The IRS lacks company-wide plans to modernize its legacy technology, according to a report released by the regulator last week.

The tax authority has been able to implement some of the years-old recommendations of the Inspector General of Tax Administration since TIGTA first raised them in 2020 by making improvements in the tracking of its legacy technology.

However, TIGTA is not satisfied with the IRS’s plans to shut down or upgrade old technology, writing: “There is no enterprise-wide program to identify, prioritize and execute the upgrade, replacement or decommissioning of legacy systems.”

The report comes as the IRS spends the tens of billions it received from Congress as part of the Inflation Reduction Act of 2022. As TIGTA has previously reported, the IRS’s technology and data are fundamental to the success of many of the agency’s goals to use the funds for a transformation that the agency’s commissioner has called a “generational imperative.”

“This vision that taxpayers across the country can just go online and get everything done – there’s a lot of data that needs to be cleaned up; the technology that needs to be cleaned up; the processes that need to be redesigned. Behind the scenes at the IRS, the technology is outdated,” IRS Commissioner Danny Werfel said previously. “There’s just a lot of work that needs to be done.”

The tax agency’s spending on IT operations and maintenance increased 35% to $2.7 billion between fiscal years 2019 and 2023 – a figure that “is likely to continue to rise until the majority of legacy systems are decommissioned,” according to TIGTA.

By the end of last year, the IRS had designated 107 of 334 legacy systems as “candidates for retirement,” and of those, only two had concrete retirement plans, according to the regulator’s most recent report.

Since the 2020 TIGTA report — which recommended the tax agency create an enterprise-wide program to upgrade or retire its legacy technology — the IRS established a Technology Retirement Office in 2021 but then closed it in early 2023. The inspector general wants the agency to either reestablish the office or create a similar program.

In comments included in the report, IRS CIO Rajiv Uppal pointed to the agency’s Transformation and Strategy Office, which was created after the IRA, where there is a senior executive who oversees every goal the IRS has under its strategic operating plan, which was created after the IRA was passed. Uppal also pointed to an advisory committee that oversees IRA projects.

The tax agency also has a new strategy to modernize legacy systems, Uppal writes, using a “platform and product model” – an operating model that is user-experience-driven and where centralized platforms provide common functionality, as McKinsey describes it – rather than aiming to rewrite and decommission all of the IRS’s legacy systems.

This is not the first time regulators have accused the IRS of a lack of planning.

In March, the Government Accountability Office also found that the IRS lacks a detailed technology agenda, which could hinder the agency’s efforts to achieve its major transformation goals.

The IRS Strategic Operations Plan Implementation Roadmap, released in May, did not include the IRA’s technical objectives. This report indicates that GAO has an open recommendation to the IRS to include the technical objective in its roadmap.

Uppal wrote in the latest TIGTA report that an upcoming updated roadmap for calendar years 2025 and 2026 will include the technology target.

“The IRA’s transformation plan will reflect the implementation of common enterprise platforms for functions such as case management, case triage, and service management,” the IRS CIO wrote. “As priorities are determined by the Transformation Steering Committee, each platform team will progressively deliver new capabilities that will replace relevant legacy features and functionality over time.”

In some cases where “common platforms are not applicable,” the IRS will “continue to develop new opportunities that will allow for the phasing out of legacy burdens.” According to the agency, this includes the processing of individual and business tax returns, for which there will be corresponding strategies and plans in IRA roadmaps.

In another report in February, GAO found that many of the IRS’s modernization initiatives lacked timelines for retiring legacy systems.

TIGTA’s recent report also identified some errors in the way the IRS labeled its technology as obsolete and included a related recommendation to ensure that the agency correctly identifies all of its obsolete technologies in its authoritative source for technology and business environments. The IRS fully agreed with this recommendation.