deputy Commissioner transformation strategy office Chief tax Compliance officer taxpayer services Small Business/ Self-Employed taxpayer experience office Information technology office of the Chief operating officer Procurement online services Criminal Investigation Human Capital Office Office of Professional Responsibility Privacy, Government Liaison & Disclosure Whistleblower Office Office of the Chief Financial Officer Enterprise Case Management Research, Applied Analytics & Statistics Tax Exempt & Government Entities Facilities Management & Security Services Large Business & International Office of the Chief Risk Officer Return Preparer Office View the most current IRS organization (www.irs.gov/about-irs/irs-organization) and leadership structure. 4 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT PERFORMANCE OVERVIEW IRS Strategic Framework The IRA creates a unique opportunity for this nation to realize a future of tax administration that meets the evolving needs of taxpayers. After years of underfunding that deteriorated taxpayer service and tax enforcement, frustrating taxpayers, the tax community, and IRS employees alike, the IRA provides the IRS with tens of billions of dollars during the next decade. This funding enables the IRS to significantly improve taxpayer services, ensure fair enforcement of tax law, and generate the revenue needed to fund the country’s vital activities. Published in April 2023, the SOP (www.irs.gov/strategicplan) envisions a modernized IRS that is focused on the customer experience, prefers digital over manual processes, and prioritizes compliance efforts that focus on complex tax issues and high-income individuals, complex partner­ ships, and large corporations. It outlines how the IRS will transform the American tax administration system into one that is more modern, capable of adapting to this digital age, and serves the evolving needs of taxpayers. It also supports the government-wide strategic priorities from the President’s Management Agenda, including strengthening the federal workforce, delivering an excellent customer experience, enhancing clean energy efforts, increasing equity, and supporting underserved communities. Each IRS organization aligns its programs and performance within the SOP framework, which serves as a guide for decision-making by IRS leadership and project managers. The SOP outlines five major objectives to carry forward this transformation: Strategic Objective 1 Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible. Strategic Objective 2 Quickly resolve taxpayer issues when they arise. Strategic Objective 3 Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap. Strategic Objective 4 Deliver cutting-edge technology, data, and analytics to operate more effectively. Strategic Objective 5 Attract, retain, and empower a highly skilled, diverse work­ force, and develop a culture that is better equipped to deliver results for taxpayers. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 5 The IRS Transformation and Strategy Office was established in January 2023 to act as a catalyst for the IRS transformation. The Chief Transformation and Strategy Officer provides leadership and oversees transformation efforts. Change management practices are built into all initiatives and project plans and incorporates measures of success, as appropriate. Champions are appointed to lead ongoing projects throughout the IRS to achieve, communicate, and monitor the IRS’s cultural goals. As mentioned in the IRS's SOP Annual Update Supplement (www.irs.gov/strategicplan), the IRS incurs costs outside of the purview of the five objectives for ongoing activities performed by its support organizations, which include actions to fulfill statutory and regulatory requirements, effec­ tively administer the tax system, and meet obligations to taxpayers. The IRS has reported select FY 2024 accomplishments performed by these offices in the Performance Overview section under Shared Services Support. As Treasury’s largest bureau, the IRS plays a critical role in advancing the Treasury Strategic Plan 2022–2026 (home.treasury.gov/about/budget-financial-reporting-planning-and-performance/ strategic-plan) by co-leading the Tax Policy and Administration strategic objective and supporting nine other objectives across all five Treasury goals. Major Programs The IRS demonstrates responsible stewardship over taxpayer dollars by aligning major programs and performance measures with budgetary resources as appropriated by Congress. SOP Objec­ tives 1 through 4 align to the major programs in the IRS Statement of Net Cost and represent trans­ formational activities as described in the SOP and IRS base operations costs. The IRS distributes the costs associated with Objective 5 and Shared Services Support across all major programs. DID YOU KNOW? IRS OFFERS TAX WITHHOLDING ESTIMATORS Home File Individuals Tax Withholding Estimator About You Tax Withholding Estimator Use your best estimates for the year ahead to determine how to complete Form W-4 or W-4P so you don't have too much or too little federal income tax withheld. 1 2 3 4 5 6 About You Income & Withholding Adjustments Deductions Tax Credits Results Information About You Select the information that best describes how you anticipate filing your 2024 tax return. All fields marked with an asterisk (*) are required. What filing status will you use for your tax return? * Single Married filing jointly Married filing separately Head of Household Qualifying Widow(er) NEXT 6 The IRS encourages taxpayers to use the IRS Tax Withholding Estimator to ensure they are withholding the correct amount of tax from their pay. Visit IRS.gov/w4app to learn more. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT SOP Objectives, Initiatives, and Near-Term Priority Efforts Through the course of implementing the SOP (www.irs.gov/strategicplan) in the first year, the IRS further refined its vision and near-term priority efforts. As published in its SOP Annual Update Supplement, the IRS presents in more detail the vision, plan, and resources required to continue implementing the SOP. A key component was the development of plain language outcomes aligned to the five objectives in the SOP, with priority efforts and key results over the next two years. The SOP is structured to achieve the following five objectives and their near-term priority efforts, which will be accomplished through a series of initiatives and projects: Strategic Objective 1: Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible. Initiatives Near-Term Priority Efforts 1.1 Improve the availability and accessibility of customer service. 1.2 Expand digital services and digitalization. 1.3 Ensure employees have the right tools. • Enhance Live Assistance • Expand Online Services • Accelerate Digitalization • Improve Employee Tools 1.4 Improve self-service options. 1.5 Explore direct file. 1.6 Enable taxpayers to access their data. 1.7 Provide earlier legal certainty. 1.8 Deliver proactive alerts. 1.9 Help taxpayers understand and claim appropriate credits and deductions. 1.10 Make payments easy. 1.11 Build status-tracking tools for taxpayers. 1.12 Streamline multichannel customer assistance. Major Program: service to the taxpayer MAnAgeMent's DIsCUssIon AnD AnAlysIs Total Program Cost: $6,519 million | IRS FY 2024 AGENCY FINANCIAL REPORT 7 Strategic Objective 2: Quickly resolve taxpayer issues when they arise. Initiatives Near-Term Priority Efforts 2.1 Identify issues during filing. • Simplify Notices 2.2 Deliver early and appropriate treatments for issues. • Disrupt Scams 2.3 Develop taxpayer-centric notices. 2.4 Expand tax certainty and issue resolution programs. 2.5 Offer proactive debt resolution. 2.6 Expand engagement with nonfilers. 2.7 Use improved data and analytics to tailor timely collections contacts. Major Program: enforcement of tax legislation Total Program Cost: Objective 2 is combined with Objective 3 Strategic Objective 3: Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap. Initiatives 3.1 Employ centralized, analytics-driven, riskbased methods to aid in the selection of compliance cases. Near-Term Priority Efforts • Ensure Fairness in Enforcement 3.2 Expand enforcement for large corporations. 3.3 Expand enforcement for large partnerships. 3.4 Expand enforcement for high-income and high-wealth individuals. 3.5 Expand enforcement in areas where audit coverage has declined to levels that erode voluntary compliance. 3.6 Pursue appropriate enforcement for complex, high-risk, and emerging issues. 3.7 Promote fairness in enforcement activities. Major Program: enforcement of tax legislation 8 MAnAgeMent's DIsCUssIon AnD AnAlysIs Total Program Cost: $12,359 million | IRS FY 2024 AGENCY FINANCIAL REPORT Strategic Objective 4: Deliver cutting-edge technology, data, and analytics to operate more effectively. Initiatives Near-Term Priority Efforts 4.1 Transform core account data and processing. • Modernize Foundational IT 4.2 Accelerate technology delivery. 4.3 Improve technology operations. 4.4 Continue to ensure data security. 4.5 Maximize data utility. 4.6 Apply enhanced analytics capabilities to improve tax administration. 4.7 Strategically use data to improve tax administration. 4.8 Partner to expand insights. Major Program: transformation of Business systems Total Program Cost: $914 million Strategic Objective 5: Attract, retain, and empower a highly skilled, diverse workforce, and develop a culture that is better equipped to deliver results for taxpayers.* Initiatives Near-Term Priority Efforts 5.1 Redesign hiring and onboarding. • Enhance Human Capital and Culture 5.2 Attract a talented and diverse workforce. 5.3 Improve the employee experience. 5.4 Help employees grow and develop. 5.5 Develop a data-savvy workforce. 5.6 Elevate workforce planning strategy. 5.7 Improve organizational structures and governance. 5.8 Build a culture of service and continuous improvement. *The IRS distributes costs associated with Objective 5 among Objectives 1, 2, 3 and 4. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 9 IRS Performance Measurement Reporting Process The IRS Congressional Budget Justification & Annual Performance Report and Plan (www.irs. gov/about-irs/budget-documents), approved by the IRS Commissioner and Deputy Commissioner, includes key performance measures, with annual and outyear targets and key performance indicators. Key performance indicators are created in the absence of historical data or when there is a lessened degree of control over the measurable value; therefore, targets are not required. The IRS uses these key metrics to assess progress in achieving the success in major program areas. All performance results in the FY 2024 Agency Financial Report are considered preliminary. The IRS will publish the actual results in the FY 2026 IRS Congressional Budget Justification & Annual Performance Report and Plan, which is generally published after the State of the Union Address. DID YOU KNOW? CONGRESSIONAL BUDGET JUSTIFICATION & ANNUAL PERFORMANCE REPORT AND PLAN • Ensures taxpayers can easily interact with the IRS • Maintains fairness in the tax system • Addresses tax scams • Outlines IT infrastructure funding and modern technology platforms Summary of FY 2024 Results: The IRS has a total of 28 key performance measures and key performance indicators that support IRS major program areas, of which 20 are measures with targets and 8 are indicators. The IRS exceeded the FY 2024 target for 12 out of 20 key perfor­ mance measures and 2 out of 3 key performance indicators are trending in the desired direction compared to the prior year result. Results were not available for 5 key performance indicators; those results will appear in the FY 2026 IRS Congressional Budget Justification & Annual Perfor­ mance Report and Plan. Refer to the Verification and Validation of Performance Data information at the end of this Perfor­ mance Overview section for details on the IRS’s approach to verification and validation of perfor­ mance data and performance measurement reporting. 10 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT Strategic Objective 1: Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible. Major Program | service to the taxpayer In FY 2024, the IRS enhanced live assistance. After the passage of the IRA, the IRS hired thousands of new customer service representatives to ensure that call centers could effectively handle the millions of calls that the IRS receives annually. The improvement to taxpayer service was immediate. During the 2024 filing season, the IRS answered more than one million additional phone calls than the prior year and achieved a nearly 88% level of service (the percentage of callers that speak to a customer service representative), while maintaining an average call wait time of three minutes. The IRS introduced new voicebot technology, which helped 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. Without additional funding, the IRS estimates it can maintain the taxpayer services workforce at the level required to deliver exceptional service in FY 2025 but will not be able to sustain these efforts through FY 2026. Consequently, the IRS projects that the 85% level of service targeted for the 2025 filing season may drop to less than 30% in FY 2026, absent additional funding. In FY 2024, the IRS launched additional efforts to ensure that taxpayers can access additional tax credits for which they may be eligible, such as: • In November 2023, the IRS sent over 1.8 million reminder letters to individuals who received the advanced Child Tax Credit but did not file a 2021 return and could be eligible to claim the other 50% of the expanded Child Tax Credit. • In January 2024, while expanding partnerships with tax software companies, paid preparers, philanthropies, employers, and state and local governments, the IRS launched a new annual Tax Professional Awareness initiative to educate tax professionals on refundable credit eligibility requirements and inform them of their due diligence obligations to help eligible taxpayers receive credits. The IRS also began a data sharing program with states that enables them to inform potentially eligible taxpayers about the Earned Income Tax Credit. These efforts will not only support taxpayers with receiving Earned Income Tax Credits and other refundable tax credits but also support taxpayers' compliance with the complex eligibility rules for claiming those credits. This will assist taxpayers with claiming only those tax credits for which they are eligible and could lead to reductions in the IRS improper payment rates. More information on IRS improper payments can be found in Other Information – Section C: Management and Performance Challenges. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 11 Using IRA funding, in FY 2024, the IRS also expanded its online services. The IRS enhanced and created popular and convenient online tools that save taxpayers time and money, while also reducing phone calls, paper processes, and other burdens. The IRS added new features to the Online Account for individuals, giving individual taxpayers the ability to perform more interactions with the IRS without needing to speak to a customer service representative. These additional features allow taxpayers to view digital copies of most notices and letters, access forms, view status updates such as changes in refund status, expand secure two-way messaging, and view their previous year’s tax return forms and information returns. It also allows individuals to process and monitor payments and apply for an identity protection personal identification number. In FY 2024, the IRS launched its first-ever Business Tax Account, which focused on small business owners, sole proprietors, individual partners of partnerships, and individual shareholders of S corpo­ rations with an employer identification number. Now, eligible entities can view certain digital notices and letters, business tax records, business balance due, and request a tax compliance check. Additionally, tax professionals can perform most of their interactions with the IRS through their online Tax Pro Account. These enhancements provide the ability to manage active client authoriza­ tions and view individual and business clients’ tax information, such as business balance due and canceled and returned checks for individuals. The IRS dramatically increased digital services. The 2024 Direct File pilot served as an important innovation in ongoing efforts to lead the IRS into a digital, taxpayer-focused future. The IRS incorpo­ rated a Secure Access Digital Identity authentication feature that enabled eligible taxpayers to sign and electronically file their federal tax return directly and securely with the IRS. Legacy paper processes are in the process of being converted to digital formats to further support digital services. To ensure paper filings are properly retained, the IRS developed a quality control review process with defined criteria and standards to ensure digitized paper is complete and correct prior to disposal. The IRA and the Creating Helpful Incentives to Produce Semiconductors Act of 2022 represent the most significant actions taken on domestic manufacturing, clean energy, and climate change in U.S. history. Since enactment, the IRS and Treasury have collaboratively worked to implement the 34 clean energy provisions affecting both individual and business taxpayers. In November 2023, the IRS successfully launched IRS Energy Credits Online, which is used for multiple clean energy IRA provisions and is part of the larger effort underway to make improve­ ments to the taxpayer experience and to transform IRS operations. IRS Energy Credits Online provides an electronic method for users to register for a Clean Vehicle or Elective Payment/Transfer Election account. Account holders can register facilities and properties, request advance payments, and submit Clean Vehicle Time-of-Sale reports. The IRS also conducted numerous IRS Energy Credits Online registration efforts in partnership with industry organizations and shared valuable information through nine e-News bulletins focused on eligible clean energy credit commu­ nities that collectively have over 2.8 million subscribers. 12 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT The IRS established a historic collaboration with the Department of Energy where they assumed the role of service provider to the IRS for energy projects, including: • $4 billion in tax credits to advanced energy projects in the first allocation round of the Quali­ fying Advanced Energy Project Credit (48C) Program. • The approval of more than 40,000 Low-Income Communities Bonus Credit program applica­ tions for eligible solar and wind projects, allocating more than 1,100 megawatts of capacity. Another major IRS transformation effort is to accelerate digitalization by moving to a digital experience and paperless IRS. As part of the Paperless Processing Initiative, the IRS made an additional 20 forms eligible for electronic filing. The IRS replaced aged scanning equipment and automated mail sorters in high-volume locations, positioning for a future of digitizing paper returns at the point of receipt. The IRS achieved a significant milestone in FY 2024 when the Document Upload Tool accepted its one-millionth taxpayer submission. Launched in FY 2021 and expanded in FY 2023, the tool offers taxpayers and tax professionals the option to respond digitally to eligible IRS notices by uploading documents securely online through IRS.gov. The IRS estimates more than 94% of individual taxpayers will no longer have to send mail to the IRS, because they can now submit all correspon­ dence and responses to notices and letters that do not have a filing or payment action online. In FY 2024, taxpayers could submit 30 mobile-friendly forms on their mobile devices. This is an important milestone toward the goal of meeting taxpayers where they are. An estimated 15% of Americans rely solely on mobile phones for their Internet access, so it is important to make forms available in mobile-friendly formats. DID YOU KNOW? MOBILE-FRIENDLY FORMS Mobile-friendly forms are HTML versions of IRS forms that can be filled out on cell phones and tablet devices. These forms adapt to all necessary screen sizes and ensure information is entered into all data fields. Visit IRS.gov/mobilefriendlyforms to learn more. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 13 objective 1 Performance results The IRS met or exceeded 7 out of 7 of its Objective 1 key performance measures. TABLE 1: Summary of key performance measure results for FYs 2020–2024. 2020 Actual 2021 Actual 2022 Actual 2023 Actual 2024 target 2024 Actual Customer Service Representative Level of Service1 53.1% 18.5% 17.4% 51.8% 60.0% 65.1% Level of Service(A)*,2 71.6% 38.2% 39.3% 66.4% 65.0% 76.5% Customer Accuracy – Tax Law (Phones) 91.0% 92.8% 92.0% 91.4% 89.0% 90.4% Customer Accuracy – Accounts (Phones)4 93.5% 93.0% 91.8% 89.2% 89.0% 90.2% Timeliness of Critical Individual Filing Season Tax Products to the Public5 78.4% 92.0% 96.4% 96.4% 89.0% 96.6% Timeliness of Critical Tax Exempt and Government Entities & Business Tax Products to the Public6 96.0% 92.9% 96.0% 86.5% 87.0% 94.8% Enterprise Self-Assistance Participation Rate7 90.6% 92.3% 93.9% 94.2% 94.0% 95.8% Key Performance Measures 3 Target met, or indicator trending in the desired direction compared to the prior year result. Target not met, or indicator not trending in the desired direction compared to the prior year result. ** Historical data provided for comparative purpose. The number of toll-free callers that either speak to a Customer Service Representative or receive informational messages divided by the total number of attempted calls. From October 1, 2023, through September 30, 2024, Customer Service Representative Level of Service was 65.1%, which exceeded the target of 60%, and was an increase of around 26% over the prior year actual level of service of 51.8%. The level of service for the 2024 filing season was 87.6%. Customer service representatives answered around 19.9 million calls in FY 2024. Customer service representative phone demand, which includes services offered and disconnects, was around 34.5 million, which was an 11% decrease from last year’s demand of 38.8 million. In FY 2024, around 17.2 million taxpayers were offered a callback and 66.1% accepted. This resulted in around 5.3 million hours saved for the taxpayer, providing a better experience. 2 The relative success rate of taxpayers that call seeking assistance and receive a response to their inquiry by an assistor or through automated responses divided by the total number of attempted calls. This indicator was added to performance reporting in FY 2023. 3 The percentage of correct answers given by a live assistor on toll-free tax law inquiries. 4 The percentage of correct answers given by a live assistor on toll-free account inquiries. 5 The percentage of critical individual filing season tax products available to the public seven calendar days before the official IRS start of the individual filing season. 6 The percentage of critical Tax Exempt and Government Entities and business tax products available to the public seven calendar days before the official IRS start of the individual filing season. 7 The percentage of taxpayer assistance requests resolved using self-assisted automated services. 1 14 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 1 out of 2 of the Objective 1 key performance indicators are trending in the desired direction compared to the prior year result. TABLE 1.1: Summary of key performance indicator results for FYs 2020-2024. 2020 Actual 2021 Actual 2022 Actual 2023 Actual 2024 target 2024 Actual Taxpayers Satisfied with the IRS1 74 70 69 75 Indicator N/A** Total Ending Inventory (Thousands)*,2 1,100 4,100 2,156 2,923 Indicator 3,242 Percent of Closures to Receipts*,3 99.6% 71.9% 116.4% 93.8% Indicator 96.5% Key Performance Indicators Target met, or indicator trending in the desired direction compared to the prior year result. Target not met, or indicator not trending in the desired direction compared to the prior year result. ** Historical data provided for comparative purpose. ** Results not available and are not included in the total Key Performance Indicators count above. Results will appear in the IRS FY 2026 Congressional Budget Justification & Annual Performance Report and Plan. The score of taxpayers satisfied with the IRS according to the American Customer Satisfaction Index survey. The All-Individual Tax Filer score is calculated from separate American Customer Satisfaction Index Individual Paper Filer and Electronic Filer Customer Satisfaction Index Scores. Based on a 100-point scale. There was a methodology change made in 2023, which shifted the American Customer Satisfaction Index data collection from telephone interviews to online panel surveys and made efforts to improve representation. American Customer Satisfaction Index is conducted by Claes Fornell International Group, founding partner of the American Customer Satisfaction Index and sole licensee in the U.S. to use the patented American Customer Satisfactions Index methodology. 2 The total number of accounts management and correspondence work to be processed in inventory. This indicator was added to performance reporting in FY 2022. 3 The number of adjustment cases closed compared to the number received. This indicator was added to performance reporting in FY 2022. 1 DID YOU KNOW? Sign In Español DIRECT FILE WON FEDSCOOP'S INNOVATION OF THE YEAR AWARD The award (fedscoop.com) celebrates cutting-edge, innovative applications of technology that have disrupted traditional government operations and processes leading to an enhanced impact on mission and service delivery. File your taxes online — for free — directly with the IRS. Visit IRS.gov/directfile to learn more. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 15 Strategic Objective 2: Quickly resolve taxpayer issues when they arise. Major Program | enforcement of tax legislation Correspondence issued via mail or, more recently, via online accounts, remains one of the most critical methods the IRS has for engaging taxpayers. With IRA funding, the IRS is focused on improving communications with taxpayers by making IRS notices easier to understand and providing online access to those who choose to engage with the IRS electronically. The IRS redesigned 31 notices for the 2024 tax season. These included notices to taxpayers who may be eligible for tax deferment, including those who served in combat zones, notices reminding a taxpayer they may have unfiled returns, and notices reminding a taxpayer about their balance due and where they can go for assistance. The IRS continues to detect and disrupt tax scams through data analytics and private sector partnerships. In FY 2024, the IRS offered a withdrawal option to help small business owners and others who were misled or pressured by the marketers or promoters to file ineligible Employee Retention Credit claims. Claims that were withdrawn were treated as if they were never filed, and the IRS did not impose penalties or interest. The IRS also partnered with the Department of Veterans Affairs to support the disruption of tax scams and schemes that specifically target U.S. military veterans. These initiatives protected more than $1 billion in improper claims. DID YOU KNOW? TAX SCAMS – WHAT TO KNOW, WHAT TO DO You can avoid falling victim to a tax scam. Know what to watch out for and how the IRS contacts you. Visit IRS.gov/scams to learn more. 16 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT objective 2 Performance results The IRS did not meet the target of its Objective 2 key performance measure. TABLE 2: Summary of key performance measure results for FYs 2020–2024. Key Performance Measures Collection Coverage1 2020 Actual 2021 Actual 2022 Actual 2023 Actual 2024 target 2024 Actual 34.9% 41.2% 38.3% 34.9% 40.7% 39.1% Target met, or indicator trending in the desired direction compared to the prior year result. Target not met, or indicator not trending in the desired direction compared to the prior year result. ** Historical data provided for comparative purpose. 1 The volume of collection work disposed compared to the volume of collection work available. FY 2024 performance was 39.1%, which was an increase from 34.9% in FY 2023. Collection Coverage finished below the target of 40.7%. While total closures have increased compared to FY 2023, total ending inventory has also increased by around 13%. The Objective 2 key performance indicator data is not yet available. TABLE 2.1: Summary of key performance indicator results for FYs 2020–2024. 2020 Actual 2021 Actual 2022 Actual 2023 Actual 2024 target 2024 Actual Time to Start Compliance Resolution*,1 66.3% 66.0% 68.0% 72.0% Indicator N/A** Time to Resolve Compliance Issue after Filing*,2 491 484 404 372 Indicator N/A** Repeat Noncompliance Rate*,3 35.6% 30.7% 28.1% 18.9% Indicator N/A** Cost to Collect $100 $0.35 $0.33 $0.29 $0.34 Indicator N/A** Key Performance Indicators 4 Target met, or indicator trending in the desired direction compared to the prior year result. Target not met, or indicator not trending in the desired direction compared to the prior year result. ** Historical data provided for comparative purpose. ** Results not available and are not included in the total Key Performance Indicators count above. Results will appear in the IRS FY 2026 Congressional Budget Justification & Annual Performance Report and Plan. The percentage of all individual income tax enforcement cases started within six months of the return posting date. This indicator was added to performance reporting in FY 2020. 2 The median time it takes to close all individual income tax enforcement cases in days (excluding disaster, bankruptcy and Tax Equity and Fiscal Responsibility Act cases for exam and collection cases that are not closed as full paid) starting from filing date. This indicator was added to performance reporting in FY 2020. 3 The percentage of individual taxpayers in a fiscal year with noncompliance two years after the initial tax year that contains a filing, payment or reporting compliance issue, compared to total taxpayers. This indicator was added to performance reporting in FY 2020. 4 The cost of collecting $100 is computed as total operating costs divided by gross collection multiplied by 100. 1 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 17 Strategic Objective 3: Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap. Major Program | enforcement of tax legislation Prior to funding provided by the IRA, more than a decade of budget cuts prevented the IRS from keeping pace with the sophisticated ways that some taxpayers attempt to evade taxes. The IRS is moving more swiftly to improve tax compliance in areas where the IRS did not have adequate resources; however, small businesses and households earning $400,000 or less will not see audit rates increase relative to historical levels. In continuing efforts to improve tax compliance and ensure fairness, the IRS used IRA funding to reduce the number of high-income nonfilers. The IRS is working to ensure priority taxpayer segments, which include large corporations, complex partnerships, high-income and high-wealth individual filers pay the taxes they owe. New compliance efforts are focused on 125,000 highincome taxpayer cases where federal income tax returns have not been filed since 2017. This work is directly in line with the IRS’s vision to minimize attempts at tax evasion by complex filers. The IRS estimates that approximately $63 billion, or 9% of the gross tax gap, is due to nonfilers. More information on the tax gap can be found in Other Information – Section B: Tax Burden, Tax Gap, and Tax Expenditures. In FY 2024, the IRS sent more than 25,000 compliance letters to the priority nonfiler population with more than $1 million in income, and over 100,000 letters to nonfilers who had incomes between $400,000 and $1 million for tax years 2017 through 2021. The IRS expanded enforcement for priority taxpayer segments in FY 2024 by increasing total trained staff and making compliance work more efficient with new tools and processes. This included identifying and implementing strategic options for rapidly increasing enforcement activities to supplement hiring and training. The IRS introduced a pilot to utilize refined approaches and treatments for priority taxpayer segments. High-income nonfilers received tailored, proactive outreach before receiving automated assessments or penalties. In FY 2024, the IRS ramped up efforts to pursue high-income and high-wealth individuals who have either not filed their taxes or failed to pay recognized tax debt, concentrating on taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. The IRS opened examinations on 76 of the largest partnerships in the U.S., representing a cross section of indus­ tries including hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms, and other industries. The selection of these returns is the result of groundbreaking collab­ oration among experts in data science and tax enforcement. In addition, the IRS expanded the large corporate compliance program, focusing on noncompliance by using data analytics to identify large corporate taxpayers for audit. The large corporate compliance program includes 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. With the funding provided by the IRA, the IRS has already begun to rebuild capacity and deliver results to improve tax fairness, including collecting over $1 billion from millionaires with delinquent tax debt and examining the returns of large partnerships with questionable balance sheets. This has been 18 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT made possible by an increase in enforcement staff of more than 8,000 since the passage of the IRA, bringing total enforcement staffing to nearly 43,000. This resulted in boosting enforcement capacity to ensure high-income individuals, large corporations, and complex partnerships pay what they legally owe, and to disrupt tax scams that prey on families, small businesses, and other taxpayers. The IRS continues to rebuild trust and fairness in enforcement. When researchers from Treasury and several academic institutions published a study (https://siepr.stanford.edu/publications/ working-paper/measuring-and-mitigating-racial-disparities-tax-audits) that found Black taxpayers were three to five times more likely to be audited than other taxpayers, the IRS dedicated resources to evaluate the extent to which exam priorities, automated processes, and the data it relies on, contributed to this disparity. The IRS’s findings supported the conclusion that Black taxpayers are audited at higher rates than other taxpayers. The IRS is revamping compliance efforts to advance its commitment to fair, equitable, and effective tax administration and hold itself accountable to taxpayers. The IRS is investing IRA resources in research that can help identify disparities across dimensions of race, ethnicity, age, gender, and geography, and is using that research to continu­ ously refine approaches to compliance and enforcement. Concerns about the IRS’s Whistleblower Program have been raised by Congress, the whistleblower practitioner community, and the news media regarding the decline in the total dollar amount of whistleblower awards, THE IRS WHISTLEBLOWER OFFICE the total proceeds collected attributed to The IRS Whistleblower Office processes whistleblower awards paid, the number of tips received from individuals who spot awards paid, and the length of time it takes tax problems in their workplace, while to pay out an award. To address these conducting day-to-day personal concerns, the IRS introduced several steps business or anywhere else they may be during FY 2024 to improve the Whistleencountered. Monetary awards are paid blower Program by increasing the capacity to eligible individuals whose information to use high-value whistleblower information is used by the IRS. Visit IRS.gov/ effectively, awarding whistleblowers fairly whistleblower to learn more. and as soon as possible, and keeping whistleblowers informed of the status of their claims and the basis for IRS decisions. The IRS is strengthening collaboration with all whistleblower program stakeholders. In FY 2024, the IRS updated Form 211, Application for Award for Original Information, based on feedback from whistleblower program stakeholders. Form 211 revisions included updated alleged violation issue options to improve data capture of key compliance work areas and the option for multiple whistleblowers to file jointly. The IRS is working to make it easier for whistleblowers to file a claim by devel­ oping a digital intake solution. The IRS took steps to help improve awareness of the program and is developing a multi-year IRS Whistleblower Office Strategic Plan that is also based on feedback from internal and external stakeholders. In FY 2024, the IRS paid awards totaling $123.5 million based on whistleblower information attributable to tax and other amounts collected of $474.7 million. Since issuing its first award in 2007 through September 2024, the IRS has paid over $1.3 billion in awards based on the successful collection of $7.4 billion from noncompliant taxpayers. DID YOU KNOW? MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 19 objective 3 Performance results The IRS met or exceeded 1 out of 6 of its Objective 3 key performance measures. TABLE 3: Summary of key performance measure results for FYs 2020–2024. 2020 Actual 2021 Actual 2022 Actual 2023 Actual 2024 target 2024 Actual Examination Efficiency – Individual1 76 108 101 103 106 82 Exam Starts – High-Income Individuals*,2 2,693 2,227 3,625 4,326 4,398 4,052 Exam Starts – Partnerships* 4,106 4,327 3,155 6,709 4,074 2,285 Exam Starts – Large Corporations (Assets >= $250M)*,4 1,700 1,490 1,365 1,400 1,250 1,263 Criminal Investigations Completed5 2,624 2,766 2,552 2,584 2,500 2,481 Conviction Rate 90.4% 89.4% 90.6% 88.4% 92.0% 90.0% Key Performance Measures ,3 6 Target met, or indicator trending in the desired direction compared to the prior year result. Target not met, or indicator not trending in the desired direction compared to the prior year result. ** Historical data provided for comparative purpose. The sum of all individual 1040 returns closed by Small Business/Self-Employed, Taxpayer Services, and Large Business and International (Field Exam and Correspondence Exam programs) divided by the total full-time equivalent expended in relation to those individual returns. FY 2024 performance was 82. Examination Efficiency – Individual finished below the target of 106. This was due to training new hires and working complex cases, which take more time to complete. 2 The number of examinations of individual returns started during the fiscal year with a total positive income of $10 million and above. This indicator was added to performance reporting in FY 2021. FY 2024 performance was 4,052, which was a 6.3% decrease from FY 2023. Exam Starts – High-Income Individuals finished below the target of 4,398. This was due to hiring and experienced examiners being taken offline to serve as on-the-job instructors, reducing overall direct exam time. Exam starts are expected to increase in FY 2025 and subsequent years as new hires complete training and trainers resume their normal work. 3 The number of examinations of partnership returns started during the fiscal year. This indicator was added to performance reporting in FY 2021. FY 2024 performance was 2,285, which was a 65.9% decrease from FY 2023. Exam Starts – Partnerships finished below the target of 4,074. This was due to a delay in partnership training. Per directive, IRA funding was not to be used to increase exams on small businesses. Thus, partnership examinations will move towards more complex organizations requiring long cycle times and resulting in fewer starts. 4 The number of examinations of large corporate returns started during the fiscal year reporting assets of $250 million and above. This indicator was added to performance reporting in FY 2021. There was significant hiring in FY 2024, which required new hire training. Exam starts are expected to increase in FY 2025 and subsequent years as new hires complete training and trainers resume their normal work. 5 The total number of subject criminal investigations completed during the fiscal year, including those that resulted in prosecution recommendations to the Department of Justice as well as those discontinued due to a lack of prosecution potential. FY 2024 performance was 2,481, which was a 4% decrease from FY 2023. Criminal Investigations Completed finished below the target of 2,500 because there was a bigger shift toward training as a result of much needed hiring. Experienced agents served as on-the-job instructors and academy instructors, thereby impacting productivity. 1 6 The percent of adjudicated criminal cases that result in convictions. DID YOU KNOW? IDENTITY THEFT CONTROL Tax-related identity theft happens when someone steals your personal information to commit tax fraud. Visit IRS.gov/idtheft to learn more. 20 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT Strategic Objective 4: Deliver cutting-edge technology, data, and analytics to operate more effectively. Major Program | transformation of Business systems The IRS is a technology shop in that every aspect of delivering tax administration is enabled by technology and data. The foundational technology infrastructure, data, systems, and network are critical to enabling services and enforcement efforts, while ensuring core IRS operations remain resilient and secure. None of the improvements previously described would be possible without investing in the IRS’s underlying technology infrastructure and data analytics. Thanks to IRA invest­ ments, the IRS is deploying new technology to benefit taxpayers and is making significant progress on modernizing its foundational legacy information technology systems. In addition to replacing decades-old sorting machines, in FY 2024, the IRS enabled bulk filings of Forms 1099 and scanned millions of paper forms. Business systems modernization activities were zeroed out in the FY 2023 and FY 2024 appropria­ tions; therefore, the IRS is reliant on IRA funding for digitalization and other technological innova­ tions. With the absence of discretionary business systems modernization funding, the IRS estimates it is currently underfunded by nearly $3 billion through FY 2031 for funds dedicated to information technology modernization. The IRS estimates business systems modernization funds provided by the IRA will be exhausted by FY 2026, at which point: • Automation solutions will be scaled back leaving taxpayers unable to have up-to-date account information when they want it. • Cyber and cloud work will be truncated, increasing the risk for failure of IRS systems and cyber-attacks. • Work on digital solutions including Taxpayer 360 (a new platform designed to provide a more seamless and efficient experience for both taxpayers and customer service representatives), expanded payment functionality, and other important modernization efforts will be stopped. In FY 2024, the IRS implemented enhanced security audit trails and advanced logging, advanced cybersecurity monitoring, cyber fraud analytics, and incident response capabilities to reduce risk and ensure high availability of IRS systems and applications, and protected information without major disruption to nearly 10,000 data users. Enhanced security audit trails were completely modernized by consolidating all audit trail data repositories into a centralized monitoring tool. As a result, the IRS is now receiving audit trails from 100% of IRS applications, an increase from 36 applications to 320. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 21 objective 4 Performance results The IRS met or exceeded 2 out of 4 of its Objective 4 key performance measures. TABLE 4: Summary of key performance measure results for FYs 2020–2024. 2020 Actual 2021 Actual 2022 Actual 2023 Actual 2024 target 2024 Actual Rentable Square Feet per Person1 278 278 264 248 238 224 Percent of Aged Hardware2 16.0% 9.3% 7.1% 19.9% 20.0% 17.6% Percent of Major Information Technology Investments Within +/- 10% Cost Variance at the Investment Level3 84.2% 94.1% 81.3% 85.7% 90.0% 85.7% Percent of Major Information Technology Investments Within +/- 10% Schedule Variance at the Investment Level4 94.7% 100.0% 87.5% 92.8% 90.0% 71.4% Key Performance Measures Target met, or indicator trending in the desired direction compared to the prior year result. Target not met, or indicator not trending in the desired direction compared to the prior year result. ** Historical data provided for comparative purpose. The amount of rentable square feet the IRS maintains per person requiring space. This measure shows the percentage of all information technology hardware in operation that is past its useful life. 3 The number of major information technology investments within +/-10% variance between planned total cost and projected/actual cost within a fiscal year divided by the total number of major information technology investments in the fiscal year. Six of seven major investments were within the cost variance threshold at the close of the 4th quarter. Filing and Intake underspent due to the Digitalization program which achieved efficiencies in spend. 4 The number of major information technology investments within +/-10% variance between planned days and projected/actual days within a fiscal year divided by the total number of major information technology investments in the fiscal year. Five of seven major investments were within the schedule variance threshold at the close of the 4th quarter. Digital Services was late and Filing and Intake was early. 1 2 Treasury Secretary Janet Yellen and Submission Processing Field Director Michelle Momsen view a new IBML Fusion HDL scanner at the IRS campus in Austin, TX. This will allow employees to convert and store more paper documents in a digital format and is one of many IRA investments. 22 Commissioner Werfel discussed the new sorting machines with Secretary Yellen and (l-r) Submission Processing Deputy Director Scott Wallace and Texas Congressman Greg Casar. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT Strategic Objective 5: Attract, retain, and empower a highly skilled, diverse workforce and develop a culture that is better equipped to deliver results for taxpayers. Employees are the foundation of everything the IRS does – without a high-quality workforce, none of the improvements made thus far would be possible. The IRS continues to invest in its employees to ensure it recruits and retains top talent. In FY 2024, the IRS assessed and reshaped its workforce to meet future requirements by modernizing how the IRS attracts, retains, develops, and empowers its employees. The IRS also focused on efforts to ensure IRS employees have the tools, training, and culture they need to perform at their best, collaborate effectively, and build meaningful connections within and across teams. Through these efforts, the IRS fostered a positive and enhanced employee experience and created a workplace that reflects the diversity of the taxpayers it serves. In FY 2024, the IRS matured its workforce planning capabilities by enhancing hiring plans to include additional position requirements to perform critical work. The IRS updated onboarding and orien­ tation programs to ensure a positive first employee experience for new hires. In-person orientation events were established in 12 key campus and IRS locations. The IRS launched a Health of the Workforce dashboard to monitor workforce trends at different levels and teams. The IRS also expanded training for managers to increase their ability to support their employees and the IRS mission and expanded its workforce using streamlined, efficient methods for workforce planning, recruiting, hiring, and onboarding quality applicants that represent the American taxpayers. The IRS continuously encourages its employees to pursue educational opportunities that enhance performance and help the IRS fulfill its mission of providing effective tax administration. In May 2024, the IRS implemented a new, voluntary Certified Internal Controls Advocate course to provide employees with an understanding of internal controls concepts. The course covers basic skills on how to analyze operations, determine and rate risks, design and implement effective controls, and monitor the controls to ensure they are operating as intended. Since implementation, IRS employees from 14 different organizations became Certified Internal Controls Advocates. The IRS also created the Risk Management Advocate Program, which provides opportunities for all IRS employees to gain an understanding of enterprise risk management concepts and tools for practical application in their normal duties, develop and improve leadership competencies, and obtain a greater awareness of enterprise risk management initiatives. Successful completion of this course allows employees to become Certified Risk Management Advocates. In FY 2024, 90 new Certified Risk Management Advocates were added, bringing the total to over 600 certified employees since the program’s inception in 2019. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 23 objective 5 Performance results The IRS met or exceeded 2 out of 2 of its Objective 5 key performance measures. TABLE 5: Summary of key performance measure results for FYs 2020-2024. 2020 Actual 2021 Actual 2022 Actual 2023 Actual 2024 target 2024 Actual Attrition Rate1 6.15% 7.52% 9.72% 8.43% 7.90% 7.12% Hiring Cycle Time2 119.5 98.6 80.63 77.14 80 74 Key Performance Measures Target met, or indicator trending in the desired direction compared to the prior year result. Target not met, or indicator not trending in the desired direction compared to the prior year result. ** Historical data provided for comparative purpose. Attrition Rate is the total number of full-time permanent employees that left the IRS during the fiscal year divided by the number of full-time permanent employees on board at the beginning of the fiscal year plus the number of full-time permanent new hires. 2 Hiring Cycle Time is the number of days between the date a hiring request is approved (or a certificate is issued) to the enter on duty date. This measure was added to performance reporting in FY 2019. 1 The Objective 5 key performance indicator is trending in the desired direction compared to the prior year result. TABLE 5.1: Summary of key performance indicator results for FYs 2020-2024. Key Performance Indicators Employee Engagement Index1 2020 Actual 2021 Actual 2022 Actual 2023 Actual 2024 target 2024 Actual 74.2% 73.5% 73.1% 72.9% Indicator 73.7% Target met, or indicator trending in the desired direction compared to the prior year result. Target not met, or indicator not trending in the desired direction compared to the prior year result. ** Historical data provided for comparative purpose. ** Results not available and are not included in the total Key Performance Indicators count above. Results will appear in the IRS FY 2026 Congressional Budget Justification & Annual Performance Report and Plan. 1 The Office of Personnel Management Employee Engagement Index is a measure of the conditions conducive to engagement. The index consists of 15 items grouped into three subindices: Leaders Lead, Supervisors, and Intrinsic Work Experience. The Office of Personnel Management measures this government wide. 24 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT Shared Services Support The IRS incurs costs for shared tasks that occur outside the purview of the SOP (www.irs.gov/ strategicplan). These tasks support employees, taxpayers, and the overall mission of the IRS. Below are select FY 2024 accomplishments performed by these offices. security and Facilities Safety, security, and the well-being of IRS employees, taxpayers, contractors, and facilities is of utmost importance to the IRS. The IRS overcame many funding challenges to enhance physical facility security and provide permanent and interim space solutions by strategically allocating IRA and discretionary funds across more than 500 facilities. The IRS applied critical upgrades and expansions to its security infrastructure, which included procuring state-of-the-art video surveil­ lance systems and automating data collection and processes. The IRS also collaborated with the Department of Homeland Security’s Federal Protective Service to enhance its threat response capabilities and develop a certified training course. To enhance taxpayer service, the IRS modernized 25 Taxpayer Assistance Centers by replacing walk-up counter windows, upgrading security, making alterations, and in some locations, creating private taxpayer workspace for virtual communication with individual taxpayer assistance specialists. Since the IRA funding was approved, the IRS reopened 35 previously closed Taxpayer Assistance Centers across the country, ensuring equipment was up-to-date and functional. In addition, the IRS continued its expansion effort in Puerto Rico to enhance in-person and over-the­ phone taxpayer service levels, which generated over 3,000 new jobs, having an economic impact of over $200 million in salaries annually. The IRS delivered a permanent training center, expanded the Automated Collection System Call Site in San Juan, adding one call site in Guaynabo (Caparra), two Taxpayer Services call sites in Caguas and Ponce, and four Taxpayer Assistance Centers across the island. Human Capital To bolster the overall employee experience, the IRS delivered several new and enhanced programs and services. The Student Loan Repayment Program was updated to expand eligibility to all employees and streamline the payment process. The Student Loan Repayment Program provides student loan repayments to support employee retention. The Childcare Subsidy Program was enhanced making it accessible to more IRS families. Additionally, the IRS established supply stations at all campuses to ensure employees had the necessary supplies to carry out their day-to­ day duties. The IRS implemented a new series of events called IRS Cares Day. The events were designed to provide a wide variety of services and real-time support to address employees’ workplace needs. The IRS implemented an electronic Official Personnel Folder hybrid digitization and robotics automation solution to meet the National Archives and Records Administration and Office of Management and Budget Mandate M-19-21 directive. The capabilities of the hybrid solution digitize and utilize robotic process automation to upload forms to an employee’s electronic profile in the Office of Personnel Management’s electronic Official Personnel Folder system. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 25 Privacy and Disclosure In FY 2024, the IRS continued its efforts to preserve and enhance protection, authentication, minimization, retention, and disclosure of taxpayer information. The IRS developed a Privacy Advocate Certification Program to increase IRS employees’ ability to identify and address privacy threats to federal tax information and promote awareness of criminal activities aimed at compro­ mising taxpayers’ private information. The IRS began implementing a new artificial intelligence governance process to ensure enterpriselevel oversight and compliance with federal requirements. The process was approved by the Data and Analytics Strategic Integration Board and issued interim guidance for new Internal Revenue Manual 10.24.1, Artificial Intelligence (AI) Governance and Principles (www.irs.gov/pub/foia/ig/ spder/interim-guidance-raas-10-0524-0001-artificial-intelligence-governance-and-principles­ redacted.pdf), in May 2024. The governance body included an artificial intelligence assurance team consisting of subject matter experts from 10 different business units. Using IRA funding, the IRS enhanced and created popular convenient online tools that save taxpayers time and money, while reducing phone calls, paper processes, and other burdens on IRS employees. The IRS FREEDOM OF INFORMATION ACT improved timely access to records and PUBLIC ACCESS PORTAL transparency to operations by deploying a This portal (foiapublicaccessportal.for.irs.gov) Freedom of Information Act Portal. The provides members of the public with basic portal provides members of the public the information on how to obtain access to ability to request and receive records records maintained by the IRS. electronically, including tax records protected by Internal Revenue Code Section 6103. This has enhanced customer satisfaction while protecting sensitive information in a digital environment. The Freedom of Infor­ mation Act Portal also provides requesters access to a dashboard of requests submitted, the ability to obtain the status of those requests and submit questions, and the functionality to download responsive records securely. DID YOU KNOW? Procurement In FY 2024, the IRS created the Acquisition Program Management Office, to provide a centralized point of contact for direct customer support with acquisition package development, including requirements writing, during the pre-award phase of the acquisition process. The IRS also designed an IRS-specific training, ensuring that all contracting officer representatives possess the necessary knowledge and tools to effectively oversee contracting activities and enhance compliance and operational efficiency within the organization. Over 95% of the IRS contracting office representatives completed the Contractor Onboarding and Offboarding training. 26 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT The IRS continued to work towards meeting statutory and regulatory requirements for contracts throughout the agency. The IRS's priority objective is timely execution of procurement packages. However, the IRS faced challenges with increased workloads, continuous customer education for ideal contract management, continuing resolution constraints, and swift adaptability to changing procurement landscapes that influence how the agency acquires goods and services. The IRS continued to work through competing priorities, attrition, contract management, and growing demands for contract requirements. Finance The IRS was the first agency to meet Treasury’s Government Invoicing mandate. Previously a manual process, this new solution uses the IRS's financial system to integrate with Treasury Government Invoicing for intragovernmental agreements and transaction processing. This enables the IRS to transparently manage its intra-governmental buy/sell transactions, and with its trading partners, negotiate and accept general terms and conditions agreements, broker orders, exchange performance information, and validate settlement requests through intra-governmental payment and collection. The IRS continued to streamline processes — such as accounts payable — to save time, improve reporting, ensure adherence to prompt payment legislation, and to ensure the IRS makes timely and accurate payments. The streamlined accounts payable process saves labor hours annually while continuing to exceed the 98% prompt payment target. enterprise risk Management The IRS continued to strengthen its Enterprise Risk Management Program and risk management practices. The IRS Commissioner kicked off the Risk Awareness Campaign in October 2023 with the theme of Nurturing a Robust Risk-Aware Culture, whereby he emphasized the significance of having a strong risk-aware culture that encourages employees to consider risks while doing their daily work. Throughout the fiscal year, the IRS hosted a series of risk management events with internal and external partners to promote awareness on risks, enhance incident response and program management strategies; and educate employees on how they can recognize and report potential threatening activities to enable early detection and intervention. On November 29, 2023, the Association for Federal Enterprise Risk Management, an organization that promotes Enterprise Risk Management practices within the federal government, awarded the IRS with the prestigious Enterprise Risk Management Luminary Award for significant progress and notable achievements in the implementation and management of an Enterprise Risk Management program. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 27 Verification and Validation of Performance Data The IRS requires complete, accurate, and reliable performance data to assess progress toward its strategic objectives and program outcomes to make good management decisions. The IRS's approach to verification and validation of performance data to improve accuracy and reliability is based upon the following: 1. The IRS reviews performance measures through its annual performance assessment process with Treasury. This assessment includes reviewing the extent to which currently reported perfor­ mance measures support the strategic plan and priorities and identifying or developing new performance measures to fill any gaps. 2. IRS business units use a standard template to document detailed information for each perfor­ mance measure. The IRS includes these measure templates in its comprehensive data dictionary, which it maintains corporately and updates annually. For each measure, the data dictionary includes information including, but not limited to: • Definition • Source of the data • Business unit • Data limitations • Responsible Official • Management controls • Formula/methodology for computation 3. The Responsible Official for the measure assesses the completeness, consistency, timeliness, and quality of the data, following the documented procedures for gathering the data and ensuring management controls are in place. The heads of office are accountable for their perfor­ mance results. These positions vary by business unit. 4. The CFO's Strategic Planning office reviews quarterly and year-end performance measure results before sharing the results with the senior executive team and/or publishing them in Treasury and IRS documents. The Strategic Planning office also independently reviews the performance measure targets and accompanying documentation. If anomalies occur, the Strategic Planning office informs the business unit, which makes any necessary adjustments. Leadership reviews all target adjustments as part of the budget development and review process. 5. As part of managing the portfolio of enterprise performance measures, the Strategic Planning office conducts ad-hoc meetings with business units to discuss topics such as: oversight, respon­ sibilities of ownership, guidance on measurement and reporting, and organizational change. 6. At the end of each fiscal year, the business units who are involved in the collection and reporting of these measures receive a notification from the Strategic Planning office, reminding them of their responsibility for: • Ensuring the quality and accuracy of the performance data. • Reviewing and following Internal Revenue Manual guidelines when proposing new and modifying existing measures. 28 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT • Ensuring there are sufficient controls in place for proper and accurate reporting of their performance results. These procedures help to provide assurances that the performance data and internal controls reported by the IRS are sufficiently complete, accurate, and reliable. Detailed guidance on the appropriate use and application of performance information appears in Internal Revenue Manual 1.5.1: The IRS Balanced Performance Measurement System (www.irs.gov/irm/part1/irm_01-005-001). Members of Puerto Rico Accounts Management at the Bayamon location during in-person program reviews. The Accounts Management function answers more than 55 million account and tax law inquiries and form requests via telephone and 19.8 million paper inquiries each year across ten campus and fifteen remote locations. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 29 ENTERPRISE RISK MANAGEMENT In compliance with the Office of Management and Budget Circular A-123, Management’s Respon­ sibility for Enterprise Risk Management and Internal Control, the IRS conducts an annual Enterprise Risk Assessment and develops an Enterprise Risk Profile, which articulates the IRS’s top risks to achieving its strategic objectives. As part of the annual Enterprise Risk Assessment process, the Chief Risk Officer brings together representatives from across the IRS to assess risk environments, looking at external and internal factors, including business unit level risks, that could impact the IRS within the next 12 to 18 months. The Commissioner and Executive Risk Committee deliberate on the Enterprise Risk Assessment outputs, which update the IRS Enterprise Risk Profile and determine priorities and focus for the upcoming year. For the 2024 reporting, the IRS is organizing its portfolio of enterprise risks by Risk Type, which brings visibility to certain enterprise risks individually and those that may fall at the bottom of the traditional numerical ranked profile. The table below includes Risk Types, a Risk Type Summary, and the top ranked Enterprise Risk within each Risk Type. IRS 2024/2025 Enterprise Risk Profile Risk Type Strategic/ Reputational The strategic/ reputational risks are related to the IRS’s strategic posture and reputation. Internally, risks are related to taxpayer experience, compliance and the management of contracts and vendors. Externally, risks are related to the impact of legislation and third parties. Technology Operational Organizational The technology risks are related to the IRS information technology infrastructure’s resiliency, accessibility, reliability, security, and evolving risks such as Artificial Intelligence and the modernization of Information Technology at the IRS. The operational risks are related to managing efficient and effective operations at the IRS, including physical threats to operations, data and record protection, acquisition processes, procedure and policy and overall alignment with the SOP. The organizational risks are related to IRS employee experience, such as challenges with recruitment, hiring, retention; embracing change stemming from the IRA transformation efforts; and monitoring the IRS’s cultural goals. Financial/ Reporting The financial/reporting risks are related to the reliability of the overall financial wellbeing of the IRS and the U.S. tax system. This includes threats associated with fraud, communication, reliable reporting and funding for taxpayer services. Top Enterprise Risk by Risk Type Taxpayer Experience 30 Data Security Contract Planning and Acquisition MAnAgeMent's DIsCUssIon AnD AnAlysIs Employee Experience | Retention of IRA Resources IRS FY 2024 AGENCY FINANCIAL REPORT ANALYSIS OF FINANCIAL STATEMENTS Financial Management Highlights The financial statements are prepared to report the financial position and results of operations, pursuant to the requirements of 31 U.S. Code Section 3515(b). The statements are prepared from records of the IRS in accordance with U.S. generally accepted accounting principles and the formats prescribed by the Office of Management and Budget. Reports used to monitor and control budgetary resources are prepared from the same records. Users of the statements are advised that the statements are for a component of the U.S. government. The IRS is responsible for the administration of tax laws and the custodial collections of taxes for the U.S. government. The IRS responsibilities are divided into two distinct financial management activity categories: administrative and custodial. Administrative accounts are included as appropri­ ations and offsetting collections in the Statements of Budgetary Resources. These resources are also reflected as assets, liabilities, revenues, expenses, and the net position of the IRS. Custodial accounts include activity in support of tax collections. The IRS collects nearly all the receipts that support the federal government’s operations. Tax receipts are accounted for in designated custodial accounts as presented on the Statements of Custodial Activity. Custodial accounts are also included in the Balance Sheets for Fund Balance with Treasury; Federal Taxes Receivable, Net; and Federal Tax Refunds Payable. Financial Statement Overview The IRS received $79,411 million in multi-year (FYs 2022 through 2031) supplemental funding through the IRA. However, the Fiscal Responsibility Act of 2023 rescinded $1,389 million in IRA funding and the appropriations bill for FY 2024 rescinded $20,200 million in IRA funding from Enforcement. Since inception, IRA net obligations incurred total $9,009 million with $48,813 million remaining unobligated to carry forward into FY 2025. IRA unobligated balances by budget account at the end of FY 2024 are broken out as follows: • Taxpayer Services – $1,891 million • Enforcement – $22,415 million • Business Systems Modernization – $2,707 million • Operations Support – $21,356 million • Energy Security – $441 million • Direct E-File Taskforce – $3 million MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 31 The following financial statements analysis provides an overview of the IRS’s financial position and results of operations with an emphasis on significant variations in financial statement line items. Audited financial statements with accompanying notes, including the independent auditor’s report, are presented in the Financial Information section of this report. In addition, Note 20. IRA provides cumulative financial data specific to the IRA appropriations. Financial Statement Analysis Analysis of the Balance sheets The Balance Sheets display amounts of future economic benefits owned or available for use (assets), amounts owed (liabilities), and the residual amounts (net position) at the end of the fiscal year. The following chart displays changes in Balance Sheet line items as of the fiscal year ended September 30, 2024, compared to September 30, 2023. 2024 2023 $ 139,220 $ 182,000 Fund Balance with Treasury 66,019 Due from the General Fund of the U.S. Government 4,427 Other ($ in Millions) $ Change %Change ASSETS Federal Taxes Receivable, Net Total Assets $ (42,780) -23.5% 86,347 (20,328) -23.5% 6,647 (2,220) -33.4% 2,525 1,798 727 40.4% $ 212,191 $ 276,792 $ (64,601) -23.3% $ LIABILITIES Intragovernmental $ 148,335 $ 185,633 (37,298) -20.1% Federal Tax Refunds Payable 4,427 6,648 (2,221) -33.4% Other 3,601 3,870 (269) -7.0% Federal Employee Benefits Payable 1,310 1,507 (197) -13.1% $ 157,673 $ 197,658 $ (39,985) -20.2% $ $ $ (25,136) -32.4% Total Liabilities NET POSITION Unexpended Appropriations Cumulative Results of Operations Total Net Position 32 52,433 77,569 2,085 1,565 520 33.2% $ 54,518 $ 79,134 $ (24,616) -31.1% MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT Assets of the IRS primarily comprise: Federal Taxes Receivable, Net; Fund Balance with Treasury; Due from the General Fund of the U.S. Government; and Other, which primarily consists of Property and Equipment, Net. The composition of FY 2024 assets is presented as follows: 2.1% 1.2% 65.6% 31.1% FY 2024 $212,191 Assets ($ in Millions) Federal Taxes Receivable, Net Fund Balance with Treasury Due from the General Fund of the U.S. Government Other Asset fluctuations primarily include decreased Fund Balance with Treasury; Federal Taxes Receivable, Net; and Due from the General Fund of the U.S. Government—which are partially offset by an increase in Property and Equipment, Net. Federal Taxes Receivable, Net decreased by $42,780 million in FY 2024 as compared to FY 2023. This decrease is primarily due to payments that reduced amounts of nondelinquent 965(h) unpaid assessments, partially offset by an increase in delinquent unpaid assessments, both of which are described further in the section for Unpaid Assessments. Additional information on Federal Taxes Receivable, Net can be found in Note 4. Federal Taxes Receivable, Net in the Financial Infor­ mation section of this report. Fund Balance with Treasury decreases of $20,328 million are primarily due to the rescission of $20,200 million in IRA funding. Other Assets increased by $727 million as purchases of property and equipment have risen from $382 million in FY 2023 to $1,005 million in FY 2024, the majority being attributable to capitalized internal-use software. Due from General Fund of the U.S. Government decreased by $2,220 million which correlates to the liability for Federal Tax Refunds Payable. Amounts due from the General Fund of the U.S. Government represents funds that will be used as resources to disburse federal tax refunds. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 33 Liabilities include Intragovernmental (Due to the General Fund of the U.S. Government and Other Intragovernmental Liabilities), Federal Tax Refunds Payable, Federal Employee Benefits Payable, and Other Liabilities with the Public. Additional information for Federal Employee Benefits Payable and Other Liabilities (Intragovernmental and With the Public) can be found in Note 8. Federal Employee Benefits Payable and Note 9. Other Liabilities. The percentage composition of IRS liabilities is depicted in the following chart: 2.8% 2.3% 0.8% 94.1% FY 2024 $157,673 Liabilities ($ in Millions) Intragovernmental Federal Tax Refunds Payable Other Federal Employee Benefits Payable Liability fluctuations primarily include decreased Intragovernmental liabilities, Federal Tax Refunds Payable, and Other Liabilities with the Public. Intragovernmental liabilities decreased from the previous fiscal year because of a $37,218 million decline in the amount for the Due to the General Fund liability, which is representative of funds that will be distributed to the General Fund upon collection. This amount is directly correlated with the amount of Federal Taxes Receivable, Net but also includes State Innovation Waiver Payments (refer to Note 1.K. Due to the General Fund of the U.S. Government). Federal Tax Refunds Payable decreased by $2,221 million in comparison to FY 2023. Refunds of Federal Taxes and Outlays decreased by 16.1% from the prior year as discussed in the Analysis of the Statements of Custodial Activity. Other Liabilities with the Public decreased by $311 million due to a lower amount of federal tax deposits not yet identified. Net Position consists of Unexpended Appropriations and Cumulative Results of Operations. Funds made available by Congress are recorded in Unexpended Appropriations. Cumulative Results of Operations is the net difference between 1) expenses, losses, and transfers from the inception of an agency or activity and 2) financing sources such as expended appropriations, revenues, gains, and transfers in from the inception of an agency or activity, as of the reporting date of the financial statements. The net book value of capitalized assets and future funding require­ ments of unfunded liabilities both affect net position but do not factor into the unobligated balance as reported on the Statement of Budgetary Resources. Net Position decreased by 31.1% due to higher payroll expenditures and the rescission of $20,200 million of IRA funding. 34 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT Analysis of the statements of net Cost The Statements of Net Cost present the annual cost of operating the IRS’s three major programs: Service to the Taxpayer, Enforcement of Tax Legislation, and Transformation of Business Systems. Net Cost of Operations includes Gross Cost less Earned Revenue from user fees and reimbursable agreements. Net Cost of Operations increased by $1,998 million, or 11.6% over the prior fiscal year. The Statement of Net Cost reflects a total of $19,226 million for the period ending September 30, 2024, as compared to $17,228 million for the period ending September 30, 2023. Statement of Net Cost 2024 ($ in Millions) 2023 $ Change % Change 570 9.6% GROSS COSTS Service to the Taxpayer $ Enforcement of Tax Legislation Transformation of Business Systems Total Gross Costs $ 6,519 $ 5,949 $ 12,359 10,916 1,443 13.2% 914 943 (29) -3.1% 1,984 11.1% 19,792 $ 61 $ 17,808 $ 60 $ REVENUES Service to the Taxpayer $ Enforcement of Tax Legislation Transformation of Business Systems Total Revenues 1 1.7% 500 514 (14) -2.7% 5 6 (1) -16.7% $ 566 $ 580 $ (14) -2.4% $ 6,458 $ 5,889 $ 569 9.7% 1,457 14.0% NET COSTS Service to the Taxpayer Enforcement of Tax Legislation 11,859 Transformation of Business Systems 10,402 909 Total Net Costs $ 19,226 937 $ 17,228 $ (28) -3.0% 1,998 11.6% Gross Cost increased by $1,984 million due primarily to higher costs for personnel salaries and benefits as staffing levels are 10.7% higher and a cost-of-living adjustment of 4.7% was imple­ mented for calendar year 2024. Total payroll expenses have risen by $1,434 million and imputed costs associated with employee pension benefits have increased by $262 million. In addition, agency modernization efforts have resulted in higher expenses for contractual services, which includes management consulting services for large-scale information technology projects. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 35 Net Cost of Operations by major programs are presented in the table below for the periods ending September 30, 2024 and 2023, respectively. 4.7% 33.6% 61.7% FY 2024 $19,226 Net Cost ($ in Millions) Enforcement of Tax Legislation Service to the Taxpayer Transformation of Business Systems Analysis of the statements of Budgetary resources IRS operations are financed through appropriations, spending authority from offsetting collections, and unobligated balances carried forward. Custodial appropriations for taxpayer refunds, refundable tax credits, and other outlays are not available to the IRS for operational expenditures and are therefore not included in the presentation of the Statements of Budgetary Resources (refer to Note 15. Statement of Budgetary Resources for a reconciliation to the Budget of the U.S. Government). As displayed in the following chart, Total Budgetary Resources decreased by $23,537 million from the previous fiscal year, which is primarily attributable to the $20,200 million rescission in the IRA appropriation for Enforcement. 2024 ($ in Millions) 2023 $ Change 80,934 $ % Change BUDGETARY RESOURCES Unobligated Balance from Prior Year Authority $ 76,112 $ (4,822) -6.0% Appropriations (Discretionary and Mandatory) Taxpayer Services Enforcement Operations Support Business Systems Modernization Other Total Appropriations Spending Authority from Offsetting Collections Total Budgetary Resources 36 3,390 2,880 510 17.7% (15,034) 3,776 (18,810) -498.1% 3,890 4,181 (291) -7.0% – 10 (10) -100.0% 436 575 (139) -24.2% (7,318) 11,422 (18,740) -164.1% 174 149 25 16.8% $ 68,968 $ 92,505 $ (23,537) -25.4% MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT In FY 2024, the IRS incurred obligations of $18,580 million, which is an increase of $2,054 million, or 12.4%, from the previous fiscal year. Higher obligations are due to expenditures from the IRA supplemental appropriations for information technology projects and to cover additional payroll costs associated with expanding the size of the IRS workforce. Of the $1,434 million in additional personnel-related obligations, $840 million was funded through the IRA accounts. The following chart displays the FY 2024 obligations incurred by category. Miscellaneous includes travel and transportation, grants, printing, and supplies and materials. 7.6% 21.9% 5.7% 64.9% FY 2024 $18,580 Obligations ($ in Millions) Personnel Salaries & Benefits Contractual Services Rent, Communications, Utilities, and Miscellaneous Property and Equipment Major Budget Account Descriptions Taxpayer Services funds the necessary expenses of the IRS to provide taxpayer services, including pre-filing assistance and education, filing and account services, taxpayer advocacy services, and Low-Income Taxpayer Clinic and Volunteer Income Tax Assistance grants for tax return preparation assistance. Enforcement funds the necessary expenses for tax enforcement activities of the IRS to determine and collect owed taxes, provide legal and litigation support, conduct criminal investigations, and enforce criminal statutes related to violations of internal revenue laws and other financial crimes. Operations Support funds the necessary expenses of the IRS to support taxpayer services and enforcement programs, including rent payments; facilities services; printing; postage; physical security; headquarters and other administration activities spanning the entire bureau; research and statistics of income; telecommunications; information technology development; enhancement; operations; maintenance; and security. Business Systems Modernization funds the necessary expenses of the IRS's business systems modernization program to include resources for planning and capital asset acquisition of infor­ mation technology systems. In FY 2023 and FY 2024, Congress did not appropriate funds to the discretionary Business Systems Modernization account, however, funding from the IRA remains available through FY 2031. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 37 Analysis of the statements of Custodial Activity The Statements of Custodial Activity present custodial revenues (federal tax collections), and dispositions of custodial revenues for the current and prior fiscal years. As custodial activity is performed on behalf of another entity, the IRS collects federal tax revenues on behalf of the U.S. government. Federal tax revenues are reported in six major tax categories: • Individual Income, which includes Federal Insurance Contributions Act and Self-Employment Contributions Act • Corporate Income • Excise • Estate and Gift • Railroad Retirement • Federal Unemployment FY 2024 revenue receipts collected by the IRS totaled $5,100,490 million, a $406,155 million increase from $4,694,335 million in FY 2023. Statement of Custodial Activity 2024 2023 Individual Income $ 4,409,528 $ 4,112,546 Corporate Income 565,086 456,941 ($ in Millions) $ Change % Change 296,982 7.2% 108,145 23.7% CUSTODIAL REVENUES $ Excise 77,948 74,249 3,699 5.0% Other 47,928 50,599 (2,671) -5.3% $ 5,100,490 $ 4,694,335 406,155 8.7% Total Custodial Revenues $ The Statements of Custodial Activity also present refunds and outlays disbursed by the IRS on behalf of the federal government. Total Refunds of Federal Taxes and Outlays include such items as refunds of tax overpayments, interest payments, and disbursements for refundable tax credits. For additional information on refundable tax credits and outlays, refer to Other Information – Section E: Refundable Tax Credits and Other Outlays and Social Security and Medicare Taxes. Total Refunds of Federal Taxes and Outlays decreased 16.1%, to $552,661 million from $659,052 million for the periods ending September 30, 2024 and 2023, respectively. 38 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT Unpaid Assessments Under federal accounting standards, federal taxes receivable are unpaid tax assessments in which the taxpayer or court has agreed to the amount. Those unpaid assessments not agreed to by taxpayers or the courts are categorized as compliance assessments; those that have no future collection potential are categorized as write-offs. Compliance assessments and write-offs are not included on the Balance Sheets as Federal Taxes Receivable, Net. 2024 ($ in Millions) 2023 UNPAID ASSESSMENTS Federal Taxes Receivable $ 389,856 $ 404,000 Compliance Assessments (Amounts not agreed to by taxpayer or courts) 90,131 94,000 Write-Offs (No future collection potential) 86,033 76,000 Total Unpaid Assessments $ 566,020 $ 574,000 The decrease in total unpaid assessments is $7,980 million when compared to September 30, 2023. This change is primarily due to a decrease in Gross Federal Taxes Receivable associated with Internal Revenue Code Section 965(h) payments partially offset by an increase in Write-Offs (No future collection potential). For additional information, refer to the Required Supplementary Information section, Federal Taxes Receivable, Net. The total unpaid assessment balance consists of delinquent and nondelinquent balances. These balances are owed by taxpayers who file returns without sufficient payment and/or assessed amounts through the IRS’s enforcement programs (refer to Note 1.G. Federal Taxes Receivable, Net and Note 4. Federal Taxes Receivable, Net). Delinquent balances are past due while nonde­ linquent balances are Internal Revenue Code 965(h) amounts, for repatriated foreign earnings, due at a future point in time. Unpaid Assessments Other consists of uncollected branded prescription drugs fees and delinquent miscellaneous accounts not separately tabulated for financial reporting. 2024 ($ in Millions) 2023 FEDERAL TAXES RECEIVABLE, GROSS Nondeliquent Internal Revenue Code Section 965(h) Unpaid Assessments $ 76,868 Delinquent Unpaid Assessments Delinquent Restitution Based Unpaid Assessments Unpaid Assessments Other Federal Taxes Receivable, Gross MAnAgeMent's DIsCUssIon AnD AnAlysIs $ | 123,000 276,000 3,528 3,000 137 2,000 389,856 IRS FY 2024 AGENCY FINANCIAL REPORT $ 309,323 $ 404,000 39 Collectability Modeling and economic Conditions Delinquent unpaid assessments collectability reflects existing economic conditions of the taxpayers’ ability to pay. Indicators of financial health were manually reviewed for publicly traded businesses with large dollar Internal Revenue Code Section 965(h) amounts due. The analysis determined that large dollar Internal Revenue Code Section 965(h) taxpayers are primarily in a favorable long-term economic position to make their future payments. Federal Taxes Receivable, Net, excludes the estimated uncollectible amounts of $250,636 million and $222,000 million as of September 30, 2024 and 2023, respectively. Examples of uncollectible taxes include taxpayers who agree they owe the tax but are unlikely to pay and businesses with extreme financial hardships. Overall collectibility combines separate collectibility calculations for Internal Revenue Code Section 965(h) amounts and components of delinquent taxes receivable. estimated Collectability: Federal taxes receivable gross and net As of September 30, 2024 ($ in Millions) Collectability Nondelinquent Unpaid Assessments 94.4% Delinquent Unpaid Assessments 21.3% Gross $ 76,868 Net $ 312,988 66,619 Federal Taxes Receivable, Gross and Net $ ($ in Millions) As of September 30, 2023 Collectability Nondelinquent Unpaid Assessments 94.3% Delinquent Unpaid Assessments 23.1% Federal Taxes Receivable, Gross and Net 40 MAnAgeMent's DIsCUssIon AnD AnAlysIs $ Gross $ 125,000 404,000 139,220 Net $ 279,000 $ | 389,856 72,601 118,000 64,000 $ 182,000 IRS FY 2024 AGENCY FINANCIAL REPORT ANALYSIS OF SYSTEMS, CONTROLS, AND LEGAL COMPLIANCE Federal Managers' Financial Integrity Act of 1982 Background The Federal Managers' Financial Integrity Act of 1982 requires executive branch agencies to establish and maintain internal control and financial systems to provide reasonable assurance that: • Obligations and costs comply with applicable laws. • Funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or misappropriation. • Revenues and expenditures applicable to agency operations are properly recorded and accounted for to permit the preparation of accounts and reliable financial and statistical reports, and to maintain accountability over the assets. The Office of Management and Budget Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control provides implementing guidance for the Federal Managers' Financial Integrity Act of 1982, and defines management’s responsibility for establishing and assessing internal controls. The Circular also requires federal agencies to adhere to the Government Accountability Office’s Standards for Internal Control in the Federal Government, and to evaluate and report on the effectiveness of the organization’s internal controls based on the 17 GAO Green Book principles. The purpose of this guidance is to improve accountability and effec­ tiveness of programs and operations through implementation of enterprise risk management practices and by establishing, maintaining, and assessing internal control effectiveness. The Management Controls Executive Steering Committee is the IRS's internal control oversight body and exercises its governance authority over significant annual internal control processes. The Management Controls Executive Steering Committee briefs the Chief Operating Officer regarding any significant deficiencies. Executives from different divisions provide periodic updates on the status of any deficiencies and any current or pending audits regarding these. Analysis of Controls The Commissioner’s Assurance Statement is supported by a comprehensive risk-based internal control evaluation plan that adheres to Treasury guidance. This plan includes a methodology that identifies and documents key controls and provides for the assessment and testing of those controls to provide reasonable assurance that the controls are designed, implemented, and operating effectively. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 41 As part of the evaluation process the business units do the following: • Submit an Internal Control Managerial Assessment certified by their head of office. • Submit the GAO Evaluation Tool: consisting of an evaluation of the 17 Green Book Principles (biennial). • Conduct A-123 internal control testing of key financial and non-financial transactions. • Update the Quality Assurance Review Listing. • Conduct quality assurance reviews (managerial, operational, quality, security, and program evaluation). • Conduct Internal Control Review program assessments of IRS activities. Internal Control over Financial and non-Financial reporting In accordance with Office of Management and Budget Circular A-123, Appendix A, Management of Reporting, and Data Integrity Risk, the IRS also assessed internal controls over financial reporting. The IRS applied Treasury’s Appendix A guide to assess the effectiveness of its internal controls by testing the design, implementation, and operating effectiveness of key internal controls for material transactions to support reliable financial reporting. Based on the results of this assessment the IRS can provide reasonable assurance regarding the effectiveness of its internal control over financial reporting as of September 30, 2024. Furthermore, the IRS completed a pilot project to test internal controls over non-financial reporting to ensure the overall data quality and reliability of the information used to make decisions. The pilot project review covers internal controls and processes that support overall data quality and reliability. Reporting requirements include the following: • Reports IRS Executives need to support critical decision-making and evaluation of perfor­ mance. • Reports considered high-level and might garner significant attention from media and/or oversight groups. • Reports driven by statutory requirements or the need for integrity, accountability, or trans­ parent government data. • Reports responsive to agency plans at strategic, operational, or other various levels. • Reports used and relied upon by other government agencies that might reduce the public's trust and confidence in the IRS if they were to include inaccuracies. 42 MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT Federal Financial Management Improvement Act of 1996 The Federal Financial Management Improvement Act of 1996 requires federal agencies to implement and maintain financial management systems that comply substantially with federal financial management systems requirements, applicable federal accounting standards, and the U.S. Standard General Ledger at the transaction level. The Act’s Section 803(c)(1) requires an annual determination of substantial compliance with Section 803(a) of the Act based on review of relevant factors. To support this determination, the IRS uses the implementation guidance established by the Office of Management and Budget Circular A-123, Appendix D, Management of Financial Management Systems – Risk and Compliance, to determine whether our financial management systems comply substantially with federal financial management system requirements, applicable federal accounting standards and the U.S. Standard General Ledger at the transaction level. The assessment process includes the use of the Federal Financial Management Improvement Act Compliance Determination Framework in Office of Management and Budget Circular A-123, Appendix D, which is a risk and evidence-based assessment model that leverages existing audits, evaluations, and reviews that auditors and agency management already perform. In applying the Federal Financial Management Improvement Act Compliance Determination Framework, the IRS assesses available information from audit reports and other relevant and appropriate sources, such as the IRS Federal Information Security Modernization Act of 2014 compliance activities, to determine whether the financial management systems comply substan­ tially with the Federal Financial Management Improvement Act of 1996. The IRS also assesses improvements and ongoing efforts to strengthen financial management systems and the impact of instances of noncompliance on overall financial management system performance. Based on the results of the overall assessment, the IRS concluded that its financial management systems did not comply with federal financial management system requirements as of September 30, 2024, due to a significant deficiency. The IRS has a significant deficiency in internal control over financial reporting related to unpaid assessments. Specifically, this deficiency relates to limitations in the ability of IRS’s financial management systems to classify unpaid assessments and report taxes receivable in accordance with federal accounting standards. The IRS worked diligently during FY 2024 to enhance its infor­ mation technology security posture and resolved the long-standing Information System Controls significant deficiency condition. The IRS continues to implement a strategy to downgrade the unpaid assessments significant deficiency. MAnAgeMent's DIsCUssIon AnD AnAlysIs | IRS FY 2024 AGENCY FINANCIAL REPORT 43 Financial Management systems The IRS developed its financial management systems to generate timely and accurate data and to comply with applicable laws and regulations, while protecting data and systems through the design, implementation, and monitoring of strong internal controls. The IRS objectives are to continuously improve financial management systems by implementing enhancements that expand and streamline financial transaction processing, analysis, and reporting, while operating in a robust security environment. The IRS’s financial management systems provide timely, accurate, and complete financial infor­ mation to generate the IRS’s financial statements and provide IRS business units data to execute their missions. The IRS's financial management systems comprise two major components. The Redesigned Revenue Accounting Control System is a custom-built software database used to account for and summarize all IRS revenue tax transactions and activities. The IRS uses the Redesigned Revenue Accounting Control System to record, control, account for, reconcile, and balance [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Af5c9370904277107. Public record. Not legal advice.