What the hell?! The IRS has a problem, and that means American taxpayers have a problem, too. The agency relies heavily on systems that are over 60 years old and are still used to process tax returns and manage citizens’ personal information. Although the IRS has spent hundreds of millions of dollars on upgrades over the years, an audit has found that the IRS still lacks a clear strategy to modernize these legacy systems, exposing taxpayers to delays and security risks.

As the agency responsible for managing the nation’s tax infrastructure, the IRS is stuck in a technological time warp, struggling to keep pace with modern demands for efficiency and security using its aging IT infrastructure.

This struggle was further exacerbated by the closure of the IRS’s Technology Retirement Office. The office was responsible for retiring outdated IT systems, leaving the agency without a clear strategy for modernizing its technology infrastructure.

The decision to close the office was criticized in a new report from the Treasury Inspector General for Tax Administration (TIGTA), which warned that without a dedicated program, the IRS will continue to struggle with rising IT costs and increased security risks. Still, the IRS has decided not to rebuild the office. Instead, it plans to integrate those functions into its Transformation and Strategy Office by September 2025, raising questions about the agency’s commitment to addressing its technology challenges.

The IRS’s track record in modernizing its technology is inconsistent at best. Despite years of pushing to modernize its systems, the agency has successfully implemented only two of four recommended strategies.

According to TIGTA, the two remaining strategies were poorly implemented and lacked the necessary strategic oversight for managing legacy systems—a responsibility that actually belonged to the now-defunct Technology Retirement Office. While the IRS identified 107 of 334 legacy systems for retirement, it developed concrete retirement plans for only two—a significant shortcoming that drew TIGTA’s ire.

IRS legacy systems are defined as systems that use outdated technology that is still critical to operations. They are typically 25 years old or older. However, TIGTA’s analysis found that this definition was not applied accurately, resulting in certain systems being incorrectly classified as legacy systems.

In fact, TIGTA identified more legacy systems than the IRS was aware of, highlighting the embarrassing fact that the agency does not fully understand its own technology.

The consequences of poor management of legacy systems are evident in the IRS’s rising IT infrastructure costs, which have increased 35% from $2 billion in 2019 to $2.7 billion in 2023. This trend is expected to continue unless more legacy systems are retired.

At the same time, operations are dangerously close to collapse due to outdated technology: 33% of applications, 23% of software and 8% of hardware are considered obsolete but essential for daily operations. Some systems date back to the 1960s and are based on programming languages ​​such as COBOL and assembly language, which were developed in the 1950s.

In addition, the IRS suffers from a critical shortage of staff who can maintain these outdated systems. The agency’s use of outdated technology is preventing it from recruiting new talent, exacerbating its staffing problems, according to a separate report from the Government Accountability Office.

For taxpayers, this is a grim and alarming picture of an agency that has such a great influence on the financial situation of Americans.

Photo credit: Jonathan