IRS begins ‘absolutely critical’ upgrade of legacy HR systems

The IRS is embarking on a multi-year project to modernize its existing human resources management information systems — a move top officials say will improve workforce planning and employee retention.

The agency is working with the Treasury Department’s Chief Information Officer to modernize its HR systems. Among the improvements, the IRS and Treasury plan to automate some manual HR processes and better leverage Treasury’s shared services offerings.

IRS Commissioner Danny Werfel told reporters that the multi-year modernization effort will improve productivity and “help us maintain the strong, highly skilled workforce we need to provide better services to taxpayers.”

“It’s absolutely critical infrastructure. We can’t maintain an effective HR strategy and work environment without a modern HR platform,” Werfel said in the interview. “These are the kinds of things that happen under the hood in organizations like the IRS that are absolutely critical. And when you don’t have the right levels of funding, those things get left behind and you end up wasting a lot of time on manual processing and not having the right data.”

The IRS anticipates that these HR technology improvements will have a beneficial impact on the recruiting process, workforce planning, and employee-union relations.

The IRS manages hundreds of legacy human resources IT systems covering thousands of workflows, but it put off modernizing those systems as the agency faced budget cuts.

The agency is funding these improvements with tens of billions of dollars in Inflation Relief Act funding to rebuild its workforce and modernize some of the oldest information technology systems still operating in the federal government.

The IRS also doubled its network capacity at many of its worksites “to ensure employees have rapid access to the systems they need to perform their duties.”

The agency expects to complete the network expansion across all of its locations before next year’s tax filing season.

IRS sees progress in transition to paperless service

The IRS is also taking big steps to go paperless. The Document Upload Tool gives taxpayers an online option to submit required documents to the IRS when they receive a notice from the IRS in the mail.

Taxpayers no longer need to send documents via snail mail and can expect a faster response from the agency. The IRS launched the Document Upload Tool in 2021 and recently received its millionth filing using the tool.

The IRS estimates that more than 94% of individual taxpayers no longer need to send correspondence to the agency, and 125 million correspondence can be submitted digitally each year.

“We are working to enable a future where all taxpayers can fulfill their obligations digitally if they prefer,” Werfel said. “Once their journey is complete, taxpayers will be able to securely file all documents and respond to all notifications online, and securely access and download their data and account history.”

The IRS, using Inflation Reduction Act funds, is replacing outdated mail scanning and sorting equipment. The agency replaced scanning equipment that was more than five years old and installed mail sorting machines at six of its largest facilities.

As of June 30, the IRS has scanned more than 2 million paper documents since the digitization effort began.

“These updates allow for a streamlined process for opening, sorting and scanning mail,” Werfel said, adding that the IRS scans “virtually all” paper tax returns and information once the agency receives them in the mail.

Digital and mobile-friendly services

The IRS is also making more of its most popular forms available online and in mobile-friendly formats.

The agency now has a total of 30 forms available for mobile use, allowing taxpayers to complete common non-tax forms on mobile phones and tablets and submit them digitally. Taxpayers have filed more than 72,000 digital forms since September 2023.

“By making digital forms available, making payments easier and continuing to reduce paper processes, we are making long-awaited improvements to the IRS,” Werfel said. “We are reversing situations that have long hindered the IRS and frustrated taxpayers and the tax community.”

The IRS is also introducing new features that will allow taxpayers to resolve their tax issues online, through individual online accounts.

Taxpayers can now check their tax refund status in their online accounts and request an updated Identity Protection PIN using their smartphone or tablet.

Taxpayers subject to tax audit can also view information about the audit status on their online account without having to call the office.

“Everyone has an online account. The question is, have they activated it? So everyone has that option,” Werfel said.

The agency expects that as more taxpayers resolve their tax issues online, this change will end online fraud involving IRS impersonators.

“The online account will increasingly become a reliable source of information for taxpayers to help them determine whether the IRS is actually trying to contact them or not,” Werfel said.

Short wait time for identity theft “top priority”

The IRS also sees other areas for improvement.

The Taxpayer Ombudsman recently wrote that identity theft victims wait almost two years for their tax refunds.

Werfel said reducing call wait times for identity theft cases is an “absolutely top priority” and that the agency is working to reduce call wait times for identity theft victims.

The IRS has focused on answering more calls on its main phone line, which accounts for 85% of total call volume.

“It’s a smart decision to make sure that if 85% of the traffic is going through that phone line, let’s get that right,” Werfel said. “But we have other phone lines and other areas that we’re still working to invest in. And one of our biggest priorities going forward is supporting victims of identity theft.”

Werfel said the IRS is working to improve live assistance for the upcoming tax filing season by improving efficiency in call centers. He added that the agency will continue to wean itself off paper processes and increase staffing in taxpayer assistance centers to provide in-person assistance to the public.

“For this progress to continue, we must maintain reliable, consistent annual allocations to our agency, as well as keep Inflation Reduction Act funding intact,” Werfel said. “With adequate resources, we will be able to continue transforming the agency in 2024, the 2025 tax filing season, and in years to come.”