Internal Revenue Service

FY 2017

President’s Budget

February 9, 2016
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Table of Contents

Section 1 - Purpose................................................................................................ 4

1A – Mission Statement .........................................................................................................4

1.1– Appropriation Detail Table by Appropriation and Budget Activity.........................4

1B – Vision, Priorities, and Context .....................................................................................5

Section 2 – Budget Adjustments and Appropriations Language................... 18

2.1 – Budget Adjustments Table .........................................................................................19

2A – Budget Increases and Decreases Description............................................................20

FY 2016 Administrative Provision 113...........................................................................20

Maintaining Current Levels (MCLs) .................................................................................20

Efficiencies and Savings.......................................................................................................21

Program Increases................................................................................................................21

Theme 1: Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support ..........................................................................................22

Implement Legislative Mandates Component.................................................................23

Facilitate Voluntary Compliance through Taxpayer Service .........................................24

Development of Innovative Technology and Tools.........................................................24

Theme 2: Understand non-Compliant Taxpayer Behavior, and Develop Approaches to 

Deter and Change It..........................................................................................................27

Strengthen Core Enforcement Programs........................................................................28

Develop Innovative Technology......................................................................................30

Theme 6: Drive More Agility and Efficiency in IRS Operations ...................................33

Implement New Capabilities and Systems ......................................................................33

Provide Support for Existing Systems Component .........................................................34

Focus Area: Strengthen Cybersecurity and Eliminate Identity Theft............................35

Address the Increased Workload Associated with Identity Theft, Refund Fraud, and 

Improper Payments.........................................................................................................36

Strengthen Technology to Improve the Prevention of Refund Fraud and Improper 

Payments.........................................................................................................................38

Alcohol and Tobacco Tax and Trade Bureau Transfer..................................................40

2.2 – Operating Levels Table...............................................................................................41

2B – Appropriation Language and Explanation of Changes...........................................42

2C – Legislative Proposals...................................................................................................47

2D – Legislative Tax Proposals ...........................................................................................48

2E – Strategic Objective Annual Review (SOAR).............................................................50

2F – IRS Use of Evidence and Evaluation..........................................................................52

Section 3 – Budget and Performance Plan ....................................................... 54

Taxpayer Services.................................................................................................................54

2.1 – Budget Adjustments Table .........................................................................................55

2.2 – Operating Levels Table ..............................................................................................56

2.3 – Appropriation Detail Table ........................................................................................57

3A – Pre-Filing Taxpayer Assistance and Education..........................................................58

3.1.1 – Budget and Performance Report and Plan ..............................................................61

3B – Filing and Account Services.......................................................................................61

3.1.2 – Budget and Performance Report and Plan ..............................................................65

Enforcement..........................................................................................................................66

2.1 – Budget Adjustments Table .........................................................................................67
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2.2 – Operating Levels Table ..............................................................................................68

2.3 – Appropriation Detail Table ........................................................................................69

3C – Investigations..............................................................................................................69

3.1.3 – Budget and Performance Report and Plan ..............................................................73

3D – Exam and Collections.................................................................................................73

3.1.4 – Budget and Performance Report and Plan ..............................................................79

3E – Regulatory...................................................................................................................79

3.1.5 – Budget and Performance Report and Plan ..............................................................81

Operations Support..............................................................................................................82

2.1 – Budget Adjustments Table .........................................................................................83

2.2 – Operating Levels Table ..............................................................................................84

2.3 – Appropriation Detail Table ........................................................................................85

3F – Infrastructure ...............................................................................................................85

3.1.6 – Budget and Performance Report and Plan ..............................................................88

3G – Shared Services and Support......................................................................................88

3.1.7 – Budget and Performance Report and Plan ..............................................................93

3H – Information Services ..................................................................................................93

3.1.8 – Budget and Performance Report and Plan ..............................................................96

Business Systems Modernization ........................................................................................97

2.1 – Budget Adjustments Table .........................................................................................97

2.2 – Operating Levels Table ..............................................................................................98

2.3 – Appropriation Detail Table ........................................................................................99

3I – Business Systems Modernization.................................................................................99

3.1.9 – Budget and Performance Report and Plan ............................................................103

Section 4 – Supplemental Information............................................................ 104

4.1 – Summary of Capital Investments ............................................................................104

4A – Capital Investment Strategy.....................................................................................104

4B – IRS Aging Legacy Information Technology (IT) Infrastructure (non-BSM) 

Proposed Long-term Multiyear Funding Strategy and Timetable................................107

4C – Summary of FY 2015 Savings Realized...................................................................110

4.2 - Return on Investment (ROI) for IRS Major Enforcement Programs..................112

4.3 – IRS Performance Measure Table ............................................................................113

4.4 – Alignment of the FY 2017 Initiatives to Goals and Themes..................................115

4.5 – Summary of IRS FY 2017 ACA Budget Request...................................................116

4.6 – Summary of IRS FY 2017 Budget Request by Theme...........................................116

4.7 – Summary of IRS FY 2017 Program Integrity Cap Adjustment...........................117
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Internal Revenue Service

Section 1 - Purpose

1A – Mission Statement

Provide America’s taxpayers top-quality service by helping them understand and meet their 

tax responsibilities and enforce the law with integrity and fairness to all.

1.1 – Appropriation Detail Table by Appropriation and Budget Activity

Dollars in thousands

Internal Revenue Service

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Taxpayer Services 27,476 $2,173,684 30,370 $2,333,376 31,056 $2,406,318 686 $72,942 2.26% 3.13%

Pre-Filing Taxpayer Assistance and 

Education 5,349 609,196 5,499 629,920 5,532 643,197 33 $13,277 0.60% 2.11%

Filing and Account Services 22,127 1,564,488 24,871 1,703,456 25,524 1,763,121 653 59,665 2.63% 3.50%

Enforcement 39,708 $4,767,563 38,840 $4,864,936 41,028 $5,216,263 2,188 $351,327 5.63% 7.22%

Investigations 3,399 601,665 3,425 604,620 3,849 714,208 424 109,588 12.38% 18.13%

Exam and Collections 35,258 4,018,292 34,402 4,108,566 36,163 4,347,684 1,761 239,118 5.12% 5.82%

Regulatory 1,051 147,606 1,013 151,750 1,016 154,371 3 2,621 0.30% 1.73%

Operations Support 10,614 $3,601,436 11,922 $3,746,688 12,250 $4,314,099 328 $567,411 2.75% 15.14%

Infrastructure 833,846 832,543 895,094 62,551 7.51%

Shared Services and Support 5,013 1,126,230 5,231 1,141,485 5,257 1,197,954 26 56,469 0.50% 4.95%

Information Services 5,601 1,641,360 6,691 1,772,660 6,993 2,221,051 302 448,391 4.51% 25.29%

Business Systems Modernization 309 $107,745 440 $290,000 469 $343,415 29 $53,415 6.59% 18.42%

Subtotal New Appropriated Resources 78,107 $10,650,428 81,572 $11,235,000 84,803 $12,280,095 3,231 $1,045,095 3.96% 9.30%

Other Resources:

Reimbursables 612 103,474 643 133,987 675 140,686 32 6,699 4.98% 5.00%

Offsetting Collections - Non Reimbursables 11 10,314 12 42,797 12 44,937 2,140 5.00%

User Fees 1,344 438,557 876 509,309 1,530 399,730 654 (109,579) 74.66% -21.52%

Recovery from Prior Years 1,908

Unobligated Balances from Prior Years 428 294,625 453,357 384,544 (68,813) -15.18%

Transfers In/Out 2

7 (5,000) (5,000)

Resources from Other Accounts 3

290 2 2

Subtotal Other Resources 2,685 $848,885 1,533 $1,139,450 2,219 $964,897 686 ($174,553) 44.75% -15.32%

Total Budgetary Resources 80,792 $11,499,313 83,105 $12,374,450 87,022 $13,244,992 3,917 $870,542 4.71% 7.03%

% Change

FY 2016 to FY 2017 

Request

Change

FY 2016 to FY 2017 

Request

FY 2016

Enacted 1

FY 2015

Actual

2

Resources from Transfers In/Out include a FY 2015 transfers between IRS and the Office of National Drug Control Policy (ONDCP) High Intensity Drug 

Trafficking Area (HIDTA) Program (obligations $7 thousand), and a 2017 transfer out to the Alcohol and Tobacco Tax and Trade Bureau (TTB) ($5 million).

FY 2017

Request

3

Resources from Other Accounts include Other Direct FTE funded by the Department of Health and Human Services (287 FTE in FY 2015) and the Federal 

Highway Administration (3 FTE for FY 2015, and 2 FTE projected for FY 2016 and FY 2017).

1

FY 2016 Enacted includes $290 million in Section 113 Administrative Provision funding in the following amounts: $176.8 million in Taxpayer Services, $4.9 

million in Enforcement, and $108.2 million in Operations Support.
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1B – Vision, Priorities, and Context

Improving Tax Administration 

The IRS administers the nation’s tax laws and collects the revenue to fund the government. In

fiscal year (FY) 2015, the IRS processed 244 million tax returns and other forms, and 

collected $3.3 trillion in gross taxes (gross receipts before tax refunds of $403 billion), 

equating to 93 percent of total federal government receipts. The Budget will allow the IRS to 

make progress in rebuilding the robust capabilities necessary to administer the tax system, and 

make new investments to keep pace with technology, taxpayer expectations, criminal activity 

related to stolen identity/refund fraud, and preventing cyber crime. The IRS is focused on 

providing a more integrated and secure delivery of taxpayer services through the same 

efficient, customer-focused channels, that taxpayers have come to expect from other financial 

institutions. The IRS is also working toward a more streamlined compliance program that 

identifies issues sooner and resolves them faster. These plans are part of the IRS Future State 

Vision. 

Customer feedback indicates the desire for more online tools to facilitate the delivery of 

taxpayer services. In the IRS Oversight Board’s 2015 Taxpayer Attitude Survey, 84 percent 

of taxpayers stated that they were likely to use the IRS website, and 85 percent of taxpayers 

who were under the age of 35 said IRS applications on mobile devices such as smartphones 

are valuable. To address this customer feedback, “increasing secure self-service options for 

taxpayers” was established as an Agency Priority Goal and investments in the FY 2017 

request to enhance IRS’s online services will directly address this goal.

The IRS plans to more effectively and efficiently deliver services to more people at a lower 

cost, increase compliance, prepare for the future, and prevent identity theft. The plan to 

improve tax administration requires the IRS to invest in the following areas:

• Integrated and Secure Taxpayer Experience 

o Faster, simpler problem solving tools to identify issues such as math errors, 

decreasing taxpayer burden, and reducing the risk of penalties and interest; 

o Improved capabilities for both taxpayers and IRS employees to address issues 

through enhanced digital services; and 

o Communication channels that reduce wait times and empower taxpayers to 

take more control of their tax account. This includes technology enabling

personal service without being physically present in the same location. 

• Streamlined Compliance Program 

o Leveraging better data analytics to improve voluntary compliance; 

o Mechanisms and case management capabilities that enable activities to 

minimize taxpayer burden; 

o A shortened enforcement cycle so taxpayers quickly know their issues are

resolved with as few contacts as necessary; and 
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o Improved outreach and notifications prior to and during filing coupled with 

applications allowing taxpayers to validate and/or self-correct their accounts.

• Stronger Foundational Capabilities – Information technology building blocks to

deliver services and enforcement actions efficiently and effectively; deliberate

workforce planning to attract and retain a skilled workforce; and an enhanced learning 

evaluation technology and dynamic enterprise knowledge management system.

• Strong Information and System Security – Secure technologies to provide 

maximum protection of taxpayer information, combat identity theft, provide timely 

victim assistance, and allow for appropriate enforcement.

New Investment Review Process

IRS senior leadership developed and implemented a new investment process to ensure 

proposed investments align with the IRS Strategic Plan. The IRS leadership prioritized its 

new investments based on their alignment with the IRS’s strategic themes and this submission 

includes the IRS’s highest priority investments. This includes an array of lower cost, online 

services; early error detection; online self-correction tools; enhanced cybersecurity; and 

compressed, more virtualized enforcement with minimal taxpayer burden.
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Strategic Goals IRS Strategic Objectives IRS Strategic Theme

Strategic Goal I: 

Deliver high quality 

and timely service to 

reduce taxpayer 

burden and encourage 

voluntary compliance.

- Design tailored service approaches with 

a focus on digital customer service to 

meet taxpayer needs, preferences, and 

compliance behaviors in order to 

facilitate voluntary compliance.

- Provide timely assistance through a 

seamless, multichannel service 

environment to encourage taxpayers to 

meet their tax obligations and accurately 

resolve their issues.

- Deliver clear and focused outreach, 

communications and education programs 

to assist taxpayer understanding of tax 

responsibilities and awareness of 

emerging tax laws.

Theme 1 - Facilitate 

voluntary compliance by 

empowering taxpayers 

with secure innovative 

tools and support

Theme 3- Leverage and 

collaborate with external 

stakeholders

Strategic Goal II: 

Effectively enforce the 

law to ensure 

compliance with tax 

responsibilities and 

combat fraud.

- Enforce domestic and international 

compliance by strengthening expertise, 

adopting innovative approaches, and 

streamlining procedures.

- Identify trends, detect high-risk areas of 

non-compliance, and prioritize 

enforcement approaches by applying 

research and advanced analytics.

Theme 2 -Understand noncompliant taxpayer 

behavior, and develop 

approaches to deter and 

change it

Strategic Foundation 

for Organizational 

Excellence: 

Invest in the IRS

workforce and the 

foundational 

capabilities necessary 

to achieve its mission 

and deliver high 

performance for 

taxpayers and 

stakeholders.

- Invest in building a highly talented, 

diverse workforce & cultivating an 

inclusive & collaborative environment. 

- Realize operational efficiencies and 

effectively manage costs by improving 

enterprise-wide resource allocation and 

streamlining processes.

- Implement enterprise-wide analytics 

and research capabilities to make timely, 

informed decisions.

Theme 4 - Cultivate a wellequipped, diverse, skilled 

and flexible workforce

Theme 5 - Select highest 

value work using data 

analytics and a robust 

feedback loop

Theme 6 – Drive more 

agility, efficiency, and 

effectiveness in IRS 

Operations 

Focus Area – Strengthen 

cybersecurity and 

eliminate identity theft

Themes in bold are supported by investments in the FY 2017 Budget Request.
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Treasury Strategic and Agency Priority Goals

The IRS FY 2017 Budget supports the following Department of the Treasury Strategic and 

Agency Priority Goals:

• Treasury Strategic Goal: Fairly and effectively reform and modernize federal 

financial management, accounting, and tax systems.

• Treasury Strategic Objective: Pursue tax reform, implement the Patient Protection 

and Affordable Care Act (ACA, Public Law 111-148) and Foreign Account Tax 

Compliance Act (FATCA, Public Law 111-147), and improve the execution of the tax

code.

• Treasury Strategic Goal: Create a 21st–century approach to government by 

improving efficiency, effectiveness, and customer interaction.

• Treasury Strategic Objective: Create a culture of service through relentless pursuit of 

customer value.

Agency Priority Goal: Increasing Secure Self-Service Options for Taxpayers:

The IRS will introduce self-service and electronic-service taxpayer options to enable 

taxpayers to securely authenticate, view account status, view and print tax records online, pay 

outstanding debts, enter into installment agreements, get tax law information, and easily 

access all parts of IRS.gov. By September 2017, the percentage of service interactions 

processed electronically should reach 32%, and the percentage of electronic interactions 

completed by taxpayers should reach 47%. 

The tax administration system of the future will promote and improve voluntary compliance 

by delivering better service to more people at a lower cost. Taxpayers will have a variety of 

service options with an emphasis on online tools and support, and will be able to obtain 

service when and where they want it. The IRS will strive to accelerate enforcement processes 

through early issue detection, resolution, and minimal taxpayer burden, while simultaneously 

maximizing revenue by targeting the highest value work. To achieve this future state of tax 

administration the IRS has established six strategic themes and one focus area to guide its

investment strategy and resource allocation. These themes align with existing Strategic Goals 

and Objectives and provide a clearer articulation of the strategic outcomes the IRS seeks to 

achieve in the future. The FY 2017 Budget aligns new investments to subsets of these 

themes:

Theme 1: Facilitate voluntary compliance by empowering taxpayers with secure 

innovative tools and support - Investments that support this theme will drive the IRS 

towards better delivery of tax administration by developing a more taxpayer-centric service 

and compliance model with a variety of self-service options and early error detection and 

resolution tools to reduce taxpayer burden. Some of the cutting-edge technologies requested 

are:

• Secure e-authentication technologies to improve the identification of individual 

taxpayers as well as third parties and businesses; 
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• Event Driven Architecture (EDA) to transform the IRS IT software architecture to a 

more efficient and responsive means of processing tax returns, collecting tax revenue, 

and issuing tax refunds by treating each transaction as a single event as opposed to 

batch processing; 

• Enterprise Case Management (ECM) to establish a single, integrated case management 

system; and 

• Expanded functionality to critical systems projects such as the Customer Account Data 

Engine (CADE) 2 and Modernized E-file (MeF), including the electronic receipt and 

processing of Form 1040X, Amended U.S. Individual Income Tax Return.

Theme 2: Understand non-compliant taxpayer behavior and develop approaches to 

deter and change it - These investments will leverage data and behavioral analytics to target 

the most effective non-compliance work in collection and enforcement while delivering a 

compressed, efficient enforcement cycle with early, upfront error detection and resolution. 

These investments will fund the use of network analysis to investigate abusive tax schemes,

the enforcement and deterrence of non-compliance abroad through the implementation of the 

FATCA, and appropriate, balanced coverage by improving audit and collection coverage 

rates. 

With the next generation of analytics, the IRS will improve tax administration and the 

taxpayer experience by evaluating the effectiveness of data-driven approaches for identifying 

and resolving taxpayer issues accurately and early, thereby reducing taxpayer burden. The 

IRS will take data analytics into the tax-exempt sector by digitizing the Form 990 (Return of 

Organization Exempt from Income Tax), which will yield faster processing of returns and 

more data-driven decisions on enforcement treatments. 

Theme 3: Leverage and collaborate with external stakeholders - While the IRS is not 

requesting new investments in this theme, the IRS is continuing existing efforts to improve

partnerships with all its stakeholders. 

Theme 4: Cultivate a well-equipped, diverse, skilled workforce - Although no new 

investments are being requested for this theme, the IRS will continue to advance it using 

available resources. Deliberate workforce planning and knowledge management are 

cornerstones to the IRS’s ability to execute a new era of tax administration. Knowledge 

management and a diverse, skilled workforce will be achieved through active corporate 

workforce planning that identifies and closes skill gaps across the organization. 

Theme 5: Select highest value work using data analytics and a robust feedback loop -

The IRS is not requesting new investments for this theme. With the next generation of 

analytics, the IRS will continuously improve tax administration and the taxpayer experience 

by evaluating the effectiveness of data-driven approaches for identifying and resolving 

taxpayer issues accurately and early. This theme focuses on harnessing data to inform work 

streams and enhance case selection capabilities and also includes an internal and external 

feedback loop to avert or address compliance issues quickly. 
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Theme 6: Drive more agility, efficiency, and effectiveness in IRS Operations - Ensures

compliance with Federal Records Act of 1950 as amended (44 U.S.C. Chapter 31), which 

requires all systems to implement an electronic retention policy and the Managing 

Government Records Directive (M-12-18) which instructs agencies to manage electronic 

records more efficiently and effectively. Investments in this area enable faster responses to 

customers. Investments include: 

• A robust electronic records management program; 

• New software for processing information returns from third parties; 

• Improvements to the IRS revenue financial accounting systems; and 

• Funds to keep IT infrastructure current for existing and newly deployed systems. 

These investments will increase organizational performance by reducing and eliminating 

manual processes and improving the reliability of enterprise infrastructure to support new and 

changing requirements from legislation, presidential orders, Government Accountability 

Office (GAO) recommendations, and demands from taxpayers; and helping to secure the 

IRS’s people and facilities.

Focus Area: Strengthen cybersecurity and eliminate identity theft –Provides investments 

that combat Stolen Identity Refund Fraud and includes detection and prevention, assistance to 

victims, and law enforcement. In addition, the IRS plans to institute multiple layers of 

electronic authentication, including multi-factor security for access to taxpayer-facing systems 

and authentication at the time of filing. The IRS will enhance the security of its networks via 

the use of a cyber-threat forensics, implementation of a comprehensive patch management 

system, and the adoption of government-wide information security continuous monitoring 

tools as parts of a layered defense. 
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Leveraging Funds to Advance Progress in Strategic Areas

The Consolidated Appropriations Act of 2016 provided much needed funding to improve 

performance in customer (telephone) Level of Service, to enhance cybersecurity, and to 

prevent identity theft and refund fraud. The IRS plans to build upon these funding levels to

move forward with implementing a Future State Vision that delivers a better overall 

experience for the taxpayer. 

Despite this increase for these specific areas, other areas of the IRS remain under-resourced 

compared to FY 2010 levels and continue to experience performance issues. For example, 

reductions in the enforcement budget resulted in a reduced examination program. The 

number of revenue agents fell seven percent, from 11,422 in FY 2014 to 10,657 in FY 2015, 

the lowest level in more than a decade. The correspondence audit program declined by 

275 FTE in FY 2015, which limited the impact on voluntary compliance. The related loss in 

closures is approximately 109,129 cases and potentially $539 million in revenue. In addition, 

examinations of large corporate taxpayers (with assets of more than $10 million) declined to 

only 7,448 in FY 2015, also the fewest in over a decade.

Despite the three percent decline in its FY 2015 budget from the year before, the IRS made 

investment decisions that achieved positive results during the year in key strategic areas. 

Theme 1 - Facilitate voluntary compliance by empowering taxpayers with secure 

innovative tools and support - The IRS is building an environment of multiple digital 

service options. In FY 2015, the IRS launched or enhanced an array of services:

• IRS2Go Mobile, Version 5 which was launched at the start of the 2015 filing season, 

enables taxpayers to make electronic payments, find the nearest location offering free 

volunteer tax help, and uses responsive design to update the app for screen sizes of 

multiple devices. In FY 2015, IRS2GO was downloaded more than 2.3 million times 

and had over 3.8 million active users.

• Third Party Data Services Pilot enables the IRS to share refund status data with tax 

preparation firms, tax preparation software, and state and federal agencies that require 

individual taxpayer information. All information sharing was conducted with prior 

taxpayer consent.

• Online Payment Agreement (OPA) updates improved the individual taxpayer’s user 

experience for a number of functions including log-in and authentication, expansion of 

the number of taxpayers eligible to set up installment agreements, and added analytics 

to better understand taxpayer experience within the application. Since its launch, 

more than 200,000 OPA agreements were completed representing more than $650 

million in balances owed.

• IRS Direct Pay, Release 3 adds responsive design and enhancements for guest users 

(i.e., those taxpayers who do not create a username and password); email 

confirmations of payments, cancellations, or reversals, and a Spanish language 

version. Since the November 2013 launch, the IRS has collected $17 billion through 

this application, of which $14.9 billion was collected in FY 2015.
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• Directory of Federal Preparers with Credentials and Select Qualifications

provides a lookup tool to find return preparers by location. Since its launch in January 

2015, customers performed more than 200,000 searches.

• Payment Mix Comparison Tool enables preparers, on behalf of the business 

taxpayer community, to compare the portion of gross receipts from credit card receipts 

to the business plans of similar businesses from prior years. This tool is intended to 

encourage accurate reporting by payment recipients and help close the tax gap.

• Optimized Virtual Service Technology Delivery (VSD) allows taxpayers to have 

face-to-face interactions with an IRS assistor who is working in a remote location by 

using video monitors stationed at non-IRS owned taxpayer support sites. So far, IRS 

has deployed this technology at five sites. 

In addition, the IRS continues to implement the ACA. In FY 2015, the IRS successfully 

implemented two major provisions: the refundable premium tax credit and individual shared 

responsibility for both individual taxpayer returns and information returns from employers 

and insurers. 

Theme 2 - Understand non-compliant taxpayer behavior and develop approaches to 

deter and change it - The IRS collected $54.2 billion during FY 2015 through its 

enforcement programs. 

In addition, the IRS:

• Completed 4,486 criminal investigations and obtained 2,879 convictions;

• Identified 1,281 questionable refund schemes reflecting $1.2 billion in potentially 

fraudulent refunds claims and also imposed limits on the number of refunds that can 

be deposited in a single bank account. As a result, 205,019 refunds totaling 

$863 million were converted to paper. and

• Received 28,635 taxpayer applications from the Offshore Voluntary Compliance 

Disclosure Program, which permits taxpayers to voluntarily disclose that they failed to 

report income in offshore bank accounts.

In moving towards three aspects of Theme 2 - integrated case management, early anomaly 

detection, and a compressed enforcement cycle - the IRS will establish a program 

management office to roll out the Enterprise Case Management system, which will 

incorporate business rules and filters for better case selection for exam, collection, and issue 

identification. Additionally, the IRS has re-engineered the examination process for corporate 

48.9

57.6 55.2 50.2 53.3 57.1 54.2

0

20

40

60

FY09 FY10 FY11 FY12 FY13 FY14 FY15

IRS Enforcement Revenue ($ Billions)
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taxpayers. The IRS uses data-driven analysis to develop early warnings of emerging areas of 

tax non-compliance. 

A centerpiece of the IRS’s enforcement strategy is the continued implementation of the

FATCA. The IRS added additional capabilities to the FATCA registration website and 

released second-generation software for registration. It released the International Data 

Exchange Service – which consists of testing with foreign partners to enable them to conduct 

reporting. The IRS also initiated and deployed the International Compliance Management 

Model (ICMM), a new system that receives, processes, manages, and stores FATCA data and 

modernizes communications with foreign governments that have Intergovernmental 

Agreements (IGAs) and Competent Authority Arrangements (CAAs). ICMM processes 

FATCA reports filed electronically or on paper. 

The IRS also implemented an initiative to improve the Fraud Referral Program and 

examinations of 501(c) tax exempt entities, allowing the IRS to identify 19 entities involved 

in illicit terrorist financing schemes.

Theme 3: Leverage and collaborate with external stakeholders - This past year, the IRS 

launched a major campaign in partnership with tax professional organizations focused on 

helping taxpayers choose tax return preparers wisely, while understanding the different 

categories of tax preparers. The IRS also used social media tools, such as YouTube, Twitter, 

and podcasts to share the latest information on tax changes, initiatives, products, and services. 

The IRS partnered with Volunteer Income Tax Assistance/Tax Counseling for the Elderly 

partners, to provide more than 3.7 million taxpayers with free tax preparation. The IRS 

introduced and launched a new Taxpayer Bill of Rights (TBOR) to enhance the taxpayers’ 

understanding of their rights, incorporating the existing rights in the tax code, and grouping

them into ten easily understandable categories. In addition, the IRS worked with key partners 

and stakeholders to establish a Security Summit Group this past March, composed of two 

dozen public and private sector leaders. It included the chief executive officers of Intuit, 

H&R Block and other tax and financial product companies. On June 11, 2015, Commissioner 

Koskinen joined the tax industry and state tax authorities to announce several Security 

Summit Group efforts to combat stolen identity refund fraud.

Focus Area: Strengthening cybersecurity and preventing identify theft/refund fraud has 

been an IRS priority for many years. While staying ahead of adaptive adversaries is a 

constant challenge and requires extreme vigilance, the IRS continues to build robust programs 

in these areas and has had success despite recent issues across the government. In FY 2015,

the IRS identified and shut down 1,474 false IRS websites and deployed the second release of 

e-Authentication software, which handled a 275 percent increase in traffic from the same 

period last year, with 7.3 million unique users (registered and guest) and, 34.4 million 

proofing transactions requested.

Get Transcript provides a current digital display of an individual's tax record across five 

transcript types using enterprise-wide authentication. Since the January 2014 launch, over 

45 million transcripts have been generated through this application. In FY 2015, the IRS 

experienced unauthorized accesses on the Get Transcript application when 390,000 attempts 

to access taxpayer data were made, of which nearly three out of five were successful. The 
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IRS sent letters to the affected taxpayers informing them of the issue, and offered victims free 

credit monitoring services. Within five days of recognizing the issue, the IRS also notified 

Congress. As a result of this response, the IRS was able to minimize unauthorized access. 

During the 2015 filing season, more than 23 million taxpayers successfully accessed their 

transcripts online and received immediate service. The Get Transcript application was shut 

down to prevent additional breaches. The IRS has partnered with the U.S. Digital Service to 

develop new authorization methodologies using cutting-edge security platforms. The IRS 

currently plans to put Get Transcript back online during calendar year 2016. 

In addition to the aforementioned cybersecurity efforts, in 2014 the IRS deployed a new 

fraud/anomaly detection system, the Return Review Program (RRP), and successfully 

executed an ID theft/fraudulent return pilot project. By processing all refund returns through 

multiple analytic models and business rules, the RRP system scores and selects suspicious 

returns that have a high probability of identity-theft related fraud. RRP has successfully 

loaded and scored over 98 million electronic refund returns. Of those returns, nearly 800,000 

were identified as potential identity theft fraud, representing potentially more than $4.7 billion 

in government revenues protected. RRP was able to reduce the amount of manual analysis 

work by 20 percent, identifying suspicious cases earlier in the process. In its inaugural filing 

season, RRP operated without interruption

In addition to the identity theft prevention efforts focused on screening returns as potentially 

fraudulent, the IRS was also successful in stopping actual fraudulent refunds. The IRS

stopped more than 1.7 million fraudulent returns with associated refunds of more than 

$14 billion. The IRS prisoner program continues to be successful in preventing fraudulent 

refunds; the IRS stopped more than 30,000 fraudulent prisoner returns with associated refunds 

of more than $1.2 billion.

The Electronic Fraud Detection System (EFDS) which is the IRS’s current fraud protection 

system, has successfully loaded and analyzed 125 million individual income tax returns via 

Modernized e-File and 12.8 million paper returns in FY 2015. Of that number, nearly 1.1 

million returns were identified as fraudulent, representing $6.8 billion in revenue protection. 

The IRS also continues to refine and develop new identity theft filters based on analytical 

models and data validation. As a result, potentially fraudulent returns are stopped much 

earlier in processing allowing the IRS to quickly resolve cases for identity theft victims. In 

FY 2015, the IRS selected 1,987,975 returns for further analysis via its enhanced analytics 

compared to 1,570,008 in FY 2014 (a 27 percent increase).
IRS - 15

Tax Statistics at a Glance

Tax Administration is at Risk

The IRS made substantial progress related to its strategic themes and will make additional 

progress as a result of the resources provided in FY 2016. Nonetheless, the IRS’s progress 

with regard to preparing for the future state of tax administration proves challenging without 

additional resources to modernize its systems and deliver the type of customer service 

expected of any financial services provider. The world is changing, taxpayer expectations are 

changing, and given the continuing budget challenges, the IRS needs to look at the future in a 

more comprehensive way, and consider how it can take advantage of the latest technology to 

move the entire taxpayer experience to a new level. The IRS will do this in a way that meets 

the needs of taxpayers, helps IRS employees in their jobs, and is cost-effective for the 

government. A key part of this effort is for taxpayers to have a more complete online 

experience for all of their transactions with the IRS. The organization’s ability to roll out 

capabilities such as enhanced digital services will prove very challenging without these 

additional resources.

The Road Ahead

The investments in this Budget request are needed for the IRS to succeed in the future with 

regard to tax administration, and the IRS will continue to target its investments towards the 

IRS’s strategic themes and priorities. The IRS is also committed to a rigorous and continuous 

planning and investment decision process. To that end, the IRS will enhance its performance 

management process to monitor its progress towards achieving a new, improved taxpayer 

experience and streamlined compliance that aims to detecting errors and resolving issues as 

early as possible with the least amount of taxpayer burden. Efforts started in FY 2015 to 

identify a more definitive suite of enterprise goals and supporting intermediate performance 

measures to track progress toward the IRS future state vision and strategic themes have 

continued into FY 2016. These enterprise goals and intermediate measures will be finalized 

in FY 2016 and then woven into an effective and transparent strategic performance 

management system that will help guide senior level decision making at the IRS. 
IRS - 16

Program Integrity Cap Adjustment 

In addition to the base appropriations request of $11.8 billion, the FY 2017 Budget proposes a 

$515 million cap adjustment to fund new and continuing investments in expanding and 

improving the effectiveness and efficiency of the IRS’s and the Alcohol and Tobacco Tax and 

Trade Bureau’s (TTB) overall tax enforcement program. The proposed FY 2017 enforcement 

investments will yield additional revenue as described within this document. The Budget also 

proposes additional cap adjustments for new investments each year through FY 2021 that are 

sustained with additional adjustments through 2026 to account for economic factors, such as 

inflation. The investments will generate approximately $64 billion in additional revenue over 

10 years and will cost about $18 billion for an estimated net savings of $46 billion. Notably, 

the return on investment (ROI) is likely understated because it only includes amounts directly 

recovered; it does not reflect the effect that enhanced enforcement has on deterring 

non-compliance. This deterrent effect helps to ensure the continued payment of over $3 

trillion in taxes paid each year without direct enforcement measures. 

Return on Investment (ROI) for FY 2017 Enforcement Investments

Enforcement efforts increase revenue by encouraging voluntary compliance for those 

taxpayers who would otherwise seek to avoid meeting their tax obligations under the law. 

The IRS calculates a return on investment for both revenue protecting investments and 

revenue generating investments. Protected revenue is revenue the IRS protects from being 

refunded erroneously. It is associated with activities that occur prior to the issuance of a 

taxpayer’s refund, including the identification of fraud and questionable returns. Revenue 

generated is from compliance efforts that yield direct, measurable results through enforcement 

activities such as examination and collection returns.
IRS - 17

FY 2017 Revenue-Producing Investments

The FY 2017 budget includes $388.1 million in investments for traditional enforcement and 

strategic revenue programs, which are projected to generate $2.6 billion in revenue once the 

investments reaches full potential in FY 2019, the expected total ROI is $5.6 to $1. 

The FY 2017 budget also includes an additional $180.5 million to support strategic 

revenue-producing investments. These investments do not have an immediately measureable 

ROI, but have clear long-term revenue effects. 

FY 2017 Revenue-Protecting Investments

In addition to the traditional revenue-producing investments, IRS activities to prevent the 

issuance of fraudulent returns related to identify theft will allow the IRS to identify and 

resolve issues before issuing a taxpayer’s refund. While this number is not currently included 

in the IRS’s traditional ROI calculations, investment in these activities is projected to protect 

$1.5 billion in revenue at a lower cost than the downstream enforcement actions and achieve 

an FY 2019 ROI of $12.3 to $1.

Return on Investment (ROI) for IRS FY 2017 Enforcement Initiatives 

Dollars in Millions Cost Revenue ROI Cost Revenue ROI

FY 2017 Revenue Producing Enforcement Initiatives $388.1 $397.5 1.0 $475.1 $2,643.1 5.6

Cap Adjustment Enforcement Initiatives $388.1 $397.5 1.0 $475.1 $2,643.1 5.6

Immediate and Directly Measurable Revenue-Producing Initiatives $207.6 $397.5 1.9 $282.6 $2,643.1 9.4

Increase Collection Coverage 90.5 160.5 1.8 127.3 1,216.4 9.6

Increase Audit Coverage 117.1 237.0 2.0 155.3 1,426.7 9.2

Strategic Revenue-Producing Initiatives (which do not have immediately measurable 

ROI, but clear long-term revenue effects) $180.5 $0.0 0.0 $192.5 $0.0 0.0

Digitizing Form 990 2.4 0.0 0.0 3.1 0.0 0.0

FATCA: Implement, Expand Filing Coverage, and Combat Criminal Non-compliance 126.7 0.0 0.0 141.6 0.0 0.0

Pursue Employment Tax and Abusive Tax Schemes 15.8 0.0 0.0 10.1 0.0 0.0

Increase Investigations of Transnational Organized Crime (TOC) 35.6 0.0 0.0 37.7 0.0 0.0

First Year (FY 2017) Full Performance (FY 2019)

FY 2017 Revenue-Protecting Enforcement Initiatives

Dollars in Millions Cost Revenue ROI Cost Revenue ROI

Revenue Protecting Initiatives (which protect taxpayer information, prevents identity theft, 

and results in long-term revenue protection) $101.3 $676.0 6.7 $124.3 $1,526.0 12.3

Before Cap Adjustment Revenue Protecting Initiative $90.0 $612.0 6.8 $107.6 $1,146.0 10.7

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 90.0 612.0 6.8 107.6 1,146.0 10.7

Cap Adjustment Revenue Protecting Initiative $11.3 $64.0 5.7 $16.7 $380.0 22.8

Increase Audit Coverage (revenue-protecting portion) 11.3 64.0 5.7 16.7 380.0 22.8

First Year (FY 2017) Full Performance (FY 2019)
IRS - 18

Section 2 – Budget Adjustments and Appropriations Language

The IRS Budget Request for FY 2017 is $11,765,347,000 in direct appropriations and 

82,679 FTE. The request represents an increase of $530,347,000, or 4.72 percent, and 

1,107 FTE more than the FY 2016 Enacted level of $11,235,000 and 81,572 FTE. The total 

Budget Request including the program integrity cap adjustment is $12,280,095 and 84,803 

FTE.
IRS - 19

2.1 – Budget Adjustments Table

Summary of Proposed FY 2017 Request (Dollars in Thousands)

Internal Revenue Service FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 78,919 $10,945,000

FY 2016 Administrative Provision 113 2,653 $290,000

Improve Taxpayer Service 2,483 178,422

Cyber Security 170 95,442

Strengthening the Prevention of Identity Theft 16,136

FY 2016 Enacted 81,572 $11,235,000

Changes to Base:

Maintaining Current Levels (MCLs): $170,348

Pay Annualization 26,975

Pay Raise 99,926

Non-Pay 43,447

Efficiencies/Savings: (72) ($3,766)

Increase e-File Savings (72) (3,766)

Subtotal FY 2017 Changes to Base (72) $166,582

FY 2017 Current Services (Base) 81,500 $11,401,582

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure Innovative Tools and 

Support

Implement Changes to Deliver Tax Credits and Other Requirements for the Affordable Care Act 153,240

Leverage New Technologies to Advance the IRS Mission 29 53,488

Improve Taxpayer Service 613 48,455

Subtotal 642 $255,183

Drive More Agility, Efficiency, and Effectiveness in IRS Operations

Enterprise Electronic Records Management Solution 46 18,543

Subtotal 46 $18,543

Focus Area: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 491 90,039

Subtotal 491 $90,039

Subtotal FY 2017 Budget Request Program Increases 1,179 $363,765

Total FY 2017 Total Budget Request 82,679 $11,765,347

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 1,107 $530,347

Percent Change FY 2017 Budget Request over FY 2016 Enacted 1.36% 4.72%

Cap Adjustment Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure Innovative Tools and 

Support

Enterprise Case Management 22 7,967

Subtotal 22 $7,967

Understand Non-Compliant Taxpayer Behavior and Develop Approaches to Deter and Change It

Increase Collection Coverage 699 90,467

Increase Audit Coverage 856 128,435

Digitizing Form 990 7 2,378

FATCA: Implement, Expand Filing Coverage, and Combat Criminal Non-compliance 273 126,739

Pursue Employment Tax and Abusive Tax Schemes 37 15,786

Increase Investigations of Transnational Organized Crime (TOC) 130 35,564

Subtotal 2,002 $399,369

Drive More Agility, Efficiency, and Effectiveness in IRS Operations

Operations and Maintenance for Deployed Business Systems Modernization (BSM) Projects 73 92,174

Maintain Integrity of Revenue Financial Systems 27 10,238

Subtotal 100 $102,412

Alcohol and Tobacco Tax and Trade Bureau Transfer:

Transfer to TTB for High-Return on Investment (ROI) Tax Enforcement Activities 5,000

Subtotal $5,000

Subtotal FY 2017 Cap Adjustment Program Increases 2,124 $514,748

Subtotal FY 2017 Total Program Increases Including Cap Adjustment 3,303 $878,513

Total FY 2017 Total Budget Request Including Cap Adjustment 84,803 $12,280,095

Dollar/FTE Change FY 2017 Budget Request including PIC over FY 2016 Enacted 3,231 $1,045,095

Percent Change FY 2017 Budget Request including PIC FY 2016 Enacted 3.96% 9.30%
IRS - 20

2A – Budget Increases and Decreases Description 

FY 2017 Investment Labor Costing Methodology

The IRS uses a variety of methods to calculate the cost of its investments. Investments that 

require labor funding are calculated by converting the workload to the number and type of 

staff (e.g., Revenue Agents, Revenue Officers, or Special Agents) needed to deliver targeted 

performance goals. Once the number of full-time equivalents (FTE) and type of staff are 

determined, the cost of the FTE is estimated using a Unit Cost Rate (UCR) calculator, a tool 

for projecting FTE salary and non-salary support costs and/or savings. The UCR calculator 

fully costs the salary, benefits, and support costs needed for each FTE, based on known 

averages. 

The FY 2017 investment FTE were estimated assuming an April 1 hire date except for 

front-line positions in Submission Processing and Account Management and Assistance –

Electronic/Correspondence Assistance, which assumed an October 1 hire date. The primary 

function of the Submission Processing and Account Management and Assistance taxpayer 

service programs is to assist taxpayers during the filing season. They are not dependent on 

the typical hiring and training process affecting other IRS programs because there is a large 

existing seasonal workforce that is available to work additional hours as resources become 

available. To fully fund the FTE requested in this Budget request using an April 1 hire date, 

the IRS will require an additional $256 million and 2,601 FTE for annualization in FY 2018.

FY 2016 Administrative Provision 113 (Public Law 114-113) 

+$290,000,000 / +2,653 FTE

Section 113 of the Department of the Treasury Appropriations Act of 2016 provided

$290,000,000 to: measurably improve the customer service representative level of service 

(LOS) rate (the percentage of callers to the IRS who receive service from an assistor or 

automated system), improve the identification and prevention of refund fraud and identity 

theft, and enhance cybersecurity to safeguard taxpayer data. 

These resources, supplemented with user fees, will allow the IRS to achieve a 65 percent LOS 

during the filing season and 47 percent for FY 2016; this is a substantial improvement over 

FY 2015 levels. These resources will also increase staff and support technology innovation 

efforts in relation to cybersecurity; and improve methods of detecting and preventing identity 

theft/refund fraud patterns and schemes.

Maintaining Current Levels (MCLs)

+$170,348,000 / 0 FTE 

Pay Annualization +$26,975,000 / 0 FTE

Funds are requested for annualization of the January 2016 pay raise. 

Pay Raise +$99,926,000 / 0 FTE

Funds are requested for the proposed January 2017 pay raise.
IRS - 21

Non-Pay +$43,447,000 / 0 FTE

Funds are requested for inflation adjustments in non-labor costs such as travel, contracts, rent, 

supplies, and equipment. 

Efficiencies and Savings

-$3,766,000 / -72 FTE

Increase e-File Savings -$3,766,000 / -72 FTE

These savings are a result of reduced paper returns. The IRS projects a total of 

1,026,100 fewer returns filed on paper in FY 2017 (525,100 individual and 501,000 business 

returns). 

Program Increases

FY 2017 Budget Request +$363,765,000 +1,179 FTE

FY 2017 Program Integrity Cap Adjustment +$514,748,000 +2,124 FTE

FY 2017 Budget Request Including Program 

Integrity Cap Adjustment

+$878,513,000 +3,303 FTE

This section of the budget request is organized into themes. Each theme section provides an 

overview, and a description of challenges, and resources needed to support these themes. The 

IRS is moving toward a vision through a dynamic shift that is already being executed, and this 

budget request help steadily move the IRS toward accomplishing that vision.

The total FY 2017 budget request makes new investments in the following two themes and a 

focus area:

• Theme 1: Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support +$255,183,000 / +642 FTE

• Theme 6: Drive More Agility and Efficiency in IRS Operations +$18,543,000 / 

+46 FTE

• Focus Area: Strengthen Cybersecurity and Eliminate Identity Theft 

+$90,039,000 / +491 FTE 

The FY 2017 Program Integrity Cap Adjustment of +$514,748,000 and +2,124 FTE consists

of the following three themes and the TTB transfer:

• Theme 1: Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support +$7,967,000 / +22 FTE

• Theme 2: Understand Non-Compliant Taxpayer Behavior, and Develop Approaches 

to Deter and Change It +$399,369,000 / +2,002 FTE

• Theme 6: Drive More Agility and Efficiency in IRS Operations +$102,412,000 / 

+100 FTE

• Alcohol and Tobacco Tax and Trade Bureau Transfer +$5,000,000 / 0 FTE
IRS - 22

Theme 1: Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support +$263,150,000 / +664 FTE

Voluntary compliance is the cornerstone of the nation’s tax system, and is at its highest when 

the IRS is able to provide effective and timely service. Efforts associated with this theme will 

drive the IRS towards a new era of tax administration through taxpayer-centric service and 

compliance with a variety of self-service options, early error detection and resolution, and 

with minimal taxpayer burden. 

In 2015, the IRS processed an estimated 27 million more returns than it did 17 years ago. 

Budget constraints affected customer service levels. Telephone Level of Service (LOS)

dropped below 40 percent during the 2015 filing season, meaning more than 6 out of every 10 

call attempts did not reach a live assistor. The number of taxpayers disconnected by the IRS 

phone system when it became overloaded with calls was over 17.682 million in FY 2015, 

compared with 1.401 million in FY 2014, and wait times in many cases were greater than 30 

minutes. 

The IRS’s future state will enable taxpayers to interact with the IRS in ways similar to today’s 

financial services companies, using capabilities built and proven successful in the private 

sector. The IRS is committed to improving taxpayer service and increasing the service 

options available through the IRS web site and mobile application.

This investment has three major components:

• Implement Legislative Mandates – Make major modifications to existing IRS systems 

and processes to administer new requirements from recent legislation.

Initiative

(dollars in thousands)

$000 FTE $000 FTE $000 FTE $000 FTE

Budget Request Program Increases $153,240 $48,455 613.00 $53,488 29.00 $255,183 642.00

Implement Changes to Deliver Tax Credits and Other 

Requirements for the ACA $153,240 $153,240

Improve Taxpayer Service $48,455 613.00 $48,455 613.00

Increase level of service (LOS) 41,420 590.00 41,420 590.00

Online Accounts 5,130 9.00 5,130 9.00

Other Direct Costs 1,905 14.00 1,905 14.00

Leverage New Technologies to Advance the IRS 

Mission

$53,488 29.00 $53,488 29.00

Expand business Systems Modernization 11,207 5.50 11,207 5.50

 CADE-2 1,674 3.50 1,674 3.50

 Web Applications 4,020 4,020

 Modernized e-File 4,549 2.00 4,549 2.00

Architecture, Integration and Management 61 61

Management Reserve 903 903

Event Driven Architecture 30,555 14.50 30,555 14.50

Enterprise Case Management (PMO) 11,726 9.00 11,726 9.00

Cap Adjustment Program Increases $7,967 22.00 $7,967 22.00

Enterprise Case Management (PMO) 7,967 22.00 7,967 22.00

FY 2017 Total Program Increases $153,240 $56,422 635.00 $53,488 29.00 $263,150 664.00

Facilitate Voluntary 

Compliance through 

Taxpayer Service 

Develop Innovative 

Technology and Tools 

Total 

Theme 1 Budget 

Request

Summary of Theme 1 Budget Request (by Component)

Implement Legislative 

Mandates 
IRS - 23

• Facilitate Voluntary Compliance through Taxpayer Service – Increase LOS to 70

percent for the full FY 2017 (FY 2016 is expected to be 47 percent), handle additional 

workload from the expansion of enforcement programs, and develop innovative 

technology to support taxpayer services.

• Develop of Innovative Technology and Tools – Provide dynamic return processing, 

develop enterprise case management, and develop critical IT systems for taxpayer 

service programs. Increasing web services will help meet taxpayer demand for webbased self-service tools while reducing the number of phone and correspondencebased communication. 

Implement Legislative Mandates Component (+$153,240,000 / 0 FTE)

Implement Changes to Deliver Tax Credits and Other Requirements for the ACA 

(+153,240,000 / 0 FTE)

This investment will allow the IRS to continue to implement the new tax law provisions 

contained in the Affordable Care Act. While the Department of Health and Human Services 

is responsible for health care policy and insurance provisions in the legislation, the IRS 

administers more than 45 specific tax provisions and numerous cross-agency sections related 

to tax administration. These requirements touch all tax administration processes, from 

submission processing to enforcement with both individual and business tax returns. 

This investment funds advanced technology infrastructure and applications support and 

allows necessary, major modifications to existing IRS tax administration systems. It provides

funds to support established ACA business capabilities by:

• Validating tax credits claimed on individual tax returns; 

• Assessing and collecting penalties, taxes, and fees; 

• Providing federal tax information to non-IRS entities in the insurance marketplaces; 

and 

• Reconciling reported income, tax credits, and individual shared responsibility 

payments with information returns. 

It will also allow the IRS to continue to develop and implement new capabilities in FY 2017, 

including:

• Assessing and supporting management of the employer shared responsibility payment;

• Expanding support for post-filing compliance activities for the employer shared 

responsibility payment;

• Mediating additional web services between systems;

• Expanding data analytics capabilities; and

• Initiating development activities related to the Excise Tax on High-Cost Health Plans.
IRS - 24

Facilitate Voluntary Compliance through Taxpayer Service (+$56,422,000 / +635 FTE)

Improve Taxpayer Service (+$48,455,000 / +613 FTE)

Delivering high quality and timely service to reduce taxpayer burden is a core part of the IRS

mission to facilitate voluntary compliance. Taxpayers increasingly expect to complete more 

of their day-to-day tasks and responsibilities online. This component provides funding to 

reverse the recent decline in taxpayer services and to implement technology to help transform 

the taxpayer experience through improved LOS, innovative technological support, and 

taxpayer advocacy support. This investment of $41.4 million and 590 FTE, along with $100 

million in user fee resources, will achieve a 70 percent LOS in FY 2017, up from the FY 2016 

level of 47 percent. If the full amounts requested in President’s Budget are not enacted, this 

level of user fee resources may not be available, and the investment of $41.4 million will 

achieve a 53 percent LOS.

The investment of $5.1 million and 9 FTE for online accounts will modernize and improve 

self-service options for individual taxpayers, and ultimately business and international 

taxpayers, by creating an integrated and easy-to-use source for timely, accurate, and 

consolidated tax filing and tax account information. It will provide the ability to correct 

returns online, which will reduce the time and money spent on processing amended returns; it

is estimated to save the IRS $5.3 million.

This component also includes funding in the amount of $1.9 million and 14 FTE to support 

both IRS’s Taxpayer Service and Enforcement programs by handling the downstream impact 

in the Taxpayer Advocate Service (TAS) from increased collection and audit coverage. The 

additional TAS specialists will ensure that the IRS does not create unnecessary burdens or 

compromise taxpayers’ rights. 

Enterprise Case Management (ECM) Project Management Office (PMO) - Cap 

Adjustment (+$7,967,000 / +22 FTE)

The PMO will serve as the integrator for ECM and will coordinate with IT and all IRS 

business units to provide strategic guidance in alignment with the IRS Strategic goals and 

business plan and drive collaboration and alignment with all aspects of case management.

Development of Innovative Technology and Tools (+$53,488,000 / +29 FTE)

Leverage New Technologies to Advance the IRS Mission (+53,488,000 / +29 FTE)

The IRS must become more accessible to today’s taxpayers by providing a consistent 

multichannel experience that includes significantly expanded digital service delivery. This 

component supports voluntary compliance through technology projects that will enable

simpler and more consistent taxpayer interactions through the following three investments: 
IRS - 25

• Expand Business Systems Modernization

This investment of $11.2 million and 5.5 FTE will allow the IRS to continue 

leveraging new technologies to develop critical information technology systems 

needed to support the IRS’s taxpayer service and enforcement programs. It will 

provide funding for IT staff, hardware and software, contractual services, and 

infrastructure support for the following:

o CADE 2 (Taxpayer Account Database) (+$1,674,000 / +3.5 FTE)

A single, data-centric solution that provides daily processing of taxpayer accounts. 

It will enable analytical reporting for more meaningful business intelligence and 

expanded opportunities to increase compliance.

o Web Applications (+$4,020,000 / 0 FTE)

Simplify the taxpayer’s online experience, provide secure digital communications, 

and add more interactive capabilities to existing web-based self-service products. 

This will allow taxpayers to resolve more issues online, requiring fewer direct 

interactions with the IRS over the telephone and in person.

o Modernized e-File (MeF) (+$4,549,000 / +2 FTE)

A standard filing structure for all IRS return types, a robust platform that meets 

performance and capacity needs, enhanced and up-to-date technologies, and 

customer service benefits. Funds will be used for the development and testing of 

Release 11, Form 1040 – U.S. Nonresident Alien Income Tax Return. This change 

will allow taxpayers to file Form 1040NR returns related to their income from 

trade and/or business transactions conducted in the United States.

o Architecture, Integration and Management (AI&M) (+$61,000 / 0 FTE)

Essential IRS systems strategy, architecture, and engineering capabilities for the 

major modernization projects across all technology platforms.

o Management Reserve (+$903,000 / 0 FTE)

Funds not otherwise designated for specific projects to allow flexibility in 

responding to unexpected IT needs.
IRS - 26

• Event Driven Architecture (EDA)

This investment of $30.6 million and 14.5 FTE will cover software licenses, hardware, 

and contractor support to implement EDA. EDA will increase the average speed at 

which refunds are delivered to taxpayers who have submitted non-problematic returns 

by handling each return independently. Currently, tax returns are bundled and 

processed together in batches, according to the time at which they are submitted, 

which creates the potential for properly completed tax returns being held up by returns 

that have issues. EDA is a framework that manages each return independently and 

immediately upon arrival. Returns submitted with minor errors (such as simple 

arithmetic problems) will be addressed by EDA immediately at time of filing. The 

current process may take months to identify simple errors and notify the filer. 

EDA is also a prerequisite for the following improvements:

o A web-based individual tax return;

o Taxpayer line-by-line self-correction of tax errors through an online tool; 

o Automated issue identification to notify a taxpayer instantly of an error prior to 

submitting a tax return; and 

• Enterprise Case Management (ECM) Technology Development

This investment of $11.7 million and 9 FTE funds ECM technology development. 

IRS has multiple aging case management systems that have operated independently 

for over 30 years. The current segmented approach is inefficient and does not allow 

the IRS to adapt quickly to changing taxpayer behavior or address changes that arise, 

such as new legislation or trends in non-compliance. ECM will use a common 

platform to improve data accessibility across the service and produce efficiencies. 
IRS - 27

Theme 2: Understand non-Compliant Taxpayer Behavior, and Develop Approaches to Deter 

and Change It +$399,369,000 / +2,002 FTE

This theme encompasses the IRS’s approach to enforcement activities. Compliance is one of 

the most challenging problems facing the IRS. While most taxpayers voluntarily comply with 

their tax obligations, some do not. The IRS roots out non-compliance to protect revenue and 

ensure accurate revenue collection by carrying out a rigorous enforcement program. Since 

FY 2010, however, the IRS has seen appropriated resources to support this program cut by 

more than 10.5 percent, resulting in falling audit coverage rates and a growing inventory of 

collection cases. As a result of insufficient funding in FY 2015, the individual examination

coverage rate fell to 0.8 percent, the lowest level in a decade. When the coverage rate is low, 

the secondary deterrent effect of enforcement activity also falls. This reduces revenue and 

threatens the integrity of the nation’s voluntary tax compliance system. The FY 2017 Budget 

request will increase the coverage rate from FY 2016 planned levels. However, if not fully 

funded, the falling coverage rate could reduce the deterrent effect of enforcement activities in 

the future.

The FY 2017 Budget provides much needed staffing for the examination, collection, and 

investigation programs, and resources to develop innovative tools to improve both the 

efficiency and effectiveness of these programs. This investment has two major components: 

• Strengthen Core Enforcement Programs - Additional enforcement staff will complete 

more than 500,000 additional audits, close more than 350,000 collection cases, 

strengthen the IRS’s international enforcement efforts, and meet the increased 

workload related to tax schemes.

Initiative 

(dollars in thousands)

$000 FTE $000 FTE $000 FTE

Cap Adjustment Program Increases $284,628 1,867.50 $112,363 127.50 $396,991 1,995.00

Increase Collection Coverage $81,355 680.00 $9,112 19.00 $90,467 699.00

Field Collection Coverage 39,779 261.00 39,779 261.00

Automated Collection System 22,537 246.50 22,537 246.50

Correspondence Collection 12,804 132.50 12,804 132.50

Withholding Compliance System (WHCS) 9,112 19.00 9,112 19.00

Other Direct Costs 6,235 40.00 6,235 40.00

Increase Audit Coverage $102,323 817.50 $26,112 38.50 $128,435 856.00

Examination Coverage 56,318 403.00 56,318 403.00

Specialty Programs 3,446 21.00 3,446 21.00

Correspondence Examination 19,848 212.00 19,848 212.00

Automated Underreporter (AUR) 9,598 100.00 9,598 100.00

Operations Support 2,837 14.50 2,837 14.50

Other Direct Costs 10,276 67.00 10,276 67.00

QuickBooks 3,325 7.50 3,325 7.50

Innocent Spouse Application in Accounts Management 2,801 7.00 2,801 7.00

Corporate Data Initiative 846 2.00 846 2.00

2D Barcoding 8,395 3.00 8,395 3.00

Correspondence Imaging for Compliance 10,745 19.00 10,745 19.00

Digitizing Form 990 2,378 7.00 2,378 7.00

FATCA: Impl, Exp Filing Coverage, & Combat Criminal Non-compliance 56,758 203.00 69,981 70.00 126,739 273.00

Pursue Employment Tax and Abusive Tax Schemes $8,628 37.00 $7,158 $15,786 37.00

Increase Investigations of Transnational Organized Crime (TOC) $35,564 130.00 $35,564 130.00

FY 2017 Total Program Increases $284,628 1,867.50 $114,741 134.50 $399,369 2,002.00

Strengthen Core 

Enforcement Programs

Develop Innovative 

Technology

Total 

Theme 2 Budget Request

Summary of Theme 2 Budget Request (by Component)
IRS - 28

• Develop Innovative Technology – Investments in IT will build out systems that 

support the implementation of FATCA, improve efficiency in operations by 

streamlining and redesigning current technology infrastructure, and develop systems 

to digitize data allowing employees to collaborate and resolve cases more effectively. 

Strengthen Core Enforcement Programs (+$284,628,000 / +1,867.5 FTE)

Investments to strengthen core enforcement programs will help the IRS improve the 

resolution of non-compliance with fairness and integrity. Budget cuts over the last several 

years have led to rising case inventories and call volumes, preventing the IRS from bringing

taxpayers who fail to pay their tax debt into compliance, and reducing individual audit 

coverage to 0.8 percent. This component will:

• Increase collection and audit coverage;

• Implement, expand filing coverage, and combat criminal non-compliance related to 

FATCA;

• Digitize form 990;

• Pursue employment tax and abusive tax schemes; and 

• Increase investigations of transnational organized crime.

Increase Collection Coverage – Cap Adjustment (+$81,355,000 / +680 FTE)

This will provide resources for the IRS to work the growing collection inventory and call 

volumes that resulted from reduced staffing levels in recent years and bring taxpayers who fail 

to pay their tax debt into compliance. This investment, including the $9.1 million for 

technology costs outlined in the Summary of Theme 2 Budget Request (by Component) table 

(above), is expected to produce additional annual enforcement revenue of $1,216.4 million, an 

ROI of $9.6 to $1, once the new hires reach full potential in FY 2019. It will:

• Provide nearly 400 additional field collection staff to expand programs that address 

non-filing and underpayment of taxes to handle more than 30,000 additional collection 

cases (currently there are more than one million cases in the queue with an aggregate 

assessed balance exceeding $52 billion); 

• Provide more than 350 additional Automated Collection System (ACS) staff to address 

an additional 302,000 ACS cases, including incoming calls generated by the issuance 

of levies, delinquent returns, and/or unpaid tax liabilities. ACS staffing has decreased 

by 25 percent since the end of FY 2011, resulting in a substantial increase in 

unhandled ACS cases; and

• Expand several Compliance Services Collection Operations (CSCO) programs that 

address nonfiling and underpayment of taxes through the notice process by more than 

320,000 notice dispositions. CSCO investments will increase balance due work and 

expand the following programs: Automated Substitute for Return, Offers in 

Compromise, Withholding Compliance, Campus Notice, and the Campus Decedent 

Taxpayer Unit
IRS - 29

Increase Audit Coverage – Cap Adjustment (+$102,323,000 / +817.5 FTE)

Budget constraints have reduced the examination staff available to conduct audits, causing the 

individual audit coverage rate to decline to 0.8 percent, which is increasing risk to the 

integrity of the nation’s voluntary tax compliance system. The IRS will invest a total of 

$128.4 million in audit coverage, which is projected to produce more than $1.4 billion in 

additional revenue annually, and protect $380.0 million of revenue annually, once the new 

hires reach full potential in FY 2019. ROI details for this investment can be found in Section 

1 of this document. The corresponding technology costs are outlined in the thematic cost 

table. These resources will help the IRS to:

• Close over 32,000 additional individual field examination cases (the number of field 

audit examiners has declined by 27 percent since 2011);

• Improve the audit coverage rate, and expand examination coverage on taxpayers 

claiming refundable credits (before the issuance of a refund), in order to prevent 

improper payments;

• Expand the Automated Underreporter (AUR) program to process more than 

400,000 additional cases. Currently AUR processes approximately 3.6 million; and

• Implement a quality review program for penalty and interest computations to provide

accurate administration of the interest and charges associated with more than 170 civil 

penalties, with assessments exceeding $30 billion annually. 

Foreign Account Tax Compliance Act (FATCA) Implement, Expand Filing Coverage, and 

Combat Criminal Non-compliance – Cap Adjustment (+$56,758,000 / +203 FTE)

The requested resources will expand filing coverage and combat criminal non-compliance 

with FATCA. This investment provides the staffing required to:

• Identify and address high priority international issues with implementation, including 

improving systems to allow financial institutions and other entities to comply with 

their requirements under FATCA;

• Develop additional guidance, and conduct outreach activities, training, and 

monitoring; 

• Create and maintain the programs and systems required to improve compliance, 

including a means to identify and address non-compliance of taxpayers, financial 

institutions, and other entities; and

• Develop enforcement and fraud prevention programs through data analysis reducing 

the likelihood of improper payments for erroneous refunds related to withholding 

under FATCA and Chapter 3.
IRS - 30

Pursue Employment Tax and Abusive Tax Schemes – Cap Adjustment (+$8,628,000 / 

+37 FTE)

Today’s sophisticated schemes to defraud the government require financial investigators to

wade through financial records. In order to ensure that employment tax and abusive tax 

schemes do not become a major source of criminal activity and lost revenue, resources must 

be dedicated to reinforcing the IRS’s criminal investigative efforts. This investment will 

allow the IRS to close an additional 100 tax evasion and abusive tax scheme cases annually 

once new hires reach their full potential in FY 2019. Currently the IRS closes about 200 such 

cases per year. 

Increase Investigations of Transnational Organized Crime (TOC) – Cap Adjustment

(+$35,564,000 / +130 FTE)

The threat of transnational organized crime (TOC) is becoming more severe as criminal 

networks use increasingly sophisticated tactics that exploit the borderless, interconnected 

nature of the global economy. IRS staff work with the Office of National Drug Control 

Policy (ONDCP) as well as several multi-agency task forces to support investigations of 

illegal drug trafficking and money laundering perpetrated by organizations involved in TOC. 

This investment is projected to allow the IRS to complete an additional 360 investigations 

annually once new hires reach full potential in FY 2019.

Develop Innovative Technology (+$114,741,000 / +134.5 FTE)

Investments in technology will help the IRS to effectively analyze risks, address the right 

issues, and apply coordinated and efficient treatments to resolve non-compliance with fairness 

and integrity. This component provides $114.7 million dollars to fund the following eight 

investments in technology:

Increase Collection Coverage– Cap Adjustment (+$9,112,000 / +19.0 FTE)

The Withholding Compliance (WHC) Program brings taxpayers who have serious underwithholding problems into compliance with tax withholding requirements and currently relies 

on three separate inputs by tax examiners for each case action. This investment will provide a 

single entry system to populate multiple databases, will generate WHC correspondence 

letters, and will increase the efficiency of WHC employees and the accuracy of data. This 

investment is projected to allow WHC to correct withholding for an additional 90,000 

taxpayers. A WHC case averages a $1,200 increase in withholding, for a total potential 

revenue increase of $108 million. Withholding behavior tends to show long-lasting 

improvements for affected taxpayers in future years.

Increase Audit Coverage – Cap Adjustment (+$26,112,000 / +38.5 FTE)

• QuickBooks (+$3,325,000 / +7.5 FTE)

Accounting software holds approximately 94 percent of the small business accounting 

software retail market, and is frequently encountered in the examination of taxpayer 

returns. This investment provides access to QuickBooks software to all revenue 
IRS - 31

agents enabling them to accept electronic accounting records and reducing taxpayer 

burden. 

• Innocent Spouse Application (ISA) in Accounts Management (+$2,801,000 / +7.0 

FTE)

ISA is a tool within the Accounts Management System to work claims for relief 

associated with the Innocent Spouse Program that ensures that users address all of the 

necessary factors that will allow consistent application of the tax laws. This 

investment enhances the ISA to systemically issue letters, post case closing 

transactions, assign inventory, and create reports that can be queried.

• Corporate Data Initiative (CDI) (+$846,000 / 2.0 FTE)

CDI will redesign Microsoft Access databases to Enterprise Architecture compliant 

design and infrastructure. This investment will allow CDI to establish an enterprise 

service model for developing, operating and maintaining small corporate databases 

and spreadsheets originally developed in Microsoft Access or Excel. 

• 2D Barcoding for Paper Forms 1040, 1040X (+$8,395,000 / 3.0 FTE)–

This investment will capture return data from the 1040 family of paper returns 

utilizing 2D barcodes and process paper payments electronically. Data captured will 

flow through to the Integrated Submission and Remittance Processing system resulting 

in faster, more accurate processing and improved audit effectiveness. 

• Correspondence Imaging for Compliance (+$10,745,000 / +19.0 FTE)

Legacy correspondence systems currently store imaged correspondence in disparate 

formats and locations. This investment will create a central repository for imaged 

correspondence and allow IRS employees to collaborate and resolve compliance cases 

more efficiently. It will also establish a common document and imaging 

infrastructure. The efficacy of search queries will be improved across applications, 

indices, and database servers by sharing server content. This investment is expected to 

reduce the time, complexity, and costs associated with current document and image 

management.

Digitizing Form 990-– Cap Adjustment (+$2,378,000 / +7.0 FTE)

This investment will allow the IRS to electronically capture data from paper-filed Forms 990, 

Return of Organization Exempt from Income Tax, and implement 2D barcodes on these 

returns. This will increase audit effectiveness and the speed of return processing, reduce

transcription errors, and reduce the incidence of inadvertent disclosure of information

resulting from manual redaction errors when posting Forms 990 to publicly available sources.

FATCA: Implement, Expand Filing Coverage, and Combat Criminal Non-compliance –

Cap Adjustment (+$69,981,000 / +70.0 FTE)

This investment of $69.9 million and 70 FTE will support the build out of FATCA systems 

requirements. It will fund updates to the legacy electronic filing system to modify and 

process FATCA forms, additional capabilities in the web-based registration system, and 
IRS - 32

enhanced functionality in the systems that facilitate the exchange and processing of FATCA 

data to and from withholding agents, Foreign Financial Institutions (FFIs) and Host Country 

Tax Authorities and the United States.

Pursue Employment Tax and Abusive Tax Schemes – Cap Adjustment (+$7,158,000 / 

0 FTE)

A network analysis tool will enable the IRS to link multiple potentially abusive returns or 

information items together to identify the central figure behind a scheme versus applying 

resources to work individual returns one at a time. This investment of $7.2 million funds 

contractual services to acquire and implement network analysis.

Expected Outcomes

The FY 2017 budget includes $399.4 million in investments to improve understanding of noncompliant taxpayer behavior, which support the IRS’s traditional enforcement programs 

including audit and collection coverage. These investments are projected to generate and 

protect $461.5 million in revenue in FY 2017, for an initial ROI of $1.2 to $1. Once the 

investment hires reach full potential, the expected ROI is $6.1 to $1. ROI for specific 

investments is identified in the table below.

FY 2017 FY 2019 FY 2017 FY 2019 FY 2017 FY 2019 FY 2017 FY 2019 FY 2017 FY 2019

Cost $ 399.4 $ 491.9 $ 90.5 $ 127.3 $ 117.1 $ 155.3 $ 11.3 $ 16.7 $ 180.5 $ 192.5

Revenue $ 461.5 $3,023.1 $ 160.5 $1,216.4 $ 237.0 $1,426.7 $ 64.0 $ 380.0

Average ROI 1.2 6.1 1.8 9.6 2.0 9.2 5.7 22.8

Increase Audit 

Coverage (revenueprotecting portion)

Enforcement 

Investments with 

Long-Term Revenue 

Effects

Total Costs and 

Revenue

Increase Collection 

Coverage

Increase Audit 

Coverage
IRS - 33

Theme 6: Drive More Agility and Efficiency in IRS Operations

+$120,955,000 / +146 FTE

This theme provides a common case management solution, an improved revenue financial 

system, and maintenance funding for IT systems. 

This theme has two major components:

• Implement New Capabilities and Systems – Create an enterprise records management 

solution and improve the IRS’s revenue financial accounting systems.

• Provide Support for Existing Systems – Acquire mainframes, servers, hardware, 

software, and contractual services for deployment of Business Systems Modernization 

(BSM) projects.

Implement New Capabilities and Systems (+$18,543,000 / +46 FTE) Cap Adjustment 

(+$10,238,000 / +27 FTE)

This component provides funding to manage official records more effectively by 

implementing new systems and creating a unified, searchable archive of IRS e-mails to avoid 

redundant archiving. This component also supports and improves the IRS’s revenue financial 

accounting systems to ensure timely and accurate reporting of tax data. This component 

funds the following investments:

Enterprise Electronic Records Management Solution - (+$18,543,000 / +46 FTE)

This investment will allow the IRS to respond more timely to legal and Congressional 

inquiries, and FOIA requests. In FY 2016, using funding from projected user fee receipts, the 

IRS will invest in the infrastructure required to support this investment. This investment will

continue the implementation of the solution for electronic records management. Over a multiyear period, the IRS will phase in enterprise content management processes for taxpayerrelated records, records of policy, program, project development, and email. These actions 

will bring IRS into compliance with the Federal Records Act of 1950 as amended (44 U.S.C.

Chapter 31) , which requires all systems to implement an electronic records retention policy 

and the Managing Government Records Directive (M-12-18) which instructs agencies to 

manage electronic records more efficiently and effectively. 

 Initiative

(dollars in thousands)

$000 FTE $000 FTE $000 FTE

Budget Request Program Increases $18,543 46.00 $18,543 46.00

Enterprise Electronic Records Management Solution 18,543 46.00 18,543 46.00

Cap Adjustment Program Increases $10,238 27.00 $92,174 73.00 $102,412 100.00

Maintain Integrity of Revenue Financial Systems 10,238 27.00 10,238 27.00

Operations and Maintenance for Deployed Business Systems 

Modernization (BSM) Projects 92,174 73.00 92,174 73.00

FY 2017 Total Program Increases $28,781 73.00 $92,174 73.00 $120,955 146.00

Implement New Capabilities to 

Drive Agility, Efficiency and 

Effectiveness 

Provide Support for 

Existing Systems 

Total 

Theme 6 Budget 

Request

Summary of Theme 6 Budget Request (by Component)
IRS - 34

Maintain Integrity of Revenue Financial Systems - Cap Adjustment (+$10,238,000 / 

+27 FTE)

The current revenue financial systems do not use commercial software, so the IRS is reliant 

on internal resources to maintain them. These systems reconcile and report to the Bureau of 

Fiscal Service on over $3 trillion in revenue before refunds and are currently identified by 

GAO as a material weakness. This investment will merge multiple financial systems into one 

repository to ensure the integrity of the IRS’s financial data and make necessary changes to 

ensure that systems comply with accounting and other requirements. This will automate 

reconciliations of the IRS ledger systems and assist in the gathering of data for creation of 

reports and for GAO and TIGTA audits. Consolidation and elimination of systems that 

support operational decision making and the financial audit will yield savings and efficiencies 

in future years. 

Provide Support for Existing Systems Component Cap Adjustment (+$92,174,000 / +73 FTE)

For the past few years, the IRS has experienced increased demand for IT projects and 

services, with significant resources going toward implementing legislative mandates, 

including the FATCA, the ACA, and other mandatory requirements. This has severely 

impacted the IRS capacity to address other operational areas, including maintenance for 

newly deployed IT infrastructure.

Operations and Maintenance for Deployed Business Systems Modernization

(BSM) Projects – Cap Adjustment (+$92,174,000 / +73 FTE) 

This investment increases IRS IT operations funding for BSM projects. The IRS receives 

funding for major IT development and modernization projects through the BSM 

appropriation. Once development is completed, regular operations and maintenance 

begins, and the IRS is required to pay for this maintenance through its Operations Support 

appropriation. Since 2013, the IRS has incurred over $95.5 million in increased annual 

requirements as a result of BSM systems deployments, but has not received commensurate 

increases to the Operations Support appropriation. This investment partially restores the 

Operations Support base so that the funding will not have to be redirected from other areas 

to pay for the deployed BSM projects. Resources will fund staff, hardware and software, 

and contractual services for these deployed systems.

Expected Outcomes

This investment will improve IRS operations by:

• Helping respond in a timely fashion to legal and Congressional inquiries;

• Helping to preserve institutional knowledge through the creation of an enterprise-wide 

electronic records management system; and

• Increasing organizational performance by improving revenue financial systems, in 

particular by reducing and eliminating manual processes and merging financial 

systemic data. 
IRS - 35

Focus Area: Strengthen Cybersecurity and Eliminate Identity Theft

+$90,039,000 / +491 FTE 

This section describes investments to combat stolen identity refund fraud, including detection 

and prevention, assistance to victims, and law enforcement.

Due to the trillions of dollars that flow through the IRS each year and the vast amount of data

it maintains, the IRS is subjected to continuous cyber-attacks by criminals attempting to steal 

taxpayer data or use the tax administration system for personal gain. Identity theft is a 

growing epidemic that impacts all federal agencies. Information security incidents in the 

federal government involving personally identifiable information increased more than 

140 percent from FY 2009 to FY 2013. Cyber scams that result in identity theft and refund 

fraud, and the methods used to perpetrate them, continue to evolve, and require constant 

adaptation by the IRS. Additionally, data breaches occurring outside of the IRS have given 

criminals access to personal data, making it easier to impersonate legitimate taxpayers. The 

IRS is making progress against these crimes, but needs to make continuous investments in 

resources and tools to stay ahead of criminals. 

The FY 2017 budget request will invest in the technology and workforce skills that allow for 

timely risk assessments, strong prevention techniques, and data analysis that can be used to 

develop solutions for stolen identity refund fraud and shorten reaction times risks and 

incidents. This investment has two major components: 

• Address the Increased Workload Associated with Identity Theft, Refund Fraud, and 

Improper Payments – Funding for this component will provide additional staffing to 

reduce case inventories, protect revenue, and provide taxpayer service for victims of 

identity theft.

Initiative

(dollars in thousands)

$000 FTE $000 FTE $000 FTE

Budget Request Program Increases

 Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 70,843 459.50 19,196 31.50 90,039 491.00

Improving the Prevention of Identity Theft and Refund Fraud 8,624 69.50 8,624 69.50

Expanding Identity Theft Victim Assistance 9,573 134.00 9,573 134.00

Expand External Leads 1,015 12.00 1,015 12.00

Prevention of False Tax Returns Filed by Inmates 524 3.00 524 3.00

Assess Preparer Penalties 1,545 16.00 1,545 16.00

Increase Criminal Investigation Identity Theft Support 46,655 204.50 46,655 204.50

Counsel and Taxpayer Services Support 2,907 20.50 2,907 20.50

Eliminate Social Security Numbers (SSN) from Taxpayer Mailings 7,100 7,100 0.00

Web-based Freedom of Information Act (FOIA) 3,436 3.50 3,436 3.50

Establish Centralized Repository for Fraud 2,785 1.00 2,785 1.00

Dishonored Check Processing 2,396 6.50 2,396 6.50

Preventing MeF Fraud and Improved Access to Social Security Administration 

Data 1,858 12.00 1,858 12.00

Integrated Automated Technology (IAT) Tools 1,621 8.50 1,621 8.50

FY 2017 Total Program Increases $70,843 459.50 $19,196 31.50 $90,039 491.00

Summary of Focus Area Budget Request (by Component)

Address the Increased 

Workload Associated with 

Identity Theft, Refund 

Fraud, & Improper 

Payments

Strengthen Technology to 

Improve the Prevention of 

Refund Fraud & Improper 

Payments

Total 

Focus Area 

Budget Request
IRS - 36

• Strengthen Technology to Improve the Prevention of Refund Fraud and Improper 

Payments – Funding for this component will build a suite of capabilities necessary to 

protect taxpayer data and the nation’s tax revenue.

Address the Increased Workload Associated with Identity Theft, Refund Fraud, and Improper 

Payments (+$70,843,000 / +459.5 FTE)

Tax-related identity theft is increasingly complex and resource-intensive to combat. From the 

computer-based fraud detection filter that flags the return, to the accounts management 

employee that helps a victim regain control of his/her account, to the special agent who 

investigates the crime, identity theft impacts virtually every major IRS function. The IRS has 

struggled to meet the public’s expectations as identity theft continues to grow. This

investment provides additional staffing to handle the increased workload associated with 

identity theft, refund fraud, and reducing improper payments. This component provides $67.9

million to fund the following six investments and associated other direct costs:

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments

(+$70,843,000 / +459.5 FTE)

• Improving the Prevention of Identity Theft and Refund Fraud (+$8,624,000 / 

+69.5 FTE)

These resources will allow the IRS to:

o Establish Campus Fraud Technical Advisors to provide investigative leads and 

referrals to federal, state, and local law enforcement agencies to solve tax-related 

identity theft cases;

o Employ staffing and contractor support to safeguard and effectively manage 

federal tax information shared externally, oversee compliance with safeguard 

agreements, and monitor unencrypted Personally Identifiable Information leaving 

the IRS enabling the timely assessment of identity theft risk or other potential harm 

to taxpayers; and

o Hire additional staff to pursue more of the available leads from the Proactive Lead 

Analysis program, which obtains leads from industry partners and state 

departments of revenue based on their fraud and identity theft detection programs 

regarding returns that have not yet been filed. This protects revenue by stopping 

improper refunds before they are issued. The staff will also help resolve the 

related taxpayer account issues quickly. The IRS projects that the added Revenue 

Protected resulting from these analyses for calendar year (CY) 2014 and CY 2015 

will be over $1.3 billion.

• Expand Identity Theft Victim Assistance (+$9,573,000 / +134 FTE)

Additional resources will expand the IRS’s ability to stop or suspend returns identified 

as potential identity theft cases. This helps taxpayers affected by tax-related identity 

theft to get their issues resolved more timely and prevent them from being burdened 

with the same issues from year to year.
IRS - 37

Funds will also expand capacity to handle additional cases involving victims of tax related 

identity theft who have engaged the IRS for assistance. Receipts for these cases grew from 

about 188,000 receipts in FY 2010 to 730,000 in FY 2014.

• Expand External Leads (+$1,015,000 / +12 FTE)

The IRS External Leads staff recovers funds related to questionable refunds from 

external sources (e.g., financial institutions, state agencies, and tax providers). 

Expanding this staff enables the IRS to increase the number of lead sources, which 

have grown from 30 to 527 since 2010, that participate in this program and provide 

support for external leads pattern development. The IRS External Leads program 

recovered more than $1.3 billion in fraudulent refunds in FY 2014 and FY 2015 and 

expects to recover an additional $1 billion in FY 2016. With this FY 2017 request, the 

External Leads program expects to recover $1.2 billion in fraudulent refunds.

• Prevention of False Tax Returns Filed by Inmates (+$524,000 / +3 FTE)

The Bipartisan Budget Act of 2013 allows the IRS access to data in the Prisoner 

Update Processing System (PUPS) maintained by the Social Security Administration 

(SSA). Resources will allow the IRS to implement and improve filters and models 

used with the PUPS data that will detect prisoner fraud including the identification of 

fraudulent wages and withholding on returns. Currently inmates use fake SSNs, SSNs 

of the deceased, and other SSNs to file fraudulent tax returns. PUPS data would add 

over two million records to the IRS’s Prisoner File, and is projected to result in $1 

billion in additional revenue protected annually.

• Assess Preparer Penalties (+$1,545,000 / +16 FTE)

The IRS requests additional staff to expand enforcement efforts to help reduce 

improper payments and assess appropriate preparer penalties. Resources will help 

identify return preparers who are committing refund fraud by filing multiple returns 

claiming false refundable credits. The IRS will develop successful penalty assessment 

models and filters to improve program effectiveness, thus creating a deterrent effect.

• Increase Criminal Investigation Identity Theft Support (+$46,655,000 / +204.5 FTE) 

The IRS requests additional funding to:

o Combat data breaches (+$40,145,000 / +167.0 FTE) by hiring:

o 120 FTE to work criminal investigation cases related to identity theft and 

refund fraud which have grown by over 350 percent;
IRS - 38

o 45 FTE to increase staff at the IRS’s Scheme Development Centers (SDCs) 

which identify and develop schemes for the purpose of referring and 

supporting high-impact criminal tax and related financial investigations; 

and

o 2 FTE to support faster and more efficient fingerprint processing in the 

IRS’s National Forensic Laboratory (NFL) Latent Fingerprint Section and 

to provide technical investigative assistance for data breach cases that 

operate in the “dark net.” 

o Expand the Identity Theft Clearinghouse (+$3,448,000 / +21.0 FTE) by increasing 

the IRS’s participation in multi-agency task forces that obtain information about 

criminal activity involving federal and state tax refunds. These specials agents 

will also extend outreach to state and local law enforcement to expand the Law 

Enforcement Assistance Program as recommended by TIGTA Audit 2015-40-003

Law Enforcement Assistance Program Requests Are Not Always Processed Timely 

and Accurately. 

o Criminal Investigation Support (+$1,377,000 / +9.5 FTE) provides funding for 

additional analysts for the Cyber Crimes Unit to provide technical investigative 

assistance and coordination in working identity theft and refund fraud cases.

o Refund Crimes Bank Secrecy Act (BSA) Review Project (+$759,000 / +3.5 FTE). 

The IRS will continue to use bank secrecy information regarding identity theft and 

tax refund fraud by focusing on bank accounts that receive multiple Automated 

Clearing House or tax refund check deposits.

o Initiative to Combat Temporary Work Visa Exploitation (+$926,000 / +3.5 FTE). 

Combat Temporary Work Visa exploitation by collaborating with SSA, FinCEN, 

and State Department to gather identifying information for visa holders. The IRS 

has seen an increase in the use foreign exchange visitors’ identities for filing false 

tax returns and facilitating the movement of false refunds.

Strengthen Technology to Improve the Prevention of Refund Fraud and Improper Payments 

(+$19,196,000 / +31.5 FTE)

Investments in cyber defense technology are imperative in order to maintain both the integrity 

of tax administration and the confidence of the American people. The proliferation of online 

financial and personal data has enabled an explosion of identity theft as compromised third 

party data is more easily and cheaply stolen, warehoused, and sold online, greatly increasing 

the risk for fraud and improper payments. This component provides $19.2 million dollars to 

fund the following investments:

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments

(+$19,196,000 / +31.5 FTE)

• Eliminate Social Security Number (SSN) from Taxpayer Mailings 

(+$7,100,000 / 0 FTE)

These funds will provide resources for software, infrastructure, and related support to 

continue to reduce the use of Social Security Numbers (SSNs) on IRS forms. This 
IRS - 39

phase of the project will reduce the display of SSNs on notices requesting a payment 

from the taxpayer, print barcodes on additional outgoing notices, and will acquire and 

implement equipment that reads 2D barcodes in the payment processing systems. This 

phase will reduce the use of SSNs on 88 notice types, eliminating the use of SSNs on 

notices to 48 million taxpayers. 

• Web-based Freedom of Information Act (FOIA) (+$3,436,000 / +3.5 FTE)

This investment will fund a web-based platform for Freedom of Information Act 

(FOIA) requests. The IRS processes over 30,000 annual FOIA requests using its 

Automated FOIA (AFOIA) system. AFOIA does not have a robust search and find 

feature and is not compliant with Section 508 provisions. A web-based platform will 

improve system stability and performance, provide the capability for additional 

enhancements such as a robust search and find feature that will protect against 

inadvertent disclosure of taxpayer information, comply with Section 508 provisions, 

and establish the foundation for taxpayers to submit, monitor, and track their requests 

for information online. This investment supports the tenets of National Institute of 

Standards and Technology (NIST) Appendix J by assessing and improving the privacy 

controls associated with the IRS FOIA system.

• Establish Centralized Repository for Fraud (+$2,785,000 / +1.0 FTE)

This project funds labor and technology that will enhance multiple core tax 

enforcement areas within the IRS, including fraud referrals, corporate fraud, and 

abusive employment tax schemes. The centralized repository will expand the IRS’s

ability to identify significant tax cases; streamline and standardize the fraud referral 

process; and increase the number of fraud convictions thereby facilitating restitution 

orders that will lead to additional assessments. This system will allow the use of data 

and research across the organization. The repository database will aid in tracking, 

monitoring, and processing all fraud referrals including those related to identity theft.

• Dishonored Check Processing (DCP) (+$2,396,000 / +6.5 FTE)

DCP will improve the IRS’s ability to efficiently process dishonored checks and 

prevent erroneous refunds caused by invalid payments. Currently, banks use a manual 

process to mail checks back to the IRS, taxpayer accounts are posted manually by the 

IRS, and the cases are assigned to tax examiners to research. DCP will eliminate 

manual processes and create a fast, systemic transfer of insufficient fund information 

to the IRS Dishonored Check File with no manual process involved. By posting 

dishonored checks to tax accounts faster, it will expedite the process of monitoring 

identity thieves’ activities.

• Preventing MeF Fraud and Improved Access to Social Security Administration Data

(+$1,858,000 / +12.0 FTE)

These resources will fund development and implementation of a means to reject 

attempts to e-file a return after five unsuccessful attempts. This will deter fraud 

perpetrators who are making multiple computerized attempts to file ID theft returns 

electronically. It also provides additional IT equipment and programming support to 

allow the IRS to get SSA Form W-2, Wage and Tax Statement, and SSA Form W-3, 

Transmittal of Wage and Tax Statement, data more quickly. Getting the data more 
IRS - 40

quickly will accelerate the verification of wages and withholding on potentially 

fraudulent tax returns, thereby catching more fraudulent returns before refunds are 

issued, and shortening the processing time for legitimate refunds. This means that 

legitimate filers will get their refunds faster.

• Integrated Automated Technology (IAT) Tools (+$1,621,000 / +8.5 FTE)

IAT tools are desktop productivity-enhancing tools that automate certain taxpayer 

account processing activities completed by IRS staff. IATs save staff hours, improve 

accuracy, and save money. IAT-developed software programs are needed to match 

wage and withholding information, automate additional taxpayer correspondence, and 

identify potential identity theft cases. These additional resources will increase IAT's 

capacity for technology development by approximately three software programs per 

year.

Expected Outcomes

The FY 2017 budget includes $90 million in investments to prevent identity theft, refund 

fraud, and improper payments. These investments are projected to protect $612 million in 

revenue in FY 2017, for an initial ROI of $6.8 to $1. Once the staff are fully trained and 

reach full potential, the expected ROI is $10.7 to $1 with $1,146 million in projected annual 

revenue protected.

Alcohol and Tobacco Tax and Trade Bureau Transfer +$5,000,000

The IRS will transfer $5 million to the Alcohol and Tobacco Tax and Trade Bureau (TTB) for 

those high-ROI tax enforcement activities that produce additional revenue through program 

activities designated to narrow the federal excise tax gap on alcohol and tobacco 

commodities. More detailed information can be found in the TTB chapter of this document.
IRS - 41

2.2 – Operating Levels Table

Dollars in Thousands

Internal Revenue Service

Object Classification

FY 2015

Actual

FY 2016

Enacted

FY 2017

Request

11.1 Full-Time Permanent Positions 5,757,996 6,061,196 6,346,976

11.3 Other than Full-Time Permanent Positions 78,545 85,525 86,844

11.5 Other Personnel Compensation 151,736 203,781 219,349

11.8 Special Personal Services Payments 23,504 16,799 17,059

11.9 Personnel Compensation (Total) 6,011,781 6,367,301 6,670,228

12.0 Personnel Benefits 2,020,457 2,005,273 2,110,081

13.0 Benefits to Former Personnel 51,147 52,266 53,054

Total Personnel and Compensation Benefits $8,083,385 $8,424,840 $8,833,363

21.0 Travel 84,025 93,859 129,553

22.0 Transportation of Things 18,482 21,407 29,748

23.1 Rental Payments to GSA 610,814 595,284 618,296

23.2 Rent Payments to Others 12,824 13,453 13,771

23.3 Communications, Utilities, & Misc 301,678 294,481 323,226

24.0 Printing & Reproduction 26,577 29,830 31,146

25.1 Advisory & Assistance Services 670,894 875,840 1,111,178

25.2 Other Services 97,504 144,134 344,782

25.3 Purchase of Goods & Services from Govt. Accounts 188,648 176,408 191,682

25.4 Operation & Maintenance of Facilities 173,022 157,775 168,283

25.5 Research & Development Contracts 2,462 1,555 1,576

25.6 Medical Care 14,180 13,640 15,063

25.7 Operation & Maintenance of Equipment 62,983 71,782 79,929

25.8 Subsistence & Support of Persons 930

26.0 Supplies and Materials 39,242 41,050 46,475

31.0 Equipment 238,020 216,543 270,787

32.0 Land and Structures 2,625 25,015 32,514

41.0 Grants, Subsidies 18,254 33,500 33,500

42.0 Insurance Claims & Indemnities 1,183 1,601 1,626

91.0 Unvouchered 2,696 3,003 3,597

Total Non-Personnel $2,567,043 $2,810,160 $3,446,732

New Appropriated Resources $10,650,428 $11,235,000 $12,280,095

Appropriations:

Taxpayer Services 2,173,684 2,333,376 2,406,318

Enforcement 4,767,563 4,864,936 5,216,263

Operations Support 3,601,436 3,746,688 4,314,099

Business Systems Modernization 107,745 290,000 343,415

Trade Adjustment Assistance Health Coverage Tax Credit

New Appropriated Resources $10,650,428 $11,235,000 $12,280,095

FTE 78,107 81,572 84,803
IRS - 42

2B – Appropriation Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

TAXPAYER SERVICES

For necessary expenses of the Internal Revenue Service to 

provide taxpayer services, including pre-filing assistance 

and education, filing and account services, taxpayer 

advocacy services, and other services as authorized by 5 

U.S.C. 3109, at such rates as may be determined by the 

Commissioner, [$2,156,554,000] $2,406,318,000, of which 

not less than $6,500,000 shall be for the Tax Counseling 

for the Elderly Program, of which not less than 

$12,000,000 shall be available for low-income taxpayer 

clinic grants, [and] of which not less than [$15,000,000, to] 

$191,822,000 shall remain available until September 30, 

[2017, shall be available for a Community Volunteer 

Income Tax Assistance matching grants program for tax 

return preparation assistance] 2018, and of which not less 

than $206,000,000 shall be available for operating 

expenses of the Taxpayer Advocate Service: Provided, 

That of the amounts made available for the Taxpayer 

Advocate Service, not less than $5,000,000 shall be for 

identity theft casework: Provided further, That, of the

amounts made available until September 30, 2018, not less 

than $15,000,000 shall be available for a Community 

Volunteer Income Tax Assistance matching grants program 

for tax return preparation assistance. 

ENFORCEMENT

For necessary expenses for tax enforcement activities of the 

Internal Revenue Service to determine and collect owed 

taxes, to provide legal and litigation support, to conduct 

criminal investigations, to enforce criminal statutes related 

to violations of internal revenue laws and other financial 

crimes, to purchase and hire passenger motor vehicles (31 

U.S.C. 1343(b)), and to provide other services as 

authorized by 5 U.S.C. 3109, at such rates as may be 

determined by the Commissioner, [$4,860,000,000] 

$5,216,263,000, of which not to exceed [$50,000,000] 

$54,936,000 shall remain available until September 30, 

[2017] 2018, and of which not less than $60,257,000 shall 

New two-year authority was 

provided in Section 113 of the 

Department of the Treasury 

Appropriations Act, 2016. 

$176,822,000 of this amount 

was allocated to Taxpayer 

Services. This same amount is 

requested in FY 2017 and is 

added to the existing two-year 

authority in the Budget request, 

for a total request of 

$191,822,000 in two-year 

authority. The total Budget 

request for Taxpayer Services is 

$2,406,318,000.

New two-year authority was 

provided in Section 113 of the 

Department of the Treasury 

Appropriations Act, 2016. 

$4,936,000 of this amount was 

allocated to Enforcement. This 

same amount is requested in FY 

2017, and is added to the 

existing two-year authority in 

the Budget request, for a total 

request of $54,936,000 in twoyear authority. 
IRS - 43

be for the Interagency Crime and Drug Enforcement 

program: Provided, That, of the amounts provided under 

this heading, not less than $231,344,000, of which 

$5,000,000 shall be transferred to the Alcohol and Tobacco 

Tax and Trade Bureau, shall be for an additional 

appropriation for tax activities, including tax compliance 

to address the Federal tax gap, as specified for purposes of 

section 251(b)(2) of the Balanced Budget and Emergency 

Deficit Control Act of 1985, as amended.

OPERATIONS SUPPORT

For necessary expenses of the Internal Revenue Service to 

support taxpayer services

and enforcement programs, including rent payments; 

facilities services; printing; postage; physical security; 

headquarters and other IRS-wide administration activities; 

research and statistics of income; telecommunications; 

information technology development, enhancement,

operations, maintenance, and security; the hire of passenger 

motor vehicles (31 U.S.C. 1343(b)); the operations of the 

Internal Revenue Service

Oversight Board; and other services as authorized by 5 

U.S.C. 3109, at such rates as may be determined by the 

Commissioner; [$3,638,446,000] $4,314,099,000, of which 

not to exceed [$50,000,000] $158,242,000 shall remain 

available until September 30, [2017]2018; of which not to 

exceed $10,000,000 shall remain available until expended 

for acquisition of equipment and construction, repair and 

renovation of facilities; of which not to exceed $1,000,000 

shall remain available until September 30, [2018]2019, for 

research; of which not to exceed [$20,000] $25,000 shall 

be for official reception and representation expenses:

Provided, That not later than 30 days after the end of each 

quarter, the Internal Revenue Service shall submit a report 

to the Committees on Appropriations of the House of 

Representatives and the Senate and the Comptroller 

General of the United States detailing the cost and schedule 

performance for its major information technology 

investments, including the purpose and life-cycle stages of 

the investments; the reasons for any cost and schedule 

The Budget Request for the 

Enforcement account is 

$5,216,263,000 including a 

program integrity cap 

adjustment of $231,344,000

which, when combined with the 

$283,404,000 cap adjustment in 

the Operations Support account, 

totals $514,748,000 in 

additional appropriation for tax 

enforcement and compliance 

activities.

New two-year authority was 

provided in Section 113 of the 

Department of the Treasury 

Appropriations Act, 2016. 

$108,242,000 of this amount 

was allocated to Operations 

Support. This same amount is 

requested in FY 2017, and is 

added to the existing two-year 

authority in the Budget request, 

for a total request of 

$158,242,000 in two-year 

authority. 

The Budget Request for the 

Operations Support account is 

$4,314,099,000 including a 

program integrity cap 

adjustment of $283,404,000.
IRS - 44

variances; the risks of such investments and strategies the 

Internal

Revenue Service is using to mitigate such risks; and the 

expected developmental milestones to be achieved and 

costs to be incurred in the next quarter: Provided further, 

That the Internal Revenue Service shall include, in its 

budget justification for fiscal year [2017]2018, a summary 

of cost and schedule performance information for its major 

information technology systems: Provided further, That, of 

the amounts provided under this heading, such sums as are 

necessary shall be available to fully support tax 

enforcement and compliance activities, including not less 

than $283,404,000, for an additional appropriation for tax 

activities, including tax compliance to address the Federal 

tax gap, as specified for purposes of Section 251(b)(2) of 

the Balanced Budget and Emergency Deficit Control Act of 

1985, as

amended. 

BUSINESS SYSTEMS MODERNIZATION

For necessary expenses of the Internal Revenue Service's 

business systems modernization program, [$290,000,000] 

$343,415,000, to remain available until September 30, 

[2018] 2019, for the capital asset acquisition of information 

technology systems, including management and related 

contractual costs of said acquisitions, including related 

Internal Revenue Service labor costs, and contractual costs 

associated with operations authorized by 5 U.S.C. 3109: 

Provided, That not later than 30 days after the end of each 

quarter, the Internal Revenue Service shall submit a report 

to the Committees on Appropriations of the House of 

Representatives and the Senate and the Comptroller 

General of the United States detailing the cost and schedule 

performance for CADE 2 and Modernized e-File 

information technology investments, including the 

purposes and life-cycle stages of the investments; the 

reasons for any cost and schedule variances; the risks of 

such investments and the strategies the Internal Revenue 

Service is using to mitigate such risks; and the expected 

developmental milestones to be achieved and costs to be 

incurred in the next quarter.
IRS - 45

ADMINISTRATIVE PROVISIONS –

INTERNAL REVENUE SERVICE

(INCLUDING TRANSFER OF FUNDS)

SEC. 101. Not to exceed 5 percent of any appropriation 

made available in this Act to the Internal Revenue Service 

may be transferred to any other Internal Revenue Service 

appropriation upon the advance [approval] notification of 

the Committees on Appropriations. 

SEC. 102. The Internal Revenue Service shall maintain an 

employee training program, which shall include the 

following topics: taxpayers' rights, dealing courteously 

with taxpayers, cross-cultural relations, ethics, and the 

impartial application of tax law.

SEC. 103. The Internal Revenue Service shall institute and 

enforce policies and procedures that will safeguard the 

confidentiality of taxpayer information and protect 

taxpayers against identity theft.

SEC. 104. Funds made available by this or any other Act to 

the Internal Revenue Service shall be available for 

improved facilities and increased staffing to provide 

sufficient and effective 1–800 help line service for 

taxpayers. The Commissioner shall continue to make 

improvements to the Internal Revenue Service 1–800 help 

line service a priority and allocate resources necessary to 

enhance the response time to taxpayer communications, 

particularly with regard to victims of tax-related crimes. 

[SEC. 105. None of the funds made available to the 

Internal Revenue Service by this Act may be used to make 

a video unless the Service-Wide Video Editorial Board 

determines in advance that making the video is appropriate, 

taking into account the cost, topic, tone, and purpose of the 

video.]

SEC. [106]105. The Internal Revenue Service shall issue a 

notice of confirmation of any address change relating to an 

employer making employment tax payments, and such 

notice shall be sent to both the employer's former and new 

address and an officer or employee of the Internal Revenue 

Service shall give special consideration to an offer-incompromise from a taxpayer who has been the victim of 

fraud by a third party payroll tax preparer.

[SEC. 107. None of the funds made available under this 

Act may be used by the Internal Revenue Service to target 

citizens of the United States for exercising any right 

guaranteed under the First Amendment to the Constitution 

of the United States.]

Section 105 is no longer 

needed. In 2013, the IRS 

established policy and standards 

for video use and the ServiceWide Video Editorial Board to 

review all video projects 

planned throughout the IRS.

Sections 107 and 108 are 

unnecessary since these 

behaviors are prohibited under 

existing, permanent law. 
IRS - 46

[SEC. 108. None of the funds made available in this Act 

may be used by the Internal Revenue Service to target 

groups for regulatory scrutiny based on their ideological

beliefs.]

[SEC. 109. None of funds made available by this Act to the 

Internal Revenue Service shall be obligated or expended on 

conferences that do not adhere to the procedures, 

verification processes, documentation requirements, and 

policies issued by the Chief Financial Officer, Human 

Capital Office, and Agency-Wide Shared Services as a 

result of the recommendations in the report published on 

May 31, 2013, by the Treasury Inspector General for Tax 

Administration entitled "Review of the August 2010 Small 

Business/Self-Employed Division's Conference in 

Anaheim, California" (Reference Number 2013–10–037).]

[SEC. 110. None of the funds made available in this Act to 

the Internal Revenue Service may be obligated or 

expended—(1) to make a payment to any employee under a 

bonus, award, or recognition program; or (2) under any 

hiring or personnel selection process with respect to rehiring a former employee, unless such program or process 

takes into account the conduct and Federal tax compliance 

of such employee or former employee.]

[SEC. 111. None of the funds made available by this Act 

may be used in contravention of section 6103 of the 

Internal Revenue Code of 1986 (relating to confidentiality 

and disclosure of returns and return information).]

[SEC. 112. Except to the extent provided in section 6014, 

6020, or 6201(d) of the Internal Revenue Code of 1986, no 

funds in this or any other Act shall be available to the 

Secretary of the Treasury to provide to any person a 

proposed final return or statement for use by such person to 

satisfy a filing or reporting requirement under such Code.]

[SEC. 113. In addition to the amounts otherwise made 

available in this Act for the Internal Revenue Service, 

$290,000,000, to be available until September 30, 2017, 

shall be transferred by the Commissioner to the "Taxpayer 

Services", "Enforcement", or "Operations Support" 

accounts of the Internal Revenue Service for an additional 

amount to be used solely for measurable improvements in 

the customer service representative level of service rate, to 

improve the identification and prevention of refund fraud 

and identity theft, and to enhance cybersecurity to 

safeguard taxpayer data: Provided, That such funds shall 

supplement, not supplant any other amounts

made available by the Internal Revenue Service for such 

Section 109 is unnecessary 

since obligation and outlay of 

funds on conferences are 

already subject to adequate 

review and departmental 

policies. 

Section 110 is unnecessary 

since employee records are 

already considered according to 

agency processes prior to hiring 

or award issuance. 

Section 111 is unnecessary 

since these behaviors are 

prohibited under existing, 

permanent law.

Section 112 is unnecessary 

because the IRS does not 

currently complete these 

activities. 

Section 113 is unnecessary. The 

amounts provided in FY 2016 

are accounted for in the FY 

2017 Budget request for the 

four main appropriations 

accounts. 

The IRS requests Streamlined 

Critical Pay (SCP) authority 

through September 30, 2021. 

This SCP authority expired 
IRS - 47

purpose: Provided further, That such funds shall not be 

available until the Commissioner submits to the 

Committees on Appropriations of the House of 

Representatives and the Senate a spending plan for such 

funds: Provided further, That such funds shall not be used 

to support any provision of Public Law 111–148, Public 

Law 111–152, or any amendment made by either such 

Public Law.]

SEC. 106. Section 9503(a) of title 5, United States Code, is 

amended by striking the clause "before September 30, 

2013" and inserting "before September 30, 2021".

SEC. 107. Section 9503(a)(5) of title 5, United States Code, 

is amended by inserting before the semicolon the following: 

"renewable for an additional two years, based on a critical 

organizational need".

SEC. 108. Section 1344(b)(6) of title 31, United States 

Code, is amended by adding a comma before "the 

Administrator of the Drug Enforcement Administration", by 

striking "and" after "Drug Enforcement Administration", 

and by inserting ", and the Commissioner of Internal 

Revenue" after "National Aeronautics and Space 

Administration".

September 30, 2013. Currently 

there are 14 senior employees 

under SCP appointments, down 

from a high of 30. If the SCP is 

not renewed, the IRS will face 

challenges recruiting and 

retaining top-level talent

through FY 2017 as the 

remaining SCP term 

appointments expire , especially 

IT professionals who can help 

protect taxpayer data from 

cyber-attacks and who are 

working to modernize the IRS’s 

IT infrastructure.

The IRS requests that the IRS 

Commissioner position be 

permanently added to 

31 U.S.C § 1344(b)(6) as one of 

the government officials with 

authorized home-to-work 

transportation. This is due to 

security concerns. 

2C – Legislative Proposals 

Streamlined Critical Pay Authority

The IRS requests Streamlined Critical Pay (SCP) authority through September 30, 2021. The 

authority to make new SCP appointments expired September 30, 2013. Currently there are 

approximately 14 senior employees under SCP appointments, down from a high of 30. If the 

SCP is not renewed, the IRS will face challenges recruiting and retaining top-level talent

through FY 2017 as the remaining SCP term appointments expire , especially IT professionals 

who can help protect taxpayer data from cyber-attacks and who are working to modernize the 

IRS's IT infrastructure. According to Treasury Inspector General for Tax Administration 

report 2015-IE-R001, The Internal Revenue Service’s Use of Its Streamlined Critical Pay 

Authority, “Private sector expertise had been crucial to introducing new leadership to 

supplement in-house expertise, and the IRS had taken advantage of the private sector 

expertise by retaining the critical pay appointees whenever feasible.”

Commissioner Transportation

The IRS requests that the IRS Commissioner position be permanently added to 

31 U.S.C § 1344(b)(6) as one of the government officials authorized home-to-work 

transportation. The IRS Criminal Investigations unit completed an extensive assessment of 
IRS - 48

the Commissioner’s threat environment and has classified the threat status as high. The 

Treasury Inspector General for Tax Administration (TIGTA) has also recommended that 

precautions continue to be taken regarding the Commissioner’s safety due to the elevated 

threat environment.

2D – Legislative Tax Proposals 

These legislative proposals are intended to reduce the tax gap and improve tax compliance 

with minimal taxpayer burden. The new tax gap proposals that were included in the FY 2017

President’s Budget were estimated by the Treasury Office of Tax Analysis (OTA) to increase 

revenue by $82.2 billion over the next 10 years. The majority of the estimated revenue 

includes revenue generated by the FY 2017 program integrity cap adjustment investments. 

These proposals will reduce the tax gap by expanding information reporting and sharing, 

improving compliance by businesses, and strengthening tax administration. The IRS 

estimates the implementation cost for these FY 2017 President’s Budget tax gap proposals to 

be $57.2 million (excluding the program integrity cap adjustment’s ten-year cost) over three 

years, including the initial startup, processing, and compliance operational costs (the cost for 

these legislative proposals is provided below). In a few cases, estimates are not yet available 

due to timing. 

Expand information reporting – Compliance with the tax laws is highest when payments are 

subject to information reporting to the IRS. Specific information reporting proposals would:

• Require a certified Taxpayer Identification Number (TIN) from contractors and 

allow certain withholding ($11.5 million); 

• Require information reporting for private separate accounts of life insurance 

companies ($0);

• Provide an exception to the limitation on disclosing tax return information to 

expand TIN matching beyond forms where payments are subject to backup 

withholding; 

• Provide for reciprocal reporting of information in connection with the 

implementation of the FATCA ($4.2 million); and

• Require Form W-2 reporting for employer contributions to defined contribution 

plans ($1.7 million).

Improve compliance by businesses – Improving compliance by businesses of all sizes is 

important due to their role in tax administration (through employment taxes) and to ensure 

equity across the tax system. Specific proposals to improve compliance by businesses would:

• Increase certainty with respect to worker classification ($1.9 million); 

• Increase information sharing to administer excise taxes ($0); and

• Provide authority to readily share beneficial ownership information of U.S. 

companies with law enforcement ($4.3 million).
IRS - 49

Strengthen tax administration – The IRS has taken a number of steps under existing law to 

improve compliance. These efforts would be enhanced by specific tax administration 

proposals that would:

• Impose liability on shareholders to collect unpaid income taxes of applicable 

corporations ($0.1 million);

• Implement a program integrity statutory cap adjustment for tax administration 

($17.5 billion);

• Revise offer-in-compromise application rules ($17.8 million);

• Make repeated willful failure to file a tax return a felony ($0);

• Facilitate tax compliance with local jurisdictions ($1.2 million);

• Improve investigative disclosure statute ($0);

• Allow IRS to absorb credit and debit card processing fees for certain tax payments 

($9.6 million); 

• Provide the IRS with greater flexibility to address correctable errors ($1.4 million);

• Enhance electronic filing of returns ($0);

• Improve the whistleblower program ($0);

• Index all penalties for inflation ($0.8 million);

• Combat tax-related identity theft ($2.7 million);

• Allow states to send notices of intent to offset federal tax refunds to collect state 

tax obligations by regular first-class mail instead of certified mail ($0)

• Accelerate information return filing due dates ($0);

• Increase oversight of paid tax return preparers ($0);

• Enhance feasibility of the administration of the appraiser penalty ($0);
IRS - 50

2E – Strategic Objective Annual Review (SOAR)

The GPRA Modernization Act of 2010 requires each federal agency to conduct a review of 

performance goals and objectives on an annual basis. This Strategic Objective Annual 

Review (SOAR), conducted across Treasury with participation from the IRS, serves as an 

annual assessment of progress to improve program outcomes and looks at opportunities for 

productivity gains using a variety of analytical, research, and evaluation methods to support 

the assessment.

Based on the FY 2015 SOAR, the IRS identified two next steps: (1) Implement first ACA 

filing season, and (2) Concisely articulate IRS enforcement and service priorities.

In FY 2015, the IRS made significant progress in addressing these SOAR focus areas through 

the successful delivery of several Quarterly Performance Review (QPR) priority projects. 

Actions completed to date include:

Provided outreach communications, customer service, and stakeholder collaboration on the 

ACA tax provisions during the second ACA open enrollment period and the first ACA Filing 

Season. The IRS integrated technology to support ACA Filing Season 2015 tax 

administration processing, allowing taxpayers to report health insurance coverage, claim 

health coverage exemptions, report a shared responsibility payment, and claim the ACA 

Premium Tax Credit. The IRS built a new system, the ACA Verification Service (AVS), to 

enable at-filing checks of tax returns for reporting the Premium Tax Credit, leveraging thirdparty data from the Insurance Marketplaces, and validating ACA-related tax forms. This 

system, which processed millions of tax returns, helped identify fraudulent and erroneous 

returns at the initial processing stage, reducing the number of refunds disbursed in error. In 

addition to making progress in completing the SOAR next steps, the IRS also completed 

major milestones on the following priority initiatives tracked through the Department’s 

Quarterly Performance Reviews (QPRs)

• Achieved a major milestone by opening the first release of the International Data 

Exchange Service (IDES) Gateway. IDES enables both Financial Institutions and 

Host Country Tax Administrations to comply with their Foreign Account Tax 

Compliance Act (FATCA) reporting obligations by safely and securely sending 

electronic FATCA reports to the IRS.

• Initiated the Return Review Program (RRP) pilot project. The RRP successfully 

loaded and scored over 99 million electronic refund returns. Of those returns, nearly 

800,000 were identified as potential ID theft fraud, representing over $4.7 billion in 

government revenues protected. By identifying suspicious cases up front, RRP was

able to reduce the amount of manual analysis work by 19 percent. In its inaugural 

filing season, RRP did not miss a single day of processing returns, identifying 

potential ID theft, and protecting taxpayer revenues.

• Received Executive Steering Committee approval of the Customer Account Data 

Engine (CADE) 2 Transition State 2 (TS2) five-year release plan. In addition to 

continued support of the IRS’s current tax processing needs, the plan includes 

expansion of CADE 2 capabilities. The TS2 five-year release plan will address the 
IRS - 51

Unpaid Assessment Financial Material Weakness, leverage the CADE 2 database as 

the Authoritative Source for Financial Statement Audit and Reporting, and begin the 

migration of core Individual Master File (IMF) functions from Assembly Language 

Code (ALC) to a modern computer language. Notably, an update in FY 2015 

prevented issuance of erroneous notices for limited Failure to Pay Penalties and 

another enabled capturing historic financial data expected to be useful in audit 

processes. 

• Completed 10 cross-organizational projects to upgrade and improve existing website 

content to better meet the needs of online audiences, continually improving the online 

experience provided to taxpayers on many IRS.gov website pages. The IRS 

developed a multi-year strategy to convert many tax publications and instructions into 

the user-friendly e-Pub electronic format. This digital publishing standard adapts 

traditional paper formats into a format readable by mobile devices such as tablets, 

e-readers, and smartphones and also meets accessibility requirements.

A summary of IRS accomplishments that directly support the SOAR can be found in Section 

1B, Vision, Priorities, and Context. A detailed discussion of the performance measures 

associated with the above focus areas can be found in Section 3. More detailed information 

on the IRS FY 2015 accomplishments can be found in the Management’s Discussion and 

Analysis section of the audit report, Financial Audit - IRS’s Fiscal Years 2015 and 2014 

Financial Statements dated November 2015 (GAO-16-146).
IRS - 52

2F – IRS Use of Evidence and Evaluation

The IRS continues to improve program performance by applying existing evidence about 

what works and by using research and innovation to improve program delivery. 

Significant Accomplishments 

Reducing Taxpayer Burden and Improving Compliance

• Post-Filing Model: The IRS has developed a model of the post-filing interactions 

between taxpayers and the IRS, accounting for various post-filing treatment streams, 

with a focus on taxpayer burden, IRS costs, cycle time, and compliance outcomes. 

The model is used to inform the campus exam plan along with the design and analysis 

of nonfiler outreach and enforcement treatments. The underlying research study is 

being updated based on more recent taxpayer experience and is also being extended to 

cover the experience of corporate and partnership taxpayers.

• Behavioral Economics Research: The IRS is engaged in a set of pilots and research 

studies aiming to better align treatments to taxpayer behavior. These include 

randomized controlled trials of outreach programs to encourage compliant 

participation in the Earned Income Tax Credit and the American Opportunities Tax 

Credit, filing compliance outreach and pre-emptive communication, and collection 

treatments. The research applies principles of behavioral economics in the design and 

analysis of the treatments. The analysis further considers the salience and flow of 

information to and among taxpayers in evaluating both direct and indirect effects of 

IRS treatments.

Highest Priorities

Improving the Effectiveness of the IRS

• Evaluation of Statistics of Income (SOI) Major Programs: The IRS SOI office will 

continue evaluations of its income tax products, determine projected future needs, and 

identify areas of potential cost savings. The evaluations conducted to date have

suggested new directions for the individual income files and changes over the next 

5-years in the production and delivery of business tax data to better represent 

increased globalization. SOI plans to continue evaluating the remainder of its 

products in FY 2016. The Division is also incorporating customer feedback and the 

effects of the changing data landscape into its 5-year business plan; a draft will be 

available by the end of the fiscal year.

• Creating More Accessible Statistics: SOI is developing a comprehensive plan to 

modernize its public communications efforts. Planned initiatives include extensive 

data visualizations, social media outreach, and redesigned web pages. A redesign of 

the IRS Data Book is already in process. 
IRS - 53

• Linking Data across Forms: SOI is initiating new projects to increase its ability to link 

data across tax and information returns. Linked data products will assist users in 

developing more comprehensive analysis and better understanding taxpayer behavior.

Implementation Updates for OMB Memo M-14-06

• Incarceration Data: SOI provided Treasury with a copy of an IRS administrative data 

file containing information on U.S. Citizens who have been incarcerated. Treasury 

will use the file for studies of how individuals who have served time in prison use 

various tax expenditures to both help their families during periods of imprisonment 

and improve their economic circumstances once they have been released. This file 

may also be used to study the long-term economic effects of imprisonment on various 

U.S. demographic groups.

• Providing Information on the Tax System to the Public: During FY 2015, SOI 

released the 2012 Corporation Source Book online. This publication includes nearly 

450 electronic tables that present corporate tax data by industrial sector as well as by 

major and minor industries within sector. SOI also released tables for the 

2012 Corporation Income Tax Returns Complete Report on the IRS webpage, Tax 

Stats. These tables consist of extensive corporate tax data classified primarily by size 

of total assets and size of total tax receipts. 

To date in FY 2015, SOI has also released more than 380 additional tables containing 

detailed information on a wide range of topics. Significantly, SOI released the 2012

state and county level migration data, which are based on year-to-year address changes 

reported on individual income tax returns. State-level files track inflows and outflows 

and include both origins and destinations by county. SOI’s other releases included 

time-series tables showing number of returns, adjusted gross income, and total income 

tax for individual taxpayers, by percentile, for TY 2001 to TY 2012, as well as 

TY 2012-updated data for corporations, partnerships, and sole proprietorships.
IRS-54

Section 3 – Budget and Performance Plan

Taxpayer Services 

Appropriation Description

The Taxpayer Services appropriation provides funding for taxpayer service activities and 

programs. This includes printing forms and publications, processing tax returns and related 

documents, offering filing and account services, providing taxpayer assistance, and providing 

taxpayer advocacy services.

The Taxpayer Services budget request for FY 2017 is $2,406,318,000 in direct appropriations 

and 31,056 FTE. This is an increase of $72,942,000 or 3.13 percent, and 686 FTE more than 

the FY 2016 Enacted level of $2,333,376,000 and 30,370 FTE.

The performance measures reflected in this section align with Goal 3: Fairly and effectively 

reform and modernize federal financial management, accounting, and tax systems, Objective 

3.3: Pursue tax reform, implement the ACA and FATCA, and improve the execution of the tax 

code of the Department of Treasury’s Strategic Plan for FY 2014 – FY 2017 Strategic Plan.
IRS - 55

2.1 – Budget Adjustments Table 

Dollars in Thousands

Taxpayer Services FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 27,887 $2,156,554

FY 2016 Administrative Provision 113 2,483 $176,822

Improve Taxpayer Service 2,483 176,622

Strengthening the Prevention of Identity Theft 200

FY 2016 Enacted 30,370 $2,333,376

Changes to Base:

Maintaining Current Levels (MCLs): $33,446

Pay Annualization 6,440

Pay Raise 23,856

Non-Pay 3,150

Efficiencies/Savings: (72) ($3,708)

Increase e-File Savings (72) (3,708)

Subtotal FY 2017 Changes to Base (72) $29,738

FY 2017 Current Services (Base) 30,298 $2,363,114

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Improve Taxpayer Service 604 33,503

Subtotal 604 $33,503

Focus Area: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 154 9,701

Subtotal 154 $9,701

Subtotal FY 2017 Budget Request Program Increases 758 $43,204

Total FY 2017 Total Budget Request 31,056 $2,406,318

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 686 $72,942

Percent Change FY 2017 Budget Request over FY 2016 Enacted 2.26% 3.13%
IRS - 56

2.2 – Operating Levels Table 

Dollars in Thousands

Taxpayer Services

Object Classification

FY 2015

Actual

FY 2016

Enacted

FY 2017

Request

11.1 Full-Time Permanent Positions 1,457,204 1,606,843 1,656,581

11.3 Other than Full-Time Permanent Positions 40,876 43,497 44,168

11.5 Other Personnel Compensation 35,485 66,350 69,662

11.8 Special Personal Services Payments 617 886 899

11.9 Personnel Compensation (Total) 1,534,182 1,717,576 1,771,310

12.0 Personnel Benefits 494,627 420,188 435,578

13.0 Benefits to Former Personnel 70

Total Personnel and Compensation Benefits $2,028,879 $2,137,764 $2,206,888

21.0 Travel 12,184 18,415 19,314

22.0 Transportation of Things 754 709 720

23.2 Rent Payments to Others

23.3 Communications, Utilities, & Misc 1,213 1,490 1,515

24.0 Printing & Reproduction 7,955 8,843 8,983

25.1 Advisory & Assistance Services 26,007 22,735 23,141

25.2 Other Services 6,854 37,312 38,400

25.3 Purchase of Goods & Services from Govt. Accounts 65,813 64,459 65,516

25.4 Operation & Maintenance of Facilities 2 2 3

25.7 Operation & Maintenance of Equipment 1,510 1,535

25.8 Subsistence & Support of Persons 177

26.0 Supplies and Materials 5,031 5,666 5,815

31.0 Equipment 185 332 338

41.0 Grants, Subsidies 18,254 33,500 33,500

42.0 Insurance Claims & Indemnities 376 639 650

Total Non-Personnel $144,805 $195,612 $199,430

New Appropriated Resources $2,173,684 $2,333,376 $2,406,318

Budget Activities:

Pre-filing Taxpayer Assistance & Education 609,196 629,920 643,197

Filing & Account Services 1,564,488 1,703,456 1,763,121

New Appropriated Resources $2,173,684 $2,333,376 $2,406,318

FTE 27,476 30,370 31,056
IRS - 57

2.3 – Appropriation Detail Table

Dollars in thousands

Taxpayer Services

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Pre-Filing Taxpayer Assistance and Education 5,349 $609,196 5,499 $629,920 5,532 $643,197 33 $13,277 0.60% 2.11%

Filing and Account Services 22,127 1,564,488 24,871 1,703,456 25,524 1,763,121 653 59,665 2.63% 3.50%

Subtotal New Appropriated Resources 27,476 $2,173,684 30,370 $2,333,376 31,056 $2,406,318 686 $72,942 2.26% 3.13%

Other Resources:

Reimbursables 464 30,198 487 34,729 512 36,465 25 1,736 5.13% 5.00%

Offsetting Collections - Non Reimbursables

User Fees 71 44,694 661 103,496 1,377 116,841 716 13,345 108.32% 12.89%

Recovery from Prior Years

Unobligated Balances from Prior Years 110 14,304 11,000 12,000 1,000 9.09%

Transfers In/Out

Resources from Other Accounts 2 287

Subtotal Other Resources 932 $89,196 1,148 $149,225 1,889 $165,306 741 $16,081 64.55% 10.78%

Total Budgetary Resources 28,408 $2,262,880 31,518 $2,482,601 32,945 $2,571,624 1,427 $89,023 4.53% 3.59%

% Change

FY 2016

Enacted 1

FY 2015

Actual

FY 2017

Request

FY 2016 to FY 2017 

Request

FY 2016 to FY 2017 

Request

Change

2

Resources from Other Accounts include Other Direct FTE funded by the Department of Health and Human Services (287 FTE in FY 2015).

1

FY 2016 Enacted includes $176.8 million in Section 113 Administrative Provision funding for Taxpayer Services.
IRS - 58

3A – Pre-Filing Taxpayer Assistance and Education ($643,197,000 in direct 

appropriations, $83,000 from reimbursable programs, and an estimated $3,386,000 from 

user fees): This budget activity funds services to assist taxpayers with understanding and 

meeting their tax obligations, including tax law interpretation, publication, production, and 

advocate services. The program activities include the following:

• Pre-Filing Services Management supports headquarters management associated with 

Customer Assistance Relationship and Education (CARE). CARE provides pre-filing 

taxpayer assistance and education.

• Taxpayer Communication and Education researches customer needs; develops and 

manages educational programs; establishes partnerships with stakeholder groups; and 

disseminates tax information to taxpayers and the general public through a variety of 

media, including publications and mailings, websites, broadcasting, and advertising.

• Media and Publications develops and produces notices, forms, and publications for 

printed and electronic tax materials, and provides media production services to 

taxpayers.

• Taxpayer Advocacy provides advocate services to taxpayers by identifying the 

underlying causes of taxpayer problems and participating in the development of 

systematic and/or procedural remedies.

• Account Management and Assistance – Field Assistance provides face-to-face 

assistance, education, and compliance services to taxpayers. It includes return 

preparation, answering tax questions, resolving account and notice inquiries, and 

supplying forms and publications to taxpayers.

• Taxpayer Advocate Case Processing provides advocate services to taxpayers to 

resolve taxpayer problems through prompt identification, referral, and settlement.

• W&I HQ Management and Administration provides staffing, training, and direct 

support for Wage and Investment management activities of strategic planning, 

communications and liaison, finance, human resources, equity, diversity and inclusion, 

business modernization, and embedded training. 

• National Distribution Center processes orders for IRS forms and publications received 

from individual taxpayers, tax practitioners, and IRS tax return preparation partners.

Description of Performance

In FY 2015, the IRS timely delivered 89 percent (97 out of 109) of the Critical Individual 

Filing Season Tax Products to the public by the fifth workday of January. The Tax Increase 

Prevention Act of 2014; the Tax Technical Corrections Act of 2014; and the Achieving a 

Better Life Experience (ABLE) Act of 2014, were enacted on December 19, 2014, and had 

major implications and directly impacted reaching the FY 2015 goal of 95 percent. While 

89 percent of the tax products were made available to the public by January 8, 2015 date, 

93 percent (101 of 109) of them were available to the public by the January 20th filing season 

start date. While IRS cannot control the timeliness of tax-related legislation, procedures are 

in place to mitigate the impact of late legislation. For example, in early January 2015, a Joint 

Committee on Taxation report, identified 52 tax provisions that expired on 
IRS - 59

December 31, 2014 that may be extended by legislation before the start of the 2016 filing 

season. The IRS plans to implement its “best practice” of reserving lines on tax returns in 

advance of anticipated extended legislation for the coming year. Reserving lines provides

flexibility and expedites the process for implementing legislative changes due to extenders 

rather than initiating new development at the end of the tax year. The practice also allows for 

the most productive and efficient use of resources. IRS will continue to release products not 

affected by legislation early to devote more time to analyze, develop, and post or print the tax 

products affected by late changes to legislation. To achieve future targets IRS will continue 

to employ this strategy. In FY 2016 and FY 2017, the IRS will lower the target to 87 percent 

due to anticipated legislation passed late in the year that will impact form and product 

development.

In FY 2015, the IRS Timeliness of Critical Tax Exempt and Government Entities (TE/GE) 

and Business Filing Season Tax products to the Public was 92.6 percent (151 of 163), falling 

short of the FY 2015 target of 95 percent. As discussed above, the passage of late legislation 

negatively impacted reaching the year-end target. To ensure meeting future targets, the IRS 

will plan, monitor, and coordinate all product development and delivery activities. The IRS 

will also continue to evaluate its processes so that mitigation strategies can be implemented 

quickly, as necessary. In FY 2016 and FY 2017, the IRS will lower the target to 87 percent 

for providing Critical TE/GE and Business Tax Products to the Public due to anticipated 

legislation passed late in year.

Taxpayer Self-Assistance Rate reached 88.7 percent through FY 2015, exceeding the 

FY 2014 rate of 84.7 percent and the FY 2015 target of 85 percent. This increase is primarily 

attributed to a 28 percent increase in web services including significantly more taxpayers 

using the Where’s My Refund? application to request the status of their refund. Self-Service 

channels continue to experience an increase in demand due to shifting customer preferences 

as more taxpayers choose to use automated applications to resolve issues and questions

instead of traditional methods of contacting the IRS including telephone and written 

correspondence or walk-in visits to Taxpayer Assistance Centers. In FY 2016 and FY 2017, 

the IRS is devoting substantial resources to bolster traditional methods in order to better meet 

demand. Through continued use of automation, the IRS expects to achieve the FY 2016 goal 

of 90 percent and FY 2017 target of 89 percent. The IRS will continue to look for new 

applications that support the needs of the taxpayer as well as its ability to manage resources 

efficiently as possible in order to meet all future goals.
IRS - 60

 

FY 2017 Changes by Budget Activity

Dollars in Thousands

Pre-Filing Taxpayer Assistance & Education FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 5,499 $629,920

FY 2016 Administrative Provision 113

Improve Taxpayer Service

Cyber Security

Strengthening the Prevention of Identity Theft

FY 2016 Enacted 5,499 $629,920

Changes to Base:

Maintaining Current Levels (MCLs): $9,776

Pay Annualization 1,817

Pay Raise 6,729

Non-Pay 1,230

Efficiencies/Savings: -

Increase e-File Savings -

Subtotal FY 2017 Changes to Base $9,776

FY 2017 Current Services (Base)1 5,499 $639,696

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Implement Changes to Deliver Tax Credits and Other Requirements for the 

Affordable Care Act

Leverage New Technologies to Advance the IRS Mission

Improve Taxpayer Service 14 1,482

Subtotal 14 $1,482

Drive More Agility and Efficiency in IRS Operations

Enterprise Electronic Records Management Solution

Subtotal

Strategic Focus: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 18 2,019

Subtotal 18 $2,019

Subtotal FY 2017 Budget Request Program Increases 32 $3,501

Total FY 2017 Total Budget Request 5,531 $643,197

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 32 $13,277

Percent Change FY 2017 Budget Request over FY 2016 Enacted 0.58% 2.11%
IRS - 61

3.1.1 – Budget and Performance Report and Plan 

3B – Filing and Account Services ($1,763,121,000 in direct appropriations, an estimated 

$36,382,000 from reimbursable programs, and an estimated $113,455,000 from user fees): 

This budget activity funds programs that provide filing and account services to taxpayers, 

process paper and electronically-submitted tax returns, issue refunds, and maintain taxpayer 

accounts. The IRS continues to make progress in decreasing paper returns and increasing the 

use of electronic filing and payment methods. The program activities include the following:

• Filing and Account Services Management administers filing and account services 

programs.

• Submission Processing processes paper and electronically submitted tax returns and 

supplemental documents, accounts for tax revenue, processes information documents, 

and issues refunds and tax notices.

• Account Management and Assistance – Electronic/Correspondence Assistance

provides education and assistance to taxpayers and resolves accounts and notice 

inquiries through telephone, paper, and internet correspondence.

• Electronic Products and Services Support provides centralized operations and support 

capabilities for the IRS suite of electronic products, including e-help desk, technology 

support, and operations support.

• Electronic Tax Administration (ETA) markets and administers electronic tax 

administration products and services.

• Business Performance Lab recommends and manages systemic solutions for the 

detection and treatment of improper refunds while ensuring effective treatment for 

payment of valid refund claims, leads the development of innovative business 

processes and technology solutions and represents Return Integrity & Compliance 

Services (RICS) interest in support of the service-wide revenue protection strategy.

Dollars in Thousands

Pre-Filing Taxpayer Assistance & Education FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Resource Level Enacted Enacted Enacted Enacted Enacted Enacted Enacted Request

Appropriated Resources1 $679,924 $678,204 $625,189 $605,761 $610,496 $621,516 $629,920 $643,197

Reimbursable Resources2 862 1,135 96 46 51 79 83

User Fees2 5,514 22,460 6,400 22,400 4,141 11,039 3,386

Budget Activity Total $686,300 $679,339 $647,745 $612,161 $632,942 $625,708 $641,038 $646,666 1

The FY 2010 - FY 2015 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2010 - FY 2015 columns represent realized resources for reimbursables and user fees.

Pre-Filing Taxpayer Assistance & Education FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2015 FY 2016 FY 2017

Measure Actual Actual Actual Actual Actual Actual Target Target Target

Timeliness of Critical Filing Season Tax Products to the 

Public (Ot) 95.3% 96.3% 97.2% 58.9% 99.1% 89.0% 95.0% 87.0% 87.0%

Timeliness of Critical TE/GE & Business Tax Products to 

the Public (Ot) 97.7% 96.4% 94.5% 83.6% 98.7% 92.6% 95.0% 87.0% 87.0%

Taxpayer Self-Assistance Rate (E) (L) 64.4% 70.1% 78.5% 83.3% 84.7% 88.7% 85.0% 90.0% 89.0%

Pre-Filing Taxpayer Assistance & Education Budget and 

Performance Plan

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Long Term Goal
IRS - 62

• Pre-Refund provides coordination support for the pre-refund activities to ensure timely 

issuance of refunds and credits that are legally due to taxpayers.

• Joint Operations Center (JOC) provides service, support, and technology for 

telephone, correspondence, and electronic media inquiries; real time monitoring and 

routing of inbound calls; monitoring of Customer Service Representative accuracy; 

and management of the enterprise telephone database.

Description of Performance

Millions of individual and business taxpayers file their returns electronically. In FY 2015, the 

IRS achieved an 85.3 percent individual e-file rate and a 47 percent business e-file rate. Both 

the individual and business e-file rates exceed the FY 2015 targets. The overall benefits of 

e-file (i.e. faster refunds, greater accuracy, secure and confidential submission, quick 

confirmation, and the ability to file online) continue to drive performance. The IRS is also 

promoting the benefits of e-filing via social media. The IRS will increase the individual 

e-filing target to 86 percent for FY 2016 and FY 2017 and the business e-filing target will 

increase to 48 percent for FY 2016 and FY 2017. IRS will continue to process individual and 

business returns as efficiently as possible to meet future plans.

In FY 2015, Customer Accuracy – Tax Law was at 95 percent, exceeding the target of 

92 percent. IRS will continue to monitor results through data driven analysis of reports 

obtained from Embedded Quality Review System (EQRS) to ensure achievement of the 

FY 2016 goal. The IRS will continue to hold weekly conference calls to discuss quality 

defects/errors and procedures to ensure the target is met. For FY 2016 and FY 2017, the IRS 

will keep the tax law accuracy targets at 92 percent, as responding to legislative changes in 

tax laws will continue to be a major challenge moving forward.

In FY 2015, the IRS correctly answered 95.5 percent of account questions via the telephone, 

exceeding the target of 94 percent. The IRS expects to maintain high performance on the 

Customer Accuracy – Accounts (Phones) and will achieve the FY 2016 and FY 2017 target of 

94 percent through ongoing efforts to focus on promoting coding consistency of product 

reviews and providing training to managers and employees to ensure quality service.

In FY 2015, the IRS Customer Contacts Resolved per Staff Year reached 26,245, exceeding 

last year’s result and the FY 2015 target of 21,000. This measure includes activities such as 

automated and assistor calls answered and web services completed. The increase is attributed 

to a 28 percent increase in web usage including a significant jump in Where’s My Refund?

usage. The FY 2016 target is set at 28,000 with an expected increase in web usage. The 

FY 2017 target is set at 25,700, as IRS expects more employee assisted calls. To achieve 

these targets, the IRS will continue to provide efficient responses to customer contacts with 

the resources available and provide more self-service applications on IRS.gov.

In FY 2015, the Customer Service Representative Level of Service (LOS) was 38.1 percent, 

exceeding the FY 2015 target of 38.0 percent. Additional funding provided in FY 2016, and 

supplemented with user fees, will allow the IRS to achieve a projected LOS of 47.0 percent 

for the full year, including 65.0 percent LOS during filing season. The FY 2017 Budget, 

supplemented with approximately $100 million in user fees, provides sufficient funding to 
IRS - 63

achieve a projected 70.0 percent LOS for the full year including filing season. Sustained 

reductions in funding have led to a long-term decline in LOS. In FY 2015, low LOS, coupled 

with limited telephone port capacity, led to a higher demand than could be adequately 

handled. When demand exceeds available system capacity, callers are disconnected. These 

Courtesy Disconnects increased 1,162 percent in FY 2015 compared to FY2014 (17.7 million 

vs. 1.4 million). Weather related closures during the second quarter and several system 

outages in the third quarter caused a 162 percent increase in emergency closure messages. 

Refund timeliness is defined as the percentage of paper refunds issued within 40 days or less. 

In FY 2015, Refund Timeliness reached 98.8 percent, exceeding the FY 2015 target of 

94 percent as the number of paper refunds continued to decline. There was a 7.5 percent 

decrease in the number of paper refunds compared to the same period in FY 2014. IRS will 

continue to monitor IMF return cycles and inventories through various reports and production 

meetings to ensure this target is met. For FY 2016 and FY 2017, the IRS expects to achieve a 

target of 97 percent.
IRS - 64

FY 2017 Changes by Budget Activity

Dollars in Thousands

Filing and Account Services FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 22,388 $1,526,634

FY 2016 Administrative Provision 113 2,483 $176,822

Improve Taxpayer Service 2,483 176,622

Cyber Security

Strengthening the Prevention of Identity Theft 200

FY 2016 Enacted 24,871 $1,703,456

Changes to Base:

Maintaining Current Levels (MCLs): $23,670

Pay Annualization 4,623

Pay Raise 17,127

Non-Pay 1,920

Efficiencies/Savings: (72) ($3,708)

Increase e-File Savings (72) (3,708)

Subtotal FY 2017 Changes to Base (72) $19,962

FY 2017 Current Services (Base)1 24,799 $1,723,418

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Implement Changes to Deliver Tax Credits and Other Requirements for the 

Affordable Care Act

Leverage New Technologies to Advance the IRS Mission

Improve Taxpayer Service 590 32,021

Subtotal 590 $32,021

Drive More Agility and Efficiency in IRS Operations

Enterprise Electronic Records Management Solution

Subtotal

Strategic Focus: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 136 7,682

Subtotal 136 $7,682

Subtotal FY 2017 Budget Request Program Increases 726 $39,703

Total FY 2017 Total Budget Request 25,525 $1,763,121

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 654 $59,665

Percent Change FY 2017 Budget Request over FY 2016 Enacted 2.63% 3.50%
IRS - 65

3.1.2 – Budget and Performance Report and Plan 

Filing and Account Services FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Resource Level Enacted Enacted Enacted Enacted Enacted Enacted Enacted Request

Appropriated Resources1 $1,614,418 $1,630,549 $1,614,514 $1,529,792 $1,546,058 $1,565,038 $1,703,456 $1,763,121

Reimbursable Resources2 21,993 27,857 20,759 37,535 28,555 30,147 34,650 36,382

User Fees2 115,998 128,966 152,136 184,599 160,342 40,553 92,457 113,455

Budget Activity Total $1,752,409 $1,787,372 $1,787,409 $1,751,926 $1,734,955 $1,635,738 $1,830,563 $1,912,958

1

The FY 2010 - FY 2015 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2010 - FY 2015 columns represent realized resources for reimbursables and user fees.

Filing and Account Services FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2015 FY 2016 FY 2017

Measures Actual Actual Actual Actual Actual Actual Target Target Target

Percent Individual Returns Processed Electronically (Oe) (L 69.3% 76.9% 80.5% 82.5% 84.1% 85.3% 84.6% 86.0% 86.0%

Percent of Business Returns Processed Electronically (Oe) 25.5% 31.8% 36.7% 40.2% 43.1% 47.0% 46.5% 48.0% 48.0%

Customer Accuracy - Tax Law (Phones) (Ot) 92.7% 93.4% 93.2% 95.7% 95.0% 95.0% 92.0% 92.0% 92.0%

Customer Accuracy - Accounts (Phones) (Ot) 95.7% 96.0% 95.6% 96.0% 96.2% 95.5% 94.0% 94.0% 94.0%

Customer Contacts Resolved per Staff Year (E) 10,744 12,419 16,320 20,767 21,018 26,245 21,000 28,000 25,700

Customer Service Representative Level of Service (Oe) (L) 74.0% 70.1% 67.6% 60.5% 64.4% 38.1% 38.0% 47.0% 70.0%

Refund Timeliness - Individual (Paper) (Ot) 96.1% 99.4% 99.7% 99.0% 98.7% 98.8% 94.0% 97.0% 97.0%

Cost per Taxpayer Served ($) (HCTC) (E) $9.52 $12.36 $14.43 $13.41 N/A N/A N/A N/A N/A

Sign-up Time (Days) - Customer Engagement (HCTC) (Ot) 124.0 117.0 116.0 125.2 N/A N/A N/A N/A N/A

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Long Term Goal

Filing and Account Services Budget and Performance Plan

Dollars in Thousands
IRS - 66

Enforcement 

Appropriation Description

The Enforcement appropriation provides funding for the examination of tax returns, both 

domestic and international; administrative and judicial settlement of taxpayer appeals of 

examination findings; technical rulings; monitoring of employee pension plans; determination 

of qualifications of organizations seeking tax-exempt status; examination of tax returns of 

exempt organizations; enforcement of statutes relating to detection and investigation of 

criminal violations of the internal revenue laws; identification of underreporting of tax 

obligations; securing of unfiled tax returns; and collection of unpaid accounts.

The Enforcement budget request for FY 2017 is $4,984,919,000 in direct appropriations and 

39,141 FTE. This is an increase of $119,983,000, or 2.47 percent, and 301 FTE more than the 

FY 2016 Enacted level of $4,864,936,000 and 38,840 FTE. The total Enforcement budget 

request including the program integrity cap adjustment is $5,216,263,000 and 41,028 FTE.

The performance measures reflected in the Enforcement appropriation support and align to 

Goal 3: Fairly and effectively reform and modernize federal financial management, 

accounting, and tax systems, Objective 3.3: Pursue tax reform, implement the Patient 

Protection and Affordable Care Act and Foreign Account Tax Compliance Act, and improve 

the execution of the tax code of the Department of the Treasury’s FY 2014 – FY 2017 

Strategic Plan.
IRS - 67

2.1 – Budget Adjustments Table

Dollars in Thousands

Enforcement FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 38,840 $4,860,000

FY 2016 Administrative Provision 113 $4,936

Strengthening the Prevention of Identity Theft 4,936

FY 2016 Enacted 38,840 $4,864,936

Changes to Base:

Maintaining Current Levels (MCLs): $75,008

Pay Annualization 14,952

Pay Raise 55,386

Non-Pay 4,670

Subtotal FY 2017 Changes to Base $75,008

FY 2017 Current Services (Base) 38,840 $4,939,944

Program Increases:

Budget Request Program Increases:

Focus Area: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 301 44,975

Subtotal 301 $44,975

Subtotal FY 2017 Budget Request Program Increases 301 $44,975

Total FY 2017 Total Budget Request 39,141 $4,984,919

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 301 $119,983

Percent Change FY 2017 Budget Request over FY 2016 Enacted 0.78% 2.47%

Cap Adjustment Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Enterprise Case Management 22 7,369

Subtotal 22 $7,369

Understand Non-Compliant Taxpayer Behavior and Develop 

Approaches to Deter and Change It

Increase Collection Coverage 678 58,213

Increase Audit Coverage 816 74,161

Digitizing Form 990 1 80

FATCA: Implement, Expand Filing Coverage, and Combat Criminal Noncompliance 203 49,889

Pursue Employment Tax and Abusive Tax Schemes 37 7,210

Increase Investigations of Transnational Organized Crime (TOC) 130 29,422

Subtotal 1,865 $218,975

Alcohol and Tobacco Tax and Trade Bureau Transfer:

Transfer to TTB for High-Return on Investment (ROI) Tax Enforcement Activ 5,000

Subtotal $5,000

Subtotal FY 2017 Cap Adjustment Program Increases 1,887 $231,344

Subtotal FY 2017 Total Program Increases Including Cap Adjustment 2,188 $276,319

Total FY 2017 Total Budget Request Including Cap Adjustment 41,028 $5,216,263

Dollar/FTE Change FY 2017 Budget Request including PIC over FY 2016 Enacted 2,188 $351,327

Percent Change FY 2017 Budget Request including PIC FY 2016 Enacted 5.63% 7.22%
IRS - 68

2.2 – Operating Levels Table

Dollars in Thousands

Enforcement

Object Classification

FY 2015

Actual

FY 2016

Enacted

FY 2017

Request

11.1 Full-Time Permanent Positions 3,238,319 3,231,404 3,411,336

11.3 Other than Full-Time Permanent Positions 31,184 32,727 33,235

11.5 Other Personnel Compensation 99,942 114,087 124,871

11.8 Special Personal Services Payments 22,642 15,678 15,921

11.9 Personnel Compensation (Total) 3,392,087 3,393,896 3,585,363

12.0 Personnel Benefits 1,133,218 1,131,180 1,202,298

13.0 Benefits to Former Personnel 1

Total Personnel and Compensation Benefits $4,525,306 $4,525,076 $4,787,661

21.0 Travel 60,041 66,676 98,152

22.0 Transportation of Things 7,198 9,060 16,591

23.1 Rental Payments to GSA 11 30 31

23.2 Rent Payments to Others 472 411 491

23.3 Communications, Utilities, & Misc 2,493 2,708 3,050

24.0 Printing & Reproduction 2,221 2,822 3,080

25.1 Advisory & Assistance Services 65,721 147,319 157,580

25.2 Other Services 29,396 48,219 65,059

25.3 Purchase of Goods & Services from Govt. Accounts 45,123 37,984 40,799

25.4 Operation & Maintenance of Facilities 20 17 18

25.5 Research & Development Contracts 2,462 1,555 1,576

25.6 Medical Care 67 43 44

25.7 Operation & Maintenance of Equipment 533 1,940 6,047

25.8 Subsistence & Support of Persons 735

26.0 Supplies and Materials 15,814 14,888 18,473

31.0 Equipment 6,713 2,409 13,228

32.0 Land and Structures 13 12 12

42.0 Insurance Claims & Indemnities 528 764 774

91.0 Unvouchered 2,696 3,003 3,597

Total Non-Personnel $242,257 $339,860 $428,602

New Appropriated Resources $4,767,563 $4,864,936 $5,216,263

Budget Activities:

Investigations 601,665 604,620 714,208

Exam & Collections 4,018,292 4,108,566 4,347,684

Regulatory 147,606 151,750 154,371

New Appropriated Resources $4,767,563 $4,864,936 $5,216,263

FTE 39,708 38,840 41,028
IRS - 69

2.3 – Appropriation Detail Table

3C – Investigations ($714,208,000 in direct appropriations and an estimated $45,789,000

from reimbursable programs): This budget activity funds the Criminal Investigation (CI) 

programs that explore potential criminal and civil violations of tax laws, enforce criminal 

statutes relating to violations of tax laws and other financial crimes, and recommend 

prosecution as warranted. The program activities include the following:

• General Management and Administration supports the headquarters management 

activities of strategic planning, communications, finance, and human resources for 

CI activities.

• Criminal Investigations supports the enforcement of criminal statutes relating to 

violations of internal revenue laws and other financial crimes. CI investigates cases of 

suspected intent to defraud that involve both legal and illegal sources of income and 

recommends prosecution as warranted. This activity includes the investigation and 

prosecution of tax and money-laundering violations associated with narcotics 

organizations.

• Criminal Tax Legal Support provides legal advice and support from IRS Counsel to 

CI.

• International Investigations supports enforcement of violations involving U.S. 

Citizens residing abroad, non-resident aliens, expatriates, and investigations involving 

other international issues, including legal support (e.g., Foreign Tax Credit and 

Foreign Earned Income Exclusion, Corporations, Non-Profits, Pension Plans, etc.).

Dollars in thousands

Enforcement

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources: 2

Investigations 3,399 $601,665 3,425 $604,620 3,849 $714,208 424 $109,588 12.38% 18.13%

Exam and Collections 35,258 4,018,292 34,402 4,108,566 36,163 4,347,684 1,761 239,118 5.12% 5.82%

Regulatory 1,051 147,606 1,013 151,750 1,016 154,371 3 2,621 0.30% 1.73%

Subtotal New Appropriated Resources 39,708 $4,767,563 38,840 $4,864,936 41,028 $5,216,263 2,188 $351,327 5.63% 7.22%

Other Resources:

Reimbursables 56 30,960 59 44,973 62 47,222 3 2,249 5.08% 5.00%

Offsetting Collections - Non Reimbursables 11 10,314 12 42,797 12 44,937 2,140 5.00%

User Fees 86 18,485 116 10,151 116 14,594 4,443 43.77%

Recovery from Prior Years

Unobligated Balances from Prior Years 284 22,883 17,741 30,147 12,406 69.93%

Transfers In/Out 3

7 (5,000) (5,000)

Resources from Other Accounts 4

3 2 2

Subtotal Other Resources 440 $82,649 189 $115,662 192 $131,900 3 $16,238 1.59% 14.04%

Total Budgetary Resources 40,148 $4,850,212 39,029 $4,980,598 41,220 $5,348,163 2,191 $367,565 5.61% 7.38%

Change % Change

FY 2015

Actual

FY 2016

Enacted 1

FY 2017

Request

FY 2016 to FY 

2017 Request

1

FY 2016 Enacted includes $4.9 million in Section 113 Administrative Provision funding for Enforcement.

2

This includes the Program Integrity Cap Adjustment.

3

Resources from Transfers In/Out include a FY 2015 transfers between IRS and the Office of National Drug Control Policy (ONDCP) High Intensity Drug 

Trafficking Area (HIDTA) Program (obligations $7K), and a 2017 transfer out to the Alcohol and Tobacco Tax and Trade Bureau (TTB) ($5M).

4

Resources from Other Accounts include Other Direct FTE funded by the Federal Highway Administration (3 FTE projected for FY 2015, and 2 FTE projected for 

FY 2016 and FY 2017).

FY 2016 to FY 

2017 Request
IRS - 70

Description of Performance

Criminal Investigations (CI) serves the American public by investigating potential criminal 

violations of the Internal Revenue Code and related financial crimes in a manner that fosters 

confidence in the tax system and compliance with the law. The following measures are used 

to evaluate the success of achieving its mission. 

In FY 2015, results for criminal investigation completions are 18.1 percent above the year-end 

target (3,800) and reflect a 2.6 percent decrease compared to FY 2014. Results exceeded the 

target mostly due to a higher than expected number of multi-defendant narcotics related 

investigations, which were initiated and completed earlier in FY 2015. Overall performance 

in FY 2015 was impacted by a significant decrease in the number of Special Agents in recent 

years as well as a re-focus on more complex tax case programs, which take longer to 

complete, and on inventory still in the judicial process. To re-focus, the Chief of CI wrote a 

letter to all U.S. Attorney Offices describing the overall decrease in staffing and the reduction 

of resources in several program areas as well as the need for IRS-CI to concentrate on core tax 

cases, as IRS CI is the only agency with jurisdiction over tax crimes. 

CI’s continued significant attrition in FY 2015 coupled with little to no hiring authority in FY

2016 will continue to negatively impact the number of completions for FY 2016 and FY 

2017. CI utilized its performance projection model to establish its FY 2016 and FY 2017 

year-end targets. This project model accounts for attrition, average cases per case-working 

agent, projected case initiations and average time to complete cases. Accumulated impact of 

minimal hiring in fiscal years prior to FY 2016, which led to lower staffing, case initiations

and inventories, negatively influenced the performance project model for future years. The

additional special agent hiring under the FY 2017 budget request will have minimal impact on 

CI’s performance until at least FY 2018 or FY 2019 due to the length of special agent law 

enforcement training (6 months) and average case cycle time (300-400 days). CI will 

continue to utilize proven case development strategies, expand case development efforts, and 

leverage interagency partnerships to identify, initiate, and complete significant criminal 

investigations in all program areas to meet the FY 2016 target of 3,800 and the FY 2017 

target of 3,600.

In FY 2015, results for the number of convictions are 6.6 percent above the year-end target 

(2,700) and reflect a 7.4 percent decrease compared to FY 2014. A large number of quality 

investigations initiated and completed in previous years (many of which were ID Theft cases) 

continue to be processed by the Department of Justice (DOJ). Recent decreases to the 

Judicial Process (pipeline) inventory will have an impact on the number of convictions in 

future years as well as the approximately 15 percent decrease in open inventory in FY 2015 (a 

decline of over 600 cases). Additional factors such as unforeseen legislative and prosecutorial 

priorities will also have an impact on future performance. CI management will continue to 

ensure appropriate and consistent contact with DOJ Tax Division and U.S. Attorney Offices 

regarding prosecutorial priorities and appropriate movement of pipeline investigations to meet 

the FY 2016 target of 2,500 and the FY 2017 target of 2,400. 

In FY 2015, conviction rate is slightly lower (0.17 percent) than FY 2014 and 1.3 percent 

above the year-end target (92 percent). Acquittals and dismissals decreased by 32 percent and 
IRS - 71

1.5 percent, respectively, compared to FY 2014. Appropriate case selection and effective field 

performance continue to positively impact the number of cases resulting in convictions. Since 

CI does not prosecute its own cases, it must depend on the ability of DOJ to accept its cases 

for prosecution and move such cases through the courts. CI management will continue its 

current efforts of appropriate and consistent contact with DOJ Tax Division and U.S. Attorney 

Offices regarding prosecutorial priorities and appropriate movement of pipeline 

investigations, to ensure a high rate of conviction and meet the FY 2016 and FY 2017 target 

of 92 percent.

The Conviction Efficiency Rate is determined by taking the cost of the CI program divided by 

the number of convictions. FY 2015 results ($221,782) are 8.7 percent better than the 

year-end target ($243K) and 4.0 percent better compared to FY 2014. CI's overall financial 

plan and FTEs (which contribute to the numerator) decreased by 2.8 percent and 7.7 percent

respectively, compared to FY 2014. CI will continue to monitor its budget and coordinate 

with DOJ Tax Division and U.S. Attorney Offices regarding prosecutorial priorities - which 

affect convictions - to ensure this measure is at or below future target. CI expects to meet the 

FY 2016 and FY 2017 target of $272,000.
IRS - 72

FY 2017 Changes by Budget Activity

Dollars in Thousands

Investigations FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 3,425 $604,620

FY 2016 Administrative Provision 113

FY 2016 Enacted 3,425 $604,620

Changes to Base:

Maintaining Current Levels (MCLs): $9,311

Pay Annualization 1,817

Pay Raise 6,730

Non-Pay 764

Subtotal FY 2017 Changes to Base $9,311

FY 2017 Current Services (Base) 3,425 $613,931

Program Increases:

Budget Request Program Increases:

Focus Area: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 208 39,106

Subtotal 208 $39,106

Subtotal FY 2017 Budget Request Program Increases 208 $39,106

Total FY 2017 Total Budget Request 3,633 $653,037

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 208 $48,417

Percent Change FY 2017 Budget Request over FY 2016 Enacted 6.06% 7.89%

Cap Adjustment Program Increases:

Understand Non-Compliant Taxpayer Behavior and Develop Approaches to 

Deter and Change It

Increase Collection Coverage

Increase Audit Coverage

Digitizing Form 990

FATCA: Implement, Expand Filing Coverage, and Combat Criminal Non- 51 19,837

Pursue Employment Tax and Abusive Tax Schemes 35 6,912

Increase Investigations of Transnational Organized Crime (TOC) 130 29,422

Subtotal 216 $56,171

Alcohol and Tobacco Tax and Trade Bureau Transfer:

Transfer to TTB for High-Return on Investment (ROI) Tax Enforcement Activities 5,000

Subtotal $5,000

Subtotal FY 2017 Cap Adjustment Program Increases 216 $61,171

Subtotal FY 2017 Total Program Increases Including Cap Adjustment 424 $100,277

Total FY 2017 Total Budget Request Including Cap Adjustment 3,849 $714,208

Dollar/FTE Change FY 2017 Budget Request including PIC over FY 2016 Enacted 424 $109,588

Percent Change FY 2017 Budget Request including PIC FY 2016 Enacted 12.37% 18.13%
IRS - 73

3.1.3 – Budget and Performance Report and Plan 

3D – Exam and Collections ($4,347,684,000 in direct appropriations, $606,000 from 

reimbursable program, and an estimated $574,000 from user fees): This budget activity 

funds programs that enforce the tax laws and increase compliance through examination and 

collection programs that ensure proper payment and tax reporting. This budget activity also 

includes campus support of the Questionable Refund program and appeals and litigation 

activities associated with exam and collection. The program activities include the following:

• Compliance Services Management supports management associated with exam and 

collection program activities.

• Payment Compliance – Correspondence Collection supports IRS collection activities 

by initiating contact and collecting delinquent taxpayer liabilities through written 

notices and other means.

• Automated Collections and Support initiates contact and collects delinquent taxpayer 

liabilities through the centralized Automated Collection System (ACS). 

• Payment Compliance – Field Collection conducts field investigations and collection 

efforts associated with delinquent taxpayer and business entity liabilities, including 

direct taxpayer contact and outreach programs to protect the interest of the federal 

government in delinquent tax liability situations.

• Tax Reporting Compliance – Document Matching supports the Automated 

Underreporter (AUR), Combined Annual Wage Reporting (CAWR), Federal 

Unemployment Tax Act (FUTA), and other Document Matching Programs.

• Tax Reporting Compliance – Electronic/Correspondence Exam initiates written 

correspondence with taxpayers related to tax issues arising from claims on their tax

returns.

• Tax Reporting Compliance – Field Exam compares taxpayer income levels and 

corresponding tax liabilities to ensure the accuracy of taxpayer returns.

Investigations FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Resource Level Enacted Enacted Enacted Enacted Enacted Enacted Enacted Request

Appropriated Resources1 $639,363 $644,479 $636,386 $589,751 $599,193 $602,144 $604,620 $714,208

Reimbursable Resources2 67,549 63,146 56,895 28,582 27,133 29,957 43,608 45,789

User Fees2 6,935 4,709

Budget Activity Total $706,912 $707,625 $700,216 $623,042 $626,326 $632,101 $648,228 $759,997 1

The FY 2010 - FY 2015 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2010 - FY 2015 columns represent realized resources for reimbursables and user fees.

Investigations FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2015 FY 2016 FY 2017

Measures Actual Actual Actual Actual Actual Actual Target Target Target

Criminal Investigations Completed (Ot) (L) 4,325 4,697 4,937 5,557 4,606 4,486 3,800 3,800 3,600

Number of Convictions (Oe) (L) 2,184 2,350 2,634 3,311 3,110 2,879 2,700 2,500 2,400

Conviction Rate (Oe) (L) 90.2% 92.7% 93.0% 93.1% 93.4% 93.2% 92.0% 92.0% 92.0%

Conviction Efficiency Rate ($) (E) (L) $324,776 $310,029 $270,511 $211,048 $231,103 $221,782 $243,000 $272,000 $272,000

Investigations Budget and Performance Plan

Dollars in Thousands

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, L - Long Term 
IRS - 74

• Fraud/Bank Secrecy Act assists and supports compliance employees IRS-wide in 

protecting the integrity of the U.S. tax administration system. The Bank Secrecy Act 

Program examines non-bank financial institutions and nonfinancial trades and 

businesses for compliance with the anti-money laundering provisions of the Bank 

Secrecy Act of 1970 (BSA) and the USA PATRIOT Act of 2001. It processes and 

provides customer support for Reports of Foreign Bank and Financial Accounts 

(FBARs) and Form 8300, Report of Cash Payments Over $10,000 Received in a Trade 

or Business. The National Fraud Program provides oversight and direction for fraud 

policy and operations IRS-wide.

• Appeals supports an administrative review process that provides a channel for 

impartial case settlement before a case is docketed in a court of law.

• Litigation provides legal support for the IRS in litigation of cases, including 

interpretation of the tax law.

• Specialty Programs – Exams examines federal tax returns of businesses and 

individuals responsible for the filing and payment of employment, excise, estate, and 

gift taxes.

• International Collection supports international field collection efforts associated with 

delinquent taxpayer and business entity liabilities from U.S. Citizens residing abroad, 

non-resident aliens, expatriates, and those involving other international issues 

(e.g., Foreign Tax Credit and Foreign Earned Income Exclusion).

• International Exams supports the international exam program involving U.S. Citizens 

residing abroad, non-resident aliens, expatriates, and other examinations involving 

other international issues including legal support (e.g., Foreign Tax Credit and Foreign 

Earned Income Exclusion, Corporations, Non-Profits, Pension Plans, etc.).

• Unit General Management and Administration provides staffing, training, and direct 

support for headquarters management activities of strategic planning, communication 

and liaison, finance, human resources, equity, diversity and inclusion, business system 

planning, and embedded training.

• EITC Management and Administration supports headquarters management associated 

with administering the Earned Income Tax Credit (EITC) program IRS-wide.

• Integrity & Verification Operations supports IRS civil fraud detection and prevention 

efforts in a pre-refund environment including monitoring program performance and 

developing policy and procedures and guidance for processing civil revenue protection 

programs(s).

• ID Theft Victim Assistance was recently reorganized to consolidate nearly all identity 

theft work into one IRS program. This program activity has end-to-end responsibility 

and accountability for identity theft victim assistance, including policy and operations, 

which includes paper inventories from tax-related ID theft, the Identity Theft 

Protection Specialized Unit (IPSU) and Return Preparer Misconduct.

• Accounts Management Taxpayer Assurance Program provides support to Accounts 

Management for the review of questionable refunds including Identity Theft functions.
IRS - 75

• Whistleblower Office provides staffing, training, and direct support to process, assess, 

and analyze tips from individuals who identify potential tax problems.

• Communications and Liaison coordinates local government and liaison relationships; 

manages congressional, state, and national stakeholder relationships and issues; 

coordinates crosscutting issues, including audit management and legislative 

implementation; manages national media contacts and local media relationships; and 

ensures IRS compliance with disclosure and privacy laws.

Description of Performance - Exam

The Examination program provides taxpayers top quality service by helping them understand 

and meet their tax responsibilities and by applying the tax law with integrity and fairness. 

The performance goals that the IRS uses to gauge the Examination program’s performance 

are discussed below.

The IRS met its FY 2015 Individual Exam Coverage target of 0.8 percent. In FY 2015, there 

were approximately 14,400 fewer individual audits compared to FY 2014, a 1.2 percent 

decrease. The decrease in audits was due, in part, to the SBSE Compliance Realignment. 

IRS-wide emphasis is to continue monitoring base inventory levels and decrease cycle times 

through process improvements while focusing on improving quality. The IRS will reduce the 

coverage rate for FY 2016 to 0.6 percent, due to budget reductions necessitating a reduction in 

FTE through attrition. In order to mitigate this decrease, Examination will monitor starts and 

the mix of discretionary inventory more closely in FY 2016. The FY 2017 target is set at 0.7 

percent.

In FY 2015, the Field Exam National Quality Review Score is at 86.7 percent, falling short of 

the FY 2015 target of 89.6 percent. The decline in quality was driven by declines in 16 of the 

17 quality attributes. Beginning in FY 2016, Exam will hold bi-monthly calls to address 

developing issues with respect to the return preparer visits and to ensure all agents understand 

actions required of them. Attribute 112 (Required Filing Checks) is the only attribute to 

reflect improvement. The IRS expects to achieve a quality score of 86.7 percent in FY 2016 

and FY 2017.

In FY 2015, Office Exam Quality is at 88.3 percent, falling short of the FY 2015 target of 

90.2 percent. The overall decline in quality was driven by declines in 14 of the 17 quality 

attributes. To assist examiners with documenting their audit activities, lead sheets for 

minimum income probes, required filing checks, and innocent spouse will be updated during 

FY 2016. The IRS expects to achieve its FY 2016 and FY 2017 target of 88.3 percent. Both 

the Field Exam National Quality Review and the Office Exam Quality continue to focus on 

reducing the leading errors in their two weakest attributes 510 (Time Span) and 112 (Required 

Filing Checks).

The Examination Quality – Large Business measure is calculated through a review of a 

statistically valid random sample of closed Large Business Return cases. Case scores are 

based on the percentage of elements passed within each of the four audit standards (Planning; 

Inspection; Development; Work Papers and Reports). In FY 2015, Examination Quality –

Large Business is 86 percent, 4 percentage points below the FY 2015 target of 90 percent. 
IRS - 76

The 86 percent was a result of low scores in Standard 1 (Planning), Standard 2 (Inspection) 

and Standard 4 (Work papers and Reports). Actions currently underway to improve the score 

include direct feedback to Revenue Agents, outreach presenting the Quality Standards and 

ways to affect case quality improvement, conducting quarterly meetings to highlight and 

discuss actions for areas of improvement, and one-on-one report outs to Industry Analysts. 

The FY 2016 and FY 2017 target was set at 90 percent.

The Examination Coverage – Business (Assets > $10 million) measure is calculated by taking 

the total number of Large Business & International (LB&I) returns with assets over 

$10 million (including all partnerships) examined and closed by LB&I during the current 

fiscal year, divided by total filings for the preceding calendar year. In FY 2015, Business 

Examination Coverage is 3.9 percent. While corporate closures are down slightly, 

S-Corporation and partnership closures are up 3.5 percent and 6.3 percent, respectively, 

compared to FY 2014. The IRS expects to achieve the FY 2016 target of 3.5 percent. The 

FY 2016 and FY 2017 targets were lowered to 3.5 percent and 3.2 percent, respectively, based 

on a reduction in FTE and as the IRS is projecting an increase in partnership returns filed.

The Individual Exam Efficiency measure is calculated by taking the sum of all individual 

1040 return examinations and audit reconsideration cases divided by the total staff years 

expended in relation to those individual 1040 returns. In 2015, Exam Efficiency - Individual 

is 148, exceeding the FY 2015 target of 135. SBSE Campus Exam realized greater efficiency 

due to changes in the processing of TEFRA inventory. The same level of efficiency gains is

not anticipated in FY 2016 2016 or FY 2017 due to a reduction in Exam FTE and efficiency 

adjustments based on workload considerations due to the reduction in staffing. The IRS 

expects to achieve the FY 2016 and FY 2017 target of 122, as the IRS expects new staff to 

require time for training before reaching full efficiency.

The Automated Underreporter (AUR) Efficiency measure is calculated by taking the total 

number of W&I and SB/SE contact closures divided by the total FTEs, including overtime. 

AUR Efficiency is 2,209 through FY 2015, above the FY 2015 target of 2,032. While total 

AUR closures decreased 3.5 percent, total FTEs decreased at a much higher rate at 9.3 percent 

resulting in improved AUR efficiency compared to FY 2014 (2,209 vs. 1,935). SBSE 

Campus Automated Underreporter realized efficiency gains in FY 2015 from new processes 

put in place allowing work to close more quickly. The inclusion of the Premium Tax Credit 

(PTC) in FY 2016 will require manual calculations for a significant number of cases resulting 

in a lower projected number of closures next year compared to FY 2015. The IRS expects to 

achieve the FY 2016 target of 2,036. The FY 2017 target is set at 2,006, as new staff will not 

have an immediate impact on performance due to the need for training.

The AUR Coverage measure is calculated by taking the total number of contact closures 

divided by total prior calendar year individual filings. In FY 2015, AUR Coverage is 2.3 

percent and below the FY 2015 target of 2.6 percent. An overall decrease in FTE, caused by 

the inability to cover attrition loses throughout the year, resulted in fewer contact closures in 

FY 2015 than in previous years. Due to a shift in FTE and work streams and the additional 

resources needed to work ACA cases, SBSE lowered the Coverage targets for FY 2016 and 

FY 2017. The IRS expects to achieve the FY 2016 target of 2.2 percent and the FY 2017 

target of 2.3 percent.
IRS - 77

Description of Performance - Collection

The Collection program collects delinquent taxes, secures delinquent tax returns through the 

fair and equitable application of tax laws, and provides education to promote future 

compliance, thereby protecting and instilling public confidence in the American tax system. 

The performance goals that the IRS uses to gauge collection program performance are:

The Collection Coverage measure is calculated by taking the total volume of collection work 

disposed divided by total collection work available. In FY 2015, Collection Coverage is 

46.3 percent, exceeding the FY 2015 target of 43.8 percent and last year’s performance of 

45.9 percent. The FY 2015 net dispositions increased 2.6 percent compared to FY 2014 

(23.62 million vs. 23.03 million). Beginning Inventory, New Issuance Receipts, and 

Reactivated Currently-Not-Collectable cases increased 1.3 percent, 1.8 percent, and 

57.6 percent, respectively, while Returned to Inventory cases decreased 2.7 percent compared 

to FY 2014. The IRS will continue to market and promote the use of the online Installment 

Agreement and Direct Pay tools available to taxpayers. The IRS expects to achieve the FY 

2016 target of 41.8 percent, as additional employees are hired to process a steady projected 

volume of available collection casework. The FY 2017 target is set at 41.1 percent, as new 

staff will not have an immediate impact on performance due to the need for training.

The Collection Efficiency measure is calculated by dividing total collection case closures by 

the total number of FTEs devoted to working the closures. In FY 2015, Collection Efficiency 

is 2,448 exceeding the FY 2015 target of 2,173. The Collection Coverage measure was 

updated based on FY 2015 performance and the current disposition and inventory targets in 

the collection work plan for FY 2016 and FY 2017. The planned reduction in overall 

dispositions in FY 2016 is expected to have a negative impact, due to the lack of hiring, on 

overall Collection Coverage. Through planned improvements, including the realignment of 

the Collection function, IRS expects to achieve the FY 2016 target of 2,208 and the FY 2017 

target of 2,124, as new hires are brought on board and trained.

The Field Collection Quality measure is the percentage of quality attributes reviewed by an 

independent quality reviewer that are determined to be correct. In FY 2015, the Field 

Collection National Quality Review Score is 79.2 percent, below the FY 2014 actual and 

behind the FY 2015 target of 81.6 percent. The shortfall in Field Collection Quality is 

primarily related to a decline in the timeliness attributes. This is largely a result of changing 

the training delivery method, due to budgetary considerations, from a traditional classroom 

format to a virtual setting, which resulted in delayed delivery. More than one third of the 

Field Revenue Officers (ROs) were off-line for almost two weeks and all ROs were off-line 

for another week due to training. This training interrupted case timeliness, resulting in missed 

follow-up deadlines. Timeliness was also impacted by the delayed movement of 100 ROs 

into the specialty programs necessitating reassignment of those inventories. In order to 

improve quality all Field Collection Areas developed and implemented action plans to ensure 

focus on workload management and case actions critical to timely case resolution. However, 

due to the timing of case closures and reviews, it could take up to ten months after 

implementation before the score results begin to reflect the benefit of these plans. With a 

continued emphasis on improving timeliness and the quality of work products, the IRS 

expects to achieve the FY 2016 and FY 2017 target of 79.7 percent.
IRS - 78

The IRS achieved the FY 2015 Automated Collection System (ACS) Accuracy target of 

94.0 percent, reaching 95.3 percent. The ACS Accuracy measure reflects the percentage of 

correct responses from a weighted random sampling of calls selected for quality review by the 

Centralized Quality Review System (CQRS). SB/SE will continue to follow-up on quality 

action plans resulting from site visits. Monthly calls with the Quality staff will also continue 

to identify and discuss issues and trends affecting Customer Accuracy. Additionally, 

increased oversight will continue as former W&I sites transition into taking various SB/SE 

calls. The expectation is that this will help reduce Customer Accuracy errors and enable the 

FY 2016 and FY 2017 target of 95 percent to be achieved.

FY 2017 Changes by Budget Activity

Dollars in Thousands

Exam and Collections FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 34,402 $4,103,630

FY 2016 Administrative Provision 113 $4,936

Improve Taxpayer Service

Cyber Security

Strengthening the Prevention of Identity Theft 4,936

FY 2016 Enacted 34,402 $4,108,566

Changes to Base:

Maintaining Current Levels (MCLs): $63,349

Pay Annualization 12,655

Pay Raise 46,879

Non-Pay 3,815

Subtotal FY 2017 Changes to Base $63,349

FY 2017 Current Services (Base) 34,402 $4,171,915

Program Increases:

Budget Request Program Increases:

Strategic Focus: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 92 5,699

Subtotal 92 $5,699

Subtotal FY 2017 Budget Request Program Increases 92 $5,699

Total FY 2017 Total Budget Request 34,494 $4,177,614

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 92 $69,048

Percent Change FY 2017 Budget Request over FY 2016 Enacted 0.27% 1.68%

Cap Adjustment Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Enterprise Case Management 22 7,369

Subtotal 22 $7,369

Understand Non-Compliant Taxpayer Behavior and Develop Approaches to 

Deter and Change It

Increase Collection Coverage 677 58,185

Increase Audit Coverage 815 74,086

Digitizing Form 990 1 80

FATCA: Implement, Expand Filing Coverage, and Combat Criminal Noncompliance 152 30,052

Pursue Employment Tax and Abusive Tax Schemes 2 298

Subtotal 1,647 $162,701

Subtotal FY 2017 Cap Adjustment Program Increases 1,669 $170,070

Subtotal FY 2017 Total Program Increases Including Cap Adjustment 1,761 $175,769

Total FY 2017 Total Budget Request Including Cap Adjustment 36,163 $4,347,684

Dollar/FTE Change FY 2017 Budget Request including PIC over FY 2016 Enacted 1,761 $239,118

Percent Change FY 2017 Budget Request including PIC FY 2016 Enacted 5.12% 5.82%
IRS - 79

3.1.4 – Budget and Performance Report and Plan 

3E – Regulatory ($154,371,000 in direct appropriations, $827,000 from reimbursable 

programs, and an estimated $14,020,000 from user fees): This budget activity funds the 

development and printing of published IRS guidance materials; interpretation of tax laws; 

internal advice to IRS on general non-tax legal issues; enforcement of regulatory rules, laws,

and approved business practices; and support for taxpayers in the areas of pre-filing 

agreements, determination letters, and advance pricing agreements. The activities include:

• Tax Law Interpretation and Published Guidance interprets the tax law through 

published guidance, technical advice, and other technical legal services.

• General Legal Services provides advice to the IRS on non-tax legal issues, including 

procurement, personnel, labor relations, equal employment opportunity, fiscal law, tort 

claims and damages, ethics, and conflict of interest.

• Rulings and Agreements applies the tax law to specific taxpayers in the form of

pre-filing agreements, determination letters, advance pricing agreements, and other 

pre-filing determinations and advice.

• International Regulatory Legal Support supports Counsel’s work in tax law 

interpretation and rulings and agreements related to international issues.

Exam and Collections FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Resource Level Enacted Enacted Enacted Enacted Enacted Enacted Enacted Request

Appropriated Resources1 $4,700,345 $4,689,220 $4,504,885 $4,210,108 $4,196,794 $4,019,123 $4,108,566 $4,347,684

Reimbursable Resources2 8,729 11,163 6,385 804 640 577 606

User Fees2 49 918 574

Budget Activity Total $4,709,123 $4,700,383 $4,511,270 $4,210,912 $4,196,794 $4,019,763 $4,110,061 $4,348,864 1

The FY 2010 - FY 2015 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2010 - FY 2015 columns represent realized resources for reimbursables and user fees.

Exam and Collections FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2015 FY 2016 FY 2017

Measures Actual Actual Actual Actual Actual Actual Target Target Target

Examination Coverage - Individual (Oe) (L) 1.1% 1.1% 1.0% 1.0% 0.9% 0.8% 0.8% 0.6% 0.7%

Field Exam National Quality Review Score (Oe) (L) 84.9% 85.8% 87.4% 89.2% 88.4% 86.7% 89.6% 86.7% 86.7%

Office Exam National Quality Review Score (Oe) (L) 91.6% 90.4% 91.3% 90.3% 90.6% 88.3% 90.2% 88.3% 88.3%

Examination Quality - Large Business1 (Oe) (L) 92.0% 83.0% 86.0% 90.0% 90.0% 90.0%

(New in FY 2013)

Examination Coverage - Business (Assets > $10 million) (O 5.7% 6.2% 6.2% 5.6% 4.3% 3.9% 3.8% 3.5% 3.2%

Automated Underreporter (AUR) Efficiency (E) (L) 1,924 2,007 2,041 2,025 1,935 2,209 2,032 2,036 2,006

Automated Underreporter (AUR) Coverage (E) (L) 3.0% 3.3% 3.2% 2.8% 2.6% 2.3% 2.6% 2.2% 2.3%

Examination Efficiency - Individual (E) (L) 140 139 142 142 138 148 135 122 122

Collection Coverage - Units (Ot) (L) 50.1% 50.0% 48.1% 47.0% 45.9% 46.3% 43.8% 41.8% 41.1%

Collection Efficiency - Units (E) (L) 1,822 1,952 1,997 2,057 2,051 2,448 2,173 2,208 2,124

Field Collection National Quality Review Score (Ot) (L) 80.6% 80.3% 80.4% 81.4% 81.6% 79.2% 81.6% 79.7% 79.7%

Automated Collection System (ACS) Accuracy (Oe) 95.9% 94.9% 94.7% 94.4% 95.2% 95.3% 94.0% 95.0% 95.0%

1

As a result of program changes that occurred in the Large Business and International (LB&I) organization, starting in FY 2013, a new Examination Quality - 

Exam and Collections Budget and Performance Plan

Dollars in Thousands

Key: Oe - Outcome Measure, E - Efficiency Measure, L - Long Term Goal, Ot - Output/Workload Measure
IRS - 80

• Return Preparer Strategy provides staffing, training, and direct support associated 

with the Return Preparer Strategy.

• Office of Professional Responsibility identifies, communicates, and enforces Treasury 

Circular 230 standards of competence, integrity, and conduct of those who represent 

taxpayers before the IRS, including attorneys, Certified Public Accountants (CPAs), 

enrolled agents, enrolled actuaries and appraisers, and other professionals.

Description of Performance

Tax Exempt and Government Entities (TEGE) Determination Closures include both 

applications for tax-exempt status for employee retirement plans (EP) and applications from 

various charitable entities seeking tax-exempt status (EO). The IRS reviews applications to 

determine eligibility and closes them upon approval or disapproval. 

TE/GE exceeded the plan for total determination closures in FY 2015, as the number of 

determination cases completed reached 111,940. EO closed over 15,000 more Form 1023-EZ 

applications than initially anticipated due to a higher adoption rate by the public than 

expected. In EP, FY 2015 closures fell short of plan as resources were diverted to other 

priorities such as processing voluntary compliance applications and developing the TE/GE 

Knowledge Management initiative. In FY 2016, both programs anticipate further 

implementing recommendations stemming from Lean Six Sigma reviews of EP and EO case 

processing to improve timeliness and maintain consistent case treatment. TEGE will increase 

the FY 2016 and FY 2017 targets to 103,852 and 109,768, respectively.
IRS - 81

3.1.5 – Budget and Performance Report and Plan 

FY 2017 Changes by Budget Activity

Dollars in Thousands

Regulatory FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 1,013 $151,750

FY 2016 Administrative Provision 113

FY 2016 Enacted 1,013 $151,750

Changes to Base:

Maintaining Current Levels (MCLs): $2,348

Pay Annualization 480

Pay Raise 1,777

Non-Pay 91

Subtotal FY 2017 Changes to Base $2,348

FY 2017 Current Services (Base) 1,013 $154,098

Program Increases:

Budget Request Program Increases:

Strategic Focus: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 1 170

Subtotal 1 $170

Subtotal FY 2017 Budget Request Program Increases 1 $170

Total FY 2017 Total Budget Request 1,014 $154,268

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 1 $2,518

Percent Change FY 2017 Budget Request over FY 2016 Enacted 0.13% 1.66%

Cap Adjustment Program Increases:

Understand Non-Compliant Taxpayer Behavior and Develop Approaches to 

Deter and Change It

Increase Collection Coverage 1 28

Increase Audit Coverage 1 75

Subtotal 2 $103

Subtotal FY 2017 Cap Adjustment Program Increases 2 $103

Subtotal FY 2017 Total Program Increases Including Cap Adjustment 3 $273

Total FY 2017 Total Budget Request Including Cap Adjustment 1,016 $154,371

Dollar/FTE Change FY 2017 Budget Request including PIC over FY 2016 Enacted 3 $2,621

Percent Change FY 2017 Budget Request including PIC FY 2016 Enacted 0.33% 1.73%

Regulatory FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Resource Level Enacted Enacted Enacted Enacted Enacted Enacted Enacted Request

Appropriated Resources1 $164,292 $159,293 $158,096 $149,319 $156,991 $147,733 $151,750 $154,371

Reimbursable Resources2 574 654 660 631 792 363 788 827

User Fees2 13,249 12,482 15,700 13,241 18,485 9,233 14,020

Budget Activity Total $164,866 $173,196 $171,238 $165,650 $171,024 $166,581 $161,771 $169,218 1

The FY 2010 - FY 2015 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2010 - FY 2015 columns represent realized resources for reimbursables and user fees.

Regulatory FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2015 FY 2016 FY 2017

Measure Actual Actual Actual Actual Actual Actual Target Target Target

TE/GE Determination Case Closures (Ot) 105,247 91,205 87,000 65,877 136,746 111,940 99,942 103,852 109,768

Key: Ot - Output/Workload Measure

Regulatory Budget and Performance Plan

Dollars in Thousands
IRS - 82

Operations Support 

Appropriation Description

The Operations Support appropriation provides funding for overall planning, direction, and 

support for the IRS, including shared service support related to facilities services, rent 

payments, printing, postage, and security. This appropriation funds headquarters policy and 

management activities such as corporate support for strategic planning; communications and 

liaison; finance; human resources; equity, diversity and inclusion; research and statistics of 

income; and necessary expenses for information systems and telecommunication support, 

including development, security, and maintenance of the IRS’s information systems.

The Operations Support budget request for FY 2017 is $4,030,695,000 in direct 

appropriations and 12,013 FTE. This is an increase of $284,007,000 or 7.58 percent, and

91 FTE more than the FY 2016 Enacted level of $3,746,688,000 and 

11,922 FTE. The Operations Support total budget request for FY 2017 including the program 

integrity cap adjustment is $4,314,099,000 and 12,250 FTE.

The measures reflected in the Operations Support appropriation align to Goal 3: Fairly and 

effectively reform and modernize federal financial management, accounting, and tax systems, 

Objective 3.3: Pursue tax reform, implement the ACA and FATCA, and improve the execution 

of the tax code of the Department of the Treasury’s FY 2014 – FY 2017 Strategic Plan.
IRS - 83

2.1 – Budget Adjustments Table

Dollars in Thousands

Operations Support FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 11,752 $3,638,446

FY 2016 Administrative Provision 113 170 $108,242

Improve Taxpayer Service 1,800

Cyber Security 170 95,442

Strengthening the Prevention of Identity Theft 11,000

FY 2016 Enacted 11,922 $3,746,688

Changes to Base:

Maintaining Current Levels (MCLs): $60,994

Pay Annualization 5,392

Pay Raise 19,975

Non-Pay 35,627

Efficiencies/Savings: ($58)

Increase e-File Savings (58)

Subtotal FY 2017 Changes to Base $60,936

FY 2017 Current Services (Base) 11,922 $3,807,624

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure Innovative Tools and 

Support

Implement Changes to Deliver Tax Credits and Other Requirements for the Affordable Care Act 153,240

Leverage New Technologies to Advance the IRS Mission 973

Improve Taxpayer Service 9 14,952

Subtotal 9 $169,165

Drive More Agility, Efficiency, and Effectiveness in IRS Operations

Enterprise Electronic Records Management Solution 46 18,543

Subtotal 46 $18,543

Focus Area: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 36 35,363

Subtotal 36 $35,363

Subtotal FY 2017 Budget Request Program Increases 91 $223,071

Total FY 2017 Total Budget Request 12,013 $4,030,695

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 91 $284,007

Percent Change FY 2017 Budget Request over FY 2016 Enacted 0.76% 7.58%

Cap Adjustment Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure Innovative Tools and 

Support

Enterprise Case Management 598

Subtotal $598

Understand Non-Compliant Taxpayer Behavior and Develop Approaches to Deter and Change It

Increase Collection Coverage 21 32,254

Increase Audit Coverage 40 54,274

Digitizing Form 990 6 2,298

FATCA: Implement, Expand Filing Coverage, and Combat Criminal Non-compliance 70 76,850

Pursue Employment Tax and Abusive Tax Schemes 8,576

Increase Investigations of Transnational Organized Crime (TOC) 6,142

Subtotal 137 $180,394

Drive More Agility, Efficiency, and Effectiveness in IRS Operations

Operations and Maintenance for Deployed Business Systems Modernization (BSM) Projects 73 92,174

Maintain Integrity of Revenue Financial Systems 27 10,238

Subtotal 100 $102,412

Alcohol and Tobacco Tax and Trade Bureau Transfer:

Transfer to TTB for High-Return on Investment (ROI) Tax Enforcement Activities

Subtotal

Subtotal FY 2017 Cap Adjustment Program Increases 237 $283,404

Subtotal FY 2017 Total Program Increases Including Cap Adjustment 328 $506,475

Total FY 2017 Total Budget Request Including Cap Adjustment 12,250 $4,314,099

Dollar/FTE Change FY 2017 Budget Request including PIC over FY 2016 Enacted 328 $567,411

Percent Change FY 2017 Budget Request including PIC FY 2016 Enacted 2.75% 15.14%
IRS - 84

2.2 – Operating Levels Table

Dollars in Thousands

Operations Support

Object Classification

FY 2015

Actual

FY 2016

Enacted

FY 2017

Request

11.1 Full-Time Permanent Positions 1,025,551 1,169,563 1,221,731

11.3 Other than Full-Time Permanent Positions 6,100 9,227 9,366

11.5 Other Personnel Compensation 15,721 20,303 21,659

11.8 Special Personal Services Payments 245 235 239

11.9 Personnel Compensation (Total) 1,047,617 1,199,328 1,252,995

12.0 Personnel Benefits 381,526 438,472 455,608

13.0 Benefits to Former Personnel 51,076 52,266 53,054

Total Personnel and Compensation Benefits $1,480,219 $1,690,066 $1,761,657

21.0 Travel 11,765 8,175 11,006

22.0 Transportation of Things 10,530 11,638 12,437

23.1 Rental Payments to GSA 610,803 595,254 618,265

23.2 Rent Payments to Others 12,352 13,042 13,280

23.3 Communications, Utilities, & Misc 297,972 290,283 318,661

24.0 Printing & Reproduction 16,401 18,165 19,083

25.1 Advisory & Assistance Services 526,886 524,393 701,466

25.2 Other Services 61,220 58,104 240,801

25.3 Purchase of Goods & Services from Govt. Accounts 77,712 73,930 85,332

25.4 Operation & Maintenance of Facilities 173,000 157,756 168,262

25.5 Research & Development Contracts

25.6 Medical Care 14,113 13,597 15,019

25.7 Operation & Maintenance of Equipment 59,759 65,956 69,971

25.8 Subsistence & Support of Persons 18

26.0 Supplies and Materials 18,396 20,428 22,036

31.0 Equipment 227,399 180,700 224,119

32.0 Land and Structures 2,612 25,003 32,502

42.0 Insurance Claims & Indemnities 279 198 202

Total Non-Personnel $2,121,217 $2,056,622 $2,552,442

New Appropriated Resources $3,601,436 $3,746,688 $4,314,099

Budget Activities:

Infrastructure 833,846 832,543 895,094

Shared Services & Support 1,126,230 1,141,485 1,197,954

Information Services 1,641,360 1,772,660 2,221,051

New Appropriated Resources $3,601,436 $3,746,688 $4,314,099

FTE 10,614 11,922 12,250
IRS - 85

2.3 – Appropriation Detail Table

3F – Infrastructure ($895,094,000 in direct appropriations and an estimated $772,000 from 

reimbursable programs): This budget activity funds administrative services related to space 

and housing, rent and space alterations, building services, maintenance, guard services, and 

non-IT equipment. The program activities include:

• Building Delegation oversees and manages the IRS GSA-delegated buildings, 

including cleaning, maintenance, utilities, protection, administrative, and recurring and 

one-time repair costs.

• Rent provides resources for all IRS rent needs. 

• Space and Housing/Non-IT Equipment provides management of all IRS building 

services, maintenance, space alterations, guard services, custodial overtime, utility 

service’s needs, and non-IT equipment.

• Security covers building security costs related to contract guard services.

Description of Performance 

In FY 2015, there were 59 space reduction projects completed that resulted in the release of 

624,306 Rentable Square Feet (RSF) of space with Annualized Rent Savings (ARS) of 

$17.6 million that will support lower rent costs in the future.

Approximately 45 space reduction projects were approved for implementation in FY 2016, 

which will result in the release of 550,757 RSF of space and ARS of approximately 

$15 million that will support lower rent costs in the future. In addition, the IRS embarked on 

a program to aggressively reduce the IRS space footprint nationwide and set, as a goal, the 

annual reduction of 800,000 RSF for the period FY 2016 through FY 2020. Achievement of 

this goal however, is contingent on the availability of funds to complete the projects that will 

Dollars in thousands

Operations Support

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources: 2

Infrastructure $833,846 $832,543 $895,094 $62,551 7.51%

Shared Services and Support 5,013 1,126,230 5,231 1,141,485 5,257 1,197,954 26 56,469 0.50% 4.95%

Information Services 5,601 1,641,360 6,691 1,772,660 6,993 2,221,051 302 448,391 4.51% 25.29%

Subtotal New Appropriated Resources 10,614 $3,601,436 11,922 $3,746,688 12,250 $4,314,099 328 $567,411 2.75% 15.14%

Other Resources:

Reimbursables 92 42,316 97 54,285 101 56,999 4 2,714 4.12% 5.00%

Offsetting Collections - Non Reimbursables

User Fees 1,187 375,378 99 395,662 37 268,295 (62) (127,367) -62.63% -32.19%

Recovery from Prior Years 1,908

Unobligated Balances from Prior Years 3 123,655 148,173 66,200 (81,973) -55.32%

Transfers In/Out

Resources from Other Accounts

Subtotal Other Resources 1,282 $543,257 196 $598,120 138 $391,494 (58) ($206,626) -29.59% -34.55%

Total Budgetary Resources 11,896 $4,144,693 12,118 $4,344,808 12,388 $4,705,593 270 $360,785 2.23% 8.30%

Change % Change

FY 2016 to FY 

2017 Request

1

FY 2016 Enacted includes $108.2 million in Section 113 Administrative Provision funding for Operations Support.

2

This includes the Program Integrity Cap Adjustment.

FY 2015

Actual

FY 2016

Enacted 1

FY 2017

Request

FY 2016 to FY 2017 

Request
IRS - 86

enable realization of these savings. Project identification will continue during this budget 

year and into the future.

The IRS also intends to place new hires in existing space and renew leases at existing sites 

rather than move to new locations, when cost effective. These and other actions will help 

limit the projected rent costs in the future.
IRS - 87

FY 2017 Changes by Budget Activity

Dollars in Thousands

Infrastructure FTE Amount

FY 2016 Enacted (before Administrative Provision 113) $832,543

FY 2016 Administrative Provision 113

FY 2016 Enacted $832,543

Changes to Base:

Maintaining Current Levels (MCLs): $15,161

Pay Raise 1

Non-Pay 15,160

Subtotal FY 2017 Changes to Base $15,161

FY 2017 Current Services (Base) $847,704

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Leverage New Technologies to Advance the IRS Mission 405

Improve Taxpayer Service 4,508

Subtotal $4,913

Drive More Agility and Efficiency in IRS Operations

Enterprise Electronic Records Management Solution 646

Subtotal $646

Strategic Focus: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 6,014

Subtotal $6,014

Subtotal FY 2017 Budget Request Program Increases $11,573

Total FY 2017 Total Budget Request $859,277

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted $26,734

Percent Change FY 2017 Budget Request over FY 2016 Enacted 3.21%

Cap Adjustment Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Enterprise Case Management 306

Subtotal $306

Understand Non-Compliant Taxpayer Behavior and Develop Approaches to 

Deter and Change It

Increase Collection Coverage 9,911

Increase Audit Coverage 12,148

Digitizing Form 990 92

FATCA: Implement, Expand Filing Coverage, and Combat Criminal Noncompliance 3,876

Pursue Employment Tax and Abusive Tax Schemes 518

Increase Investigations of Transnational Organized Crime (TOC) 1,839

Subtotal $28,384

Drive More Agility and Efficiency in IRS Operations

Operations and Maintenance for Deployed Business Systems Modernization 

(BSM) Projects 1,037

Maintain Integrity of Revenue Financial Systems 6,090

Subtotal $7,127

Subtotal FY 2017 Cap Adjustment Program Increases $35,817

Subtotal FY 2017 Total Program Increases Including Cap Adjustment $47,390

Total FY 2017 Total Budget Request Including Cap Adjustment $895,094

Dollar/FTE Change FY 2017 Budget Request including PIC over FY 2016 Enacted $62,551

Percent Change FY 2017 Budget Request including PIC FY 2016 Enacted 7.51%
IRS - 88

3.1.6 – Budget and Performance Report and Plan 

3G – Shared Services and Support ($1,197,954,000 in direct appropriations, $23,152,000

from reimbursable programs, and an estimated $19,574,000 from user fees): This budget 

activity funds policy management, IRS-wide support for research, strategic planning, 

communications and liaison, protection of sensitive information and the privacy of taxpayers 

and employees, finance, human resources, and equity, diversity, and inclusion programs. It 

also funds printing and postage, business systems planning, physical security, corporate 

training, legal services, procurement, and employee benefits programs. The program 

activities include the following:

• National Headquarters Management and Administration directs the management 

activities of strategic planning, communications and liaison, finance, human resources, 

equity, diversity and inclusion programs, business systems planning, embedded 

training, and utilization of Treasury Franchise Fund services. This activity sets 

policies and goals, provides leadership and direction for the IRS, and builds partner 

relationships with key stakeholders (Congress, GAO, OMB, and the Oversight Board). 

It provides policy guidance for conducting planning and budgeting strategies, 

conducting analysis of programs and investments to support strategic decisionmaking, and developing and managing human resources. It also includes official 

reception and representation expenses.

• Real Estate and Facilities Management provides services and supplies required to 

manage IRS facilities.

• Procurement supports the procurement function of the IRS.

• Equity, Diversity and Inclusion Field Services provides staffing, training, and direct 

support to plan and manage the IRS’s Equity, Diversity and Inclusion program.

• Communications and Liaison coordinates local government and liaison relationships; 

handles congressional, state, and national stakeholder relationships and issues; 

coordinates crosscutting issues, including managing audits and legislative 

implementation; handles national media contacts and local media relationships; and 

ensures IRS-wide compliance with disclosure and privacy laws.

• Employee Support Services plans and manages financial services, including relocation, 

travel, purchase cards, corporate express, and employee clearances.

• Shared Support not provided by Agency-Wide Shared Services provides resources for 

shared cross-functional support, such as copiers, postage meters, shredders, courier 

services, and post office boxes.

Infrastructure FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Resource Level Enacted Enacted Enacted Enacted Enacted Enacted Enacted Request

Appropriated Resources1 $895,202 $926,190 $929,634 $886,535 $849,025 $841,243 $832,543 $895,094

Reimbursable Resources2 505 880 1,016 701 16,694 928 735 772

User Fees2 23,290 57,477 5,414 17,137

Budget Activity Total $895,707 $950,360 $988,127 $892,650 $882,856 $842,171 $833,278 $895,866

1

The FY 2010 - FY 2015 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2010 - FY 2015 columns represent realized resources for reimbursables and user fees.

Infrastructure Budget and Performance Plan

Dollars in Thousands
IRS - 89

• Printing and Postage – Media and Publications provides operating divisions with 

printing and postage, including shipping of taxpayer and internal use materials.

• Statistics of Income provides resources for researching annual income, financial, and 

tax data from tax returns filed by individuals, corporations, and tax-exempt 

organizations.

• Research provides resources for market-based research to identify compliance issues, 

for conducting tests of treatments to address non-compliance, and for the 

implementation of successful strategies to address taxpayer non-compliance.

• Security Administration and Management manages and oversees the staffing, training, 

equipment, and direct support for the protection of IRS employees, facilities, and 

assets, and the protection and proper use of identity information.

• Wage and Investment (W&I) Business Modernization Support provides staffing, 

training, and direct support for W&I’s enterprise-wide business modernization efforts,

including CADE 2, and Account Management Services (AMS) technology solutions,

and re-engineered business processes.

• Benefit Payments provides resources to fund Workers’ Compensation benefits and 

Unemployment Compensation for federal employee payments.

• Shared Services provides additional services, such as the Public Transit Subsidy.

Description of Performance

Through support activities that include management and administration of human resources, 

security, and research, the IRS continues to provide shared services to all IRS programs.

Human Capital 

The IRS’s employees are its greatest asset and the IRS is committed to building a diverse and 

high performing workforce by recruiting and hiring top talent. In FY 2015, the IRS: 

• Focused on enhancing communication, cultivating an inclusive and collaborative 

environment, and encouraging employee engagement. To do that, the IRS developed 

and retained current employees by relying on their expertise to improve systems and 

processes and also by focusing on knowledge management, staff training, data 

analytics, and training for new ACA and FATCA requirements. Although under an 

exception-only hiring freeze, the IRS successfully hired seasonal staff to support filing 

season, recruited veterans and employees with targeted disabilities, and hired experts 

in the international area.

• Developed the FY 2015 Leadership Engagement Action Plan (LEAP) to tie numerous 

planned employee engagement efforts throughout the IRS into a single, corporate 

engagement strategy. The LEAP focuses on aligning engagement activities to a 

strategic vision, investing in employees and building support systems and tools to 

equip both leaders and employees for success. It is founded upon the Four Pillars of 

Engagement: Lead, Listen, Develop, and Support.
IRS - 90

• Encouraged an inclusive and collaborative environment through its robust employee 

communications, including more than 50 Commissioner or Deputy Commissioner 

employee email messages, articles in the IRS all-employee and manager newsletters, 

and moderated panel discussions with IRS executives. The IRS also conducted a 

number of special events for employees including a Leadership Forum featuring 

Commissioner Koskinen with then NTEU national president Colleen Kelley, 

Commissioner’s Award and Deputy Commissioners’ Awards programs, and an open 

office hours program that allowed employees to have one-on-one face time with the 

Deputy Commissioner of Operations Support.

• Shifted the conversation about diversity to focus on the business benefits of a highly 

diverse, multi-talented workforce. This includes training programs for IRS leaders 

about managing a diverse workforce and embracing the diversity of thought, 

perspective, experience, and cultural background within their staff. 

The IRS will continue to support its mission by investing in human capital strategies and tools 

that support an agile workforce. Engaging, recruiting, hiring, developing, and retaining a 

flexible workforce with foundational skill sets, along with specialized knowledge will 

position the IRS to more easily adapt to a changing landscape where taxpayers’ interactions 

will be more technologically-driven.

Security 

Security of taxpayer data and providing a secure environment for employees are of utmost 

importance to the IRS. In FY 2015, the IRS continued efforts at protecting employees. In 

2015, the IRS:

• Enhanced employee awareness in service-wide emergency response training and 

education through the development of an Active Shooter/Threat and Workplace 

Violence mandatory briefing. IRS delivered this face-to-face training to employees at 

175 large Posts of Duty (PODs) and Campuses and completed 155 facilities security 

risk assessments.

• Amended existing contracts to require that favorable background investigations be 

obtained for all relevant contract employees before routine, unescorted, unsupervised 

physical access to taxpayer information is granted.

• Maintained perimeter security controls within its Trusted Internet Connection 

environment that block an average of more than two million malicious, suspicious, or 

prohibited events targeting IRS employees, systems, or networks on a daily basis. 

Over the past year, the IRS Cybersecurity Computer Security Incident Response 

Center (CSIRC) also identified, mitigated, and responded to 1,128 cyber incidents and 

produced 540 advisories and bulletins informing responsible business units, system 

administrators, and users of mitigation actions to address current vulnerabilities and 

threats affecting the IRS enterprise. 

• Refined and developed new identity theft filters based on analytical models and data 

validation. As a result, potentially fraudulent returns were stopped much earlier in 

processing, allowing the IRS to more quickly resolve cases for ID theft victims. 
IRS - 91

Research 

The IRS National Research Program (NRP) continued to analyze reporting compliance data 

for various taxpayer populations, including Individual Income Tax, Corporate Income Tax, 

Employment Taxes, and Fuel Excise Taxes. NRP results enhance taxpayer service by 

improving IRS processes to reduce taxpayer burden and support enforcement activities by 

identifying issues with high risks for non-compliance. 

The IRS Joint Statistical Research Program (JSRP) uses Statistics of Income and IRS 

administrative tax data to study the effects of existing tax policies on individuals, businesses, 

and the economy. The JSRP is responsible for several research projects that require 

collaborating with academia, non-profit research organizations, and other government 

agencies on important issues affecting tax administration. 

The Office of Research, Analysis, and Statistics is conducting research on behavioral 

responses to IRS actions. This research included a pilot on the use of outreach methods 

designed to encourage taxpayers to participate in the tax system. An FY 2014 pilot 

demonstrated that generic informational postcards could influence filing behaviors among 

taxpayers who appear to be eligible for the Earned Income Tax Credit but have not filed a 

return in recent years in order to claim it. The increased participation seems to have resulted 

in increased compliance; the outreach appears to move two key indicators in a positive 

direction for the IRS: the Voluntary Filing Rate and the EITC participation rate. The 

FY 2015 outreach tested variations in the language used and the timing of the postcard 

messages to increase participation; preliminary FY 2015 results indicate that there were 

increases in participation, even among those who owed tax and/or did not receive a refund.

The Nonfiler/Late-filer Survey is designed to help the IRS understand the drivers of nonfiling 

and gather burden data to inform the IRS Taxpayer Compliance Burden Model (TCBM). The 

study is conducted as an expansion of the Tax Year (TY) 2014 Taxpayer [post-filing] 

Compliance Burden Survey. The TCBM is used to estimate taxpayer post-filing burden and 

inform tax policy and tax law administration. The data from the study will provide additional 

insights into the issues associated with individuals who are at risk to stop filing and inform 

refinement of treatments for those individuals who do fail to file a required return.
IRS - 92

FY 2017 Changes by Budget Activity

Dollars in Thousands

Shared Services and Support FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 5,231 $1,141,485

FY 2016 Administrative Provision 113

FY 2016 Enacted 5,231 $1,141,485

Changes to Base:

Maintaining Current Levels (MCLs): $18,488

Pay Annualization 2,356

Pay Raise 8,725

Non-Pay 7,407

Subtotal FY 2017 Changes to Base $18,488

FY 2017 Current Services (Base) 5,231 $1,159,973

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Leverage New Technologies to Advance the IRS Mission 199

Improve Taxpayer Service 1,460

Subtotal $1,659

Drive More Agility and Efficiency in IRS Operations

Enterprise Electronic Records Management Solution 5 5,397

Subtotal 5 $5,397

Strategic Focus: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 13 7,439

Subtotal 13 $7,439

Subtotal FY 2017 Budget Request Program Increases 18 $14,495

Total FY 2017 Total Budget Request 5,249 $1,174,468

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 18 $32,983

Percent Change FY 2017 Budget Request over FY 2016 Enacted 0.34% 2.89%

Cap Adjustment Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Enterprise Case Management 90

Subtotal $90

Understand Non-Compliant Taxpayer Behavior and Develop Approaches to 

Deter and Change It

Increase Collection Coverage 2 7,092

Increase Audit Coverage 1 8,839

Digitizing Form 990 43

FATCA: Implement, Expand Filing Coverage, and Combat Criminal Noncompliance 2,541

Pursue Employment Tax and Abusive Tax Schemes 557

Increase Investigations of Transnational Organized Crime (TOC) 3,086

Subtotal 3 $22,158

Drive More Agility and Efficiency in IRS Operations

Operations and Maintenance for Deployed Business Systems Modernization 

(BSM) Projects 481

Maintain Integrity of Revenue Financial Systems 5 758

Subtotal 5 $1,239

Alcohol and Tobacco Tax and Trade Bureau Transfer:

Transfer to TTB for High-Return on Investment (ROI) Tax Enforcement Activities

Subtotal

Subtotal FY 2017 Cap Adjustment Program Increases 8 $23,487

Subtotal FY 2017 Total Program Increases Including Cap Adjustment 26 $37,982

Total FY 2017 Total Budget Request Including Cap Adjustment 5,257 $1,197,955

Dollar/FTE Change FY 2017 Budget Request including PIC over FY 2016 Enacted 26 $56,470

Percent Change FY 2017 Budget Request including PIC FY 2016 Enacted 0.50% 4.95%
IRS - 93

3.1.7 – Budget and Performance Report and Plan 

3H – Information Services ($2,221,051,000 in direct appropriations, $33,075,000 in 

reimbursable resources, and an estimated $248,721,000 from user fees): This budget activity 

funds staffing, equipment, and related costs to manage, maintain, and operate the information 

systems critical to the support of the tax administration programs. This includes the design 

and operation of IT security controls and disaster recovery planning. This budget activity 

funds the development and maintenance of the millions of lines of programming code that 

support all aspects and phases of tax processing and the operation and administration of 

mainframes, servers, personal computers, networks, and a variety of management information 

systems. IT systems and data are key to all IRS functions. 

Information Systems (IT) is responsible for IRS information technology, ranging from cyber 

security and networks to applications development and end user equipment and services. The 

program activities include the following: 

• ACA – Program Management Office (PMO) manages the strategic planning, development, 

and implementation of new information systems in support of the business requirements 

associated with healthcare reform. 

• Application Development performs the analysis, design, development, testing, and 

implementation of about 550 applications supporting critical tax processing, management 

information reporting, and financial management support systems for the IRS. This 

program also supports external trading partner data exchanges with federal government 

agencies, state and local governments, and other third party entities. The program 

controls application source code and deploys applications to the production environment.

• Cybersecurity delivers IT security services and ensures IRS compliance with federal 

statutory and regulatory requirements governing confidentiality, integrity, and availability 

of IRS electronic systems, services, and data. Cybersecurity tracks compliance, 

continuously monitors risk, and provides remediation to manage the IRS's IT Security 

Program in accordance with the Federal Information Security Management Act.

• Enterprise Operations designs, develops, and maintains IT that supports critical tax 

processing, management information reporting, and financial management support 

systems for the IRS. The program supports data exchanges with external organizations, 

such as other federal agencies, state and local governments, and external entities (e.g., 

employers and banks), and includes a comprehensive disaster recovery capability to 

ensure continued operations in the event of a major interruption of service. 

Shared Services and Support FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Resource Level Enacted Enacted Enacted Enacted Enacted Enacted Enacted Request

Appropriated Resources1 $1,311,127 $1,291,568 $1,214,514 $1,111,317 $1,188,067 $1,138,910 $1,141,485 $1,197,954

Reimbursable Resources2 20,315 19,957 31,486 17,175 19,886 17,126 22,050 23,152

User Fees2 17,887 4,588 14,938 33,826 7,819 1,768 3,722 19,574

Budget Activity Total $1,349,329 $1,316,113 $1,260,938 $1,162,318 $1,215,772 $1,157,804 $1,167,257 $1,240,680

1

The FY 2010 - FY 2015 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2010 - FY 2015 columns represent realized resources for reimbursables and user fees.

Shared Services and Support Budget and Performance Plan

Dollars in Thousands
IRS - 94

• Enterprise Program Management Office (EPMO) provides oversight and project 

integration into daily IT processes for large-scale development, modernization, and 

enhancement projects. It enables a coordinated, cross functional project planning, 

implementation, and performance assessment effort to improve the quality, cost, and 

delivery schedule of IT systems. 

• Enterprise Services plans and manages service and delivery methods used across the IT 

organization, including demand analysis, enterprise architecture, configuration 

management, project reporting, enterprise life cycle management, release management, 

systems engineering, dashboard reporting, and internal management.

• IT Executive Oversight provides support to the Office of the Chief Technology Officer as 

well as his direct reports for equity, diversity, and inclusion, and the Director, Stakeholder 

Management (including Communications Services and Program Oversight). The program 

provides executive direction for the IT organization, enabling IT to be a customer-focused 

supplier of IT solutions that are responsive to customer business priorities and meet 

functional and operational needs effectively. 

• IT Infrastructure provides a centrally managed investment program for the replacement of 

IRS IT infrastructure that has reached or surpassed its useful life cycle. 

• Management Services provides for the design, development, delivery, and evaluation of a 

wide range of human resources programs for the IT organization. These programs include 

workforce planning, recruitment and retention, career management, performance 

management, labor/employee relations, position management, workplace improvement, 

succession management, and service-wide IT training and education. 

• Strategy and Planning delivers the Enterprise IT investment strategy and portfolio 

management, addressing a broad spectrum of functions coordinated through four 

divisions: 1) Business Planning and Risk Management ensures effective demand and risk 

management, overseeing Enterprise Intake and leveraging the Integrated Release Plan to 

support risk-based decisions; 2) Financial Management Services, IT’s link to the Chief 

Financial Officer, formulates and executes IT budgets, prepares fiscal policy, and provides 

financial services to the IT organization; 3) Investment and Portfolio Management and 

Oversight monitors investments currently executing in the control phase of the Capital 

Planning and Investment Control process as well as investments and projects that have 

completed implementation; and 4) Strategic Sourcing strategically manages IT 

acquisitions and vendors to maximize the value of the IRS’s investments while 

simultaneously minimizing business risk.

• Treasury Franchise Fund (TFF) is a centralized functional area that pays for services 

provided through the Treasury Franchise Fund. 

• User and Network Services provides telecommunications and desktop support services 

that allow service-wide. This includes the operation of equipment and services to meet 

business user needs and the execution of routine changes for scheduled and unscheduled 

modifications to the telecommunications infrastructure and applications. It addresses all 

phases of engineering, acquisition, implementation, and operation of telecommunications 

and desktop systems and services, including voice, video, and data communications.
IRS - 95

Description of Performance

The IRS taxpayer service and enforcement programs rely heavily on information systems that 

fall into the non-business systems modernization (non-BSM) major investment categories. 

These systems process tax and information returns, account for tax revenues collected, send 

bills for taxes owed, issue refunds, assist in the selection of tax returns for audit, and provide 

telecommunication services for all business activities, including the public toll-free telephone 

system that provides access to tax information. 

In FY 2015, the IRS provided new and improved applications and services to make it easier 

for taxpayers to get assistance and secure tax information. 

• Completed transition of the Joint Operations Center (JOC) information systems 

support from contractor to the IRS. The transition included hardware, 

communications, and systems management with servers being moved to the IRS’s 

Enterprise Computing Center and Operations Support providing software and third 

party data acquisition, data management, Federal Information Security Management 

Act (FISMA) security support, and analytic tools to the JOC.

• Integrated technology to support the Affordable Care Act with 2015 Filing Season tax 

administration processing, allowing taxpayers to report health insurance coverage, 

claim health coverage exemptions, report a shared responsibility payment, and claim 

the ACA Premium Tax Credit. The IRS built the ACA Verification Service (AVS) to 

enable at-filing checks of tax returns for reporting the Premium Tax Credit, leveraging 

third-party data from the Insurance Marketplaces, and validating ACA-related tax 

forms. This system processed millions of tax returns, and helped identify fraudulent 

and erroneous returns at the initial processing stage, reducing erroneous refunds. 

• Opened the first release of the new International Data Exchange Service (IDES) 

Gateway. The IDES enables both Financial Institutions and Host Country Tax 

Administrations to comply with their FATCA reporting obligations by safely and 

securely sending electronic FATCA reports to the IRS. 

• Deployed new capabilities associated with Online Bill Pay, IRS Direct Pay, Online 

Payment Agreement, Return Preparer Lookup, and the IRS2Go mobile application; in 

time for the start of the 2015 tax filing season. 

• Starting in FY 2015, the Cost and Schedule Variance measure that the IRS uses to 

gauge performance includes all major investments (BSM and non-BSM). This can be 

found on table 3.1.9. There are 19 major investments currently in progress or 

delivered to date in FY 2015. 

In FY 2016, and beyond, the IRS will continue to focus efforts on expanding its capabilities to 

identify fraudulent returns and prevent identity theft, enhance cyber monitoring and IT 

security controls, and enhance services options to taxpayers and practitioners through the 

development of a customer-centric strategy known as Service on Demand (SOD). In addition 

to supporting required changes for filing season, major investments for FY 2016 include 

delivering ACA and FATCA releases.
IRS - 96

3.1.8 – Budget and Performance Report and Plan 

FY 2017 Changes by Budget Activity

Dollars in Thousands

Information Services FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 6,522 $1,664,418

FY 2016 Administrative Provision 113 170 $108,242

Improve Taxpayer Service 1,800

Cyber Security 170 95,442

Strengthening the Prevention of Identity Theft 11,000

FY 2016 Enacted 6,691 $1,772,660

Changes to Base:

Maintaining Current Levels (MCLs): $27,345

Pay Annualization 3,036

Pay Raise 11,249

Non-Pay 13,060

Efficiencies/Savings: ($58)

Increase e-File Savings (58)

Subtotal FY 2017 Changes to Base $27,288

FY 2017 Current Services (Base) 6,691 $1,799,948

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Implement Changes to Deliver Tax Credits and Other Requirements for the 

Affordable Care Act 153,240

Leverage New Technologies to Advance the IRS Mission 369

Improve Taxpayer Service 9 8,984

Subtotal 9 $162,593

Drive More Agility and Efficiency in IRS Operations

Enterprise Electronic Records Management Solution 41 12,500

Subtotal 41 $12,500

Strategic Focus: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 23 21,910

Subtotal 23 $21,910

Subtotal FY 2017 Budget Request Program Increases 73 $197,003

Total FY 2017 Total Budget Request 6,764 $1,996,951

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 73 $224,291

Percent Change FY 2017 Budget Request over FY 2016 Enacted 1.09% 12.65%

Cap Adjustment Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Enterprise Case Management 202

Subtotal $202

Understand Non-Compliant Taxpayer Behavior and Develop Approaches to 

Deter and Change It

Increase Collection Coverage 19 15,251

Increase Audit Coverage 39 33,287

Digitizing Form 990 6 2,163

FATCA: Implement, Expand Filing Coverage, and Combat Criminal Noncompliance 70 70,433

Pursue Employment Tax and Abusive Tax Schemes 7,501

Increase Investigations of Transnational Organized Crime (TOC) 1,217

Subtotal 134 $129,852

Drive More Agility and Efficiency in IRS Operations

Operations and Maintenance for Deployed Business Systems Modernization 

(BSM) Projects 73 90,656

Maintain Integrity of Revenue Financial Systems 22 3,390

Subtotal 95 $94,046

Subtotal FY 2017 Cap Adjustment Program Increases 229 $224,100

Subtotal FY 2017 Total Program Increases Including Cap Adjustment 302 $421,103

Total FY 2017 Total Budget Request Including Cap Adjustment 6,993 $2,221,051

Dollar/FTE Change FY 2017 Budget Request including PIC over FY 2016 Enacted 302 $448,391

Percent Change FY 2017 Budget Request including PIC FY 2016 Enacted 4.51% 25.29%

Information Services FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Resource Level Enacted Enacted Enacted Enacted Enacted Enacted Enacted Request

Appropriated Resources1 $1,877,555 $1,838,958 $1,803,268 $1,803,091 $1,831,050 $1,719,293 $1,772,660 $2,221,051

Reimbursable Resources2 17,231 16,286 5,154 8,850 4,734 24,262 31,500 33,075

User Fees2 36,081 26,764 59,823 145,036 198,206 373,610 391,940 248,721

Budget Activity Total $1,930,867 $1,882,008 $1,868,245 $1,956,977 $2,033,990 $2,117,165 $2,196,100 $2,502,847

1

The FY 2010 - FY 2015 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2010 - FY 2015 columns represent realized resources for reimbursables and user fees.

Information Services Budget and Performance Plan

Dollars in Thousands
IRS - 97

Business Systems Modernization

Appropriation Description

The Business Systems Modernization (BSM) appropriation provides resources for the 

planning and capital asset acquisition of IT to modernize the IRS business systems.

The BSM budget request for FY 2017 is $343,415,000 in direct appropriations and 

469 FTE. This is an increase of $53,415 or 18.42 percent, and 29 FTE more than the FY 2016 

Enacted level of $290,000,000 and 440 FTE.

The performance measures reflected in the Enforcement appropriation support and align to 

Goal 3: Fairly and effectively reform and modernize federal financial management, 

accounting, and tax systems, Objective 3.3: Pursue tax reform, implement the Patient 

Protection and Affordable Care Act and Foreign Account Tax Compliance Act, and improve 

the execution of the tax code of the Department of the Treasury’s FY 2014 – FY 2017

Strategic Plan.

2.1 – Budget Adjustments Table 

Dollars in Thousands

Business Systems Modernization FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 440 $290,000

FY 2016 Enacted 440 $290,000

Changes to Base:

Maintaining Current Levels (MCLs): $900

Pay Annualization 191

Pay Raise 709

Subtotal FY 2017 Changes to Base $900

FY 2017 Current Services (Base) 440 $290,900

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure Innovative 

Tools and Support 

Leverage New Technologies to Advance the IRS Mission 29 52,515

Subtotal 29 $52,515

Subtotal FY 2017 Budget Request Program Increases 29 $52,515

Total FY 2017 Total Budget Request Including Cap Adjustment 469 $343,415

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 29 $53,415

Percent Change FY 2017 Budget Request over FY 2016 Enacted 6.64% 18.42%
IRS - 98

2.2 – Operating Levels Table 

Dollars in Thousands

Business Systems Modernization

Object Classification

FY 2015

Actual

FY 2016

Enacted

FY 2017

Request

11.1 Full-Time Permanent Positions 36,922 53,386 57,328

11.3 Other than Full-Time Permanent Positions 385 74 75

11.5 Other Personnel Compensation 588 3,041 3,157

11.9 Personnel Compensation (Total) 37,895 56,501 60,560

12.0 Personnel Benefits 11,086 15,433 16,597

Total Personnel and Compensation Benefits $48,981 $71,934 $77,157

21.0 Travel 35 593 1,081

22.0 Transportation of Things

23.3 Communications, Utilities, & Misc

24.0 Printing & Reproduction

25.1 Advisory & Assistance Services 52,280 181,393 228,991

25.2 Other Services 34 499 522

25.3 Purchase of Goods & Services from Govt. Accounts 35 35

25.4 Operation & Maintenance of Facilities

25.7 Operation & Maintenance of Equipment 2,691 2,376 2,376

26.0 Supplies and Materials 1 68 151

31.0 Equipment 3,723 33,102 33,102

Total Non-Personnel $58,764 $218,066 $266,258

New Appropriated Resources $107,745 $290,000 $343,415

Budget Activities:

IT Investments 107,745 290,000 343,415

New Appropriated Resources $107,745 $290,000 $343,415

FTE 309 440 469
IRS - 99

2.3 – Appropriation Detail Table 

Dollars in thousands

Business Systems Modernization

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Business Systems Modernization 309 $107,745 440 $290,000 469 $343,415 29 $53,415 6.59% 18.42%

Subtotal New Appropriated Resources 309 $107,745 440 $290,000 469 $343,415 29 $53,415 6.59% 18.42%

Other Resources:

Reimbursables

Offsetting Collections - Non Reimbursables

User Fees

Recovery from Prior Years

Unobligated Balances from Prior Years 31 133,783 276,443 276,197 (246) -0.09%

Transfers In/Out

Resources from Other Accounts

Subtotal Other Resources 31 $133,783 $276,443 $276,197 ($246) -0.09%

Total Budgetary Resources 340 $241,528 440 $566,443 469 $619,612 29 $53,169 6.59% 9.39%

FY 2016 to FY 

2017 Request

FY 2015

Actual

FY 2016 to FY 

2017 Request

FY 2017

Request

Change % Change

FY 2016

Enacted

3I – Business Systems Modernization ($343,415,000 in direct appropriations): This budget 

activity funds the planning and capital asset acquisition of information technology (IT) to 

modernize IRS business systems, including labor and related contractual costs.

Business Systems Modernization (BSM) uses best practices and expertise in business 

solutions and internal management from the IRS, businesses, and the technology sectors to 

develop a world-class tax administration system. The program provides value to taxpayers, 

the business community, and the government, and it plays an integral role in reducing the tax 

gap. BSM has delivered improved taxpayer service, electronic filing, and data analysis 

capabilities, and it has maintained strong performance in delivering projects within planned 

cost, schedule, and scope estimates. 

The following projects are supported by the FY 2017 BSM request of $343.3 million:

CADE 2 (Taxpayer Account Database): Implements a single, data-centric solution that 

provides daily processing of taxpayer accounts. A major component of the CADE 2 program 

is a modernized relational database and comprehensive data model for all individual taxpayers 

that provides the foundation for more efficient and effective tax administration. In Transition 

State 2 of the CADE 2 initiative, the modernized database will become the IRS’s authoritative 

source for taxpayer account data, as it begins to address core IMF financial material weakness 

(FMW) requirements for individual taxpayer accounts. Existing financial reports will be 

modified to take into account the increased level of detail and accuracy of data in the CADE 2 

database. In addition, CADE 2 data will be made available for access by downstream 

systems, such as the Integrated Data Retrieval System (IDRS), for online transaction 

processing by IRS customer service representatives. It will enable analytical reporting for 

more meaningful business intelligence and expanded opportunities to increase compliance. 

Enterprise Case Management (ECM): Addresses the need to modernize and upgrade aging 

IRS case management systems. These resources will provide for an enterprise solution using 

a Commercial Off-the Shelf (COTS) product for performing standard case management 
IRS - 100

functions, an infrastructure platform, and a common service that case management 

applications will leverage. 

Event Driven Architecture (EDA): Funds the development of a framework that processes tax 

returns immediately upon arrival, which will provide a scalable infrastructure and the ability 

to balance distributed workflows, resulting in a more efficient infrastructure model and 

improved customer service.

Modernized e-File (MeF): Provides a standard filing structure for all IRS return types, a 

robust platform that meets performance and capacity needs, enhanced and up-to-date 

technologies, and customer service benefits that are of great appeal to external customers and 

stakeholders. With MeF, the IRS stores all tax return data in XML format in a Modernized 

Tax Return Database (MTRDB), allowing all authorized viewers of the data to see an entire 

tax return online. Once fully implemented, all tax returns and transmission files will be 

standardized and adhere to IRS rules/schemas.

Return Review Program (RRP): Delivers an integrated and unified system that enhances IRS 

capabilities to detect, resolve, and prevent criminal and civil tax non-compliance. The RRP 

provides a flexible and accessible system capable of supporting a cross-functional approach to 

address criminal and civil tax non-compliance. In addition, the RRP allows analysis and 

support of complex case processing requirements for compliance and criminal investigation 

programs during prosecution, revenue protection, accounts management, and taxpayer 

communications processes. 

Web Applications (formerly Enhance Online Services (OLS)): Will simplify the taxpayer’s 

online experience, provide secure digital communications, and add more interactive 

capabilities to existing web self-service products. This will allow taxpayers to resolve more 

issues online, requiring fewer direct interactions with the IRS over the telephone and in 

person. 

Architecture, Integration and Management (AI&M): Provides engineering management 

capabilities essential to delivering a program of BSM’s magnitude and complexity. It also 

delivers essential IRS systems strategy, architecture, and engineering capabilities for the 

major modernization projects across all technology platforms: IT Infrastructure, Business 

Applications, Data Management, and IT Security. The AI&M program translates enterprise 

and project objectives into targeted, actionable investments to provide the necessary 

framework and direction for a cohesive, successful modernization.

Core Infrastructure: Provides mission-critical services for designing, engineering, testing, 

and deploying standardized, consolidated, virtual, and secure modernized development and 

production environments for use by BSM projects. 

The IRS is modernizing taxpayer applications to take advantage of web-based technologies 

that allow taxpayers to communicate with the IRS through the Internet using commercially 

available technology. The modernized infrastructure provides a complete environment 

(hardware, software, processes, and management) for developing, testing, deploying, 

operating, and monitoring both customer and internal applications in support of business 
IRS - 101

practices. This includes continuing to update the web portal environment and standardizing 

services, security, and operations management. 

This approach facilitates the IRS’s ability to develop a shared infrastructure and common 

business service solutions that are usable across multiple BSM projects. 

Management Reserve: Allows the IRS some flexibility to cover unanticipated cost 

adjustments. 

Labor and support: This activity provides the labor and support costs associated with the 

development of projects within the BSM portfolio.

Dollars in Thousands

Business Systems Modernization FY 2015 

Enacted

FY 2016

Enacted

FY 2017 

Budget 

Request 

Difference 

2016 to 2017

CADE 2 (Taxpayer Account Database) 

Continue the design and development of applications that will modernize core tax processing application architecture, 

address financial material weakness, and expand capabilities in leveraging the CADE 2 relational database as the 

authoritative source of individual taxpayer data.

100,000 91,000 100,000 9,000

Enterprise Case Management

Provide an enterprise-wide strategic approach to case management that will implement standard case management 

functions, an infrastructure platform, and common services that a case management application will leverage. The 

anticipated results are to streamline processes, reduce the number of duplicative applications and improve data 

accessibility and usability.

2,000 25,000 35,000 10,000

Event Driven Architecture

A framework that processes the tax return immediately upon arrival. Just-in-time processing will allow each individual 

return to flow independently through the system at its own pace. This will allow the IRS to move away from batch 

processing, view returns dynamically, and understand the status of a return as it is processed.

0 2,500 30,000 27,500

Modernized e-File 

Fund Milestone 4b (development and testing) of Release 11, Form 1040NR BMF Components & Shared Components 

(to include Dual Status and Fiscal Year Returns). 28,500 7,700 12,000 4,300

Return Review Program

Provide leading-edge technologies to advance IRS effectiveness in detecting, addressing, and preventing tax refund 

fraud and protecting US Treasury revenue. The RRP system contains multiple data sources combined with 

sophisticated modeling and business rule analytics to support pre-refund revenue protection, compliance and postrefund criminal investigation and prosecution. 

38,475 32,000 32,000 0

Web Applications

Drive the IRS transition to digital government and supports the long-term vision of migrating services from expensive 

traditional channels to the internet. To keep pace with the ever changing state of web technology and increasing 

taxpayer demand for IRS service, the IRS must create and enhance online self-service capabilities for taxpayers, tax 

practitioners, and internal IRS stakeholders. Web Applications will continue to enhance the taxpayer’s experience by 

providing additional self-service options within a secure communications infrastructure. 

12,500 13,000 17,000 4,000

Architecture, Integration, and Management

Provide system engineering management capabilities, including systems strategy, architecture, and engineering 

capabilities, across IT Infrastructure, Business Applications, Data Management, and IT Security. Provide portfolio 

control and management processes and tools, including governance, enterprise lifecycle support, tiered program 

management, and configuration/change management.

28,900 26,000 20,000 -6,000

Core Infrastructure

Provide shared infrastructure that leverages reusable engineering design patterns and best practices for standardized, 

virtual, and secure environments. These environments allow multiple BSM projects to develop, test, deploy, operate, 

and monitor in a common approach. 

15,465 15,000 15,000 0

Management Reserve 4,284 2,500 3,470 970

Subtotal Capital Investments $230,124 $214,700 $264,470 $49,770

Labor 1 58,872 71,933 77,155 5,222

Support 1,004 3,367 1,790 (1,577)

Total BSM $290,000 $290,000 $343,415 $53,415

 FY 2017 BSM Project Activities

1 FY 2017 labor includes $900K of MCLs and excludes $973K of corporate costs which are reflected in the Operations Support appropriation. 
IRS - 102

Description of Performance

The IRS’s modernization efforts focus on building and deploying advanced information 

technology systems, processes, and tools to improve efficiency and productivity. 

For the Business Systems Modernization program (BSM), the IRS reports two budget level 

measures that track the percentage of major projects that are within the +/-10 percent Cost and 

Schedule variance threshold. 

Starting in FY 2015, the measure includes all major investments (BSM and non-BSM). There 

are 19 major investments currently in progress or delivered to date in FY 2015.

In FY 2015, 14 of 19 major investments (73.7 percent) were within 10 percent cost variance. 

Reductions in the budget have caused hiring freezes and have necessitated changes in scope, 

realignment, rescheduling, and consolidation of activities. This has resulted in less spending 

than planned. Baseline Change Requests (BCRs) are in process to address these updated 

plans. Four of the five investments that did not meet the cost variance threshold were due to 

under spending; e-Services (e-SVS), Account Management Services (AMS), FATCA, and 

IRS End User Systems and Services (EUSS). The Electronic Fraud Detection System (EFDS) 

investment is slightly over budget due to the delay of planned FY 2014 work until FY 2015 

and expiration of a work contract that had to be renewed. In FY 2016, IRS will continue to

rigorously monitor program activities and address any issues associated with cost to meet the 

FY 2016 and FY 2017 target of 90 percent.

In FY 2015, 17 of 19 major investments (89.5 percent) were within the schedule variance. 

Fiscal Year

Percent within +/- 10% 

Cost Variance

Percent within +/- 10% 

Schedule Variance

2015 73.7% 89.5%

Major IT (BSM and Non-BSM) Investments
IRS - 103

3.1.9 – Budget and Performance Report and Plan

Business Systems Modernization FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Resource Level Enacted Enacted Enacted Enacted Enacted Enacted Enacted Request

Appropriated Resources1 $263,897 $263,369 $330,210 $312,938 $312,938 $290,000 $290,000 $343,415

Reimbursable Resources2

User Fees2 88,948

Budget Activity Total $263,897 $352,317 $330,210 $312,938 $312,938 $290,000 $290,000 $343,415 1

The FY 2010 - FY 2015 appropriated resources represents the approved operating plan.

2

The FY 2010 - FY 2015 columns represent realized resources for reimbursable resources and user fees.

Business Systems Modernization FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2015 FY 2016 FY 2017

Measures Actual Actual Actual Actual Actual Actual Target Target Target

Percent of BSM Projects within +/- 10% Cost Variance (E) 40.0% 71.4% 50.0% 0.0% 66.7% NA NA NA

Percent of BSM Projects within +/- 10% Schedule Variance (E) 100.0% 100.0% 90.0% 83.3% 100.0% NA NA NA

73.7% 90.0% 90.0% 90.0%

89.5% 90.0% 90.0% 90.0%

Key: E - Efficiency Measure

Business Systems Modernization Budget and Performance Plan

Dollars in Thousands

Starting in FY 2015, these measures, currently reflected in the Performance Summary Table, include all major investments (BSM and non-BSM) whereas in the previous fiscal years it 

Percent of Major IT Investments within +/- 10% Schedule 

Variance at the Investment Level1

 - new for FY 2015

Percent of Major IT Investments within +/- 10% Cost Variance 

at the Investment Level1

 - new for FY 2015

FY 2017 Changes by Budget Activity

Dollars in Thousands

Business Systems Modernization FTE Amount

FY 2016 Enacted (before Administrative Provision 113) 440 $290,000

FY 2016 Administrative Provision 113

FY 2016 Enacted 440 $290,000

Changes to Base:

Maintaining Current Levels (MCLs): $900

Pay Annualization 191

Pay Raise 709

Subtotal FY 2017 Changes to Base $900

FY 2017 Current Services (Base) 440 $290,900

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Leverage New Technologies to Advance the IRS Mission 29 52,515

Subtotal 29 $52,515

Subtotal FY 2017 Budget Request Program Increases 29 $52,515

Total FY 2017 Total Budget Request 469 $343,415

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted 29 $53,415

Percent Change FY 2017 Budget Request over FY 2016 Enacted 6.64% 18.42%
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Section 4 – Supplemental Information

4.1 – Summary of Capital Investments

A summary of capital investment resources, including major information technology and nontechnology investments, can be viewed/downloaded at: 

http://www.treasury.gov/about/budget-performance/pages/summary-of-capitalinvestments.aspx.

This website also contains a digital copy of this document.

4A – Capital Investment Strategy

2015 IRS Technology Roadmap - Conceptual View

The conceptual, top-level view of the Technology Roadmap identifies the major services that 

support each core business area along with the major architectural principles and constructs. 

Critical components of the Technology Roadmap include:

• Data: In response to the complex information ecosystem required for tax 

administration, the very core of the conceptual view is data. The Technology 
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Roadmap envisions a future where all six of the core business areas ‒ Intake, Accounts 

Management, Compliance, Case Management, Customer Service, and Internal 

Operations ‒ consume a shared, centralized, authoritative set of data seamlessly, with 

the ability to easily and efficiently organize, manage, store, retrieve, manipulate, 

analyze and share data. 

• Data Access / Service Orchestration: The long-term architectural vision for IRS is 

to move toward complete service orientation. In contrast to the monolithic, stovepiped applications of today, users from any business area will seamlessly invoke 

services and reach to data on demand. The move toward service orientation will allow 

system developers to reuse component services in many different contexts, improving 

agility in meeting user needs.

• Multi-Channel Portal: In response to user demands, cost constraints, and the 

changing technology landscape, the Technology Roadmap provides a secure, multichannel portal for both internal and external stakeholders as a single point of entry to 

access IRS services and data from “any device, any place, any time.”

• Business Areas: The six IRS business areas ‒ Intake, Accounts Management, 

Compliance, Case Management, Customer Service, and Internal Operations ‒

encompass all IRS operations as large functional groupings of capabilities and 

services. The IRS structured these business areas to cut across organizational 

boundaries to serve a key Enterprise Architecture goal of identifying and building out 

shared solutions for common, shared business processes and needs. Throughout the

Technology Roadmap, much of the vision for business capabilities, applications, and 

services is organized around these six business areas.

• Configurable Business Processes / Event-Driven Architecture (EDA): The 

Technology Roadmap leverages event driven architecture as a framework to 

orchestrate business processes and application services in response to business events. 

This approach allows the IRS to provide and optimize real time services.

FY 2017 Capital Investments

These investments will help the IRS develop shared solutions for the taxpayer and tax 

professionals:

The Customer Account Data Engine 2 (CADE 2) provides state-of-the-art individual taxpayer 

account processing and data-centric technologies to improve service to taxpayers and enhance 

IRS tax administration. CADE 2 daily processing enables faster taxpayer refunds, more 

timely account updates, and faster issuance of taxpayer notices – while leveraging a single 

centralized relational database for all individual taxpayer accounts.

Transition State 2 (TS2) supports the IRS’s plans to reengineer the Individual Master File 

(IMF) by: (1) applying modern programming languages; (2) establishing CADE 2 as the 

authoritative data source for legal and financial purposes; and (3) implementing functionality 

to address the IRS Financial Material Weakness over unpaid tax assessments for individual 

taxpayer accounts.
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E-Services is for authorized tax professionals and qualifying large business. This is a suite of 

Web-based self-assisted services for conducting business with the IRS electronically

(E-Services products are not available to the individual taxpayer). E-Services products 

currently available include:

• Registration ‒ permits creation of an electronic account by selecting a username, 

password, and personal identification number.

• E-File Application ‒ lets tax professionals submit a three-step application to 

file/transmit returns electronically and check suitability, which may include a criminal 

background or other compliance check.

• Taxpayer Identification Number (TIN) Matching ‒ allows authorized third parties 

who submit any of seven information returns, subject to backup withholding, to match 

up to 25 payee TIN and name combinations against IRS records before submitting an 

information return. Payers can confirm a taxpayer-provided social security number or 

employer identification number. Bulk TIN matching allows authorized tax 

professionals filing any of the seven information returns to match up to 100,000 TIN 

and name combinations.

• Transcript Delivery System ‒ permits authorized tax professionals with powers of 

attorney or taxpayer authorizations to receive, in a secure online session, account 

transcripts, wage and investment documents, tax return transcripts, and verification of 

non-filing letters to resolve clients' needs for return and account information quickly.

• Return Preparer Registration - Identity Verification Service (RPR-IVS) ‒

performs an identity verification check for tax preparers before the IRS issues a 

Preparer Tax Identification Number (PTIN). The check includes, but is not limited to, 

verification of the applicant’s SSN, Name, and Address of Record, with IRS records. 

IRS Direct Pay also has applied RPR-IVS to verify a taxpayer’s identity before 

allowing them to make a tax payment.

• Taxpayer Identification Number (TIN) Validation Enterprise Common Service 

(TINV-ECS) ‒ provides both interactive and batch processing for validation of

Taxpayer Identification Numbers, which are comprised of the taxpayer’s name, social 

security number, and employer identification number. 

• Automated Electronic Fingerprinting – provides criminal data checks in less than 

24 hours for tax practitioners requesting use of electronic filing services. IRS will 

scan submitted fingerprint cards electronically and send to the Federal Bureau of 

Investigation (FBI) for a criminal background check. The results will be loaded into 

the IRS Third Party Data Store (TPDS) for use in fraud detection.

• External Services Authorization Management (ESAM) ‒ provides the capability 

for Affordable Care Act (ACA) Information Return Filers to resolve Health Insurance 

Marketplace and Health Insurers’ inquiries involving tax return and account 

information quickly. 

Web Services Infrastructure investment provides the infrastructure for one-stop, Web-based 

services with the long-term goal of providing a virtual tax assistance center for internal and 

external users. This investment enables landing page access to services for taxpayers, 

businesses, practitioners, electronic return originators and IRS employees. Services made 
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available by the IRS Web Services Infrastructure investment include easy access to forms and 

publications, electronic payment transactions, delivery of transcripts, tracking of refunds and 

amended returns, modernized e-filing, free-file for certain classes of taxpayers, and other 

electronic services. Planned enhancements for the IRS Web Services Infrastructure include 

more secure and reliable portals with a modernized portal design and increased systems 

capacity.

Return Review Program (RRP) is an integrated system that adds to the IRS’s capability to 

detect, resolve, and prevent criminal and civil tax non-compliance and fraud. The RRP will 

use third-party data to ensure the accuracy of income and withholding reported on a return. 

The RRP objectives include:

• Increase identification of false tax refunds in a timely manner;

• Prevent the issuance of false tax refunds;

• Improve the IRS’s ability to detect identity theft;

• Identify 12 common frivolous arguments on tax returns;

• Determine follow-up actions for potential criminal activity related to false tax refund 

crimes; 

• Detect tax refund crime schemes;

• Refer false and highly questionable returns for audit; and

• Automate many manual tasks. 

Event Driven Architecture (EDA) will allow the IRS to provide a more efficient means of 

processing tax returns, thereby issuing tax refunds and/or collecting tax revenue owed more 

timely. It is a framework that processes the tax return immediately upon arrival. Currently, 

tax returns are bundled together. A correct return in the batch can be held up by another 

return with issues. Real time processing will allow each individual return to flow 

independently through the system. This will allow the IRS to view returns dynamically and 

understand the status of a return as it is processed. The EDA will transform the current tax 

processing architecture to a more scalable design that maximizes the technology investments 

and supports business agility. 

Enterprise Case Management will address the need to modernize, upgrade, and consolidate 

multiple aging IRS case management systems. A common case management environment 

will yield efficiencies by implementing standard case management functions, providing 

visibility across all types of tax transactions and improving data accessibility and usability. 

4B – IRS Aging Legacy Information Technology (IT) Infrastructure (non-BSM) 

Proposed Long-term Multiyear Funding Strategy and Timetable

The IRS established a Sustaining Infrastructure (SI) program to provide for long-term 

infrastructure viability with the flexibility to meet dynamically changing business 

requirements. The SI program includes a prioritization process to replenish aged assets that 

support the most critical IRS business needs. The prioritization process is a long-term 

funding strategy, to upgrade and modernize aging legacy IT infrastructure for non-Business 

Systems Modernization projects. The process is built on leading business practices and 
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strategic objectives that support the IRS mission while ensuring compliance with federal laws 

and agency oversight. 

Each year the IRS assesses and funds projects in the following four portfolios:

Portfolio Name Description

Average 

Percentage of 

Portfolio

Sustaining Infrastructure Aged inventory beyond useful life 65%

Sustaining Architecture & 

Engineering

Aged inventory not past its useful 

life, but tied to production 

applications or critical business need

15%

Sustaining Enterprise 

System Software 

Updating aged software (beyond 

useful life) to achieve (N)(N-1)

11%

Sustaining Other Operational Demand 9%

The objectives of the SI prioritization process are to:

• Achieve an acceptable level of aged assets (20 – 25 percent);

• Reduce the aged inventory of IRS infrastructure;

• Describe an IRS future infrastructure replacement decision model; 

• Focus replacement investment decisions on the future infrastructure vision; 

• Assist in preparing annual asset retirement goals; and 

• Make the most efficient infrastructure investments. 

The benefits of the SI prioritization process include:

• Reducing overall operational infrastructure cost of the IT Organization; 

• Reducing equipment diversity and quantity; 

• Improving infrastructure capacity; 

• Improving governance; 

• Increasing IT security;

• Improving disaster recovery operations; and 
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• Directing infrastructure to a more efficient world-class environment.

The SI prioritization process is defined by four lifecycle phases: Pre-Select, Select, Control, 

and Evaluate. During each phase, the IRS governance bodies make decisions using defined 

processes and data regarding the investments under consideration. Approved investments 

become part of the larger SI investment portfolio, and both new and ongoing investments are 

monitored continuously throughout their lifecycle against Key Performance Indicators (KPIs) 

for Deputy Chief Information Officer (DCIO) and Infrastructure Executive Steering 

Committee (IESC) review. The IRS conducts post-implementation assessments to ensure 

Cost, Schedule, and the overall goals of the project were successfully completed. 

The four-lifecycle phases of the SI Prioritization Process are described below:

• The Pre-Select Phase assesses proposed IT solutions for unmet business requirements.

The pre-selection phase creates a portfolio of IT project investments designed to 

improve overall organizational performance. The three-step pre-selection process is: 

o Step 1 – Screen IT proposals for relevance and feasibility. A mature investment 

screening process prescribes the required amount of documentation and level of 

analytical rigor, depending on the project’s type (e.g., mission critical 

infrastructure, etc.) and phase (e.g., initial concept, new, ongoing, and operational).

o Step 2 – Retain proposals with the highest potential to support the IRS critical 

mission and/or operations. If viable, the proposal moves into the Investment 

Management Plan (IMP) development stage.

o Step 3 – Prioritize the list of IT projects. After completing the analysis, the IRS 

develops a ranked listing of IT projects. 

• During the Select phase, an executive level, decision-making body determines which 

projects to fund based on the analyses completed during the pre-select phase. The 

process prioritizes IT investments in accordance with organizational priorities and 

strategic direction. Projects are funded based on budget constraints with consideration 

for technical soundness of projects, contribution to mission needs, performance 

improvement priorities, and overall available budget levels.

• The Control Phase begins once investments are selected and approved for funding. 

The Control Phase monitors on-going IT projects during the planning, acquisition, 

deployment, and operation and maintenance stages of the IT investment life cycle. 

The primary objective is to assess the investment’s performance and enable effective 

management of all major IT investments within the IRS. If a project is late, over cost, 

or not being developed according to approved IMPs, projects may be modified or 

cancelled. 

• The Evaluate Phase includes two components: a Post Implementation Review (PIR) 

on implemented or cancelled investments and an annual analysis of the performance 

of the IRS’s portfolio management process. During PIRs, data is collected, recorded, 

and analyzed to compare expected results against actual benefits and returns. Once 

investments are fully implemented or cancelled, actual versus expected results are 

evaluated to assess the investment’s impact on strategic performance, identify 
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modifications that may be needed, and revise the investment management process 

based on lessons learned.

4C – Summary of FY 2015 Savings Realized

The IRS FY 2015 President’s Budget request of $12,476.5 million was built on the FY 2014

Enacted level of $11,290.6 million and included $95.2 million and 70 FTE in reductions to 

the IRS FY 2014 base budget. However, the FY 2015 Enacted budget was $10,945.0 million, 

leaving the IRS with a $345.6 million shortfall in appropriated funding if it were to continue 

at the same level of employment and output as in FY 2014. In addition, the IRS estimated it 

would need $223.2 million to cover the cost of MCLs in FY 2015, for a total shortfall of 

nearly $570 million.

The FY 2015 President’s Budget proposed $95.2 million in savings and efficiencies, but 

additional savings needed to be identified in response to lower than expected enacted 

appropriations. The IRS tried to maintain the integrity of its programs and reduce disruption 

to taxpayers, but significant service impacts were unavoidable. In FY 2015, the IRS obligated 

$10,650.4 million from newly appropriated resources, down $277.1 million, or 2.5 percent, 

from FY 2014. 

Adjustment for FERS Increase

Projected Savings: (-$76,375,000)

Estimated Savings Realized: ($-500,000,000)

The IRS projected that by continuing to closely manage personnel costs it would save enough 

money to absorb the cost of the FERS contribution increase in FY 2015. The IRS realized 

approximately 4,400 fewer FTE in FY 2015 than in FY 2014 as a result of the hiring freeze. 

Savings from reduced FTE realization in FY 2015 is estimated to be approximately 

$500 million. In addition to covering the $76.4 million increase in FERS, the IRS used 

savings from attrition to cover other labor increases, such as the pay raise, career ladder 

increases, increase in the Federal Employee Health Benefits rate, and other labor inflationary 

costs. Once these additional increases were funded, remaining savings of approximately 

Dollars in Millions

Internal Revenue Service

FY 2014 Enacted $11,290.6

Changes to Base:

Maintaining Current Levels (MCLs) $223.2

Pay Raise 102.1

FERS Contribution Increase 75.3

Non-Pay Inflation Adjustment 45.8

FY 2015 Current Services $11,513.8

FY 2015 Enacted $10,945.0

Current Services Shortfall ($568.8)
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$270 million from reduced FTE realization were available to fund other mission critical 

needs. 

Increase e-File Savings

Projected Savings: (-$2,800,000 / -55 FTE)

Actual Savings Realized: (-$6,209,800/ -122 FTE) 

The IRS realized savings of 122 FTE and $6.2 million in FY 2015 as a result of increases in 

electronically filed returns. The savings exceeded the projected savings by $3.4 million and 

67 FTE. The numbers of paper returns received by the IRS decreased by 2.3 million from FY 

2014 to FY 2015 while the number of electronically filed returns increased by 6.5 million 

over the same period.

Health Coverage Tax Credit (HCTC) Program Termination

Projected Savings: (-$16,025,000 / -15 FTE)

Actual Savings Realized (-$13,752,866 / -7.63 FTE)

Projected savings were lower for the HCTC program due to budget reductions in program 

support areas and high attrition rates during FY 2013 and FY 2014. In FY 2013, the 

termination of the HCTC program was announced. Employees assigned to HCTC program 

began to attrite in FY 2013, and as a result at the start of FY 2014 only nine employees 

remained on board. Over the course of the fiscal year, HCTC lost three additional employees, 

leaving six on board at the conclusion of the fiscal year. Agency-wide cuts to travel and 

contract support reduced the amount of program savings. The Trade Adjustment Assistance 

Act of 2015 (P.L. 114-27) requires the IRS to reinstate the HCTC program and retroactively 

extend benefits effective immediately, and continuing through calendar year 2019.

Rent: 

Actual Savings: (-$17,600,000)

Rent is one of the IRS's largest organizational operating expenses. The IRS completed 

59 projects to release more than 624,306 rentable square feet of space from inventory for an 

annual rent savings of more than $17.6 million. 

Contracts:

Actual Savings: (-$68,600,000)

Negotiations leading to contract savings included price, labor hours, travel costs, 

considerations attained, schedule changes, price discounts, and more. In FY 2015, 

$68.6 million of savings were realized through contract negotiations. 
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4D - Return on Investment (ROI) for IRS Major Enforcement Programs

The actual cost and actual revenue collected for FY 2011 through FY 2015 for the three major 

enforcement programs, Examination, Collection, and Automated Underreporter (AUR) are 

provided below. The activities included in these programs include:

Examination Program conducts examinations of tax returns of individual taxpayers, 

businesses, and other types of organizations to verify that the tax reported is correct. This 

includes examinations of individual, small business, self-employed, large corporate business, 

partnerships, international, estate and gift, excise tax and employment tax, and tax-exempt, 

qualified pension benefit plans, and Government entities. The examination costs include the 

cost of the Field Exam, Correspondence Exam, IRS Chief Counsel, and Appeals functions.

Collection Program collects delinquent taxes and secures delinquent tax returns, through the

appropriate use of enforcement tools such as lien, levy, seizure of assets, installment 

agreement, offer in compromise, substitute for return, summons, and IRC 6020(b) (which 

allows the IRS to prepare returns if a taxpayer neglects or refuses to file); and provides

education to taxpayers to enable future compliance. The cost of the Collection program 

includes Automated Collection System (ACS), Field Collection, and Payment Compliance/

Correspondence Collection.

Automated Underreporter (AUR) Program matches payer information returns (Forms 1099, 

W-2, etc.) against data reported on individual tax returns to the IRS. The information is 

verified to identify any discrepancies. If a discrepancy is found, the case is given to a tax 

examiner for research and analysis. If the tax examiner is unable to resolve the discrepancy, a 

proposed notice is issued and a proposed assessment is generated. 

ROI is calculated by dividing revenue by cost. This information provides an indication of the 

ROI for the three major enforcement programs over time, but it is important to note that 

enforcement revenue collected in a fiscal year includes tax, interest, and penalties from 

multiple tax years. Some enforcement activities can take more than a year to close and may 

generate revenue over several years. 

These data reflect the average ROI for these programs and do not include indirect effects of 

IRS enforcement activities on voluntary compliance. As such, they are not intended to be 

used to allocate resources or maximize revenue. Net revenue is maximized only when 

resources are allocated according to marginal direct and indirect return on investment, but 

those ratios are much more challenging to estimate than the average ROI shown here. As a 

result, the IRS will continue to allocate enforcement resources across a range of enforcement 

activities to ensure taxpayers pay the taxes they owe with integrity and fairness to all.

Table 4.2 - Return on Investment for IRS Major Enforcement Programs Dollars in Millions

Enforcement Program Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI

IRS Total $6,543 $55,229 8.4 $6,242 $50,187 8.0 $5,883 $53,345 9.1 $5,839 $57,146 9.8 $5,644 $54,203 9.6

Examination 4,333 18,924 4.4 4,232 14,476 3.4 3,965 16,662 4.2 3,965 18,983 4.8 3,974 13,320 3.4

Collection 1,939 31,060 16.0 1,742 30,442 17.5 1,660 31,396 18.9 1,618 33,198 20.5 1,419 35,740 25.2

Automated Underreporter (AUR) 270 5,245 19.4 267 5,269 19.7 258 5,287 20.5 256 4,965 19.4 251 5,143 20.5

FY 2015

1

The cost of the enforcement programs was calculated using budget data from the IRS Integrated Financial System (IFS) and includes direct dollars and FTE from the Enforcement appropriation, Exam and 

Collections budget activity, and dollars from the Operations Support appropriation prorated using actual FTE realized for each major enforcement program.

FY 2011 FY 2012 FY 2013 FY 2014
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4.3 – IRS Performance Measure Table

Performance Measures Type of 

Measure

FY2010 

Actual

FY2011 

Actual

FY2012 

Actual

FY2013 

Actual

FY2014 

Actual

FY2015 

Actual

FY2015 

Target

FY2016 

Target 

FY2017 

Target 

Customer Service Representative Level of Service 

(LOS)1 Oe, L 74.0% 70.1% 67.6% 60.5% 64.4% 38.1% 38.0% 47.0% 70.0%

Customer Contacts Resolved per Staff Year E 10,744 12,419 16,320 20,767 21,018 26,245 21,000 28,000 25,700

Customer Accuracy - Tax Law (Phones) Ot 92.7% 93.4% 93.2% 95.7% 95.0% 95.0% 92.0% 92.0% 92.0%

Customer Accuracy - Accounts (Phones) Ot 95.7% 96.0% 95.6% 96.0% 96.2% 95.5% 94.0% 94.0% 94.0%

Timeliness of Critical Filing Season Tax Products to 

the Public Ot 95.3% 96.3% 97.2% 58.9% 99.1% 89.0% 95.0% 87.0% 87.0%

Timeliness of Critical TE/GE & Business Tax Products 

to the Public Ot 97.7% 96.4% 94.5% 83.6% 98.7% 92.6% 95.0% 87.0% 87.0%

Percent Individual Returns Processed Electronically Oe, L 69.3% 76.9% 80.5% 82.5% 84.1% 85.3% 84.6% 86.0% 86.0%

Percent of Business Returns Processed 

Electronically Oe, L 25.5% 31.8% 36.7% 40.2% 43.1% 47.0% 46.5% 48.0% 48.0%

Refund Timeliness - Individual (Paper) Ot 96.1% 99.4% 99.7% 99.0% 98.7% 98.8% 94.0% 97.0% 97.0%

Taxpayer Self-Assistance Rate E, L 64.4% 70.1% 78.5% 83.3% 84.7% 88.7% 85.0% 90.0% 89.0%

Examination Coverage - Individual Oe, L 1.1% 1.1% 1.0% 1.0% 0.9% 0.8% 0.8% 0.6% 0.7%

Field Exam Nat'l Quality Review Score Oe, L 84.9% 85.8% 87.4% 89.2% 88.4% 86.7% 89.6% 86.7% 86.7%

Office Exam Nat'l Quality Review Score Oe, L 91.6% 90.4% 91.3% 90.3% 90.6% 88.3% 90.2% 88.3% 88.3%

Examination Quality - Large Business2 Oe, L 92.0% 83.0% 86.0% 90.0% 90.0% 90.0%

Examination Coverage - Business (Assets > $10 

million) Oe, L 5.7% 6.2% 6.2% 5.6% 4.3% 3.9% 3.8% 3.5% 3.2%

Examination Efficiency - Individual E, L 140 139 142 142 138 148 135 122 122

Automated Underreporter Efficiency E, L 1,924 2,007 2,041 2,025 1,935 2,209 2,032 2,036 2,006

Automated Underreporter Coverage E, L 3.0% 3.3% 3.2% 2.8% 2.6% 2.3% 2.6% 2.2% 2.3%

Collection Coverage (Units) Ot, L 50.1% 50.0% 48.1% 47.0% 45.9% 46.3% 43.8% 41.8% 41.1%

Collection Efficiency (Units) E, L 1,822 1,952 1,997 2,057 2,051 2,448 2,173 2,208 2,124

Field Collection Nat'l Quality Review Score Ot, L 80.6% 80.3% 80.4% 81.4% 81.6% 79.2% 81.6% 79.7% 79.7%

Automated Collection System Accuracy Oe 95.9% 94.9% 94.7% 94.4% 95.2% 95.3% 94.0% 95.0% 95.0%

Criminal Investigations Completed Ot, L 4,325 4,697 4,937 5,557 4,606 4,486 3,800 3,800 3,600

Number of Convictions Oe, L 2,184 2,350 2,634 3,311 3,110 2,879 2,700 2,500 2,400

Conviction Rate Oe, L 90.2% 92.7% 93.0% 93.1% 93.4% 93.2% 92.0% 92% 92%

Conviction Efficiency Rate ($) E, L $324,776 $310,029 $270,511 $211,048 $231,103 $221,782 $243,000 $272,000 $272,000

TE/GE Determination Case Closures Ot 105,247 91,205 87,000 65,877 136,746 111,940 99,942 103,852 109,768

Percent of Major IT Investments within +/- 10% Cost 

Variance at the Investment Level 3 E 40.0% 71.4% 50.0% 0.0% 66.7% 73.7% 90.0% 90.0% 90.0%

Percent of Major IT Investments within +/- 10% 

Schedule Variance at the Investment Level 3 E 100.0% 100.0% 90.0% 83.3% 100.0% 89.5% 90.0% 90.0% 90.0%

3

 Starting in FY 2015, the measure includes all major investments (BSM and non-BSM).

2

 As a result of program changes that occurred in the Large Business and International (LB&I) organization, starting in FY 2013, a new Examination Quality - Large Business measure replaced the two previous LB&I quality measures - 

Examination Quality - Industry and Coordinated Industry.

IRS Performance Measures

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, L - Long-Term Goal

1 Beginning in FY 2013, targets include an increase in base user fees.
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4.3 – IRS Performance Measure Table (Continued)

Customer Service Representative (CSR) Level of 

Service

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.

Customer Contacts Resolved per Staff Year The number of Customer Contacts resolved in relation to staff years expended. 

Customer Accuracy – Tax Law Phones The percentage of correct answers given by a live assistor on Toll-free tax law inquiries.

Customer Accuracy – Customer Accounts 

(Phones) The percentage of correct answers given by a live assistor on Toll-free account inquiries.

Timeliness of Critical Individual Filing Season Tax 

Products to the Public

The percentage of critical individual filing season tax products (tax forms, schedules, instructions, publications, tax 

packages, and certain notices required by a large number of filers to prepare a complete and accurate tax return) 

available to the public in a timely fashion.

Timeliness of Critical TE/GE & Business Tax 

Products to the Public Percentage of critical other tax products, paper and electronic, available to the public in a timely fashion. 

Percent Individual Returns Processed 

Electronically The percentage of electronically filed individual tax returns divided by the total individual returns filed.

Percent Business Returns Processed 

Electronically The percentage of electronically filed business tax returns divided by the total business returns filed.

Refund Timeliness – Individual (Paper) The percentage of refunds resulting from processing Individual Master File paper returns issued within 40 days or less. 

Taxpayer Self Assistance Rate The percentage of taxpayer assistance requests resolved using self-assisted automated services.

Examination Coverage – Individual (1040)

The sum of all individual 1040 returns closed by Small Business/Self Employed (SB/SE), Wage & Investment (W&I), 

Tax Exempt and Government Entities (TE/GE), and Large Business and International (LB&I) (Field Exam and 

Correspondence Exam programs) divided by the total individual return filings for the prior calendar year.

Field Exam Nat'l Quality Review Score The score awarded to a reviewed field examination case by a Quality Reviewer using the National Quality Review 

System (NQRS) quality attributes.

Office Exam Nat'l Quality Review Score The score awarded to a reviewed office examination case by a Quality Reviewer using the NQRS quality attributes.

Examination Quality – Large Business Average of the scores of the Large Business Return (LBR) cases reviewed by LB&I Quality Measurement System 

(LQMS). Case scores are based on the percentage of elements passed within each of the four auditing standard.

Examination Coverage – Business Assets >$10 

Million)

The number of LB&I returns (C and S Corporations with assets over $10 million and all partnerships) examined and 

closed by LB&I during the current fiscal year divided by the number of filings for the preceding calendar year.

Examination Efficiency – Individual (1040) The sum of all individual 1040 returns closed by SB/SE, W&I, TE/GE, and LB&I (Field Exam and Correspondence 

Exam programs) divided by the total Full-Time Equivalent (FTE) expended in relation to those individual returns.

Automated Underreporter (AUR) Efficiency The total number of W&I and SB/SE contact closures (a closure resulting from a case where we made contact) divided 

by the total FTE, including overtime.

Automated Underreporter (AUR) Coverage A percentage representing the total number of W&I and SB/SE contact closures (a closure resulting from a case where 

SBSE and W&I made contact) divided by the total return filings for the prior year.

Collection Coverage – Units The volume of collection work disposed compared to the volume of collection work available.

Collection Efficiency – Units The volume of collection work disposed divided by total collection FTE.

Field Collection Nat'l Quality Review Score The score awarded to a reviewed collection cases by a Quality Reviewer using the NQRS quality attributes.

Automated Collection System (ACS) Accuracy The percent of taxpayers who receive the correct answer to their ACS question.

Criminal Investigations Completed

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. 

Number of Convictions The number of criminal convictions.

Conviction Rate The percent of adjudicated criminal cases that result in convictions.

Conviction Efficiency Rate ($) The cost of Criminal Investigation’s (CI) program divided by the number of convictions.

TE/GE Determination Case Closures The number of cases closed in the Employee Plans or Exempt Organizations Determination programs, regardless of 

type of case or type of closing.

Percent of Major IT Investments within +/- 10% 

Cost Variance at the Investment Level 

Number of major IT investments within +/-10 percent variance between planned total cost and projected/actual cost 

within a fiscal year divided by the total number of major IT investments in that fiscal year.

Percent of Major IT Investments within +/- 10% 

Schedule Variance at the Investment Level 

Number of major IT investments within +/-10 percent variance between planned days and projected/actual days within a 

fiscal year divided by the total number of major IT investments in that fiscal year.

Budget Level Performance Measure Descriptions
IRS - 115

4.4 – Alignment of the FY 2017 Initiatives to the Treasury and IRS Goals and Themes FY 2017 Initiatives Pursue tax reform, implement the Patient Protection and Affordable Care Act and Foreign Account Tax Compliance Act, and Improve Execution of the Tax Code Create a Culture of Service through Relentless Pursuit of Customer Value Introduce Self- Service and Electronic-Service Taxpayer Options Deliver High Quality and Timely Service to Reduce Taxpayer Burden and Encourage Voluntary Compliance Effectively Enforce the Law to Ensure Compliance with Tax Responsibilities and Combat Fraud Invest in our Workforce and the Foundational Capabilities Necessary to Achieve our Mission and Deliver High Performance for Taxpayers and Stakeholders Theme 1: Facilitate Voluntary Compliance by Empowering Taxpayers with Secure Innovative Tools and Support Theme 2: Understand Non- Compliant Taxpayer Behavior and Develop Approaches to Deter and Change it Theme 6: Drive More Agility, Efficiency, and Effectiveness in IRS Operations Focus Area: Strengthen Cybersecurity and Eliminate Identity Theft p g q ACA    Leverage New Technologies to Advance the IRS Mission     Enterprise Case Management     Improve Taxpayer Service       Enterprise Electronic Records Management Solution   Operations and Maintenance for Deployed Business Systems Modernization (BSM) Projects       Maintain Integrity of Revenue Financial Systems   Increase Collection Coverage    Increase Audit Coverage    Digitizing Form 990    FATCA: Implement, Expand Filing Coverage, and Combat Criminal Non- compliance

  

Pursue Employment Tax and Abusive Tax Schemes   Increase Investigations of Transnational Organized Crime (TOC)   Prevent Identity Theft and Refund Fraud and Reduce Improper Payments    

Goal #1 Strategic Focus

IRS Themes

Strategic 

Foundation for 

Organizational 

Excellence

Theme Categories Priority Goals Goal #2

Strategic Goals

IRS Goals Treasury 

Strategic Goal 3 - 

Objective 3.3

Strategic Goal 5 - 

Objective 5.4
IRS - 116

4.5 – Summary of IRS FY 2017 ACA Budget Request

The Improve Taxpayer Service portion of the ACA budget request includes $41.4 million 

(590 FTE) to handle the projected 6 million calls above normal telephone demand in FY 2017

due to the ACA.

4.6 – Summary of IRS FY 2017 Budget Request by Theme

Internal Revenue Service - Affordable Care Act Implementation $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE

FY 2016 Enacted (before Administrative Provision 113) $71,793 935 $19,984 185 $112,840 724 $204,617 1,844

FY 2016 Administrative Provision 113

Improve Taxpayer Service

Cyber Security

Strengthening the Prevention of Identity Theft

FY 2016 Enacted $71,793 935 $19,984 185 $112,840 724 $204,617 1,844

Changes to Base:

Maintaining Current Levels (MCLs): $1,108 $310 $1,719 $3,137

Pay Annualization 233 66 344 643

Pay Raise 865 243 1,273 2,381

Non-Pay 10 2 102 114

Subtotal FY 2017 Changes to Base $1,108 $310 $1,719 $3,137

FY 2017 Current Services (Base) $72,901 935 $20,294 185 $114,559 724 $207,754 1,844

Program Increases:

Before Cap Adjustment Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure 

Innovative Tools and Support

Implement Changes to Deliver Tax Credits and Other Requirements for the 

Affordable Care Act 153,240 153,240

Improve Taxpayer Service 32,021 590 9,399 41,420 590

Subtotal FY 2017 Before Cap Adjustment Program Increases $32,021 590 $162,639 $194,660 590

Total FY 2017 Budget Request $104,922 1,525 $20,294 185 $277,198 724 $402,414 2,434

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted $33,129 590 $310 $164,358 $197,797 590

Percent Change FY 2017 Budget Request over FY 2016 Enacted 46.14% 63.08% 1.55% 145.66% 96.67% 32.00%

TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT BSM TOTAL

Internal Revenue Service $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE

FY 2016 Enacted (before Administrative Provision 113) $2,156,554 27,886 $4,860,000 38,840 $3,638,446 11,753 $290,000 440 $10,945,000 78,919

FY 2016 Administrative Provision 113 $176,822 2,483 $4,936 $108,242 170 $290,000 2,653

Improve Taxpayer Service 176,622 2,483 1,800 178,422 2,483

Cyber Security 95,442 170 95,442 170

Strengthening the Prevention of Identity Theft 200 4,936 11,000 16,136

FY 2016 Enacted $2,333,376 30,369 $4,864,936 38,840 $3,746,688 11,923 $290,000 440 $11,235,000 81,572

Changes to Base:

Maintaining Current Levels (MCLs): $33,446 $75,008 $60,994 $900 $170,348

Pay Annualization 6,440 14,952 5,392 191 26,975

Pay Raise 23,856 55,386 19,975 709 99,926

Non-Pay 3,150 4,670 35,627 43,447

Efficiencies/Savings: ($3,708) (72) - ($58) - ($3,766) (72)

Increase e-File Savings (3,708) (72) - (58) - (3,766) (72)

Subtotal FY 2017 Changes to Base $29,738 (72) $75,008 $60,936 $900 $166,582 (72)

FY 2017 Current Services (Base) $2,363,114 30,297 $4,939,944 38,840 $3,807,624 11,923 $290,900 440 $11,401,582 81,500

Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with 

Secure Innovative Tools and Support 33,503 604 7,369 169,763 52,515 263,150 664

Drive More Agility, Efficiency, and Effectiveness in IRS Operations 120,955 120,955 146

Understand Non-Compliant Taxpayer Behavior and Develop 

Approaches to Deter and Change It 218,975 2 180,394 399,369 2,002

Focus Area: Strengthen Cybersecurity and Eliminate Identity Theft 9,701 154 44,975 35,363 90,039 491

Alcohol and Tobacco Tax and Trade Bureau Transfer: 5,000 5,000

Subtotal FY 2017 Total Program Increases $43,204 758 $276,319 2,188 $506,475 328 $52,515 29 $878,513 3,303

Total FY 2017 Total Budget Request $2,406,318 31,055 $5,216,263 41,028 $4,314,099 12,251 $343,415 469 $12,280,095 84,803

Taxpayer Services Enforcement Operations Support BSM TOTAL
IRS - 117

Internal Revenue Service $000 FTE $000 FTE $000 FTE $000 FTE $000 FTEFY 2016 Enacted (before Administrative Provision 113) $2,156,554 27,887 $4,860,000 38,840 $3,638,446 11,752 $290,000 440 $10,945,000 78,919

FY 2016 Administrative Provision 113 $176,822 2,483 $4,936 $108,242 170 $290,000 2,653

Improve Taxpayer Service 176,622 2,483 1,800 178,422 2,483Cyber Security 95,442 170 95,442 170Strengthening the Prevention of Identity Theft 200 4,936 11,000 16,136

FY 2016 Enacted $2,333,376 30,370 $4,864,936 38,840 $3,746,688 11,922 $290,000 440 $11,235,000 81,572

Changes to Base:

Maintaining Current Levels (MCLs): $33,446 $75,008 $60,994 $900 $170,348

Pay Annualization 6,440 14,952 5,392 191 26,975Pay Raise 23,856 55,386 19,975 709 99,926

Non-Pay 3,150 4,670 35,627 43,447

Efficiencies/Savings: ($3,708) (72) - ($58) - ($3,766) (72)

Increase e-File Savings (3,708) (72) - (58) - (3,766) (72)

Subtotal FY 2017 Changes to Base $29,738 (72) $75,008 $60,936 $900 $166,582 (72)FY 2017 Current Services (Base) $2,363,114 30,298 $4,939,944 38,840 $3,807,624 11,922 $290,900 440 $11,401,582 81,500

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure Innovative Tools and Support

Implement Changes to Deliver Tax Credits and Other Requirements for the Affordable Care Act 153,240 153,240

Leverage New Technologies to Advance the IRS Mission 973 52,515 29 53,488 29

Improve Taxpayer Service 33,503 604 14,952 9 48,455 613

Subtotal $33,503 604 $169,165 9 $52,515 29 $255,183 642Drive More Agility, Efficiency, and Effectiveness in IRS Operations

Enterprise Electronic Records Management Solution 18,543 46 18,543 46

Subtotal $18,543 46 $18,543 46Focus Area: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 9,701 154 44,975 301 35,363 36 90,039 491

Subtotal $9,701 154 $44,975 301 $35,363 36 $90,039 491

Subtotal FY 2017 Budget Request Program Increases $43,204 758 $44,975 301 $223,071 91 $52,515 29 $363,765 1,179

Total FY 2017 Total Budget Request $2,406,318 31,056 $4,984,919 39,141 $4,030,695 12,013 $343,415 469 $11,765,347 82,679

Dollar/FTE Change FY 2017 Budget Request over FY 2016 Enacted $72,942 686 $119,983 301 $284,007 91 $53,415 29 $530,347 1,107

Percent Change FY 2017 Budget Request over FY 2016 Enacted 3.13% 2.26% 2.47% 0.78% 7.58% 0.76% 18.42% 6.64% 4.72% 1.36%

Cap Adjustment Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure Innovative Tools and Support

Enterprise Case Management 7,369 22 598 7,967 22

Subtotal $7,369 22 $598 $7,967 22

Understand Non-Compliant Taxpayer Behavior and Develop Approaches to Deter and Change It

Increase Collection Coverage 58,213 678 32,254 21 90,467 699Increase Audit Coverage 74,161 816 54,274 40 128,435 856Digitizing Form 990 80 1 2,298 6 2,378 7FATCA: Implement, Expand Filing Coverage, and Combat Criminal Non-compliance 49,889 203 76,850 70 126,739 273Pursue Employment Tax and Abusive Tax Schemes 7,210 37 8,576 15,786 37Increase Investigations of Transnational Organized Crime (TOC) 29,422 130 6,142 35,564 130

Subtotal $218,975 1,865 $180,394 137 $399,369 2,002

Drive More Agility, Efficiency, and Effectiveness in IRS Operations

Operations and Maintenance for Deployed Business Systems Modernization (BSM) Projects 92,174 73 92,174 73

Maintain Integrity of Revenue Financial Systems 10,238 27 10,238 27

Subtotal $102,412 100 $102,412 100

Alcohol and Tobacco Tax and Trade Bureau Transfer:

Transfer to TTB for High-Return on Investment (ROI) Tax Enforcement Activities 5,000 5,000

Subtotal $5,000 $5,000

Subtotal FY 2017 Cap Adjustment Program Increases $231,344 1,887 $283,404 237 $514,748 2,124Subtotal FY 2017 Total Program Increases Including Cap Adjustment $43,204 758 $276,319 2,188 $506,475 328 $52,515 29 $878,513 3,303

Total FY 2017 Total Budget Request Including Cap Adjustment $2,406,318 31,056 $5,216,263 41,028 $4,314,099 12,250 $343,415 469 $12,280,095 84,803

Dollar/FTE Change FY 2017 Budget Request including PIC over FY 2016 Enacted $72,942 686 $351,327 2,188 $567,411 328 $53,415 29 $1,045,095 3,231Percent Change FY 2017 Budget Request including PIC FY 2016 Enacted 3.13% 2.26% 7.22% 5.63% 15.14% 2.75% 18.42% 6.64% 9.30% 3.96%

Taxpayer Services Enforcement Operations Support BSM TOTAL

4.7 – Summary of IRS FY 2017 Program Integrity Cap Adjustment