Internal Revenue Service 

FY 2015 

President's Budget 
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 Table of Contents 

Section 1 – Purpose ....................................................................1

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

1.1 – Appropriation Detail Table by Appropriation and Budget Activity ...........................1

1B – Vision, Priorities, and Context .........................................................................................2

Section 2 – Budget Adjustments and Appropriations 

Language ...................................................................................15

2.1 – Budget Adjustments Table .............................................................................................16

Initiative Costing Methodology ..............................................................................................17

2A – Budget Increases and Decreases Description ...............................................................17

Non-Recur FY 2014 Additional Appropriation ....................................................................17

Maintaining Current Levels (MCLs) .....................................................................................17

Other Adjustment ....................................................................................................................18

Efficiencies and Savings ..........................................................................................................18

Increase e-File Savings .........................................................................................................18

Adjustment for FERS Increase ..............................................................................................18

HCTC Program Termination ................................................................................................19

Reinvestment ............................................................................................................................19

Expand Telecom Infrastructure to Handle Increased Demand ............................................19

Program Increases ...................................................................................................................20

Improve Taxpayer Service and Return Processing ...............................................................20

Address International and Offshore Compliance Issues ......................................................25

Expand Coverage of High Wealth Individuals and Enterprises ...........................................29

Prevent Identity Theft and Refund Fraud .............................................................................31

Address Impact of Affordable Care Act (ACA) Statutory Requirements ..............................37

Expand Audit Coverage ........................................................................................................41

Enhance Collection Coverage ..............................................................................................46

Improve Coverage of Partnerships and Flow-Through Entities ..........................................51

Expand Compliance Coverage in the Tax-Exempt Sector ....................................................55

Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes ................................60

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities ....63

Implement Information Technology (IT) Changes to Deliver the Foreign Account Tax 

Compliance Act (FATCA) .....................................................................................................67

Leverage Digital Evidence for Criminal Investigation (CI) .................................................69

Leverage Data to Improve Case Selection............................................................................70

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other 

Requirements.........................................................................................................................73

Implement Information Technology (IT) Services ................................................................75

Implement Campus Consolidation and Revitalization Strategy ...........................................78

Implement eGovernment and Other Administration Priorities ............................................79

Maintain Integrity of Revenue Financial Systems ................................................................82

Expand Virtual Service Delivery (VSD) ...............................................................................83

Continue Migration from Aging Tax Administration Systems - Enhance Online Services ..85

Transfer to TTB for High-Return on Investment (ROI) Tax Enforcement Activities ............93
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2.2– Operating Levels Table ...................................................................................................94

2B – Appropriation Language and Explanation of Changes ...............................................95

2C – Legislative Proposals.......................................................................................................99

Section 3 – Budget and Performance Plan ..........................102

Taxpayer Services ..................................................................................................................102

2.1 – Budget Adjustments Table ..........................................................................................103 

2.2 – Operating Levels Table ...............................................................................................104

2.3 – Appropriation Detail Table .........................................................................................105 

3A – Pre-Filing Taxpayer Assistance and Education ..........................................................105 

3.1.1 – Budget and Performance Report and Plan ...............................................................106 

3B – Filing and Account Services .......................................................................................107 

3.1.2 – Budget and Performance Report and Plan ...............................................................108 

Enforcement ...........................................................................................................................111

2.1 – Budget Adjustments Table ..........................................................................................112 

2.2 – Operating Levels Table ...............................................................................................113

2.3 – Appropriation Detail Table .........................................................................................114 

3C – Investigations ..............................................................................................................114 

3.1.3 – Budget and Performance Report and Plan ...............................................................115 

3D – Exam and Collections .................................................................................................116 

3.1.4 – Budget and Performance Report and Plan ...............................................................119 

3E – Regulatory ...................................................................................................................122 

3.1.5 – Budget and Performance Report and Plan ...............................................................123 

Operations Support ...............................................................................................................124

2.1 – Budget Adjustments Table ..........................................................................................125 

2.2 – Operating Levels Table ...............................................................................................126

2.3 – Appropriation Detail Table .........................................................................................127 

3F – Infrastructure................................................................................................................127 

3.1.6 – Budget and Performance Report and Plan ...............................................................128 

3G – Shared Services and Support .......................................................................................129 

3.1.7 – Budget and Performance Report and Plan ...............................................................131 

3H – Information Services ...................................................................................................133 

3.1.8 – Budget and Performance Report and Plan ...............................................................136 

Business Systems Modernization ..........................................................................................139

2.1 – Budget Adjustments Table ..........................................................................................140 

2.2 – Operating Levels Table ...............................................................................................141

2.3 – Appropriation Detail Table .........................................................................................142 

3I – Business Systems Modernization .................................................................................142 

3.1.9 – Budget and Performance Report and Plan ...............................................................145 

Section 4 – Supplemental Information .................................148

4.1 – Summary of Capital Investments ................................................................................148

4A – Capital Investment Strategy ........................................................................................150

4.2 – Summary of Cost and Schedule Performance for Major IT Systems ......................176

4.3 – IRS Performance Measure Table ................................................................................177

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

Proposed Long-term Multiyear Funding Strategy and Timetable ...................................179

4C – Opportunity, Growth, and Security Initiative ...........................................................182
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4D – Summary of FY 2013 Savings Realized ......................................................................183

4E – IRS Use of Evidence and Innovation ...........................................................................186

4.4 – Cost of IRS Operating Activities .................................................................................192

4.5 – Return on Investment (ROI) for IRS Major Enforcement Programs .....................193

4.6 – Alignment of the FY 2015 Initiatives to the Department of the Treasury and IRS 

Strategic Documents ..............................................................................................................195

4.7 – Summary of IRS FY 2015 Affordable Care Act (ACA) Budget Request ................196

4.8 – Summary of Program Integrity Cap Adjustment ......................................................197

4.9 – Summary of IRS FY 2015 Budget Request ................................................................199
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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

Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Taxpayer Services 29,700 $2,135,553 28,996 $2,156,554 31,481 $2,317,633 2,485 $161,079 8.57% 7.47%

Pre-Filing Taxpayer Assistance and Education 5,610 605,761 5,489 604,638 5,681 639,249 192 34,611 3.50% 5.72%

Filing and Account Services 24,090 1,529,792 23,507 1,551,916 25,800 1,678,384 2,293 126,468 9.75% 8.15%

Enforcement 44,325 $4,949,178 42,805 $5,022,178 45,757 $5,371,826 2,952 $349,648 6.90% 6.96%

Investigations 3,641 589,751 3,623 613,417 3,896 662,606 273 49,189 7.54% 8.02%

Exam and Collections 39,597 4,210,108 38,128 4,257,836 40,681 4,538,881 2,553 281,045 6.70% 6.60%

Regulatory 1,087 149,319 1,054 150,925 1,180 170,339 126 19,414 11.95% 12.86%

Operations Support 11,885 $3,800,943 11,860 $3,798,942 13,380 $4,456,858 1,520 $657,916 12.82% 17.32%

Infrastructure 886,535 842,064 913,677 71,613 8.50%

Shared Services and Support 5,120 1,111,317 5,091 1,154,960 5,425 1,269,176 334 114,216 6.56% 9.89%

Information Services 6,765 1,803,091 6,769 1,801,918 7,955 2,274,005 1,186 472,087 17.52% 26.20%

Business Systems Modernization 471 $312,938 528 $312,938 569 $330,210 41 $17,272 7.77% 5.52%

Subtotal New Appropriated Resources 86,381 $11,198,612 84,189 $11,290,612 91,187 $12,476,527 6,998 $1,185,915 8.31% 10.50%

Other Resources:

Reimbursables 786 94,278 822 100,197 822 101,419 1,222 1.22%

Offsetting Collections - Non Reimbursables 16,589 27,408 27,408

User Fees 676 395,684 676 395,684 676 395,684

Recovery from Prior Years 13,629

Unobligated Balances from Prior Years 417 335,648 291,657 265,301 (26,356) -9.04%

Transfers In/Out3 (1,204) (5,000) (5,000)

Resources from Other Accounts4 55 5

Subtotal Other Resources 1,884 $854,624 1,503 $814,946 1,503 $784,812 ($30,134) -3.70%

Total Budget Authority 88,265 $12,053,236 85,692 $12,105,558 92,690 $13,261,339 6,998 $1,155,781 8.17% 9.55%

Enacted FY 2015 Request 2

4 Resources from Other Accounts include Other Direct FTE funded from the Federal Highway Administration (5 FTE projected for FY 2013, FY 2014 and FY 2015).

3 Resources from Transfers In/Out include FY 2013 transfers between IRS and the Office of National Drug Control Policy (ONDCP) High Intensity Drug Trafficking Area (HIDTA) Program (net transfer $152K) and prior 

year user fees from the Operations Support and Business Systems Modernization (BSM) appropriations returned to the User Fees account (-$1.356M), and a FY 2015 transfer out to the Alcohol and Tobacco Tax 

and Trade Bureau (TTB) ($5M).

1 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M transferred from the Enforcement appropriation to the 

Taxpayer Services ($13M) and Operations Support ($60M) appropriations. 2 FY 2014 Enacted includes $92M in funding ($34 million in Taxpayer Services and $58 million in Operations Support).

$ Change

FY 2014 to

FY 2015 Request

FY 2015

Operating Level1 Request

% Change

FY 2013 FY 2014 FY 2014 to
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IRS Strategic Goals 

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. 

IRS Vision

We will uphold the integrity of our nation’s tax system and preserve the public 

trust through our talented workforce, innovative technology, and collaborative 

partnerships. 

1B – Vision, Priorities, and Context 

The Internal Revenue Service (IRS) continues to focus on strengthening the public’s 

confidence in its effective administration of the nation’s tax system. The IRS has been 

engaged in a methodical, thorough, and persistent effort to identify, design, and implement 

management reforms that will benefit IRS programs and operations. The IRS mission 

statement is complemented by a vision for the IRS that describes the longer-term outcomes 

that we seek to achieve by fulfilling our mission. 

The IRS Strategic Plan guides program and budget decisions and supports the Department of 

the Treasury FY 2014 to 2017 Strategic Plan and Agency Priority Goal, which focuses on 

expanding the availability and improving the quality of customer service options. The IRS 

Strategic Plan has been updated to recognize new realities, such as the evolving scope and 

increasing complexity of tax administration, the expanding global tax environment and 

changing business models, the increasing prevalence of refund fraud and identity theft, 

meeting taxpayer’s expectations to digitally interact in a secure manner, the growing use of 

tax preparation assistance, sustaining a skilled and talented work force, and meeting the needs 

of an increasingly more diverse U.S. population. The IRS Strategic Plan goals are: 

 

The strategic objectives to deliver high quality and timely service to reduce taxpayer burden 

and encourage voluntary compliance are: 

 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; 
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 Deliver clear and focused outreach, communications, and education programs to assist 

taxpayer understanding of tax responsibilities and awareness of emerging tax laws; 

 Provide timely assistance through a seamless, multichannel service environment to 

encourage taxpayers to meet their tax obligations and accurately resolve their issues; 

 Strengthen refund fraud prevention and provide prompt assistance to support victims 

of identity theft; 

 Reduce taxpayer burden and increase return accuracy at filing through timely and 

efficient tax administration processing; 

 Improve service delivery and support effective tax administration by fostering strong 

relationships with our tax community and government partners; and 

 Enhance the quality of tax services by strengthening the outreach, education, and tools 

provided to the tax professional community. 

The strategic objectives to effectively enforce the law to ensure compliance with tax 

responsibilities and combat fraud are: 

 Enforce domestic and international compliance by strengthening expertise, adopting 

innovative approaches, and streamlining procedures; 

 Deter and promptly resolve noncompliance by protecting revenue from refund fraud 

and ensuring appropriate revenue collection; 

 Build and maintain public trust by anticipating and addressing the tax-exempt sector’s 

need for a clear understanding of its tax law responsibilities; 

 Identify trends, detect high-risk areas of noncompliance, and prioritize enforcement 

approaches by applying research and advanced analytics; 

 Address noncompliance by improving data, information, and knowledge sharing with 

tax community and government partners; and 

 Improve compliance and reduce the risk of fraud through strong partnerships with the 

tax professional community. 

To achieve the service and enforcement goals, the IRS builds on a strategic foundation 

consisting of the following objectives: 

 Be the best place to work in government by building a highly talented, diverse 

workforce and cultivating an inclusive and collaborative environment; 

 Ensure a secure environment that protects the safety of our people and security of our 

facilities; 

 Implement and maintain a robust enterprise risk management program that identifies 

emerging risks and mitigates them before they impact performance; 

 Realize operational efficiencies and effectively manage costs by improving enterprisewide resource allocation and streamlining processes; 
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 Invest in innovative, secure technology needed to protect taxpayer data and support 

taxpayer, partner, and IRS business needs; and 

 Implement enterprise-wide analytics and research capabilities to make timely, 

informed decisions. 

FY 2015 Priorities

The IRS administers the nation’s tax laws and collects the revenue that funds the Government. 

During FY 2013, the IRS processed 241 million tax returns and collected $2.9 trillion in taxes 

(gross receipts before tax refunds), 91 percent of Federal Government receipts. Through both 

taxpayer service and enforcement programs that protect the flow of revenue to the 

Government, the IRS remains committed to making the tax law easier to access and 

understand and to improving voluntary compliance and reducing the tax gap, the difference 

between taxes owed and taxes paid on time. Taxpayer service supports and protects the 

trillions of dollars in revenue that come into the Treasury each year voluntarily from 

taxpayers by helping them understand their obligations under the tax law. Enforcement 

pursues those who evade or misrepresent their tax responsibility. The IRS collected 

$53.3 billion in enforcement revenue in FY 2013. 

In the FY 2015 President’s Budget, the IRS seeks funding for: 

 Taxpayer Service to increase customer telephone level of service to address the 

projected growth in demand for traditional taxpayer services such as answering tax 

law questions and resolving accounts as well as providing assistance to taxpayers in 

the face of increased Affordable Care Act (ACA)-related demand, and improve 

service and returns processing through new online and virtual service options; 

 Enforcement to implement enacted legislation; protect revenue by identifying fraud 

and preventing the issuance of questionable refunds, including tax-related identity 

theft; address offshore noncompliance; enforce return preparer compliance; expand 

criminal investigation capabilities; address compliance issues in the tax-exempt sector, 

including employee retirement plans, exempt organizations, and direct pay bonds; and 

provide appropriate and balanced coverage by improving examination audit and 

collection coverage rates; 

 Infrastructure to continue investments to implement legislative mandates such as 

FATCA and the ACA; maintain the integrity of revenue financial systems; implement 

IT industry best practices; address physical infrastructure projects related to health and 

safety concerns at aging campuses; and implement eGovernment and other 

administration priorities; and 

 Business Systems Modernization to continue migration from aging tax 

administration systems, including the addition of the Return Review Program to take 

fraud detection and prevention for the IRS into the next generation, and Online 

Services, to lead the IRS’s transition to the future digital customer service. 
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FY 2015 Budget Request 

The IRS FY 2015 President’s Budget request is $12,476.5 million, $1,185.9 million or 

10.50 percent more than the FY 2014 Enacted Budget of $11,290.6 million. 

The $1,185.9 million increase consists of: 

 +$52 million net increase to the base: 

o -$92 million to non-recur the FY 2014 additional appropriation increase; 

o +$223.2 million to fund the pay raise, FERS contribution increase, and 

non-pay inflation adjustment; 

o -$95.2 million for efficiency savings; and 

o +$16 million for a reinvestment needed to expand telecommunications 

infrastructure to handle the increased toll-free telephone demand. 

 +$1,133.9 million for program changes: 

o +$211.2 million to allow the IRS to help meet the expected demand increases 

for taxpayer services in FY 2015, including expected demand increases related 

to assisting taxpayers in understanding ACA tax issues; 

o +$524.7 million to implement enacted legislation, protect revenue by 

identifying fraud and preventing issuance of questionable refunds including 

tax-related identity theft, increase compliance by addressing offshore tax 

evasion, strengthen examination and collection programs including 

noncompliance among corporate and high wealth taxpayers, enforce return 

preparer compliance, expand criminal investigation capabilities, and address 

compliance issues in the tax-exempt sector; 

o +$393 million to implement IT changes required to deliver legislative 

mandates such as FATCA and ACA tax credits, implement IT industry best 

practices and leverage technology to improve the efficiency of IRS operations 

and systems and meet taxpayer needs, protect the health and safety of IRS 

employees and security at IRS facilities, and continue migration from aging tax 

administration systems including the development of the Return Review 

Program and Online Services projects; and 

o +$5 million to transfer to the Alcohol and Tobacco Tax and Trade Bureau 

(TTB) for high return on investment (ROI) tax enforcement program integrity 

activities. 

Reducing the Tax Gap

Investments in IRS enforcement programs have yielded significant increases in enforcement 

revenue. Enforcement revenue was $53.3 billion in FY 2013 for a total IRS-wide ROI of 

$4.8 to $1. The ROI estimate does not include the revenue effect of the indirect deterrence 

value of these investments and other IRS enforcement programs, which is conservatively 

estimated to be at least three times the direct revenue impact. 
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In FY 2012, the IRS released updated estimates of the difference between taxes owed and 

taxes paid on a timely basis – the “tax gap.” The IRS estimated that taxpayers underpaid by 

$385 billion in 2006, net of late payments and IRS enforcement activities (see Tax Gap Map 

for Tax Year 2006 shown below). The voluntary compliance rate—the percentage of total tax 

revenue paid on time—for tax year 2006 was 83.1 percent. This rate is statistically 

unchanged from tax year 2001. The three components of the tax gap are: 

 Underreporting – Not reporting the full tax liability on a timely-filed return; 

 Nonfiling – Not filing required returns on time; and 

 Underpayment – Not timely paying the full amount of tax reported on a timely filed 

return. 

Underreporting tax liability ($376 billion) comprises 

84 percent of the gross tax gap ($450 billion). 

The remainder is almost evenly divided between 

nonfiling ($28 billion, 6 percent) and underpaying 

($46 billion, 10 percent). The IRS remains committed 

to finding ways to increase compliance and reduce the 

tax gap, while minimizing the burden on the vast 

majority of taxpayers who pay their taxes accurately 

and on time. 

Tax Gap “Map”

Tax Year 2006 ($ billions)

Actual Amounts 

Updated Estimates

No Estimates Available

Categories of Estimates

Nonfiling

$28

Individual

Income Tax

$25

Corporation

Income Tax

#

Employment

Tax

#

Excise

Tax

#

Estate

Tax

$3

Underpayment

$46

Individual

Income Tax

$36

Corporation

Income Tax

$4

Employment

Tax

$4

Estate

Tax

$2

Excise

Tax

$0.1

FICA

Tax on Wages

$14

Unemployment

Tax

$1 

Individual

Income Tax

$235

Non-Business

Income

$30.6

Business

Income

$65.3 

Corporation

Income Tax

$67

Estate

Tax

$2

Excise

Tax

#

Business

Income

$122

Large 

Corporations 

(assets > $10m)

$48

Self-Employment

Tax

$57

Non-Business

Income

$68

Small 

Corporations

(assets < $10m)

$19

Credits

$28

Adjustments,

Deductions,

Exemptions

$17

Underreporting

$376

Employment

Tax

$72

Tax Paid Voluntarily & Timely: $2,210 Total Tax

Liability

$2,660 Enforced & Other

Late Payments of Tax

$65 

Net Tax Gap: $385

(Tax Never Collected)

(Net Compliance Rate = 85.5%)

Gross Tax Gap: $450

(Voluntary Compliance Rate = 83.1%)

#

Underreporting

 84%

Underpayment

 10%

 Nonfiling

 6%
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Taxpayer Service and Enforcement Programs Complement Each Other 

The IRS serves individuals, businesses, and tax-exempt entities. It processed more than 

241 million tax returns in 2013. The system of voluntary tax compliance is most effective 

when the IRS is able to provide excellent taxpayer service for those who are trying to meet 

their obligations under the law and provide a robust and fair enforcement program for those 

who dodge their responsibilities to their fellow citizens. Most taxpayers comply with the law 

by filing returns and paying their taxes on time, but some do not comply because they do not 

understand their obligations under the complex tax laws. Noncompliance can stem from a 

wide range of causes, including lack of knowledge. 

Taxpayer Service 

Providing taxpayers top-quality service and helping them understand and meet their tax 

obligations remain top priorities for the IRS. 

By assisting taxpayers with their tax questions before they file their returns, the IRS helps 

prevent inadvertent noncompliance and reduces burdensome post-filing notices and other 

correspondence from the IRS. Accordingly, the IRS provides year-round assistance to 

millions of taxpayers through many sources, including outreach and education programs, 

issuance of tax forms and publications, rulings and regulations, toll-free call centers, IRS.gov, 

Taxpayer Assistance Centers (TAC), Volunteer Income Tax Assistance (VITA), and Tax 

Counseling for the Elderly (TCE) sites. 

During FY 2013, the IRS updated forms to help taxpayers comply with filing requirements, 

including converting forms for visually impaired taxpayers, and translated more tax products 

into multiple languages. In addition, the IRS continued its effort to redesign taxpayer 

correspondence in plain language and in a consistent format to make it easier for taxpayers to 

understand their obligations. The IRS released 56 redesigned notices, bringing the total in 

production to 181. 

Highlights of the 2013 Filing Season

The IRS delivered another successful filing season in 2013, rising to the challenges posed by 

tax legislation enacted on January 2, 2013. Despite the late legislation, the IRS took the 

necessary steps to minimize disruptions for taxpayers. The filing season began on 

January 30, 2013, less than one month after the passage of the legislation that affected over 

600 tax products. Despite the sequestration cuts and three furlough days, the IRS achieved 

the following results in 2013: 

 Processing over 147.6 million individual returns and issuing 118.7 million refunds 

totaling almost $314 billion, compared to 121.6 million refunds totaling $333 billion 

in 2012; 

 Achieving a 60.5 percent telephone level of service; 

 Answering 30.1 million assistor calls, a 2.2 percent increase from 2012; 

 Answering 54 million calls through automated responses; 
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 Responding correctly to 95.7 percent of tax law questions and 96 percent of account 

questions received via the telephone; and 

 Processing 49,202 Savings Bond requests, totaling $21.8 million. 

The IRS continued to provide alternative service options by increasing the amount of tax 

information and services available to taxpayers through IRS.gov. In FY 2013, taxpayers 

viewed IRS.gov web pages more than 1.87 billion times as they used the website and mobile 

application to: 

 Get forms and publications. More than 217.5 million tax products were 

downloaded. 

 Link to the Electronic Federal Tax Payment System (EFTPS). EFTPS processed 

nearly 145 million electronic tax payments totaling more than $2.3 trillion. 

 Get answers. Taxpayers made more than 2.4 million visits to the Interactive Tax 

Assistant introduction page where taxpayers can receive answers to tax law questions. 

 Check refund status. Taxpayers used Where’s My Refund? more than 200.5 million 

times to check on the status of their tax refunds, an increase of 51.6 percent from 

2012. 

In FY 2013, the IRS enhanced the “Where’s My Refund?” web tool to allow taxpayers to find 

out when their tax return was received, when the refund was approved, and when the refund 

was sent. The IRS also deployed a new telephone and web tool called “Where’s My Amended 

Return?” in both English and Spanish that allowed taxpayers to check the status of their Form 

1040X amended tax returns for the current year and up to three prior years. The tool also 

provided taxpayers with information such as when their amended return was received, 

adjusted, and completed, as well as specific information regarding offset conditions such as a 

previous IRS tax liability or a past due obligation. 

Taxpayer Education and Outreach

The IRS continues to improve and expand on its outreach and educational services through 

partnerships with State taxing authorities, volunteer groups, and other organizations. VITA 

and TCE sites provide free tax assistance for elderly, disabled, and limited English proficient 

individuals and families. 

In FY 2013, more than 91,800 volunteers prepared over 3.4 million Federal returns, 

95.3 percent of which were filed electronically, and over 2.5 million State returns. In 

addition, the IRS teamed up with its national partners to offer a remote filing method – 

Facilitated Self Assistance (FSA) -- at VITA sites. More than 82,000 FSA returns were 

filed at the 330 VITA sites offering the FSA remote filing model. Taxpayers with incomes of 

$57,000 or less, basic computer skills, internet access with an e-mail address, and necessary 

tax preparation documents could file their taxes using this model. 
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The Earned Income Tax Credit (EITC) is one of the Federal Government’s largest benefit 

programs for low-income working families and individuals. In FY 2013, the IRS held its 

seventh annual EITC Awareness Day, promoting EITC awareness and free return preparation 

options. Through outreach activities, including news conferences, news releases, newsletters, 

e-mails, partnerships with community-based organizations, and an increased use of social 

media tools, the IRS achieved nationwide coverage in both English and Spanish markets, 

including over 15,000 hits on IRS.gov. 

Enforcement

Return on Investment (ROI) for FY 2015 Enforcement Initiatives 

FY 2015 Revenue-Producing Initiatives 

Enforcement efforts encourage voluntary compliance for those taxpayers who seek to avoid 

meeting their tax obligations under the law, further increasing revenue. Resources for 

traditional revenue-producing compliance programs yield direct, measurable results through 

high ROI enforcement activities such as examination and collection. 

The FY 2015 President’s Budget includes $51.7 million to implement enacted legislation 

(traditional revenue-producing portion), $73.8 million to protect revenue, and $367.5 million 

for IRS initiatives funded through a program integrity cap adjustment that will reduce the 

deficit through above-base funding for high ROI tax enforcement and compliance programs, 

of which $5 million will be transferred to TTB. The $474.5 million in IRS program integrity 

cap adjustment funding includes $362.4 million for traditional enforcement initiatives, 

$4.5 million for a revenue-protecting enforcement initiative, $36.8 million for a 

revenue-enhancing enforcement initiative, and $70.8 million for other compliance-related 

initiatives in the Operations Support account (see Section 4.8, Summary of Program Integrity 

Cap Adjustment). 

The FY 2015 traditional revenue-producing initiative, not included in the program integrity 

cap adjustment, will generate $129.2 million in additional annual enforcement revenue by 

implementing enacted legislation, achieving a return on investment (ROI) of $2.3 to $1. 

Return on Investment for IRS FY 2015 Enforcement Initiative to Implement Enacted Legislation

The $362.4 million requested for the IRS FY 2015 traditional enforcement initiatives funded 

through the program integrity cap adjustment will generate nearly $2.1 billion in additional 

annual enforcement revenue, achieving a FY 2017 ROI of $5.6 to $1. 

Dollars in Millions

Cost Revenue ROI Cost Revenue ROI

Program Increase Before Cap Adjustment $51.7 $50.2 1.0 $55.9 $129.2 2.3

Address Impact of Affordable Care Act (ACA) Statutory Requirements 51.7 50.2 1.0 55.9 129.2 2.3

First Year (FY 2015) Full Performance (FY 2017)
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Dollars in Millions

Cost Revenue ROI Cost Revenue ROI

Revenue-Protecting Initiatives (which protects taxpayer information, prevents identity theft, and 

results in long-term revenue protection)

$73.8 $604.0 8.2 $75.6 $1,640.1 21.7

Program Increase Before Cap Adjustment $69.3 $570.2 8.2 $70.4 $1,533.5 21.8

Prevent Identity Theft and Refund Fraud 64.9 548.0 8.4 65.3 1,462.0 22.4

Address Impact of ACA Statutory Requirements (revenue-protecting portion) 4.4 22.2 5.0 5.1 71.5 14.0

Cap Adjustment Revenue-Protecting Initiative $4.5 $33.8 7.5 $5.2 $106.6 20.5

Expand Audit Coverage (revenue-protecting portion) 4.5 33.8 7.5 5.2 106.6 20.5

First Year (FY 2015) Full Performance (FY 2017)

Return on Investment for IRS FY 2015 Cap Adjustment Enforcement Initiatives

FY 2015 Revenue-Protecting Initiatives 

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

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

issues prior to 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 more 

than $1.6 billion in revenue at a lower cost than the downstream enforcement actions and 

achieve a FY 2017 revenue protection ROI of $21.7 to $1. 

FY 2015 Revenue-Protecting Initiatives

Dollars in Millions

Cost Revenue ROI Cost Revenue ROI

Cap Adjustment Enforcement Initiatives $362.4 $635.3 1.8 $377.0 $2,095.6 5.6

Immediate and Directly Measurable Revenue-Producing Initiatives $274.4 $635.3 2.3 $289.5 $2,095.6 7.2

Address International and Offshore Compliance Issues 56.8 87.5 1.5 60.9 292.8 4.8

Expand Coverage of High Wealth Individuals and Enterprises 21.0 78.5 3.7 21.6 243.9 11.3

Expand Audit Coverage 93.3 210.3 2.3 94.8 674.3 7.1

Enhance Collection Coverage 66.8 174.6 2.6 72.6 616.8 8.5

Improve Coverage of Partnerships and Flow-Through Entities 36.5 84.4 2.3 39.6 267.8 6.8

Strategic Revenue-Producing Initiative (which does not have immediately measurable ROI, 

but clear long-term revenue effects)

$88.0 $0.0 0.0 $87.5 $0.0 0.0

Expand Compliance Coverage in the Tax-Exempt Sector 16.0 0.0 0.0 16.8 0.0 0.0

Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 17.8 0.0 0.0 16.0 0.0 0.0

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities 17.6 0.0 0.0 17.9 0.0 0.0

Implement IT Changes to Deliver the Foreign Account Tax Compliance Act (FATCA) 32.2 0.0 0.0 32.2 0.0 0.0

Leverage Digital Evidence for Criminal Investigation (CI) 4.4 0.0 0.0 4.6 0.0 0.0

First Year (FY 2015) Full Performance (FY 2017)
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FY 2015 Revenue-Enhancing Initiative 

Improved technology also increases revenue collection by providing better case selection, 

issue identification, and enforcement case treatment. This technology allows the IRS to adapt 

quickly to changing taxpayer behavior and tax code misuse. While this number is not 

currently included in the IRS’s traditional ROI calculations, the FY 2015 revenue-enhancing 

initiatives will increase revenue by $75.4 million from technology investments that will 

analyze compliance data more efficiently and provide better case selection, issue 

identification, and treatment selection, achieving a FY 2017 revenue enhancement ROI of 

$2 to $1. 

FY 2015 Revenue-Enhancing Initiative 

In addition to the new FY 2015 enforcement initiatives, the President’s Budget also proposes 

new tax enforcement and compliance initiatives for IRS and TTB funded via cap adjustments 

through 2019 and sustained with additional adjustments through 2024. In total, the proposal 

entails 10 years of cap adjustments costing $17 billion while saving $52 billion, for a net 

savings of $35 billion.

The IRS places mission-critical importance on enforcement of the tax law, especially as tax 

administration becomes increasingly complex. As a result of the impacts of sequestration and 

furloughs, the IRS delivered key enforcement programs below FY 2012 levels. Total 

individual audits fell 5 percent, from 1.48 million to 1.40 million, while audits of high-income 

individuals declined from 179,000 to 172,000. Business return audits dropped 13 percent, 

from 70,000 to 61,000. 

In FY 2013, collections related to all 

enforcement activities totaled 

$53.3 billion, the fourth consecutive 

year the IRS exceeded $50 billion. 

Total Enforcement Revenue Collected 

increased $3.1 billion over FY 2012. 

Most of the increase came from a 

$2.6 billion rise in revenue from 

Appeals which, due to the timing of the 

Appeals process, generally relates to 

examinations for much earlier years. Revenue from the Collection function, the levels of 

which also frequently rise and fall in tandem with the overall health of the economy, 

increased by nearly $1 billion in FY 2013. While the overall receipts from enforcement 

increased in 2013 compared to the prior year, the total is still down by more than $4.3 billion 

from four years ago. The reason for this decline is primarily due to a decline in revenue from 

Dollars in Millions

Cost Revenue ROI Cost Revenue ROI

Cap Adjustment Revenue-Enhancing Initiative (which leverages technology to improve case 

selection and analysis)

$36.8 $0.0 0.0 $38.6 $75.4 2.0

Leverage Data to Improve Case Selection 36.8 0.0 0.0 38.6 75.4 2.0

First Year (FY 2015) Full Performance (FY 2017)
IRS-12 

audits, which dropped nearly $400 million in FY 2013 to $9.83 billion, the lowest level in a 

decade. This decline in audit revenue is attributable to a decline in the number of returns 

audited. 

The IRS strategic enforcement efforts and parallel Offshore Voluntary Disclosure Program 

(OVDP) gave U.S. taxpayers with undisclosed offshore assets or income an opportunity to 

become compliant with the U.S. tax system and avoid potential criminal charges. The OVDP 

program has resulted in the collection of more than $6 billion in back taxes, interest, and 

penalties from more than 43,000 participants since the program was first established in 2009. 

International compliance programs have provided the IRS with a wealth of information on 

various banks and advisors assisting people with offshore tax evasion. In FY 2013, the IRS 

continued to implement strategies to address international issues by improving 

intragovernmental coordination, expanding IRS presence in U.S. territories, and enhancing 

compliance measures. The following actions were completed in FY 2013: 

 The IRS continued to lead the design and implementation of the Foreign Financial 

Institution registration and intergovernmental data exchange processes by working 

with foreign governments to develop a network of Intergovernmental Agreements; and 

 The IRS required taxpayers with foreign financial accounts exceeding $10,000 to file 

electronically through the Bank Secrecy Act E-File System. 

In addition to recognizing the tax administration challenges presented by cross-border 

transactions, the IRS continued to focus on providing service to return preparers. Return 

preparers play a key role in increasing taxpayer compliance and strengthening the integrity of 

the U.S. tax system. 

The IRS required anyone who prepared or assisted in preparing Federal tax returns for 

compensation to have a valid Preparer Tax Identification Number (PTIN). In FY 2013, 

the IRS held a successful PTIN renewal season offering enhanced PTIN system usability, 

troubleshooting tips, and other tools, resulting in over 76,000 fewer telephone inquiries 

answered during the peak season. As of September 30, 2013, there were 689,865 valid 

PTINs. 

In FY 2013, the IRS continued to educate and inform paid return preparers on tax law 

compliance by:

 Conducting educational visits with return preparers to assist them in completing and 

filing tax returns; 

 Visiting over 3,000 return preparers nationally, including 300 real-time EITC 

compliance visits; and 

 Addressing egregious preparers through a variety of methods to ensure appropriate 

penalties and/or sanctions were pursued. 

The IRS takes appropriate enforcement action against taxpayers who file fraudulently. The 

IRS criminal investigation program examines potential criminal violations of the Internal 
IRS-13 

Revenue Code and related financial crimes such as money laundering, currency violations, 

tax-related identity theft fraud, and terrorist financing that adversely affect tax administration. 

In FY 2013, the IRS: 

 Completed 5,557 criminal investigations; 

 Maintained a Department of Justice acceptance rate of 95.5 percent, which compares 

favorably with other Federal law enforcement agencies; 

 Achieved a conviction rate of 93.1 percent; and 

 Obtained 3,311 convictions. 

Progress Made on Tax-Related Identity Theft 

Identity theft continues to grow and touches nearly every part of the IRS. In FY 2013, the 

IRS continued to focus on a comprehensive and aggressive strategy to identify and combat 

tax-related identity theft. For FY 2013, the IRS: 

 Deployed the Identity Protection Personal Identification Number (IP PIN) to over 

770,000 taxpayers for the 2013 filing season; 

 Conducted 191 Identity Theft outreach events with tax and accounting practitioners, 

the general public, and the media; 

 Launched the Law Enforcement Assistance Program (LEAP) nationwide to facilitate 

sharing of information to support the investigation and prosecution of cases of identity 

theft. In FY 2013, 314 State and local law enforcement agencies from 35 states 

participated in the program; and 

 Trained 35,000 employees to work with taxpayers and help them address their identity 

theft incidents and worked with victims to resolve and close more than 

565,000 identity theft cases, more than three times the number of cases resolved in the 

previous year. 

Business System Modernization 

The IRS modernization efforts continued to focus on building and deploying advanced IT 

systems, processes, and tools to improve efficiency and productivity. FY 2013 modernization 

successes included: 

 Customer Account Data Engine 2 (CADE 2). In Filing Season 2013, CADE 2 posted 

more than 139 million returns and issued more than 111 million refunds totaling 

$281 billion. Daily processing and posting of individual taxpayer accounts enabled 

faster refunds (65.47 percent of individual returns that were due a refund and were 

processed daily increased in FY 2013 compared to 30 percent in FY 2011 (pre-CADE 

2)). 

 Modernized e-File (MeF). MeF Release 8 deployed for Filing Season 2013 and was 

the sole e-file platform used for the Filing Season, as the IRS processed 224.7 million 

individual Federal and State returns, and 16.8 million Business Master File returns.
IRS-14 

 New Electronic Fraud Detection System (EFDS)/MeF interface was deployed in 

FY 2013, ensuring EFDS completed fraud detection before further processing. In 

FY 2013, EFDS processed over 138 million returns and stopped over $10 billion in 

potentially fraudulent refunds. 

 Information Return Document Matching (IRDM) System’s full Case Management 

functionality became available for casework in January 2013. Case management 

matches new information returns (e.g., 1099-K) with both individual and business tax 

returns to identify potential income under reporting. 

 New portal improves access to IRS.gov. The IRS transitioned one of the two internet 

portals used to access IRS.gov, the Public User Portal (PUP), to the new Integrated 

Enterprise Portal (IEP) environment allowing the IRS to increase IT services to meet 

taxpayers’ changing needs. In FY 2013, the new IEP has accommodated a 22 percent 

increase in visits and a 6 percent increase in page views compared to FY 2012. 

Opportunity, Growth, and Security Initiative 

The FY 2015 Budget requests an additional $165 million as part of the new Opportunity, 

Growth, and Security Initiative. This initiative will allow the IRS to provide additional IRS 

customer service improvements, including increasing toll-free telephone level of service by 

11 percentage points to over 80 percent, driving responsiveness to taxpayers through 

correspondence inventory reduction, and bolstering resources to help tackle more highly 

burdensome identity theft and refund fraud cases. For more information, see Section 4C, 

Opportunity, Growth, and Security Initiative.
IRS-15 

Section 2 – Budget Adjustments and Appropriations Language 

The IRS President’s Budget request for FY 2015 is $12,476,527,000 in direct appropriations 

and 91,187 FTE. This is an increase of $1,185,915,000 or 10.50 percent and 6,998 FTE more 

than the FY 2014 Enacted budget of $11,290,612,000 and 84,189 FTE. 
IRS-16 

2.1 – Budget Adjustments Table 

Internal Revenue Service FTE Amount

FY 2013 Operating Level1 86,381 $11,198,612

FY 2014 Enacted2 84,189 $11,290,612

Changes to Base:

Non-Recur FY 2014 Additional Appropriation ($92,000)

Maintaining Current Levels (MCLs): $223,177

Pay Raise 102,082

FERS Contribution Increase 75,329

Non-Pay Inflation Adjustment 45,766

Other Adjustment: 573

Base Adjustments 573

Efficiencies/Savings: (70) ($95,200)

Increase e-File Savings (55) (2,800)

Adjustment for FERS increase (76,375)

HCTC Program Termination (15) (16,025)

Reinvestment: $16,025

Expand Telecom Infrastructure to Handle Increased Demand 16,025

Subtotal FY 2015 Changes to Base 503 $52,002

FY 2015 Base 84,692 $11,342,614

Program Changes:

Program Increases:

Taxpayer Service Initiative:

Improve Taxpayer Service and Return Processing 2,391 211,258

Subtotal Taxpayer Service Initiative 2,391 $211,258

Enforcement Initiatives:

Address International and Offshore Compliance Issues 332 56,810

Expand Coverage of High Wealth Individuals and Enterprises 141 20,957

Prevent Identity Theft and Refund Fraud 457 64,876

Address Impact of ACA Statutory Requirements 399 56,099

Expand Audit Coverage 586 97,779

Enhance Collection Coverage 577 66,762

Improve Coverage of Partnerships and Flow-Through Entities 244 36,539

Expand Compliance Coverage in the Tax-Exempt Sector 119 16,095

Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 52 17,812

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities 106 17,537

Implement Information Technology (IT) Changes to Deliver the Foreign Account Tax Compliance 

Act (FATCA) 140 32,223

Leverage Digital Evidence for Criminal Investigation (CI) 6 4,372

Leverage Data to Improve Case Selection 46 36,793

Subtotal Enforcement Initiatives 3,205 $524,654

Infrastructure Initiatives:

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements 818 305,645

Implement Information Technology (IT) Services 10,000

Implement Campus Consolidation and Revitalization Strategy 10,000

Implement eGovernment and Other Administration Priorities 19 31,011

Maintain Integrity of Revenue Financial Systems 8 12,136

Expand Virtual Service Delivery (VSD) 13 7,701

Subtotal Infrastructure Initiatives 858 $376,493

Business Systems Modernization Initiative:

Continue Migration from Aging Tax Administration Systems - Enhance Online Services 41 16,508

Subtotal Business Systems Modernization Initiative 41 $16,508

Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer:

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

Subtotal Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer Initiative $5,000

Subtotal FY 2015 Program Changes 6,495 $1,133,913

Total FY 2015 Budget Request 91,187 $12,476,527

Dollars in Thousands

1 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M 

transferred from the Enforcement appropriation to the Taxpayer Services ($13M) and Operations Support ($60M) appropriations. 

2 FY 2014 Enacted includes $92M in funding ($34 million in Taxpayer Services and $58 million in Operations Support).
IRS-17 

Initiative Costing Methodology 

The IRS uses a variety of methods to calculate the cost of its initiatives. Costs for initiatives 

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. 

The FY 2015 initiative FTE were estimated assuming a January 1 hire date except for 

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

Electronic/Correspondence Assistance, which were estimated assuming an October 1 hire 

date. The primary function of the Submission Processing and Account Management and 

Assistance taxpayer service programs is to provide service to taxpayers during the filing 

season. These programs manage their workload using staff hours, not FTE. They are not as 

dependent on the traditional hiring and training process that is experienced in other IRS 

programs because they have a large existing seasonal workforce that is available to work 

additional hours as resources become available. 

As in prior years, the IRS expects to work with the Administration and Congress on any 

changes necessary as a result of the timing of and funding levels for the actual enacted fiscal 

year budget. In prior years, this has included, but is not limited to, increased hiring to fully 

realize the FTE funded by the appropriators - to the extent that attrition in the subsequent year 

would hold total FTE within budgeted resources - or one time transfers (subject to 

Congressional approval) of projected surplus funds resulting from the timing of the funding 

availability. 

2A – Budget Increases and Decreases Description 

Total Changes to Base 

 +$52,002,000 / +503 FTE 

Non-Recur FY 2014 Additional Appropriation 

-$92,000,000 / 0 FTE 

The $92 million additional appropriation increase in the Consolidated Appropriations Act, 

2014, to improve the delivery of services to taxpayers, improve the identification and 

prevention of refund fraud and identity theft, and address international and offshore 

compliance issues, is non-recurred. 

Maintaining Current Levels (MCLs) 

+$223,177,000 / 0 FTE 

Pay Raise +$102,082,000 / 0 FTE 

Funds are requested for the proposed January 2015 pay raise and to annualize the 2014 pay 

raise. 
IRS-18 

FERS Contribution Increase +$75,329,000 / 0 FTE 

Funds are requested for increases in agency contributions to the Federal Employee Retirement 

System based on updated actuarial estimates. 

Non-Pay Inflation Adjustment +$45,766,000 / 0 FTE 

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

rent, supplies, and equipment. 

Other Adjustment 

$0 / +573 FTE 

This base adjustment transfers $29.2 million and 244 FTE from the Enforcement 

appropriation to the Operations Support appropriation to reclassify Government Liaison & 

Disclosure (GLD) to better align with its role as a security function. The GLD program is part 

of Privacy, Governmental Liaison, and Disclosure (PGLD). The PGLD function is to protect 

the sensitive information and privacy of taxpayers and employees and to ensure only 

authorized disclosures and data sharing, and therefore, more appropriately belongs in the 

Operations Support appropriation. 

The exception only hiring freeze implemented by IRS over the last several years has 

generated $57.9 million in uncommitted enforcement resources. Starting in FY 2015, the IRS 

will use these base resources to provide the enforcement staff needed to implement changes 

required by enactment of the Foreign Account Tax Compliance Act (FATCA) ($20.6 million 

and 204 FTE); administer the reporting provisions for merchant payment cards, third party 

reimbursements, and basis reporting on security sales ($28.4 million and 322 FTE); and 

partially fund the expansion of the Criminal Investigation Identity Theft Clearinghouse, which 

processes all identity theft leads from field special agents and other external sources 

($8.9 million and 47 Special Agent FTE). 

Efficiencies and Savings 

-$95,200,000 / -70 FTE 

Increase e-File Savings 

-$2,800,000 / -55 FTE 

These savings are a result of reduced paper returns. The IRS projects taxpayers will file 

1,277,800 fewer paper returns (807,900 individual and 469,900 business returns) and instead 

choose to e-file. As a result, the IRS would need 55 fewer FTE in submission processing, 

generating a savings of $2.8 million. 

Adjustment for FERS Increase 

-$76,375,000 / 0 FTE 

By continuing to closely manage personnel costs in FY 2014, the IRS will achieve the 

reductions needed in FY 2015 to absorb the cost of the FERS contribution increase. 
IRS-19 

HCTC Program Termination 

-$16,025,000 / -15 FTE 

The Health Coverage Tax Credit (HCTC) program was enacted by the Trade Adjustment 

Assistance (TAA) Act of 2002, Public Law 107-210, and became effective August 2003. 

This program assisted dislocated workers with their health insurance premiums and the IRS 

was provided resources to administer the advance payment feature. This program was 

terminated January 1, 2014, as provided by the Trade Adjustment Assistance Extension Act of 

2011 (TAA Reauthorization), Public Law 112-40. Termination of this program will result in 

a savings of $16 million and 15 FTE. 

Reinvestment 

+16,025,000 / 0 FTE 

Expand Telecom Infrastructure to Handle Increased Demand 

+$16,025,000 / +0 FTE 

This reinvestment expands the Customer Service Representative (CSR) toll-free call center 

telecommunication infrastructure to allow the IRS to answer the additional telephone calls 

related to implementation of the Affordable Care Act (ACA) (Public Law 111-148). The 

expanded telecommunication infrastructure includes additional ports for the Customer Voice 

Portal (CVP) as well as licensing and configuration for Intelligent Contact Manager, CVP, 

Electronic Workforce Management, and Contact Recording. The requested funding covers 

hardware costs for high-speed internet connections, encryption technology, and 

telecommunications equipment. 
IRS-20 

Program Increases 

+$1,133,913,000 / +6,495 FTE 

Improve Taxpayer Service and Return Processing 

+$211,258,000 / +2,391 FTE 

Funding to Improve 

Taxpayer Service and 

Return Processing provides 

resources for the IRS to 

help meet the expected 

demand increases for 

taxpayer services in 

FY 2015. The additional 

resources requested in 

FY 2015 will allow the IRS 

to increase the Customer 

Service Representative 

(CSR) Level of Service 

(LOS) from the actual 

FY 2013 level of 

60.5 percent to 71 percent. 

Resources are needed to 

address the projected 

growth in demand for 

traditional taxpayer services 

such as answering tax law 

questions and resolving 

accounts as well as 

providing taxpayer 

telephone assistance, 

correspondence services, 

and outreach to individuals, 

businesses, and third parties 

affected by the Affordable 

Care Act (ACA) (Public Law 111-148). Without the additional resources, the IRS expects the 

CSR LOS would be 53 percent. This initiative also provides advanced technology to improve 

telephone customer service and allow the IRS to begin the initial phase of enhancing the 

Account Management System (AMS) to electronically receive amended returns 

(Form 1040X, Amended U.S. Individual Tax Return) from Modernized e-File (MeF). 

Position Type/Other Costs FTE Positions $000

Meet FY 2015 Expected Taxpayer Service Demand 1,562.00 1,572 $137,311

Increase Level of Service (LOS) 1,533.00 1,533 117,835

Customer Service Representative (CSR) 879.00 879 73,698

CSR - Seasonal1

624.00 624 41,482

Manager and Analyst 30.00 30 2,655

Enhance Quality and Effectiveness of Services Provided 

to Taxpayers 6.00 8 653

Program Analyst 4.50 6 421

Business Modernization Office (BMO) Analyst 1.50 2 232

IT Projects 23.00 31 18,823

Customer Callback (formerly Virtual Hold) 3,327

AMS Acceptance of 1040X Amended Returns 4,108

Authentication Retention (AR) Technology 6,277

Computer Telephone Integration (CTI) Technology 1,783

IT Specialists 23.00 31 3,328

Assist Taxpayers in Understanding Affordable Care Act 

(ACA) Issues 829.00 870 $73,947

Field Assistance (FA) 61.25 73 5,289

Individual Taxpayer Advisory Specialist 61.25 73 5,289

Process New and Revised Forms 230.00 230 13,985

Tax Examiner - Seasonal1

230.00 230 13,985

Joint Operations Center (JOC) 9.75 13 1,344

Analyst 9.75 13 1,306

High Speed Internet Connection 38

Program Management Office 1,700

Contractual Services 1,700

Taxpayer Assistance & Outreach 481.50 492 40,066

Customer Service Representative (CSR) 280.00 280 23,755

CSR - Seasonal 169.00 169 11,398

Manager and Analyst 27.25 36 3,718

Tax Technician 5.25 7 755

Contractual Services 440

Grants 6,000

ACA Grant Funds 6,000

Other Direct Costs 46.50 62 5,563

Taxpayer Advocacy Service Specialist 45.00 60 5,333

Program Analyst - Taxpayer Advocate 1.50 2 230

Total 2,391.00 2,442 211,258

For costing purposes, the number of seasonal FTE equals the number of positions.

1

The number of seasonal positions varies depending on the actual number of months and staff hours worked. 
IRS-21 

Meet FY 2015 Expected Taxpayer Service Demand (+$137.3 million / +1,562 FTE) 

This initiative will allow the IRS to: 

 Increase Level of Service (LOS) 

This initiative will fund additional staffing to improve the level of service for the both 

the existing taxpayer service workload and anticipated increases related to ACA. 

These resources will allow the IRS to answer a greater number of taxpayer telephone 

calls and to timely address taxpayer claims and inquiries submitted through paper 

correspondence requests. The IRS plans to continue to maximize self-service options, 

increase efficiencies across existing service delivery channels, and expand the use of 

more innovative technologies to address the increased demand for services. 

 Enhance Quality and Effectiveness of Services Provided to Taxpayers 

This initiative will further fund activities to support enhanced service to taxpayers. 

The IRS will conduct qualitative research to understand taxpayer behaviors related to 

compliance and taxpayer comprehension of new tax laws. The data collected will be 

used to help formulate appropriate service responses. These resources also will 

support the design of enhancements to the Account Management System (AMS) to 

provide CSRs better tools to respond to taxpayer inquiries. 

 Invest in IT Projects to Support Taxpayer Service 

o Customer Callback (CC) 

Customer Callback (CC) technology will allow taxpayers to choose how they 

interact with IRS toll-free services while waiting to speak with a CSR. Currently, 

taxpayers remain in the queue to hear announcements of estimated wait time. 

Investing in this technology will provide taxpayers with the option of remaining on 

hold or scheduling a callback. This will allow the IRS call sites to operate more 

efficiently, save telephone resources, and improve the taxpayer’s experience with 

the IRS. 

The CC technology will provide the follow benefits: 

 Reduced circuitry and port costs, estimated to save $1.5 million to 

$1.9 million annually; 

 Improved customer satisfaction and reduced taxpayer burden; 

 Increased employee satisfaction; and 

 Fewer abandoned calls. 

o Account Management System (AMS) Acceptance of Individual Amended Returns 

This project will enhance the AMS to electronically receive Form 1040X from 

Modernized e-File (MeF), resulting in more efficient tax return processing and 

improved taxpayer service. In 2013, the IRS processed 3.9 million paper amended 
IRS-22 

returns. The IRS plans to begin accepting electronic amended returns in Tax Year 

2014/Processing Year 2015. 

This enhanced AMS functionality will allow the IRS to receive tax data from MeF 

so that Form 1040X inventories can be routed and worked. This new capability 

will enhance business controls and create a virtual interface to all account and case 

information. Benefits include: 

 Better customer service on toll-free lines, as information will be readily 

available to CSRs; 

 Automated case processing, resulting in fewer manual actions; 

 Increased identification of potential issues that could result in increased 

revenue collection or prevention of revenue loss; 

 Reduced costs associated with maintaining redundant data stores and 

applications; 

 Reduced time to route cases by immediately identifying and forwarding 

cases meeting relevant criteria to the appropriate area; 

 Reduced need for scanning amended returns (in FY 2012 the IRS scanned 

and closed 1,317,637 amended return cases); 

 Reduced number of paper amended returns received and stored by the IRS; 

and 

 Better fraud and identity theft detection for Form 1040X. 

o Authentication Retention (AR) 

This technology will allow taxpayers to provide identifying information to the IRS 

only once per call to authenticate or verify their identity, while still protecting 

taxpayer privacy. Decreasing the number of times an agent has to authenticate 

callers will reduce taxpayer burden and the risk of identity theft and fraud, and 

improve efficiency. AR technology creates a seamless taxpayer experience during 

interactions with assistors and is estimated to benefit more than 31 million callers 

annually. AR technology will allow the IRS to actively address the Treasury 

Inspector General Tax Administration (TIGTA) finding that telephone 

authentication practices need improvement to prevent unauthorized disclosures. 

o Computer Telephone Integration (CTI) 

This technology provides online screen displays of taxpayer account-related data. 

CTI, which is dependent upon AR implementation, performs basic 

taxpayer-related research to provide the CSR with current account information to 

improve response time for taxpayer inquiries. 
IRS-23 

Assist Taxpayers in Understanding Affordable Care Act (ACA) Issues 

(+$73.9 million / +829 FTE) 

Beginning in FY 2015, taxpayers will file the first tax returns that will include the 

reconciliation of the Premium Tax Credit (PTC), the granting of individual exemptions from 

health insurance coverage requirements, and the assessment of individual responsibility 

payments. In addition, beginning in FY 2015, new information reporting will be required for 

certain employers and health insurance providers. The IRS must provide timely and accurate 

responses to taxpayers to help them understand their responsibilities under the new and 

complex ACA tax provisions. 

 Field Assistance 

This initiative will allow the IRS to hire additional staff to meet the increased demand 

for face-to-face assistance because of new filing and reporting requirements effective 

in 2015. The IRS plans to maximize self-service options, increase efficiencies across 

existing service delivery channels, and expand the use of innovative technologies to 

address the increased demand for services. Despite these efforts, the IRS expects a 

significant increase in the demand for face-to-face assistance due to the complexity of 

ACA. This initiative will fund additional permanent and seasonal CSRs to handle the 

increased walk-in traffic expected during the post filing season as notices begin to be 

mailed to taxpayers and the additional live-assisted contacts related to ACA that are 

anticipated in FY 2015. 

 Process New and Revised Forms 

This initiative will provide resources to process new and revised forms, including 

expanded transcription requirements and increased error resolution effective in the 

2015 filing season. The IRS expects that the new forms will require a significant 

amount of transcription, result in a higher than normal error fallout rate because of 

unfamiliarity with the complex new laws, and increase the processing of paper 

amended returns filed with Form 1040X. 

 Joint Operations Center (JOC) 

The IRS JOC provides service, support, and technology for operating divisions and 

functional organizations to achieve their desired service levels for all telephone, 

correspondence, and electronic media inquiries. Additional staff is requested to 

address the expected increase in ACA-related demand. 

 ACA Program Management Office (PMO) 

Funding will allow the Project Management Office (PMO) to continue contractual 

support services and provide oversight of ACA implementation activities focusing on 

individual and information returns processing, customer service, outreach, and 

development of guidance. 
IRS-24 

 User and Network Services (UNS) Internet and Telecommunications Support 

UNS Internet and Telecommunications support will be enhanced to handle the 

increase in ACA demand. 

 Taxpayer Assistance and Outreach 

Provide outreach efforts to inform taxpayers and associated third parties about ACA 

tax filing requirements. 

 Grants 

This initiative requests $6 million to expand the Volunteer Income Tax Assistance 

(VITA) matching grant program from $12 million to $18 million to allow the IRS to 

prepare community and volunteer-based organizations to assist taxpayers with their 

filing requirements under ACA. 

 Stakeholder Liaison and Communication 

Stakeholder liaison tax analysts and technicians will support ACA by researching 

customer needs; developing and managing educational programs; establishing 

partnerships with stakeholder groups; and disseminating tax information to taxpayers 

and the general public through a variety of media, including publications and mailings, 

websites, broadcasting, and advertising. 

Other Direct Costs (+$5.6 million / +46.50 FTE) 

Dollars in Millions

IRS Activity Cost FTE Positions Explanation

Taxpayer Advocate Service $5.6 46.50 62 Handle additional case receipts.

Total $5.6 46.50 62
IRS-25 

Address International and Offshore Compliance Issues 

+$56,810,000 / +332 FTE 

Funding to Increase Offshore 

Compliance will expand coverage of 

entities with undisclosed offshore 

accounts to comply with required 

U.S. tax reporting. This initiative 

will: 

 Promote voluntary 

compliance with U.S. laws 

through strategic 

enforcement actions directed 

at identifying U.S. taxpayers 

involved in abusive offshore 

tax schemes through banks, 

other financial institutions, and third party structures; 

 Allow the IRS to expand information gathering and data analysis to identify 

promoters or facilitators of abusive offshore schemes; and 

 Expand Offshore Criminal Investigations in pursuit of international tax and financial 

crimes as well as grow the IRS attaché presence. 

This initiative will produce annual enforcement revenue of $292.8 million, once the new hires 

reach full potential in FY 2017, an ROI of $4.8 to $1. 

Major Activities

Projected

Revenue

$M

Individual 

Closures

Business 

Closures

Investigations

Completed

Increase Offshore Compliance 292.8 6,525 75

Expand Offshore Criminal Investigations 38

 Total $292.8 6,525 75 38

Position Type/Other Costs FTE Positions $000

Increase Offshore Compliance 206.00 274 $30,702

Revenue Agents 149.25 199 24,958

Tax Examiners 21.75 29 2,065

Tax Technician 19.25 25 2,225

Support Staff 15.75 21 1,454

Expand Offshore Criminal Investigations 67.50 90 $14,656

Special Agent 22.50 30 8,373

Investigative Analyst 22.50 30 2,817

IT Specialist 14.25 19 2,195

Computer Operations Administrator (COA) 8.25 11 1,271

Other Direct Costs 58.50 78 $11,452

Revenue Agent - Appeals 0.75 1 94

Appeals Officer 9.75 13 1,689

Tax Examiner - Appeals 0.75 1 70

Attorney 44.25 59 9,330

Paralegal 0.75 1 96

Support Staff - Counsel 2.25 3 173

Total 332.00 442 $56,810
IRS-26 

Increase Offshore Compliance (+$30.7 million / +206 FTE) 

 Increased Coverage of Offshore Individual Compliance Issues 

With the increased mobility of people and transactions, offshore and cross-border tax 

issues affect a growing number of taxpayers. The additional resources in this 

initiative will allow the IRS to: 

o Ensure proper application of treaty benefits, foreign tax credits, and foreign earned 

income exclusion; 

o Verify withholding before the release of refund requests; 

o Increase pre-refund audit coverage; 

o Establish centralized classification and case building unit; and 

o Increase the use of soft letters to promote voluntary compliance. 

 Enhance International Compliance Efforts 

This funding will allow the IRS to identify emerging offshore compliance issues and 

handle the increased workload from cases with international issues and offshore 

transactions. This additional workload from the open-ended Offshore Voluntary 

Disclosure Program (OVDP), additional John Doe Summonses, and expanded 

information reporting required by the Foreign Account Tax Compliance Act (FATCA) 

is expected to result in increased individual and small business audits. 

o Implementation of OVDP 

In January 2012, the IRS reopened the previous Offshore Voluntary Disclosure 

Initiative (OVDI) with tightened eligibility requirements in response to strong 

interest from taxpayers and tax practitioners. Since the program was established in 

2009, through the end of FY 2012, the OVDP has resulted in the collection of 

more than $6 billion in back taxes, interest, and penalties from more than 

43,000 participants. 

o Issuance of John Doe Summons 

The purpose of a John Doe summons is to investigate the tax liability of a specific 

unidentified taxpayer (or a group of such taxpayers). The use of John Doe 

summonses has avoided the restrictions imposed by the international bank secrecy 

rules and resulted in over 725 primary treaty cases, equating to over 3,000 returns. 

A John Doe summons can only be served after approval by a Federal court. The 

IRS has seen an increase in the number of offshore voluntary disclosure filings 

when Department of the Treasury and/or Department of Justice announce legal 

actions against taxpayers after the issuance of John Doe summonses to foreign 

financial institutions (FFIs). 

o Expanded Information Reporting under FATCA 

In March 2010 FATCA legislation was enacted as part of the Hiring Incentives to 

Restore Employment (HIRE) Act of 2010 (Public Law 111-147). This legislation 

strengthens offshore compliance efforts by creating new information reporting 

requirements for FFIs with respect to U.S. accounts, establishing new withholding, 
IRS-27 

documentation, and reporting requirements for payments made to certain foreign 

entities, and requiring expanded information reporting for offshore assets held by 

U.S. taxpayers. Through both taxpayer voluntary identification of foreign assets 

and third party reporting by FFIs, the IRS expects to see an increase in the number 

of taxpayers with taxable offshore transactions and to identify taxpayers with 

previously undisclosed foreign holdings. 

 Increase Timely Development of Quality Fraud Referrals 

The IRS National Fraud Program ensures that areas of tax avoidance and fraud are 

promptly addressed and proactively identified. This program identifies and develops 

potential indicators for acts of fraud. These additional resources will allow technical 

advisors to: 

o Provide technical support generated from the issuance of John Doe summonses; 

o Address complex international issues; 

o Proactively assist in developing potential fraud cases and streamline referrals to 

IRS Criminal Investigation (CI); and 

o Provide assistance in obtaining international data and analyzing Suspicious 

Activity Reports (SAR) data. SARs are reports submitted to the Department of the 

Treasury by, among others, financial institutions, brokerage houses, money service 

businesses, and casinos. They provide additional information regarding suspicious 

movements of cash and wire transactions that are not included in a Currency 

Transaction Report (CTR). 

Expand Offshore Criminal Investigations (+$14.7 million / +67.5 FTE) 

These funds will provide resources to expand CI’s pursuit of international tax and financial 

crimes to include: 

 Supporting the International Law Enforcement Community 

CI's International Operations has seen substantial growth in the number of 

international assistance requests from the field and international law enforcement 

agencies. This initiative will support the IRS’s commitment to provide training and 

comply with investigative requests received from the international law enforcement 

community. 

 Expanding CI’s Overseas Enforcement Support 

The IRS is an integral part of the global fight against international tax evasion and 

other financial crimes. To fight transnational crime, CI must expand its support of 

overseas locations to meet the growing demand for criminal investigative cooperation 

and information sharing. Building CI’s overseas enforcement support will facilitate an 

influx of international leads that will result in greater case development, prosecutions, 

and an increased deterrent effect for taxpayers who evade their U.S. tax obligations. 
IRS-28 

 Expanding the CI International Attaché Program 

This initiative will provide additional resources for the International Attaché Program

to expand attachés into other countries, sustain the deployment of an increased special 

agent cadre, and facilitate a broader partnership with other organizations. The current 

international locations are understaffed, with some offices covering over 50 different 

countries. With the large growth in the number of global financial transactions, this 

initiative will allow the IRS to respond better to investigative requests from the 

international law enforcement community. 

Other Direct Costs (+$11.4 million / +58.50 FTE) 

IRS Activity Cost FTE Positions Explanation

Appeals $1.8 11.25 15 Support examination efforts on key compliance areas focused 

on improving voluntary compliance. 

Chief Counsel $9.6 47.25 63

Provide support to agents working offshore cases that will 

require assistance in case development, especially with respect 

to summonses, interviews of taxpayers, and other witnesses. 

Also, provide support for the Report of Foreign Bank and 

Financial Accounts.

Total $11.4 58.50 78

Dollars in Millions
IRS-29 

Expand Coverage of High Wealth Individuals and Enterprises 

+$20,957,000 / +141 FTE

Funding to Expand Coverage of 

High Wealth Individuals and 

Enterprises continues the IRS’s 

efforts to focus on high wealth 

taxpayers by increasing risk 

identification, case building, and 

examination capabilities. High wealth individuals frequently operate complex enterprises 

consisting of multiple, interrelated businesses and flow-through entities that often have 

international components. The IRS takes a unified look at the entire web of business entities 

controlled by high wealth individuals to better assess the risks of noncompliance. 

This initiative allows the IRS to: 

 Conduct examinations of high wealth individuals and related entities; 

 Refine a risk assessment process for global high wealth enterprises; 

 Examine highly complex returns to address the noncompliant entities; and 

 Address noncompliance stemming from multi-jurisdictional tax evasion schemes. 

This initiative will produce additional annual enforcement revenue of $243.9 million once the 

new hires reach full potential in FY 2017, an ROI of $11.3 to $1. 

P o sitio n T ype/ Other C o sts F T E P o sitio ns $ 000

Glo b al Hig h W ealt h 14 1.0 0 18 8 $2 0 ,9 57

Revenue Agents 96.00 128 17,029

Tax Examiners 24.00 32 1,962

Tax Technician 6.75 9 609

Support Staff 14.25 19 1,357

T o t al 14 1.0 0 18 8 $2 0 ,9 57

Major Activities

Projected

Revenue

$M

Individual

Audits

Business

Audits

Global High Wealth 243.9 139 186

 Total $243.9 139 186
IRS-30 

This request will increase audit coverage of the global high wealth (GHW) taxpayer 

population. The IRS takes a multifaceted approach to address the high-income, high wealth 

population to understand better the entire economic picture of the enterprises controlled by 

wealthy individuals and assess tax compliance. This initiative will: 

 Improve identification of the GHW population; 

 Enhance understanding of the complex strategies used by the GHW population; 

 Increase audit coverage of high-income, high wealth individuals; 

 Increase coverage of flow-through entities (including partnerships, trusts and 

subchapter S corporations), individuals engaged in multinational transactions, 

foundations, and other related entities; 

 Expand issue identification and audit coverage of international structures and crossborder transactions; 

 Provide sufficient resources to ensure effective application of TEFRA procedures; 

 Increase specialized expertise in conducting enterprise examinations; 

 Improve identification of issues involving enterprise structures; and 

 Improve audit coverage of international transactions involving offshore accounts and 

entities. 

Other Direct Costs 

There are no other direct costs associated with this initiative. 
IRS-31 

Major Activities Calls 

Answered

Tax Account 

Adjustments

Accounts 

Closures

Investigations 

Completed

Improve Identification and Prevention of Refund 

Fraud 90,000 108,000 13,000 20 

Tota l 9 0 ,0 0 0 10 8 ,0 0 0 13 ,0 0 0 2 0 

Prevent Identity Theft and Refund Fraud

+64,876,000 / +457 FTE 

Funding to Prevent Identity Theft 

and Refund Fraud provides 

additional staffing and advanced 

technologies to support the IRS’s 

continued efforts to handle the 

increased workload associated with 

identity theft and refund fraud. 

The resources requested will help 

the IRS to: 

 Answer telephone calls and 

adjust accounts for 

taxpayers who have been 

victims of identity theft; 

 Reduce the number of 

identity theft returns posted, 

protect additional revenue 

and address some of the 

identity theft case backlog; 

 Continue the expansion of the specialized 

Criminal Investigation (CI) Identity Theft 

Clearinghouse that processes identity theft 

leads; and 

 Invest in information technology projects that 

will protect taxpayer information, help verify 

potentially fraudulent identity theft tax returns, 

and reduce erroneous payments. 

While this initiative is not included in the IRS’s 

traditional ROI calculations, investment in these 

activities is projected to protect nearly $1.5 billion in 

revenue, once the new hires reach full potential in 

FY 2017, a protected revenue ROI of $22.4 to 1. 

Position Type/Other Costs FTE Positions $000

Improve Identification and Prevention of Refund 

Fraud 200.00 200 $16,940

Customer Service Representatives (CSR) 200.00 200 16,940

Prevent Identity Theft 159.00 212 $17,311

Tax Examiner 90.00 120 7,347

Customer Service Representative 30.00 40 2,574

Revenue Agent 10.50 14 1,328

Program Analyst 9.00 12 1,576

Manager and Support Staff 9.00 12 820

Contractual Services 2,068

Project Manager, Analyst and Support Staff 10.50 14 1,598

Expand Identity Theft Clearinghouse 36.00 48 $7,253

Special Agent 9.75 13 2,359

Investigative Analyst 6.75 9 1,040

IT Specialists 19.50 26 3,004

Contractual Services 850

IT Projects 51.00 68 $21,583

Electronic Check Processing Technology (ECP) 5.25 7 3,324

Dishonored Check Processing (DCP) 9.75 13 2,840

Improved Access to SSA Data 12.00 16 1,801

Electronic Fraud 6.00 8 832

Integrated Automated Technology (IAT) Tools 12.75 17 1,998

Web-based AFOIA 5.25 7 3,688

Eliminate SSN from Taxpayer Mailings 7,100

Other Direct Costs 11.00 15 $1,789

Attorney 9.50 13 1,639

Paralegal 1.50 2 150

Total 457.00 543 64,876

Protected Revenue ROI

$1,462.0

$64.9 $65.4 $65.3

$548.0

$1,097.0

$0.0

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

$1,400.0

$1,600.0

FY 2015 FY 2016 FY 2017

in millions

Cost Enforcement Revenue

$8.4 to 1

$16.8 to 1

$22.4 to 1
IRS-32 

Improve Identification and Prevention of Refund Fraud (+$16.9 million / +200 FTE) 

In FY 2015, the IRS projects to receive more than 520,000 correspondence receipts related to 

identity theft. In addition to the correspondence receipts, the IRS projects approximately 

658,000 telephone calls related to identity theft. The resources requested in this initiative will 

allow the IRS to answer an additional 90,000 identity theft-related telephone calls and adjust 

an additional 108,000 tax accounts for victims or potential victims of identity theft. 

Prevent Identity Theft (+$17.3 million / +159 FTE) 

These resources will allow the IRS to expand programs to prevent identity-related refund 

fraud, protect taxpayer identities, and assist victims of identity theft. To improve the 

detection, prevention, and resolution of identity theft cases, this initiative provides funding for 

the following programs: 

 Expand Taxpayer Protection Unit (TPU) 

In FY 2012, the IRS implemented a set of filters to identify, before posting, suspicious 

returns that have a high likelihood of being identity theft returns and established a 

specialized TPU to address these returns. These resources will expand staffing for the 

TPU. Preventing tax returns determined to be identity theft returns from posting will 

avoid the need for adjustments and prevent delays when the true taxpayer files later. 

This will prevent an estimated 63,300 identity theft returns from posting, reduce 

post-processing adjustments, and protect approximately $360 million in revenue. 

 Address Identity Theft Case Backlog 

The prevention and resolution of identity theft cases is one of the highest priorities for 

the IRS. The rapid growth of tax-related identity theft has resulted in a backlog of 

nearly 140,000 cases. To address this backlog and future cases, the IRS requests 

resources to increase the specialized teams dedicated to resolving identity theft cases. 

These teams will ensure that taxpayers affected by identity theft have their issues 

resolved timely and will not be burdened with the same issues from year to year. 

 Expand Identity Protection Specialized Unit (IPSU) 

Identity theft case work grew rapidly from FY 2012 through FY 2013 and is expected 

to remain at current levels in future years as the IRS continues to identify false tax 

returns and prevent fraudulent refunds from being issued. IPSU responds to IRS data 

loss notification inquiries from individuals by helping them understand what has 

occurred and answering any general incident-related inquiries about the data loss 

incident. Inventory in the IPSU grew from about 217,000 receipts in FY 2010 to more 

than 950,000 receipts in FY 2013. In FY 2015, based upon some process 

improvements, the IRS is projecting approximately 713,000 IPSU receipts. This 

funding will allow the IRS to close an estimated 13,000 additional IPSU cases in 

FY 2015. 
IRS-33 

 Establish IRS Campus Fraud Technical Advisors (FTAs) 

IRS Campus FTAs and revenue agents will provide investigative leads and referrals to 

Federal, State, and local law enforcement agencies to solve identity theft cases. 

 Protect Data Loss and Federal Tax Information 

Recent legislation and data sharing agreements have added multiple State and Federal 

agencies and exchanges that are new to receiving Federal tax information. These 

agencies must complete the documentation required by Internal Revenue Code §6103 

and protect Federal tax information within their control. Additional staff is critically 

needed to safeguard and effectively manage IRS information. 

Additional resources also will improve IRS operations to protect sensitive information 

of taxpayers and IRS employees. IRS will continue to monitor information leaving 

the IRS for vulnerabilities and increase employee awareness of and accountability for 

protecting personally identifiable information (PII). Cybersecurity tools will enhance 

protection of taxpayer information and reduce the opportunity for identity theft and 

harm to taxpayers. The oversight of unencrypted PII leaving the IRS will allow timely 

assessment of identity theft risk or other potential harm to taxpayers. 

 Implement Revenue Protection Strategy 

The IRS continues to improve its ability to prevent fraud and abuse of refundable 

credits. The IRS requests additional resources to develop alternative streamlined 

processes that will prevent the issuance of erroneous refund payments. The new staff 

will identify trends, coordinate and follow leads from banks and other sources, and 

develop recommendations on how to address the findings (i.e., issue taxpayer notices, 

modify existing systems, etc.). They also will conduct case reviews to validate the 

potential areas of abuse and pilot the new recommended procedures. In addition, these 

resources will allow the IRS to expand and expedite access to third party income and 

withholding information during the filing season. 

 Business Support to Optimize Use of Return Review Program (RRP) 

The business support component of this initiative will ensure that the new RRP system 

meets the needs of both the compliance and criminal investigation programs. The new 

RRP supports a cross-functional approach to coordinating and addressing criminal and 

civil tax noncompliance. The RRP allows analysis and support of case processing 

needs in criminal prosecution, revenue protection, accounts management, and taxpayer 

communications. This support will ensure that RRP's new capabilities to protect 

revenue meet the needs of by affected IRS organizations. 

Expand Identity Theft Clearinghouse ($7.3 million / 36 FTE) 

The initiative will expand the Identity Theft Clearinghouse in the Criminal Investigation (CI) 

Division to process, analyze, and evaluate all identity theft leads received from special agents 

in the field, other IRS organizations, and external sources. This unit monitors emerging 

identity theft refund schemes and tracks activity using compromised identifying information 

to assist in preventing the release of fraudulent refunds. The unit also combats organized and 
IRS-34 

complex identity theft schemes where fraudulently obtained refunds are used to finance other 

illegal activities including narcotics trafficking. 

These resources will allow the IRS to increase its participation in multi-agency task forces 

dedicated to tax administration and cooperation with State and local law enforcement 

agencies in jurisdictions where prosecutorial actions would have the greatest influence. The 

task forces will obtain information about criminal activity involving Federal and State tax 

refunds to expedite prosecution by the Department of Justice while the criminal activity is still 

ongoing. These teams will target larger-scale crime rings for maximum compliance results 

and publicity. In addition, special agents will extend outreach efforts to practitioners from 

filing season only to year-round to provide information and address return preparer concerns. 

IT Projects (+$21.6 million / +51 FTE) 

This initiative funds the following IT projects that will allow IRS to leverage technology to 

address refund fraud and identity theft: 

 Electronic Check Processing (ECP) and Dishonored Check Processing (DCP) 

These resources will leverage technology to improve protection of taxpayer 

information, enhance efficiency, and reduce erroneous refunds. 

o ECP will provide bulk processing of paper checks in the IRS submission 

processing centers. ECP will convert current paper processing methods 

to electronic processing using high-speed scanners, modernized data capture, 

and imaging technology. Most paper checks will no longer need to be shipped 

to banks via couriers, which will ensure taxpayer PII is protected. 

ECP further supports efforts by the Bureau of the Fiscal Service (BFS) to 

modernize cash management practices through the use of Electronic Fund 

Transfer (EFT) for all collections. BFS collects an inefficiency charge of 

$1.00 per transaction for transactions not converted to EFT. Converting IRS 

payment processing to ECP would not only improve efficiency, but also allow 

the IRS to avoid potential BFS charges. 

o DCP will greatly 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 leverage the Remittance Strategy for Paper Check 

Conversion (RS-PCC) system to provide a fast, systemic transfer of 

insufficient fund information to the IRS Dishonored Check File (DCF) with no 

manual process involved. 

 Improved Access to Social Security Administration (SSA) Data 

These resources will fund 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-35 

quickly will accelerate the verification of wages and withholding on potentially 

fraudulent tax returns and shorten the processing time for legitimate refunds. 

 Integrated Automated Technology (IAT) Tools 

IAT tools are desktop productivity-enhancing tools that automate certain taxpayer 

account processing activities. Funding for IAT technical resources supports the 

design, development, and deployment of additional software tools to support 

anti-identity theft activities throughout the IRS. 

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. 

 Web-based Freedom of Information Act (FOIA) 

The IRS processes over 66,000 annual requests for information through the FOIA and 

other channels and is able to complete 87 percent of the FOIA requests within the 

statutory period. This component will allow the IRS to migrate to a web platform to 

timely manage information requests through the FOIA and other channels. It will 

provide increased security of this information as well as increased responsiveness and 

IRS oversight. Additionally, the web platform will establish the foundation for 

taxpayers to submit, monitor, and track their requests for information online using an 

application similar to the current Where’s My Refund? web application. 

 Eliminate Social Security Number (SSN) from Taxpayer Mailings 

As part of an effort to eliminate and reduce the display of taxpayer SSNs on IRS 

notices, the IRS will continue to replace the printed SSN on notices with a 

2-dimensional barcode. 

These funds will provide resources for software, infrastructure, and related support to 

further implmement the Social Security Number (SSN) Elimination and Reduction 

2-Dimensional (2D) Barcoding project. This 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 create a system that reads 2D barcodes in the 

payment processing systems. This phase will reduce the use of SSNs on 85 notice 

types, eliminating the use of SSNs on notices to 74.1 million taxpayers. Overall, this 

project will reduce the use of SSNs on 155 notice types, eliminating the use of SSNs 

on notices mailed to 106.6 million taxpayers. 

The IRS is required to eliminate unnecessary collection, use, and display of SSNs 

within systems, programs, notices, letters, and forms to comply with the Office of 

Management and Budget (OMB) mandate as described in OMB M-07-16, 

Safeguarding Against and Responding to the Breach of Personally Identifiable 

Information. Safeguarding Personally Identifiable Information (PII) in the possession 

of the Government is essential to ensure that the Government retains the trust and 

confidence of the American public. 
IRS-36 

Other Direct Costs (+$1.8 million / +11 FTE) 

IRS Activity Cost FTE Positions Explanation

Chief Counsel $1.8 11.00 15

Provide legal guidance throughout the course of the 

investigations, evaluate the successful prosecution potential of 

cases, and work with the Department of Justice during the 

criminal trials. Also, work with CI and other Federal and State 

agencies on developing Memorandums of Understanding. 

Total $1.8 11.00 15

Dollars in Millions
IRS-37 

 Address Impact of Affordable Care Act (ACA) Statutory Requirements 

+$56,099,000 / +399 FTE

As tax laws change, the IRS must 

implement programs to ensure that 

taxpayers understand the new laws 

and that the IRS can address 

noncompliance. Funding for this 

initiative will promote compliance 

activities related to new ACA tax 

provisions and will: 

 Administer new fees on drug 

manufacturers and health 

insurers; 

 Strengthen oversight of 

tax-exempt hospital 

organizations including 

refining the community benefit 

reviews and leveraging this 

data to conduct examinations; 

 Expand coverage of new 

provisions related to the 

premium tax credit, individual 

responsibility requirement, and 

large employer insurance; and 

 Address new audit requirements related to the shared employer responsibility 

payment. 

This initiative will annually produce additional enforcement revenue of $129.2 million, once 

the new hires reach full potential in FY 2017, an ROI of $2.3 to $1, and protect revenue of 

$71.5 million, a protected ROI of $14 to $1. 

 

Position Type/Other Costs FTE Positions $000

Address Impact of ACA Legislative Requirements 283.00 339 $31,446

Administer New Fees on Drug Manufacturers 

and Health Insurers 9.00 9 $1,308

Revenue Agent 7.00 7 1,127

Support Staff 2.00 2 181

Strengthen Oversight of Exempt Hospitals 55.50 65 $7,188

Revenue Agent 30.75 36 4,461

Tax Law Specialist 5.00 6 852

Tax Technician 12.50 14 1,138

Support Staff 7.25 9 737

Promote Compliance with Other ACA 

Provisions 218.50 265 $22,950

Revenue Agent 70.25 88 9,408

Tax Examiner 98.00 113 8,182

Manager 15.00 20 1,677

Analyst 2.75 3 349

Communication Specialist 3.50 4 525

Support Staff 29.00 37 2,809

Program Management Office (PMO) 34.00 34 $10,229

Program Analyst 34.00 34 5,858

Contractual Services 4,371

Implement Statutorily Mandated Data Protection 12.25 13 $3,236

Program Analyst 12.25 13 1,947

Contractual Services 1,289

Other ACA Direct Costs 69.75 82 $11,188

Appeals Officer 15.75 20 2,484

Attorney 46.00 52 7,901

Support Staff 5.75 7 522

HR Specialist 2.25 3 281

Total 399.00 468 $56,099
IRS-38 

Administer New Fees on Drug Manufacturers and Health Insurers (+$1.3 million / +9 FTE) 

The IRS must continue to administer a new aggregate annual fee on businesses engaged in 

manufacturing and importing branded prescription drugs sold to specified Government 

programs. The fee, set at $3 billion for 2015, represents a significant new source of revenue. 

The IRS will receive and process information from manufacturers/importers and specific 

Government programs (Veterans Affairs, Medicare Parts D and B, Medicaid, Department of 

Defense, and TriCare) to determine each manufacturer’s fee assessment. Continuing 

administration includes IRS collection of data, computation of each entity’s fee amount, and 

notification of payment due. In addition, the IRS must administer a new annual fee on health 

insurance policies and self-insured health plans based on the average number of covered lives, 

which is effective for policy years ending after September 30, 2012. That fee is expected to 

raise more than $2.6 billion in the years 2013 to 2019 to fund the new Patient Centered 

Outcomes Research Institute. Further, the IRS must also continue to administer a new 

aggregate annual fee based on net premiums written by health insurance providers, set at 

$11.3 billion for 2015. 

Strengthen Oversight of Exempt Hospitals (+$7.2 million / + 55.5 FTE) 

The ACA establishes new requirements for tax-exempt hospitals, which comprise a majority 

of the hospitals in the United States. The IRS submission processing operations will need 

additional staff to process the newly required reports. In addition, the IRS is required to 

review at least once every three years the community benefit activities of tax-exempt hospital 

organizations to which new Section 501(r) applies (estimated at more than 3,300 hospital 

organizations, many with multiple facilities). The first cycle of community benefits activities 

reviews was completed in 2013. Additionally, the IRS (in consultation with the HHS) must 

develop and deliver a new annual report to the Congress on levels of charity care in the 

hospital sector. 

Promote Compliance with Other ACA Provisions (+$23 million / +218.5 FTE) 

This initiative requests resources to promote compliance with previously implemented 

provisions of the ACA, including modifying processes in response to filing and compliance 

trends in the initial processing years. Existing individual and employer compliance processes 

have been modified to support implementation. This initiative provides resources for 

additional revenue agents and tax examiners to detect fraud and identify, and examine returns 

with the highest compliance risk. This includes: 

 New Tax on Net Investment Income and Additional Medicare Tax. Filing Season 2014 

marks the first processing year for a new tax on net investment income for taxpayers 

with an adjusted gross income over certain thresholds ($200,000 for individual 

Major Activities

Projected

Revenue

$M

Protected 

Revenue

 $M

PreRefund 

Closures Closures

Community 

Benefit 

Reviews

Additional 

Entity 

Closures

Administer New Fees on Drug Manufacturers and 

Health Insurers 1,750

Strengthen Oversight of Exempt Hospitals 1,040 5 

Promoting Compliance with Other ACA Provisions

Field Exam 32.5 1,425

Correspondence Exam 75.3 71.5 23,000 13,176

Specialty Programs 21.4 2,451

Total $129.2 $71.5 23,000 19,842 5 
IRS-39 

taxpayers, $250,000 for married taxpayers filing jointly) and an additional Medicare 

Tax on wages above the same thresholds was established, for which employers 

implemented new withholding. 

 Small Business Health Tax Credit (SBHTC) and the Indoor Tanning Excise Tax. 

These resources will allow the IRS to increase audit coverage on taxpayer returns 

claiming the SBHTC and taxpayers who may be subject to the excise tax on indoor 

tanning services. 

 Premium Tax Credit and Individual Shared Responsibility Payments. These resources 

will provide correspondence examination staff to increase examination coverage and 

decrease the underreporting tax gap. The additional staff will process new notices and 

respond to taxpayer telephone and correspondence inquiries related to provisions in 

the ACA, which added the new premium tax credit (PTC) in Internal Revenue Code 

(IRC) §36B, individual responsibility payments in IRC §5000A, and related 

information returns required under IRC §36B and §6055. The PTC is a potentially 

large refundable credit and brings increased compliance risk. The IRS requests 

additional resources to address erroneous claims for the credit before refunds are 

issued. 

 Employer Shared Responsibility Payment. Specialty Programs will administer the 

employer shared responsibility payment provision added by the ACA as IRC §4980H. 

These provisions apply for months after December 31, 2014, and are expected to be a 

high compliance risk. 

Program Management Office (+$10.2 million / +34 FTE) 

With these resources, the ACA Program Management Office (PMO) will continue to prepare 

the IRS to process Form 1040, U.S. Individual Income Tax Return, modify existing business 

processes to address pre-refund and post filing compliance activities, and ensure business 

requirements are built in to regulations, forms, and IT systems. 

Implement Statutorily-Mandated Data Protection (+$3.2 million / +12.25 FTE) 

Disclosure of certain tax return information is necessary as part of the eligibility 

determination process for enrollment in a Qualified Health Plan (QHP) through an exchange 

(either a State-based or Federally-facilitated exchange). These resources will allow the IRS to 

continue to administer IRC §6103, Safeguarding Federal Tax Information, for the new sharing 

of data with non-IRS recipients under the ACA, which will require advance inspections, data 

sharing agreements, and monitoring by the IRS. 

This funding also will allow the IRS to provide oversight and outreach to State-based 

Marketplaces certified by the Department of Health and Human Services (HHS), the Federal 

Marketplace administered by HHS/Centers for Medicare & Medicaid Services (CMS), and 

State agencies who administer Medicaid programs. It will ensure that these new State and 

Federal agencies receiving Federal tax information are appropriately protecting Federal tax 

information within their control, as required. 

Other Direct Costs (+$11.2 million / +69.75 FTE) 
IRS-40 

IRS Activity Cost FTE Positions Explanation

Appeals $2.5 15.75 20

Appeals case receipts will increase by new examination 

closures completed by initiative hires that will require 

adjudication in the appeals process.

Chief Counsel $8.4 51.75 59 Counsel will provide legal advice to identify pockets of 

noncompliance and equitable resolutions. 

Human Capital Office $0.3 2.25 3 Handle increased workload to hire and support staff. 

Total $11.2 69.75 82

Dollars in Millions
IRS-41 

Expand Audit Coverage 

+$97,779,000 / +586 FTE 

This initiative will allow the IRS to improve 

individual examination coverage and 

effectively address critical noncompliance 

issues over a broad range of compliance 

priorities. Apart from detecting 

noncompliance directly, examination 

coverage promotes voluntary compliance 

both by increasing the likelihood that 

intentional noncompliance will be detected 

and reassuring compliant taxpayers of the 

fairness of the tax administration system. 

This initiative will: 

 Provide additional field employees to 

improve the individual examination 

audit coverage rate; 

 Expand correspondence examinations of 

individual taxpayers including 

increasing audits in the Individual Tax 

Identification Number (ITIN) program, 

tax return preparers, and the Individual Retirement Arrangement (IRA) pilot; 

 Increase the coverage of the document matching program to reduce the number of 

taxpayers who misreport their income; 

 Address increasing Appeals workload; and 

 Provide investments in technology to increase data capture and improve examination 

efficiency. 

This initiative will annually produce additional enforcement revenue of $674.3 million, once 

the new hires reach full potential in FY 2017, an ROI of $7.1 to $1, and protect revenue of 

$106.6 million, a protected ROI of nearly $21 to $1. 

Position Type/Other Costs FTE Positions $000

Field Examination 235.75 315 $29,924

Revenue Agent 151.00 202 20,322

Tax Technician 84.75 113 9,602

Correspondence Examination 187.50 250 $17,836

Tax Examiner 153.75 205 14,131

Manager 9.75 13 1,017

Support Staff 10.50 14 955

Tax Technician 12.00 16 1,512

Revenue Agent 1.50 2 221

Automated Underreporter (AUR) 60.00 80 $5,486

Tax Examiner 60.00 80 5,486

Address Appeals Workload 22.50 30 $3,093

Revenue Officer 15.00 20 2,006

Appeals Officer 7.50 10 1,087

IT Projects 45.00 60 $36,357

Quickbooks 2.25 3 6,259

Document Imaging 38.25 51 21,668

2-Dimensional (2D) Barcoding 4.50 6 8,430

Other Direct Costs 35.25 47 $5,083

Appeals Officer 12.75 17 1,858

Attorney 12.00 16 2,114

Paralegal 3.75 5 391

Revenue Agent 3.00 4 377

Tax Examiners 1.50 2 140

Support Staff 2.25 3 203

Total 586.00 782 $97,779
IRS-42 

Field Examination (+$29.9 million / +235.75 FTE) 

This initiative will increase field examinations to reduce the individual taxpayer portion of the 

underreporting compliance tax gap. Additional field examination resources (192 revenue 

agents and 113 tax technicians) will allow the IRS to improve examination coverage while 

achieving balance across taxpayer segments. These resources will ensure that the IRS can 

maintain broad-based coverage of the individual filing population. 

In addition to providing resources for field examination, this initiative requests 10 revenue 

agents for the IRS Office of Penalties and Interest. This additional staff will provide subject 

matter expertise to the CADE 2 modernization project to strengthen the development, 

implementation, and maintenance of a common module to improve the accuracy of penalty 

and interest calculations across the IR addressing a long-standing material weakness in IRS 

financial reporting. This project will ensure the fair, equitable, and accurate administration of 

more than 170 civil penalties, with assessments exceeding $30 billion annually. In addition, 

this project will provide enhanced data analysis to conduct both strategic and in-depth 

analysis that will help the IRS understand the effect civil penalties have on voluntary 

compliance and taxpayer behavior. The analysis and findings will drive improvements in 

penalty policy and frontline business operations.

Correspondence Examination (+$17.8 million / +187.50 FTE) 

This initiative will provide campus correspondence examination staff to increase examination 

coverage, decrease the underreporting tax gap, and expand the following programs: 

 Expand Campus Examination Program 

The Campus Examination program addresses the tax gap through increased enforcement 

presence in priority segments of individual reporting compliance, including itemized 

deductions and education credits. These resources will deter more taxpayers from evading 

their tax obligations, and thereby support the IRS goal of increased voluntary compliance 

and maintaining examination coverage of individuals. 

The additional staffing will allow the IRS to maintain broad exam coverage by meeting 

the challenges of administering new credits without reducing coverage of existing issues. 

 Address Individual Taxpayer Identification Number (ITIN) Compliance 

An ITIN is a tax processing number issued by the IRS to foreign nationals and others who 

have Federal tax reporting or filing requirements, but do not qualify for social security 

numbers. Additional resources in this area will allow the IRS to: 

Major Activities

Projected

Revenue

$M

Protected 

Revenue

 $M

Pre-Refund 

Closures Closures

Field Examination 239.4 16,587 

Correspondence Examination 284.0 106.6 25,683 47,650 

Automated Underreporter (AUR) 150.9 149,260 

Address Appeals Workload 4,025 

Total $674.3 $106.6 25,683 217,522 
IRS-43 

o Expand audit coverage on ITIN filers claiming the Advanced Child Tax Credit 

(ACTC) and American Opportunity Tax Credit (AOTC) which are not 

available for ITIN dependents residing outside the US; 

o Test filters in a pre-refund environment to identify ITIN noncompliance 

claiming these credits; 

o Address returns with new ITIN applications; and 

o Identify and address egregious ITIN return preparers. 

 Real Time Preparer Expansion – Return preparers are a critical component of tax 

administration and provide a unique opportunity to improve taxpayer behavior and 

compliance with tax laws. The Real Time Preparer program seeks to improve compliance 

among return preparers by completing pre-refund and post-refund audits, conducting 

on-site visits, and preparing warning letters to preparers. 

 Individual Retirement Account (IRA) Soft Notices – In response to Treasury Inspector 

General for Tax Administration (TIGTA) audit 2010-40-043, A Service-wide Strategy is 

Needed to Address Growing Noncompliance with Individual Retirement Account 

Contribution and Distribution Requirements, the IRS is enhancing IRA compliance 

efforts. The IRS initiated a soft notice pilot in December 2013 to encourage taxpayers to 

voluntarily correct discrepancies and increase voluntary compliance among an estimated 

15 million potential cases of underreporting related to IRAs that contribute to the tax gap 

each year. The IRA soft notice will remind taxpayers who are over 70 and a half years of 

age that they must take required distributions from their IRAs or be subject to penalties. 

The IRS also plans to initiate another pilot to conduct audits on individuals who have not 

taken the required distributions or individuals who have made excess contributions. In 

FY 2015, when both of these pilots are expanded and become part of standard operations, 

additional staffing will be needed to handle the incoming mail and phone calls associated 

with the follow-up audits for individuals who have not complied with IRA distributions or 

contributions tax laws. 

Automated Underreporter (AUR) (+$5.5 million / +60 FTE) 

The AUR program is highly successful in minimizing revenue loss through document 

matching of taxpayer account information. About 12 million taxpayers may currently 

misreport their income based on third-party information returns. The AUR program processes 

approximately 5 million taxpayer cases, leaving unaddressed 7 million taxpayers whose 

returns may have misreported income. The expansion of program coverage will increase 

voluntary compliance and reduce the number of taxpayers who underreport income in future 

tax years. 

Address Appeals Workload (+$3.1 million / +22.50 FTE) 

The Appeals function at the IRS is a critical outlet for taxpayers to get an independent, second 

review of examination decisions without burdening the court system. Appeals’ workload has 

grown significantly over the last five years, up 32 percent from FY 2007 to FY 2012. 
IRS-44 

IT Projects (+$36.4 million / +45 FTE) 

This initiative requests resources for the following IT projects: 

 QuickBooks 

This initiative requests resources to provide all revenue agents access to QuickBooks 

software. QuickBooks accounting software holds approximately 94 percent of the 

small business accounting software retail market and is frequently encountered in the 

examination of taxpayer returns. The purchase of this software will improve the 

efficiency of examinations by allowing revenue agents to accept electronic accounting 

records. 

 Implement Document Imaging 

Document Imaging (DI) will allow all of the IRS business units to share a common, 

modernized infrastructure for scanning, imaging, and managing documents. DI also 

will allow IRS employees to collaborate and resolve compliance cases more 

efficiently. It will establish a common document and imaging infrastructure that can 

support many projects simultaneously and improve customer support. Projects that 

will benefit from the common document imaging infrastructure include: 

o Content Management & Collaboration (CMC) – A web-based tool used by audit 

teams to facilitate collaboration by integrating document management, forums, 

calendars, and other interpersonal communication and productivity tools; 

o Taxpayer Advocate Service Integrated Systems (TASIS) – A Taxpayer Advocate 

Service case management system that uses document imaging to facilitate 

collaboration within the IRS so that cases can be resolved faster for taxpayers 

experiencing financial hardship or burden; and 

o Correspondence Imaging for Compliance (CIC) – An imaging solution that 

provides a central repository for imaged correspondence and stored images used 

by legacy compliance systems. 

Further, this resource will improve the efficacy of search queries across applications, 

indices, and database servers by sharing server content. DI significantly reduces the 

time, complexity, and costs of current document management and imaging processes, 

and contributes to improved customer service. 

 Two Dimensional (2D) Barcode Project 

The 2D Barcode project will allow the IRS to: 

o Convert data from paper tax returns into electronic formats more efficiently and 

accurately by adding coded information to computer-generated paper returns; 

o Process paper payments electronically; and 

o Allow the IRS to accept and store individual amended returns electronically. 

Increased data capture and faster, more accurate processing will improve audit 

effectiveness by ensuring examination programs have the most recent and most 

complete return data available. This additional data will support improved case 
IRS-45 

selection approaches, improve the quality of data available to tax examiners and 

revenue agents, and expedite the examination process by reducing reliance on paper 

files. 

Other Direct Costs (+$5.1 million / +35.25 FTE) 

 

IRS Activity Cost FTE Positions Explanation

Appeals 2.4 17.25 23 Support examination and collection efforts on key compliance 

areas focused on improving voluntary compliance. 

Chief Counsel 2.7 18.00 24

Provide support for increases in requests for legal advice, 

litigation assistance, and published guidance on issues raised in 

audits such as those related to the Child Tax Credit and 

American Opportunity Tax Credit.

Total $5.1 35.25 47

Dollars in Millions
IRS-46 

ROI 

$174.6

$489.0

$616.8

$66.8 $73.4 $72.6

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

$700.0

FY 2015 FY 2016 FY 2017

in millions

Cost Enforcement Revenue

$2.6 to $1

$8.5 to $1

$6.7 to $1

Enhance Collection Coverage 

+$66,762,000 / +577 FTE 

Funding to Enhance Collection 

Coverage will ensure that the IRS 

has sufficient resources to work 

the collection inventory to bring 

taxpayers who fail to pay their tax 

debt into compliance. This 

initiative provides resources for 

Campus Collection to take a more 

proactive role in reaching out to 

taxpayers earlier in the collection 

process and includes staffing to 

address: 

 Increased number and 

value of employment tax 

cases in Field Collection; 

 Growing collection case 

inventories and incoming 

call volumes in the 

Automated Collection 

Systems (ACS);

 Balance due correspondence and phone work, and installment agreement calls in the 

Compliance Services Collection Operation 

(CSCO) Program; and

 Increased workload in the Offers in 

Compromise (OIC) Program, which 

helps taxpayers experiencing economic 

hardship resolve their tax liabilities. 

This initiative will produce additional annual 

enforcement revenue of $616.8 million with an ROI of 

$8.5 to $1, once the new hires reach full potential in 

FY 2017. 

Major Activities

Projected

Revenue

$M Closures

Calls 

Answered

Refund 

Hold 

Cases

Field Collection 148.3 44,863

Automated Collection Systems 376.1 205,189

Compliance Service Collection Operation 28.0 8,232 160,550

Centralized Offers in Compromise 33.6 8,188

Expansion of Current Campus Collection 30.8 22,000 24,231

 Total $616.8 288,472 160,550 24,231 

Position Type/Other Costs FTE Positions $000

Filing and Payment Compliance 486.75 649 $48,111

Field Collection 192.00 256 $23,485

Revenue Officer 171.00 228 21,589

Tax Examiner 6.00 8 486

Support Staff 15.00 20 1,410

Automated Collection Systems Operations (ACS) 

and Support 192.75 257 15,364

Tax Examiner 21.75 29 1,770

Customer Service Representative 168.75 225 13,328

Support Staff 2.25 3 266

Compliance Service Collection Operations 

(CSCO) 42.75 57 $4,231

Tax Examiner 37.50 50 3,665

Support Staff 5.25 7 566

Centralized Offers-in-Compromise (OIC) 59.25 79 5,031

Tax Examiner 45.00 60 3,647

Support Staff 13.50 18 1,266

Program Analyst 0.75 1 118

Expansion of Current Campus Collection 52.50 70 $6,064

Program Analyst 1.50 2 222

Tax Examiner 47.25 63 4,248

Manager 3.00 4 328

Support Staff 0.75 1 66

Contractual Services 1,200

IT Projects 37.75 50 $12,587

Predictive Analytics for the Collection Enterprise 

(PACE) 37.75 50 9,502

Compliance Data Warehouse (CDW) 3,085

Total 577.00 769 $66,762
IRS-47 

Filing and Payment Compliance (+$48.1 million / +486.75 FTE) 

This initiative provides resources for the Field Collection program, Automated Collection 

Systems (ACS) operation, and Compliance Services Collection Operation (CSCO) to reduce 

the nonfiling and underpayment tax gap. 

 Field Collection 

These resources will allow the IRS to hire additional Field Collection staff to address 

the increase in the number and value of employment tax cases. These cases have 

become an increasingly significant issue. Individual taxpayers receive credit for the 

taxes withheld from their paychecks, and may receive tax refunds based on those 

credits, when their employer may not have turned over that withheld tax to the 

Government. In 2013, the number of employment tax cases has increased 5.5 percent 

over the prior year to more than 928,000, representing a tax obligation exceeding 

$7.4 billion. 

 Automated Collection System (ACS) 

The ACS call site operation is the most productive IRS program for revenue 

collection. The ACS program addresses incoming calls generated by the issuance of 

levies and the Predictive Dialer (PD) program, an automated system that places calls 

to taxpayers with delinquent returns and/or unpaid tax liabilities. 

As of November 2013, there were 3.3 million cases in ACS, with approximately 

1.8 million needing a levy or predictive dialer action. These additional resources will 

allow the IRS to increase dollars collected, close balance due cases, and resolve 

protected inventory cases (i.e., cases that are protected from enforcement action 

pending research or taxpayer requests for account and adjustment actions or 

explanation of complex account issues to determine correct balance due). 

 Compliance Services Collection Operations (CSCO) 

These funds will allow the IRS to expand CSCO to address nonfiling and 

underpayment of taxes in the notice process. New resources will address the increased 

balance due work and expand the following programs: 

 Withholding Compliance Program (WHC) – This automated program brings 

taxpayers with serious under-withholding problems into compliance by 

correcting their Federal income tax withholding and preventing them from 

becoming delinquent on the payment of future taxes by issuing a letter 

requiring the employer to withhold a specific, appropriate amount from the 

taxpayer’s pay. From Tax Year 2006 to 2010, the number of balance due 

returns from taxpayers in the current WHC program decreased 64 percent and 

returns with a zero balance or refund increased 246 percent. These resources 

will allow the IRS to add an additional 90,000 taxpayers to the WHC program. 
IRS-48 

 Non-Streamlined Installment Agreement (NSIA) Phones –The NSIA phone 

line, worked by CSCO employees, replaces a paperwork handoff from 

Accounts Management to CSCO with a more efficient telephone process that 

evaluates Currently Not Collectible (CNC) and NSIA requests sooner. By 

eliminating the handoff and processing delays, time-sensitive collections can 

begin sooner. 

 Centralized Offers in Compromise (COIC) 

The Offers in Compromise (OIC) program processes taxpayer requests to reduce or 

eliminate their tax liabilities because of extreme circumstances or hardship. COIC 

receipts have increased 64 percent since FY 2008 while staffing has declined 

slightly. As a result, the percentage of cases closed within six months has decreased 

from 92 percent in December 2008 to 75 percent in October 2013. Further 

enhancements to the OIC program will encourage more unemployed taxpayers to file 

an OIC request in an effort to settle their tax debts. These resources will allow the IRS 

to help taxpayers experiencing hardship resolve their tax liabilities. 

Expansion of Current Campus Collection (+$6.1 million / +52.50 FTE) 

Campus Collection is a correspondence and phone operation that addresses nonfiling and 

underpayment of taxes in the collection process. This includes: 

 Campus Notice Program 

By reaching out earlier in the collection process, Campus Collection more efficiently 

handles taxpayers who have received or are scheduled to receive a notice. Additional 

resources will allow the IRS to handle more balance due work, expand the Refund 

Hold program to secure delinquent returns by delaying issuance of a taxpayer income 

tax refund, and make more outbound calls prior to preparing an Automated Substitute 

For Return (ASFR) or to prevent installment agreement default. 

 Campus State Payment Levy Program 

The IRS requests additional staffing to explore ways to use the Bureau of the Fiscal 

Service (BFS) State Reciprocal Program (SRP) to collect State government vendor 

and Medicaid payments in order to pay delinquent Federal tax debt through its 

automated Treasury Offset Program and the Federal Payment Levy Program. 

Under current tax law, the IRS can levy Federally funded state vendor and Medicaid 

payments but limitations in the law make it inefficient. 

BFS and IRS Government Liaison and Disclosure offices are working together to 

assess the impact on state legislatures and the administrative process of centralizing 

the collection of State government payments to pay Federal tax debts. This proposed 

effort would support the recent recommendation from the GAO audit, GAO-12-857, 

Medicaid: Providers in Three States with Unpaid Federal Taxes Received Over 

$6 Billion in Medicaid Reimbursements, dated July 2012. 
IRS-49 

 Campus Decedent Taxpayer Unit

The IRS requests additional staffing to establish the Campus Decedent Taxpayer Unit. 

Data from the prior six years indicates there were approximately 464,000 decedent 

accounts with total outstanding balances due at time of death of more than $11 billion. 

Additionally, approximately 477,000 new cases accrued after death totaling another 

$4.4 billion in unpaid taxes. The lack of timely action on decedent accounts has 

resulted in significant loss of revenue. 

In order to protect the Government’s interest and increase recovery of taxes owed by 

deceased taxpayers, the IRS needs notification of probate proceedings before estate 

assets are distributed to pay other creditors. The Campus Decedent Taxpayer Unit 

would establish a centralized location to notify the IRS to file probate claims. This 

unit would be able to quickly hand off cases needing a proof of claim to the 

appropriate office. 

 Manually Monitored Installment Agreements (MMIA) and Federal Tax Deposit (FTD) 

The IRS requests additional staffing to improve the MMIA and FTD Alerts programs. 

MMIAs are installment agreements that cannot be established and monitored 

systemically with automatic reminder notices. For MMIAs, extra steps and resources 

are required to mail reminder notice letters. The Predictive Dialer could be used for a 

“just in time” reminder and potentially reduce MMIA defaults while saving printing 

and mailing costs. 

FTD Alert soft notices are issued to business taxpayers who have been identified as 

not having fulfilled a requirement to make Federal Tax Deposits. The additional staff 

will allow the IRS to utilize the Predictive Dialer system to contact taxpayers who 

have not responded to the notice. In addition, revenue from taxpayer payments will be 

received earlier in the collection process and reduce the impact of delayed action on 

enforcement resources. 

 Civil Tax Assessment Cases Resulting from Criminal Restitution 

The IRS requests additional staffing to coordinate the civil tax assessment cases 

resulting from criminal restitutions. Multiple individuals can be assessed a single 

liability requiring them to make payments, but the total liability can only be collected 

once. This work requires closely monitoring and applying court-generated payments 

of all parties, and cross-referencing them to reach a zero balance over the 10-year 

collection statute. 
IRS-50 

IT Projects (+$12.6 million / +37.75 FTE) 

These initiative resources will support the following IT projects: 

 Predictive Analytics for the Collection Enterprise (PACE) 

PACE will increase the effectiveness and efficiency of Collection through the design, 

development, and testing of models, communication, case routing, and case resolution 

tools and techniques. The system will provide decision support earlier in the 

collection process, build and incorporate new analytic models, and route cases to 

optimal treatment streams at an earlier stage. Through the results of continuous testing 

and evaluation, the IRS will be better able to define, measure, and work the most 

productive cases. Most productive case factors include long-term compliance, 

voluntary compliance impact, and revenue collected. 

 Compliance Data Warehouse (CDW) 

These funds will allow the IRS to purchase hardware and storage capacity to expand 

the data available from the CDW. The purpose of the CDW is to provide high-quality 

data and information services to the IRS Research community in support of projects, 

analyses, and studies related to tax administration, enforcement, and customer service; 

including analysis of the collection stream to improve effectiveness, treatment 

selection, and segmentation of the delinquent taxpayer population. This additional 

data will facilitate new studies to improve the effectiveness and productivity of IRS 

service and enforcement programs. 

Other Direct Costs 

 There are no other direct costs associated with this initiative. 
IRS-51 

Improve Coverage of Partnerships and Flow-Through Entities

+$36,539,000 / +244 FTE

Partnership businesses continue to be the 

fastest growing segment of all tax returns 

filed. Funding to Improve Coverage of 

Partnerships and Flow-Through Entities will: 

 Increase the number of auditors with 

specialized knowledge in partnership 

law; 

 Strengthen enforcement activities 

relating to flow-through entities and 

improve compliance by enhancing 

Tax Equity and Fiscal Responsibility 

Act of 1982 (TEFRA) procedures; 

and 

 Provide investment to replace the 

Partnership Control System (PCS) 

with enhanced technology that will 

increase productivity through the support of electronic processing. 

This initiative will produce additional annual enforcement revenue of $267.8 million, once the 

new hires reach full potential in FY 2017, an ROI of $6.8 to $1. 

 ROI 

$84.4

$174.8

$267.8

$36.5 $41.3 $39.6

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

FY 2015 FY 2016 FY 2017

in millions

Cost Enforcement Revenue

$2.3 to $1

$6.8 to $1

$4.2 to $1

P o sitio n T ype/ Other C o sts F T E P o sitio ns $ 000

Imp ro ve Id ent if icat io n and C o verag e 

of Tiered Part nerships # # # # 16 1 $2 1,4 53

Revenue Agent 104.25 139 19,536

Tax Examiner 3.00 4 245

Support Staff 9.75 13 905

M anager 3.75 5 767

St reng t hen Enf o rcement A ct ivit ies 

Related to TEFRA Workload 8 0 .2 5 10 7 $7,115

Revenue Agent 6.00 8 883

Tax Examiner 53.25 71 4,367

Tax Technician, Tax Compliance Officer 0.75 1 94

Support Staff 20.25 27 1,771

IT Projects 4.00 5 $2,327

IT Specialist 4.00 5 615

Contractual Services 1,120

Hardware and Software 592

Ot her D irect Cost s # # # # 52 $5,6 4 4

Appeals Officer 15.75 21 2,283

Revenue Agent- Appeals 6.00 8 754

Tax Examiner- Appeals 3.75 5 349

Attorney 9.75 13 1,886

Paralegal 1.50 2 169

Support Staff- Counsel 2.25 3 203

Total # # # # 325 $36,539

Major Activities

Projected

Revenue

$M Closures

Improve Identification and Coverage of 

Tiered Partnerships 267.8 2,793 

 Total $267.8 2,793 
IRS-52 

There is a wide variety of business organizations operating in the United States and abroad 

with different filing requirements. These organizations include businesses, such as sole 

proprietors, corporations, partnerships, and S-corporations, as well as trusts and non-profits. 

Partnership businesses continue to be the fastest growing segment of all tax returns filed. 

In calendar year (CY) 2013, approximately 3.7 million partnership returns were filed, an 

increase of 2.5 percent from CY 2010. This growth is projected to continue at an average rate 

of 2.4 percent per year, reaching 4.1 million returns filed by CY 2017. 

The most significant factor affecting the growth in partnerships is the rise of limited liability 

companies (LLCs) filing as partnerships. Over the last 25 years, the number of pass-through 

LLCs rose from virtually zero to more than 600,000 in 2000, to more than 2.1 million by 

2011. Total assets reported by these LLCs have grown from zero to $7.8 trillion and their 

total income has grown from zero to $2.7 trillion over the same period. This increase 

corresponds to an ongoing decline in the business activity of corporations, some of which has 

shifted to partnerships they control. 

While the number and complexity of partnership filings have increased significantly since 

2000, audit coverage for this segment has remained flat. The IRS has examined an average of 

0.34 percent of all partnership returns annually since 2000. With few exceptions, the 

percentage of partnership returns examined each year has been lower than other types of tax 

returns. This initiative provides resources to increase audit coverage of partnership returns. 

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2,200,000

2,400,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Number of Partnerships

Tax Year

Number of Domestic Partnerships by Partnership Type 

Tax Years 2002 through 2011

General Partnerships Limited Liability Companies Other [1]

Limited Partnerships Limited Liability Partnerships

[1] Data for "Other" partnerships include foreign partnerships, as well as partnerships which 

checked the "Other" box, Form 1065, Schedule B, line 1, Type of Entity, or did not check a box.
IRS-53 

Improve Identification and Coverage of Tiered Partnerships 

(+$21.5 million / +120.75 FTE) 

This initiative funds additional revenue agents to be devoted to working partnership cases 

and, other flow-through returns that are part of this network of returns. This will allow the 

IRS to increase the number of revenue agents with specialized knowledge in partnerships, and 

to address the inherent complexity associated with partnership tax law and administrative 

procedures. 

Multiple layers of partnerships have increased the complexity of flow-through examinations. 

Subchapter K of the Internal Revenue Code provides specific rules applicable to the tax 

treatment of partnerships and partners. Because of the tiered networks of partnership 

enterprises, it creates a significant challenge for the IRS to understand, recognize and address 

risk, and treat noncompliance. 

The increased complexity associated with flow-through examinations requires a 

disproportionate amount of time and effort for a revenue agent to handle, even one who is 

sophisticated in tax matters. Complexity also provides an opportunity for taxpayers to pursue 

tax-sheltering activities and has inspired many of the most abusive transactions in recent 

history. In addition to the complexities associated with Subchapter K, revenue agents also 

must deal with procedural complexity and difficulties associated with complex networks of 

related partnerships. This IRS-wide effort to address noncompliance by tiered partnerships 

will allow the IRS to:

 Enhance IRS-wide collaboration leading to efficiency and effectiveness in addressing 

compliance by tiered partnerships and related persons and entities; 

 Identify high-risk workload for examination by developing processes that allow the 

scoring and risk assessment of partnerships controlled by corporations and related 

individuals; and 

 Improve taxpayer compliance in high-risk related return structures comprised of tiered 

partnerships through issue-focused examinations by expert partnership examiners. 

Strengthen Enforcement Activities Related to TEFRA Workload 

(+$7.1 million / +80.25 FTE) 

TEFRA established unified audit rules applicable to all but certain small partnerships that 

meet the Small Partnership Exception. The TEFRA audit rules add an entire subchapter to the 

Internal Revenue Code and consist of thirteen intertwined sections and extensive 

accompanying Treasury regulations. 

Revenue agents handling partnership cases must understand both the TEFRA partnership 

audit rules and the normal audit rules that apply outside the partnership context. It is not 

always clear when TEFRA rules apply and when they do not. Tax shelter promoters have 

been known to take advantage of the complex TEFRA rules through the use of a combination 

of trusts, S corporations, limited liability companies, partnerships, and other entities, often 

arranged in complex networks, for the tax benefit of a single investor or a small group of 

investors. This deliberate addition of complexity can hamper IRS efforts to pursue investors 
IRS-54 

in abusive transactions. While the IRS has made progress in training examiners in the 

TEFRA rules, maintaining TEFRA proficiency among non-specialist revenue agents is an 

ongoing challenge. 

This initiative strengthens enforcement activities pertaining to flow-through entities by 

providing administrative assistance to the field examiners to identify the interrelated and 

tiered entities and provide notice requirements to investors within established timeframes. 

IT Project (+$2.3 million / +4 FTE) 

 Examination Technology Enhancements 

These resources will be dedicated to the replacement of the Partnership Control 

System (PCS), which will increase productivity by supporting electronic processing, 

and the processing of larger Global High Wealth and High Income High Wealth cases 

by providing enhanced functionality to a wider range of users. Electronic processing 

has many advantages including: 

o Improving staff efficiency by not having to physically transfer work between sites; 

o Providing the capability to create and generate ad hoc reports allowing 

management to monitor inventory; 

o Reducing the cost to maintain the new system; and 

o Reducing printing costs by adding the capability of storing electronic copies of 

correspondence instead of generating paper copies. 

Other Direct Costs (+$5.6 million / +39 FTE) 

IRS Activity Cost FTE Positions Explanation

Appeals $3.4 25.50 34 Support examination efforts on key compliance areas 

focused on improving voluntary compliance. 

Chief Counsel $2.2 13.50 18

Provide advice to revenue agents, revenue officers and 

the Department of Justice for District Court cases, review 

Notices of Deficiencies, and litigate cases in the Tax 

Court.

Total $5.6 39.00 52

Dollars in Millions
IRS-55 

Expand Compliance Coverage in the Tax-Exempt Sector 

+$16,095,000 / +119 FTE 

Funding to Enhance Compliance 

Coverage in the Tax-Exempt Sector 

will help the IRS to continue focused 

oversight of the tax-exempt sector and 

improve service to make voluntary 

compliance easier. This initiative will: 

 Enhance enforcement coverage 

of employee retirement plans, 

specifically those sponsored by 

small businesses, exempt 

organizations, and 

governments, which make up 

almost half of all retirement 

plans in the United States and 

control more than $1.1 trillion 

in assets; 

 Collect unrelated business 

income and employment taxes for exempt organizations, which GAO has estimated to 

be at almost $1 billion in unpaid Federal taxes; 

 Address the compliance of new exempt organizations with applicable tax laws by 

improving the service of the determination process, which is the IRS’s first 

compliance contact with these organizations; 

 Detect potentially fraudulent claims for direct Federal credit payments from direct pay 

bonds, the payments of which are estimated to reach more than $120 billion over the 

life of the bonds; and 

 Provide voluntary correction opportunities for tax issues related to employment taxes 

and retirement plan failures. 

Major Activities

Additional

Determination

Applications

Closed

Additional

Voluntary

Compliance

Closures

Additional

Returns

Closed

Voluntary 

Correction 

Follow-up 

Exams

Expand Protection and Coverage of Small Business 

and Tax-Exempt Sponsored Plans 550 

Address EO Noncompliance with UBI and ET 1,145 

Enhance Compliance for Application for Tax-Exempt 

Status 5,800 

Ensure Direct Pay Bond Compliance 30 200 

Strengthen Voluntary Compliance for Tax Exempt 

and Government Entities 2,830 80 

Total 5,800 2,860 1,895 80 

P o sitio n T ype/ Other C o sts F T E P o sitio ns $ 000

Expand Prot ect ion and C overage of 

Small B usiness and T ax- Exemp t 11.75 15 $1,6 6 2

Revenue Agent 11.75 15 1,662

A d d ress EO N o nco mp liance wit h U B I 

and ET 28.50 38 $3,784

Revenue Agent 21.00 28 3,104

Tax Compliance Officer 7.50 10 680

Enhance C o mp liance b y A p p licant s f o r 

T ax- Exemp t St at us 29.25 39 $3,385

Revenue Agent 15.00 20 1,785

Tax Law Specialist 6.75 9 974

Support Staff 7.50 10 626

Ensure D irect Pay B o nd C o mp liance 15.0 0 2 0 $2 ,3 2 7

Revenue Agent 12.00 16 1,774

Tax Law Specialist 3.00 4 553

St reng t hen V o lunt ary C o mp liance f o r 

T ax Exemp t and Go vernment Ent it ies 2 9 .2 5 3 9 $4 ,0 14

Revenue Agent 11.25 15 1,641

Tax Technician 11.25 15 1,227

Tax Examiner 1.50 2 136

Tax Law Specialist 3.00 4 529

Attorney 2.25 3 481

Ot her D irect Cost s 5.2 5 7 $9 2 3

Appeals Officer 0.75 1 109

Attorney 4.50 6 814

T o t al 119 .0 0 158 $16 ,0 9 5
IRS-56 

Expand Protection and Coverage of Small Business and Tax-Exempt Sponsored Plans 

(+$1.6 million / +11.75 FTE) 

Despite efforts over the last decade to educate small business and tax-exempt retirement plan 

sponsors and provide them opportunities to voluntarily correct plan failures, the 

noncompliance rate of retirement plans maintained by this sector remains high, more than 

75 percent in the last few years. At the same time, the audit coverage rate for these types of 

plans is approximately one-fifth of that for plans sponsored by larger businesses. 

Improving oversight of the retirement plan sector will serve to protect retirement plan assets 

and preserve plan participant benefits. This will be achieved by increasing the audit coverage 

of small business and tax-exempt entity-sponsored plans, which make up almost half of all 

retirement plans in the United States and hold more than $1.1 trillion in assets. The additional 

revenue agents will support a 6 percent increase in audits, which is expected to result in an 

additional 550 examination closures annually and a 5 percent increase in overall enforcement 

coverage of retirement plans once the new hires reach the full performance level. Additional 

audit coverage of these plans is expected to yield a 30 percent increase in protected assets of 

small business and tax-exempt plans, from $2 billion to $2.6 billion by FY 2017. The IRS 

also will continue to balance this program by maintaining enforcement efforts of retirement 

plans for mid and large-size businesses and through continuing education, outreach, and 

self-correction programs. 

Address Exempt Organization (EO) Noncompliance with Unrelated Business Income (UBI) 

and Employment Taxes (ET) (+$3.8 million / +28.50 FTE) 

While exempt organizations are exempt from income taxes for activities related to their 

exempt purposes, they are subject to many other taxes and related penalties if they fail to pay 

such taxes. The Government Accountability Office (GAO), in report GAO-07-1090T, 

Thousands of Organizations Exempt from Federal Income Tax Owe Nearly $1 Billion in 

Payroll and Other Taxes, found that nearly 55,000 tax-exempt entities had almost $1 billion 

in unpaid Federal taxes as of September 30, 2006. Of that amount, 71 percent consisted of 

payroll taxes and associated penalties dating as far back as the early 1980s. Approximately 

10 percent of that amount consisted of unrelated business income, excise, and other types of 

taxes. The GAO found multiple instances in which exempt organizations diverted payroll 

taxes to fund operations or to pay hundreds of thousands of dollars in compensation to the 

organizations’ top officials. 

Currently, the IRS’s enforcement efforts in the tax-exempt sector focus primarily on ensuring 

that exempt organizations follow the applicable laws and regulations to remain tax-exempt 

rather than on finding tax violations. This initiative funds additional staff to promote 

compliance and collect unpaid taxes for taxable activities by tax-exempt organizations. This 

will be achieved through a comprehensive program of face-to-face enforcement and remote 

compliance activities that address unreported and/or underreported employment taxes and 

unrelated business income taxes. 
IRS-57 

IRS Exempt Organization Application Closures & Receipts by On-Rolls

65,590

53,192

65,545

79,740 171

158

0

8,500

17,000

25,500

34,000

42,500

51,000

59,500

68,000

76,500

85,000

93,500

FY2010 FY2011 FY 2012 FY 2013 

Application Cases

0

20

40

60

80

100

120

140

160

180

200

On-Rolls

Closures Receipts On-rolls

Without the requested resources, the IRS risks increased noncompliance with taxable 

activities in the exempt organizations sector, including the failure to secure substantial known 

revenues. 

Enhance Compliance by Applicants for Tax-Exempt Status 

(+$3.4 million / +29.25 FTE) 

The determination process for organizations seeking tax-exempt status is the IRS’s first 

compliance contact with these entities. As such, it is a critical opportunity to ensure that these 

organizations are designed to safeguard future compliance and to detect and prevent 

potentially abusive schemes before they can manifest. 

From FY 2010 to 

FY 2013, requests for 

tax-exempt status 

increased by 

22 percent due in part 

to reapplications from 

organizations that had 

their tax-exempt status 

revoked as required by 

the Pension Protection 

Act of 2006 (Public 

Law 109-280). 

Meanwhile, the 

number of employees 

developing and closing 

these cases has 

decreased by 8 percent 

and the complexity 

and compliance risk of exempt organization applications has increased as more of these 

organizations operate like commercial entities (e.g., credit counseling, down payment 

assistance, and mortgage foreclosure assistance organizations). 

These factors have led to: 

 An increase in the open inventory of applications from over 15,500 in FY 2010 to over 

53,000 in FY 2013; 

 An increase in the average time it takes to complete an application from 104 days in 

FY 2010 to 222 days in FY 2013; and 

 A 24 percent increase in the average time it takes to complete a complex application 

since FY 2007. 

With these resources, the IRS will be able to promote the compliance of exempt organizations 

through the upfront regulatory determination process. These resources are expected to allow 

the IRS to close an additional 5,800 applications annually once the new hires reach their full 
IRS-58 

performance level and improve average processing times by 20 days. This will allow 

charitable resources to flow more quickly to where they are needed. In addition, taxpayers 

who make tax-deductible donations benefit from the assurance that their donations are going 

to a charitable organization recognized by the IRS as a tax-exempt organization. Without 

these resources, the exempt organization sector, and those who benefit from their services, 

will be adversely affected as the wait time for application closure increases. 

Ensure Direct Pay Bond Compliance (+$2.3 million / +15 FTE) 

The American Recovery & Reinvestment Act of 2009 (ARRA) (Public Law 111-5) and the 

Hiring Incentives to Restore Employment Act of 2010 (HIRE) (Public Law 111-147) created 

several new types of tax-exempt bonds and tax-credit bonds under the Internal Revenue Code, 

known as direct pay bonds. These new bonds allow governmental issuers to elect a direct 

Federal credit payment equal to a percentage of the interest payments on these bonds, rather 

than treating the interest paid on the bonds as tax-exempt. Since the enactment of the ARRA 

and HIRE, the total amount of direct pay bonds issued grew from approximately 

500 issuances, valued at $37 billion in 2009, to more than 4,400 issuances, valued at more 

than $157 billion in 2012. 

The advent of direct pay bonds created new compliance risks because the issuers may opt to 

receive a direct Federal credit payment from the IRS equivalent to 35 percent or more of the 

interest costs of the bonds. In FY 2013, the IRS processed refundable credit requests of more 

than $4.7 billion. Since inception of the program, nearly $15.5 billion in direct Federal credit 

payments has been paid out and the IRS expects to pay more than $4 billion annually through 

at least FY 2040. This creates additional risks to the IRS since the total amount of direct 

Federal credit payments may ultimately reach more than $120 billion. Moreover, both the 

Administration and certain members of Congress have proposed new direct pay bonds 

legislation. If Congress enacts these or other new legislation, the value of direct Federal 

credit payments and the associated risks will continue to grow. 

While the IRS has implemented pre-payment reviews for direct pay bonds, closing nearly 

28,500 reviews through FY 2013, additional staff is critical to maintain post-issuance 

compliance coverage of the tax-exempt bond sector and to mitigate the high risks associated 

with direct pay bonds through their life cycle. With these resources, the IRS expects to: 

 Continue to identify potentially unauthorized issuances of direct pay bonds; 

 Conduct examinations as part of enforcement projects targeting identified trends of 

noncompliance; and 

 Provide examination support to revenue officers performing pre-payment compliance 

reviews to ensure detection of potentially fraudulent claims for direct Federal credit 

payments. 

The additional resources will allow the IRS to mitigate the risks of fraudulent direct Federal 

credit payments; assist the IRS in preventing, detecting, and remedying noncompliant direct 

pay bond transactions; and ensure that IRS enforcement and voluntary compliance programs 

keep pace with the projected growth of direct Federal credit payments of direct pay bonds. 
IRS-59 

Strengthen Voluntary Compliance for Tax Exempt and Government Entities 

(+$4 million / +29.25 FTE) 

Tax-exempt organizations, employee retirement plans, and government entities account for a 

significant share of the U.S. economy (controlling approximately $8 trillion in assets). 

While not subject to income tax, these entities are responsible for employment and excise 

taxes and must satisfy a complex set of other legal requirements. To efficiently promote 

compliance within this segment, the IRS has created a number of voluntary correction 

programs that provide opportunities for taxpayers to voluntarily self-report and correct 

compliance failures. They allow these taxpayers to comply with Federal tax and reporting 

requirements with less burden and at less cost to the IRS than an examination. This request 

will support employment tax compliance by these entities and improve compliance within 

retirement plans. 

This initiative will provide opportunities for: 

 Employers to voluntarily correct employment tax issues and reclassify their workers 

as employees so that their income and employment taxes are reported and withheld 

correctly; and 

 Sponsors of retirement plans to voluntarily correct governmental retirement plan 

failures, prohibited transactions within retirement plans, and compliance failures in 

both Individual Retirement Arrangements (IRA) and Tax Sheltered Annuity Plans 

(also known as 403(b) retirement plans). 

This initiative will benefit taxpayers, including the 6.1 million employers who pay 

$1.7 trillion in employment taxes annually, and protect the retirement benefits of participants 

in retirement plans that hold nearly $7.8 trillion in retirement plan assets. 

Other Direct Costs (+$0.9 million / +5.25 FTE) 

IRS Activity Cost FTE Positions Explanation

Appeals $0.1 0.75 1 Promote exam and compliance activities related to employee 

retirement plans, exempt organizations, and direct pay bonds. 

Chief Counsel $0.8 4.50 6

Provide training, published guidance, and legal guidance to the 

IRS in addressing the ever more sophisticated taxable activities 

of exempt organizations, and to navigate potentially unexplored 

or undetected issues in the retirement plans of small 

businesses, exempt organizations and governments.

Total $0.9 5.25 7

Dollars in Millions
IRS-60 

Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 

+$17,812,000 / +52 FTE 

Funding to Pursue Fraud Referrals, 

Employment Tax, and Abusive Tax 

Schemes will enhance overall 

enforcement efforts, increase the 

number of convictions and 

assessments, and allow the IRS to 

apply social network analysis, also 

known as network analysis, to the 

investigation of fraud and abusive 

schemes. Network analysis is a 

powerful software tool being used by 

many law enforcement and other 

agencies to leverage data to detect 

illegal or other non-compliant 

behavior. By establishing and 

implementing a financial and criminal intelligence database, network analysis software will 

proactively identify potentially noncompliant taxpayers in multiple program areas by enabling 

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. These resources will improve the sharing of information among IRS operating 

divisions, expand the IRS’s capability to identify significant tax cases, increase cost savings, 

and standardize the fraud referral process. 

Many core tax enforcement program areas, such as corporate fraud, employment tax, and 

abusive tax schemes, have become underserved in recent years due to the redirection of 

limited IRS resources to other areas, such as identity theft investigations, which increased by 

660 percent between FY 2010 and FY 2013. During the same period, the amount of time 

devoted by investigators to these three areas declined by an average of 26 percent. In order to 

ensure that these areas do not become a major source of criminal activity and lost revenue, 

resources must be dedicated to reinforce the IRS’s investigative efforts. 

Fraud Referrals, Employment Tax, and Tax Schemes (+$10.3 million / +49 FTE) 

These additional resources will expand the IRS’s capabilities in the following core tax 

enforcement areas: 

 Corporate Fraud Program 

This program concentrates on violations of the Internal Revenue Code and related 

statutes committed by large, publicly traded (or private) corporations and/or by their 

senior executives. These schemes are characterized by their scope, complexity, and 

the magnitude of their negative economic consequences for communities, employees, 

lenders, investors, and financial markets. Most corporate fraud investigations are joint 

Major Activities

Investigations 

Completed

Investigations 60

 Total 60

Position Type/Other Costs FTE Positions $000

Fraud Referrals, Employment Tax & 

Tax Schemes 49.00 65 $10,292

Special Agent 34.75 46 8,345

Investigative Analyst 7.50 10 814

IT Specialist 2.25 3 346

Manager 1.50 2 325

Support Staff 3.00 4 462

Network Analysis $7,158

Contractual Services 7,158

Other Direct Costs 3.00 4 $362

Attorney 3.00 4 362

Total 52.00 69 $17,812
IRS-61 

efforts involving many Federal agencies through partnership with the Department of 

Justice Financial Fraud Enforcement Task Force. 

 Employment Tax Program 

Employers are required by law to withhold employment taxes from their employees. 

Employment taxes include Federal income tax withholding, social security, and 

Medicare taxes. 

This program investigates employers who may be subject to criminal and civil 

sanctions for willfully failing to pay employment taxes. Employees suffer in these 

situations because they may not qualify for Social Security, Medicare, or 

unemployment benefits when employers do not report or pay employment and 

unemployment taxes. The failure of these employers to properly remit withheld 

employment taxes increases the burden on compliant taxpayers whose taxes ultimately 

must cover these promised benefits. 

 Abusive Tax Schemes Program 

Abusive tax schemes have evolved from simple structuring of domestic and foreign 

trust arrangements into sophisticated strategies that take advantage of the financial 

secrecy laws of some foreign jurisdictions and the availability of credit/debit cards 

issued by offshore financial institutions. This program investigates these fraudulent 

domestic and foreign trust arrangements. One focus of the program is the 

identification and investigation of tax scheme promoters as well as those who facilitate 

abusive tax schemes (e.g., accountants, lawyers). The other, equally important focus 

is the investigation of investors who knowingly participate in abusive tax schemes. 

Network Analysis (+$7.1 million / 0 FTE) 

To further efforts in these areas, the IRS will invest in a network analysis product, which will 

provide investigators with the capability to identify patterns of noncompliance and alleged 

criminal behavior through advanced data matching methods. Successful tests of network 

analysis have demonstrated the versatility of this technology to improve case selection by 

identifying networks as opposed to single cases. The benefit of identifying the network of 

related potentially abusive returns is the ability to identify the central point behind a scheme 

or related group of returns, such as in identity theft, which would enable the IRS address the 

central figure behind the scheme versus addressing individual returns one at a time. Specific 

features of network analysis include linking data from internal data sources and identifying 

networks, patterns, and characteristics that indicate noncompliant behavior. Examples of such 

data sources include filed returns; information reporting documents such as 1099s and K-1s; 

currency transaction reports; and return preparer data. 

Network analysis software provides an opportunity for data-driven assessment of complex 

compliance issues. Investment in a permanent network analysis software tool can enhance 

issue detection, workload selection, and treatment options for some of the IRS’s most 

challenging data problems, including identity theft. 
IRS-62 

Acquiring a network analysis tool will allow IRS operating divisions to be more effective and 

efficient in identifying compliance issues that are difficult and often impossible to detect with 

existing data matching processes. In 2011 and 2012 the IRS tested network analysis and 

determined that it can help the IRS to target issues better, for example, “ghost preparers”, 

employment tax, and education tax credit schemes. In addition, the IRS successfully matched 

identity theft cases to ghost preparer networks to test the potential for applying this 

technology to identity theft work. Network analysis demonstrated a superior data-driven 

alternative that can: 

 Identify and more precisely classify case workload; 

 Increase case selection rates; 

 Estimate the potential dollars per tax return; 

 Provide compliance staff with detailed information reporting documents; and 

 Identify geographically driven issues. 

Other Direct Costs (+$0.4 million / +3 FTE) 

IRS Activity Cost FTE Positions Explanation

Chief Counsel $0.4 3 4

Provide legal guidance throughout the course of 

investigations, evaluate successful prosecutions, and 

work with the Department of Justice during criminal 

trials.

Total $0.4 3 4

Dollars in Millions
IRS-63 

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities 

+$17,537,000 / +106 FTE 

Funding to Build Out Tax Return 

Preparer Compliance and 

Professional Responsibility 

Activities will improve taxpayer 

compliance and the accuracy of 

returns filed by tax professionals 

and foster a stakeholder-driven 

culture that encourages voluntary 

compliance. With this request, the 

IRS will seek to ensure that tax 

preparers meet uniformly high 

ethical standards of conduct by 

enforcing preparer compliance 

with applicable IRS rules, 

increasing preparer examinations, 

and monitoring and pursuing 

preparers engaged in fraudulent activities, including noncompliant Earned Income Tax Credit 

(EITC) return preparers. This initiative also provides resources for the IRS’s Office of 

Professional Responsibility (OPR) to conduct oversight of return preparers who represent 

taxpayers and are subject to Circular 230, Regulations Governing Practice Before the Internal 

Revenue Service (C230). This initiative is core to the IRS’s strategy to reduce the tax gap and 

will improve the IRS’s ability to deliver high-priority, preparer-related enforcement activities. 

Key activities and deliverables of this initiative include deploying a coordinated return 

compliance strategy by: 

 Developing techniques to detect return preparer errors; 

 Coordinating return preparer activities across IRS enforcement functions; 

 Prioritizing activities through a return preparer enforcement work plan; 

 Updating detection tools and selection logic; and 

 Determining effective measurement strategies. 

 

Major Activities

Preparer

Visits

Investigations

Completed

Enforce Tax Return Preparer Compliance 2,000

Pursue Tax Return Preparer Fraudulent Activity 31

 Total 2,000 31

P o sitio n T ype/ Other C o sts F T E P o sitio ns $ 000

Enf orce Tax R et urn Preparer 

C o mp liance 59.50 79 $8,906

Revenue Agent 45.25 60 7,413

Revenue Officer 1.50 2 182

Tax Examiner 4.50 6 368

Tax Compliance Officer 3.00 4 340

Attorney 0.75 1 153

Program Analyst 0.75 1 118

Support Staff 3.75 5 332

Pursue Tax R et urn Preparer Fraudulent 

Activity 18 .75 2 5 $4 ,4 3 6

Special Agent 18.00 24 4,354

Program Analyst 0.75 1 82

Ensure Et hical St andards of C onduct 

f or Pract it ioners 27.75 37 $3,896

Attorney 8.25 11 1,640

Paralegal 4.50 6 441

Program Analyst 15.00 20 1,815

T echno lo g y Enhancement s $2 9 9

Contractual Services 299

T o t al 10 6 .0 0 14 1 $17,53 7
IRS-64 

Enforce Tax Return Preparer Compliance (+$9 million / +59.50 FTE) 

Given the important role that tax return preparers play in Federal tax administration, the IRS 

has a significant interest in identifying tax return preparers and monitoring their tax return 

preparation activities. These funds will allow the IRS to deploy a coordinated return preparer 

compliance strategy by conducting on-site visits and investigating suspicious activity, 

especially of abusive return preparers. 

The IRS identifies preparer cases through programs and referrals from field staff, taxpayers, 

and Criminal Investigation (CI). Revenue agents and special agents conduct preparer audits 

and visits. Specific planned program activities include field visits by revenue agents and CI 

special agents to returns preparers with compliance-related concerns and dedicated reviews of 

the returns of the clients of those preparers to determine whether those clients owe additional 

taxes and whether it is appropriate to assert penalties. Providing adequate resources will 

ensure that these activities can be conducted without pulling resources from other high-value 

compliance activities.

Pursue Tax Return Preparer Fraudulent Activity (+$4.4 million / +18.75 FTE)

These funds provide resources for CI to form multi-agency taskforces dedicated to tax 

administration by seeking prosecution at the State and Federal levels to prevent fraudulently 

obtained refunds (refundable credits are a large percentage) from financing and supporting 

criminal activity in some areas of the country. Special agents will conduct outreach efforts 

with the practitioner community to educate them on their legal responsibilities and develop 

leads on unscrupulous return preparers while working with State taxing agencies to leverage 

resources and seek prosecution at both the Federal and State levels as appropriate. 

These teams will target larger-scale crime rings for maximum compliance results and 

publicity. 

Ensure Ethical Standards of Conduct for Practitioners (+$3.9 million / +27.75 FTE)

The population of those who are subject to the ethical standards contained in C230 will be 

expanding to include unlicensed tax return preparers who represent taxpayers in disputes 

involving returns and claims for refund which they prepared or signed, and others who 

represent taxpayers in tax collection matters. The nature of the cases being handled by OPR 

has evolved over the past five years from being primarily focused on a practitioner’s own tax 

non-compliance (85 percent in 2009) to being primarily focused on complex practitioner 

conduct which violates substantive provisions in C230 involving due diligence, false and 

misleading information given to IRS personnel, conflicts of interest, advising conduct in 

violation of tax laws, and false and misleading advertising (71 percent in 2013). 

These complex conduct cases, by their nature, require more extensive development, involve 

more sophisticated settlement negotiations and are more apt to result in commencement of an 

administrative proceeding before an Administrative Law Judge. Recent experience also 

suggests that the tax community is misinterpreting the recent Loving v. Commissioner

decisions such that individuals are more apt to push the proceedings into litigation in lieu of 

settlement. 
IRS-65 

OPR estimates that the number of cases requiring litigation could triple over the next two 

years in line with OPR’s expanded jurisdiction. The additional staffing will handle these 

complex conduct cases and the associated appeals, conferences, allegations, negotiations, and 

administrative hearing preparation, briefing and, when necessary, appeals of Administrative 

Law Judge decisions. 

In addition, the increased staffing will handle: 

 Anticipated increases in referrals of practitioner misconduct; 

 Due process conferences; 

 The new Appellate Authority functions delegated to OPR with respect to appeals from 

Return Preparer Office (RPO) determinations by C230 practitioners regarding 

compliance and suitability in the Preparer Tax Identification Number (PTIN) 

registration process; and 

 Alleged violations of C230 standards by tax debt resolution companies that assist 

taxpayers with negotiations to abate penalties, enter into installment agreements, and 

compromise an assessed federal tax liability. 

In addition, new field office locations will provide improved access for practitioners who 

desire an in-person conference within their geographical region. Currently, all practitioners 

must travel to Washington, D.C. to be afforded their right to an in-person conference. 

Satellite offices will allow employees to handle disciplinary case conferences and related 

negotiations at three satellite offices strategically located across the country. 

Technology Expansion (+$0.3 million / 0 FTE)

 Technology 

E-TRAK Case and Correspondence Management System (CCMS) is the application 

utilized by OPR to input referrals, manage resulting cases, and produce management 

information reports. Currently, OPR’s interactions with the IRS Return Preparer 

Office (RPO) and Centralized Authorization File (CAF) unit rely on a manual process 

including: PTIN application/renewal denials and revocations; Enrolled Agent 

enrollment/renewal disputes; Continuing Education Provider disputes; and 

notifications to/from the CAF unit when a practitioner is suspended/disbarred or 

rendered ineligible to practice. 

OPR requires an interface from CCMS to RPO’s 360 database, currently in the design 

phase. Interfacing CCMS with the 360 database will allow OPR research capability 

and the ability to exchange referrals and other pertinent information electronically, to 

include the revocation of PTINs and resulting CAF notifications. 

Video Conference Capability 

C230 provides due process throughout the disciplinary process. Due process protections 

include a practitioner’s right to a notice of the allegation(s) and an opportunity for a 

conference with OPR. To reduce travel costs and enhance the ability to provide due process 
IRS-66 

remotely, OPR is seeking resources for video conferencing capability to conduct mandatory 

disciplinary conferences. 

Other Direct Costs 

There are no other direct costs associated with this initiative. 
IRS-67 

Implement Information Technology (IT) Changes to Deliver the Foreign Account Tax 

Compliance Act (FATCA) 

+$32,223,000 / +140 FTE 

This initiative is a multi-year 

project to address foreign 

withholding compliance and 

expand coverage of international 

tax return filings by providing the 

resources for IRS to implement the information technology (IT) changes required by 

enactment of FATCA included in the Hiring Incentives to Restore Employment (HIRE) Act 

of 2010 (Public Law 111-147). Many of these changes involve new technology systems or 

modifications to existing systems. FATCA seeks to improve offshore compliance by 

imposing new information reporting requirements on foreign financial institutions (FFIs) with 

respect to U.S. accounts and new withholding, documentation, and reporting requirements for 

payments made to certain foreign entities. 

FATCA creates new information reporting requirements and imposes tax-withholding 

obligations on FFIs that do not disclose holdings by U.S. individuals or firms. To avoid the 

withholding requirements, the FFIs must enter into an agreement with the Department of the 

Treasury to identify all U.S. accounts held by it or its affiliates and report annually to the 

Treasury on each account. Further, the FFI must comply with requests by the Treasury for 

additional information regarding each U.S. account and must attempt to obtain from each 

holder of a U.S. account a waiver of any bank secrecy law that would otherwise prevent such 

a report. If a waiver cannot be obtained from each holder of a U.S. account, the account will 

be closed. This initiative funds the information systems needed to support the enforcement of 

these reporting requirements. 

FATCA also will provide new coverage for discrepancies identified through third party data 

matching and will enhance and centralize coverage for non-filer taxpayers and for those with 

withholding-related issues. The IRS will compile data and reports that will provide more 

complete background information during the initial set up of related audit case files. Further, 

funding for FATCA will help the IRS address potential under withholding of U.S. source 

income flowing to undisclosed jurisdictions and unknown recipients offshore. 

The following IT projects support the delivery of FATCA: 

 FFI Registration allows FFIs to electronically register and sign agreements with the 

IRS to report on their US-held accounts as specified by FATCA; 

 International Data Exchange Service (IDES) receives Form 8966, FATCA Report, and 

Form 1042-S/T, Annual Withholding Tax Return for U.S. Source Income of Foreign 

Persons, input from FFIs through Intergovernmental Agreements and transmits forms 

in XML format to the Integrated Compliance Management Model (ICMM); 

 Integrated Compliance Management Model (ICMM) receives, processes, stores, and 

manages FATCA data received from various sources and creates reports to conduct 

data analytics for future document matching and compliance activities; 

Position Type/Other Costs FTE Positions $000

Implement IT Changes to Deliver Foreign Account 

Tax Compliance Act (FATCA) 140.00 140 $32,223

IT Specialist 140.00 140 21,499

Contractual Services 10,724

Total 140.00 140 $32,223
IRS-68 

 Refund Processing and Fraud Detection supports the development of processes to 

validate and issue refund payments against withheld taxes, and to identify and prevent 

refund fraud; 

 Compliance Solution supports development and implementation of strategies to use 

FATCA data, taxpayer filings, and third party data to identify and treat noncompliance 

on the part of U.S. taxpayers, participating foreign financial institutions (PFFIs)/Host 

Country Tax Authorities (HCTAs), US withholding agents, and taxpayers requesting 

refunds; 

 Withholding Payment Processing (WPP) supports the development of processes to 

collect withholding payments and associated reporting from US withholding agents 

and PFFIs as required under FATCA legislative mandates; and 

 Taxpayer Reporting captures data to facilitate the usage of FATCA data and taxpayer 

filings (Form 8938, Statement of Specified Foreign Financial Assets, FinCen Report 

114 (formerly TD F 90-22.1), Report of Foreign Bank and Financial Accounts

(FBAR), and others) in compliance workload identification, return selection, and 

execution of examinations by resolving problems encountered during filing season and 

enabling transcription of Form 8938 data. 

This initiative will fund investments in building and maintaining the technology necessary to 

deliver FATCA. These automated tools will reduce the response time needed to identify and 

resolve abusive tax-avoidance issues, provide unprecedented visibility into international tax 

compliance risks, and meet the legal and reporting requirements prescribed by the HIRE Act 

of 2010. 

Other Direct Costs 

There are no other direct costs associated with this initiative. 
IRS-69 

Leverage Digital Evidence for Criminal Investigation (CI) 

+$4,372,000 / +6 FTE 

Funding to Leverage Digital 

Evidence for Criminal Investigation 

(CI) will automate current CI 

processes by implementing a virtual 

digital evidence processing 

environment. This will allow the 

IRS to expedite and enhance the analysis of electronic data by special agents, computer 

investigative specialists, and other investigative staff assigned to an investigation. 

By using these virtual machines, agents will be able to analyze and sanitize contaminated or 

unknown third party data more efficiently before moving it to the CI network. This new 

secure workspace also will allow agents to call in support from forensic specialists or other 

remote agents without incurring travel costs. 

In FY 2013, the IRS has a limited production virtual digital evidence-processing environment. 

A number of CI cases are currently housed on the environment being monitored by the 

e-Crimes Lab in Alexandria, Virginia. CI case agents and computer investigative specialists 

access the system to review electronically seized digital information. The funding for 

FY 2015 will allow the IRS to expand this environment to all agents nationwide and provide a 

computer forensic analysis platform for IRS. 

Other Direct Costs 

There are no other direct costs associated with this initiative. 

Position Type/Other Costs FTE Positions $000

Leverage Digital Evidence for CI 6.00 8 $4,372

Special Agent 5.00 7 809

IT Specialist 1.00 1 124

Rent, Communications and Utilities 3,143

Contractual Services 296

Total 6.00 8 $4,372
IRS-70 

ROI

$75.4

$36.8 $38.6 $38.6

$0.0

$63.0

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

FY 2015 FY 2016 FY 2017

in millions

Cost Enforcement Revenue

$0.0 to 1

$1.6 to 1

$2.0 to 1

Leverage Data to Improve Case Selection 

+$36,793,000 / +46 FTE 

Funding Leverage Data to Improve 

Case Selection will provide the 

resources to leverage technology to 

improve data accessibility and 

usability for better case selection, 

issue identification, and treatment 

assignment. Taxpayer behavior, 

including noncompliant behavior, is 

constantly changing. The IRS must 

adapt quickly to changing taxpayer 

behavior to prevent fraud and tax 

code misuse. 

This initiative will: 

 Increase the digital availability of tax return 

information; 

 Create an analytical computing and data testing 

environment to allow the IRS to identify 

taxpayer behavioral changes more quickly and 

test compliance responses promptly; and 

 Optimize compliance case identification and 

treatment assignment to increase effectiveness 

while reducing risk and costs. 

Improved use of analytics will increase revenue collection and, while this is not included in 

the IRS’s traditional ROI calculations, this initiative is projected to increase revenue by 

$75.4 million in FY 2017, a revenue enhancing ROI of $2 to $1. 

Improve Data Availability (+$10.9 million / +25.50 FTE) 

These resources will allow the IRS to increase the data available for research and analysis by 

funding the following three projects: 

 Enhance Electronic Data Capture on Residual Paper Returns 

While the rate of electronic filing continues to increase, the IRS will continue to 

receive some tax returns on paper. These resources provide IT staffing and 

contracting support to allow existing systems to accept additional transcribed data. 

The additional data captured will include form types and data that will generate the 

greatest return on investment. 

Position Type/Other Costs FTE Positions $000

Improve Data Availability 25.50 35 $10,881

IT Specialist 25.50 35 4,491

Returns 1,612

E-file Data Interface for CDE 4,778

Design and Pilot New Ways to Identify & Prioritize 

Cases 9.25 13 $9,601

Analyst 7.00 10 1,198

Hardware & Software Acquisition 2.25 3 5,403

Contractual Services 3,000

Optimize Case Selection and Assignment to 

Appropriate Treatment Streams 11.25 15 $16,311

IT Specialist 11.25 15 4,311

Hardware & Software Acquisition 6,500

Contractual Services 5,500

Total 46.00 63 $36,793
IRS-71 

 Expand the Compliance Data Environment (CDE) and the Modernized Taxpayer 

Return Database (MTRDB) 

This initiative will expand CDE and MTRDB to include all e-filed data and make it 

accessible for research and identification of emerging trends. Analysis of e-filed data 

will allow the IRS to develop appropriate compliance strategies. The MTRDB is a 

database of all tax returns used for case selection purposes. The MTRDB 

improvements will make all e-File return data available and accessible. Campus and 

field personnel will be able to replicate complete copies of e-filed returns as needed, 

relieving taxpayers who e-file from the burden of providing copies of prior-year 

returns for an examination. 

 Allow Electronic Filing of Three Employee Retirement Income Security Act (ERISA) 

Information Returns 

Currently, taxpayers must use different means and go to different government 

agencies to file employee plan returns depending on the type of form they are filing, 

placing an undue burden on taxpayers. Unlike other Form 5500 series returns, which 

are filed electronically with the Department of Labor (DOL), Form 5500-EZ, Annual 

Return of One-Participant Retirement Plan, is filed with IRS either on paper or 

through the IRS Filing Information Returns Electronically (FIRE) system. These 

resources will consolidate electronic filing of Form 5500-EZ and two other retirement 

plan-related forms on DOL’s EFAST2 platform. Allowing retirement plan-related 

forms to be filed in one, electronic location will improve taxpayer service, improve 

case selection, and reduce processing and transcription errors. 

Design and Pilot New Ways to Identify and Prioritize Cases 

(+$9.6 million / +9.25 FTE) 

This initiative provides resources to develop an analytical computing and data testing 

environment that will allow the IRS to rapidly analyze and apply data extracts and third party 

data to evolving compliance programs. To do this, the IRS must develop an analytical 

computing environment to test this technology before full implementation and deployment. 

Once completed, this technology will enhance the IRS’s ability to study the most difficult tax 

administration challenges. Experiments conducted in this analytical computing environment 

will assist the IRS in quantifying proposed changes to processes and policies. 

Taxpayer behavior, including noncompliant behavior, is constantly changing. These resources 

will allow the IRS to identify changing taxpayer behavior quickly to prevent fraud and tax 

code misuse. Currently, much of the IRS's data analysis takes place several years after the 

returns are filed. Analyzing data that is more current would increase awareness of emerging 

fraudulent behaviors. 

The IRS will conduct pilot testing of new case selection methods. Pilot tests as part of 

carefully designed studies allow the IRS to test new hypotheses, processes, and procedures 

under rigorous methods designed to measure and assess the results. The results of the pilots 
IRS-72 

will provide the data to determine the benefits from tested changes and allow leadership to 

make informed decisions about implementing new concepts. 

Optimize Case Selection and Assignment to Appropriate Treatment Streams 

(+$16.3 million / +11.25 FTE) 

This initiative will provide the flexibility to redirect casework to functions that can handle it 

most effectively or to functions with available capacity. Developing new business rules will 

allow the most efficient selection and distribution of cases into the most effective enforcement 

activity. Once cases complete their cycle, data visualization will allow for comparison of the 

effectiveness of the treatment streams. 

The ability to adapt to the changing compliance environment and to address a changing 

noncompliant population depends on new business and technology models for case selection, 

issue identification and case treatment/assignment. The new business and technology models 

will support the organization across individual business units. Currently, IRS compliance 

tools are focused on individual business units with inadequate linkage across the operating 

boundaries of the organization. Moving to these new models requires integration and 

development of common business services. This investment in business tools 

(e.g., rules-based engines, statistical analysis packages, and data visualization) will enhance 

secure data access across the IRS organization and provide a common process to identify 

cases in production. 

Other Direct Costs 

There are no other direct costs associated with this initiative. 
IRS-73 

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other 

Requirements 

+$305,645,000 / +818 FTE 

Funding to Implement Information 

Technology (IT) Changes to Deliver 

Tax Credits and Other Requirements 

will allow the IRS to continue to 

implement the new tax law provisions 

contained in the Affordable Care Act (ACA) (Public Law 111-148). While the Department of 

Health and Human Services is responsible for the 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. This investment supports the 

administration of one of the largest refundable tax credits the IRS has administered, the 

premium tax credit. The investment touches all submission, fraud, and compliance tax 

administration processes to receive, validate, and handle individual and business tax returns. 

Funding this investment will provide enhanced technology infrastructure and applications 

support and allow necessary major modifications to existing IRS tax administration systems. 

The IRS IT organization uses industry best practices to design, develop, deploy, and manage 

ACA systems. The IRS developed a multi-year release strategy to support multiple 

concurrent releases. Some of these releases are operational and in production, while others 

are in various stages of development and are scheduled for implementation over the next 

several years. These releases include new technology implementation as well as 

modifications to the current production environment. 

The IRS supported a pivotal component of the legislation when the health insurance 

Marketplaces opened on October 1, 2013. The IRS IT organization put in place hardware and 

software infrastructure, a new database, and applications to provide two completely new data 

service systems: Income and Family Size Verification and the Advance Premium Tax Credit 

Computation. This was a major achievement for the organization because it provides the 

capability to process and provide responses within seconds of receiving the requests. The 

enhanced performance and efficiency of these systems provides noteworthy value to the 

citizen when purchasing health insurance through the Federal and State exchanges 

(Marketplaces). 

A major focus for the IRS going forward is the task of incorporating the administration and 

reconciliation of the premium tax credit into the individual tax filing processes and systems. 

IRS’s strategic emphasis will include the introduction of new forms, receipt of new third party 

data, and data verification that will enhance fraud prevention efforts. This will leverage 

collected and stored data in 2014 as it is received from the Marketplaces. The IRS will 

facilitate prompt and accurate delivery of the premium tax credit to eligible taxpayers while 

protecting against erroneous and potentially fraudulent tax credit claims. 

To continue supporting implementation of this critical legislation, the IT organization will 

design, build, and implement systems infrastructure; design, develop, and implement new IT 

systems and applications; implement security requirements and accreditation processes; test 

Position Type/Other Costs FTE Positions $000

Implement IT Changes to Deliver Tax Credits 

and Other Requirements 818.00 818 $305,645

IT Specialists 818.00 818 114,999

Contractual Services 190,646

Total 818.00 818 $305,645
IRS-74 

and evaluate applications; modify numerous existing systems; operate integration 

components; build alternate production site capabilities; and maintain systems in operations 

and maintenance mode once production activities are complete. 

Funding this IT initiative will support and ensure implementation of the following business 

capabilities: 

 Premium tax credit claimed on individual tax returns filed in 2015; 

 Penalties related to individual and employer responsibility provisions; 

 Insurance Provider and Branded Prescription Drug Fees; 

 Reporting requirements for Marketplaces, certain large employers, and insurance 

issuers; and 

 Federal tax information provided to non-IRS entities. 

Vital components of the investment include: 

 Implementing new technology and modifying existing IT systems and infrastructure 

components to process tax returns claiming premium tax credits, reconcile advance 

payments, conduct consistency checks, and calculate estimated penalties and 

payments; 

 Implementing new technology and maintaining IT systems and infrastructure to 

receive and process new forms and schedules or information reports from 

Marketplaces, insurance providers, and employers; 

 Implementing new technology and modifying existing compliance systems to detect 

potential fraud and noncompliance activities associated with the refundable credits; 

 Maintaining and expanding repositories that store data about household-level income 

to help determine eligibility for and reconciliation of the premium tax credit, and 

collecting and storing additional data, including periodic data received from the 

Federal and State exchanges that will be used to validate individual claims for the 

premium tax credit and ACA-related information returns data; 

 Preparing IT systems to support the annual open enrollment and ongoing exchange 

eligibility process for financial assistance by providing income and family size 

information from recent tax returns;

 Modifying and updating tax account systems to assess and collect penalties and fees, 

such as the individual and employer responsibility payments; and 

 Expanding tax account and case management systems to facilitate responding to 

taxpayer inquiries. 

This initiative will fund significant revisions to existing tax administration systems and invest 

in building, maintaining, and operating the new infrastructure and applications technology 

needed to continue implementation of the tax law provisions contained in the ACA. 

Other Direct Costs 

There are no other direct costs associated with the initiative. 
IRS-75 

Implement Information Technology (IT) Services 

+$10,000,000 / 0 FTE 

Funding for Implement Information 

Technology (IT) Services will allow 

the IRS to continue to implement 

industry best practices to shape the 

future of IT development and 

ongoing operational support to 

provide a more robust foundation for 

expanding IT capabilities in the 

future. 

This initiative will provide resources for the IRS to implement two industry best practices for 

managing change and monitoring its complex computer environment and to convert its 

operating system to a less complex standard that decreases the need for hardware. This 

includes funding for three efforts: IT-wide change management, End-to-End monitoring, and 

the implementation of a Linux operating system. These investments will result in a more 

stable computing environment and reduced downtime to taxpayers. 

IT-wide Change Management (+$1.3 million / 0 FTE) 

The objective of IT-wide change management is to ensure the use of standardized methods 

and procedures for efficient and prompt handling of all changes and alterations to computers, 

network components, and applications. Change Management is the process responsible for 

controlling the lifecycle of all IT changes and allowing beneficial changes to be made with 

minimal disruption to IT services. Change Management encompasses the transition of a 

change or new product from development/acquisition, through deployment, into the 

production environment, and culminates with end-of-life. 

This initiative funds contractor services to configure a new, centralized IT-wide Change 

Management system installed to support this change process and to plan the transition of all 

IT organizations to this new system. 

Change Management is a critical step toward providing world class IT services and will 

provide the following benefits: 

 Reduce infrastructure and operation costs; 

 Address TIGTA Audit 2006-30-003 Corrective Action 1.2.1 to Implement an 

Enterprise-Wide Standard Configuration Management System by December 2010; 

 Reduce the risk of changes to all IRS environments (changes will be input once and 

visible to all IT organizations); 

 Allow for the proper review and approval at the appropriate level; 

 Improve stability and control over IT operations by having one IT-wide Change 

Management system that allows changes to be seen and assessed by all IT 

organizations; 

Position Type/Other Costs FTE Positions $000

IT-wide Change Management $1,300

Contractual Services 1,300

End-to-End Monitoring $6,700

Contractual Services 5,400

Hardware & Software 1,060

Travel 240

Implementation of a Linux Operating System $2,000

Hardware & Software 2,000

Total $10,000
IRS-76 

 Allow for the retirement of several legacy Change Management systems; 

 Improve customer experience and operation efficiency by having one consolidated 

system for all input; and 

 Have one system managing, tracking, and reporting on all change-related metrics. 

End-to-End Monitoring (+$6.7 million / 0 FTE) 

End-to-End monitoring allows the IRS to actively measure and monitor all infrastructure and 

application components that support a given IT service request. The program encompasses 

the entire process—from the time a user "presses enter" through the local LAN, to the 

server/mainframe, through the application, and back again—to ensure a quality user 

experience. The program will allow true End-to-End availability of services across IT. 

End-to-End monitoring is an operational requirement for IT initiatives and is accomplished 

using servers running Commercial Off-The-Shelf (COTS) software that is heavily dependent 

on contractor services. This request will fund hardware, software, and contractor support. 

Adopting End-to-End monitoring will allow IRS employees to identify and correct IT system 

issues immediately and reduce the scope of contractor support for problem assessment and 

correction. 

Benefits of End-to-End: 

 Anticipate outages before they occur, develop strategies to improve availability, and 

deploy infrastructure and application enhancements to maintain availability;

 Monitor the availability of service from end to end; 

 Monitor systems and processes critical for a successful filing season; and 

 Identify issues and problems quickly, enabling immediate action to resolve the 

problem before the customer is affected.

Implementation of the Linux Operating System (+$2 million / 0 FTE) 

The IRS is migrating applications from a legacy platform to an open source environment 

hosted on Enterprise Linux Infrastructure (ELI). This initiative will allow the IRS to: 

 Standardize server configurations; 

 Reduce software licensing and hardware costs; 

 Provide a fully-featured, enterprise-strength operating system solution; 

 Provide higher levels of performance and responsiveness; 

 Improve security standards; 

 Improve system support while reducing support costs; and 

 Position the IRS to transition to a private or hybrid Cloud infrastructure. 
IRS-77 

In FY 2012 and FY 2013, the IRS allocated funding for this project and established an ELI in 

Martinsburg and Memphis. Capacity is managed using a supply/demand model based on a 

rolling, quarterly server demand forecast. The model forecasts significant additional capacity 

requirements through FY 2015 and beyond. 

The ELI is a virtualized host infrastructure of HP servers that are more cost effective than the 

IRS’s existing Oracle/Solaris servers. Additional investment in Linux operating system 

standardization and migration from Solaris to Linux will: 

 Reduce projected server hardware costs by approximately $25 million through 

FY 2020; 

 Support provisioning of an additional 300 standardized virtual servers on the Linux 

platform; 

 Support migration of 52 identified Solaris applications to the more cost effective 

Linux virtual platform; 

 Retire and remove approximately 200 physical Solaris servers; and 

 Provide an environment that is expandable in the future. 

Other Direct Costs 

There are no other direct costs associated with this initiative. 
IRS-78 

Implement Campus Consolidation and Revitalization Strategy 

+$10,000,000 / 0 FTE 

Funding for Implement Campus 

Consolidation and Revitalization 

Strategy will provide resources to 

fund lease consolidation in Atlanta, 

Georgia, and complete a preliminary 

design of a new, modernized submission processing facility at the IRS campus in Covington, 

Kentucky. In addition, the IRS requests funding for the Graphic Data Interface (GDI) system 

to enhance the IRS facilities management decision support. 

Consolidate and Modernize IRS Campuses (+$9.6 million / 0 FTE) 

Based on the results of a thorough Net Present Value (NPV) analysis of all of the 

viable options for each campus location, this initiative requests resources to fund: 

 Atlanta, Georgia Campus Consolidation 

The IRS plans to replace the Atlanta campus main building with a new market lease 

building (versus build-to-suit); and then consolidate off-site functions into this new 

building, generating the lowest 30-year NPV. This will allow the IRS to achieve 

operational efficiencies resulting from the elimination of duplicate support spaces 

(space reduction), reduce overhead and operating costs, and decrease multiple building 

lease costs. 

 Covington, Kentucky Preliminary Architecture & Engineering (A&E) Work 

The IRS requests resources to complete a preliminary design of a new 

submission processing facility at the IRS campus in Covington, Kentucky. The 

lowest cost to the Government for the aging Covington submission processing 

building is to build a new facility in the vicinity of the existing building. The 

requested funds will provide A&E design support for the IRS customization 

requirements needed to accommodate submission processing operational needs. 

IT Project - Graphic Data Interface (GDI) Module (+$0.4 million / 0 FTE) 

The IRS requests resources for the GDI system to enhance facilities management decision 

support capability. The purchase of a corporate asset management model will allow the IRS 

to maximize asset performance by analyzing and managing their interdependencies on 

operational, tactical, and strategic levels. The GDI system will allow the IRS to gain 

long-term efficiency by avoiding overall higher costs by computing on a NPV basis instead of 

a least (annual) cost up-front basis. 

Other Direct Costs 

There are no other direct costs associated with this initiative.

Position Type/Other Costs FTE Positions $000

Consolidate and Modernize IRS Campuses $9,574

Space Renovation 9,574

IT Project $426

Graphic Data Interface Module 426

Total $10,000
IRS-79 

Implement eGovernment and Other Administration Priorities 

+$31,011,000 / +19 FTE 

Funding to Implement eGovernment 

and Other Administration Priorities 

will allow the IRS to maximize the 

effectiveness and efficiency of the 

procurement consolidation of the 

IRS Office of Procurement, Treasury 

Departmental Offices (DO), and the 

Bureau of Engraving and Printing 

(BEP) by investing in an external interface for the IRS Integrated Procurement System (IPS) 

and to protect IRS employees, facilities, operations, and information. These departmental 

priorities will: 

 Reduce IPS operations and maintenance costs and realize efficiencies by integrating 

financial systems; 

 Provide operations and maintenance resources for the Enterprise Physical Access 

Control System (ePACs) and expedite the deployment schedule; and 

 Implement countermeasures for security risks identified during the FY 2010 Facility 

Risk Assessment. 

Implement Procurement Consolidation 

(+$6.2 million / +4.75 FTE) 

In FY 2013 the IRS Office of Procurement assumed management responsibilities for all 

procurement activities for DO and the BEP, including contracts, orders, and interagency 

agreements. To maximize the effectiveness of this consolidation, the IRS requests resources 

to support the design, development, and implementation of an external interface between the 

IRS procurement and financial systems (IPS/Integrated Financial System (IFS) and 

Treasury’s Oracle Financials and the BEP Contract Life Management (CLM) System) 

simultaneously. 

Currently, the IRS Office of Procurement staff must use three procurement systems. This 

interface is critical because it will allow IPS to access all three systems through a 

bi-directional web service interface. This investment will: 

 Increase efficiency by allowing the IRS to better manage manpower across 

organizations; 

 Reduce risks to data integrity by eliminating manual data entry of contractual actions 

completed in the DO Procurement Requests Information Systems Management 

(PRISM) and the BEP’s CLM system and then manually re-entered into IRS’s IPS 

system; 

 Standardize reporting across Treasury and the IRS to better track open commitments, 

awarded obligations, and other contractual modifications; 

Position Type/Other Costs FTE Positions $000

Implement Procurement Consolidation 4.75 6 $6,209

IT Specialist 4.75 6 737

Contractual Services 5,009

Hardware & Software 463

Improve Security at IRS Facilities 14.25 19 $24,802

IT Specialist 14.25 19 2,580

IT Contractual Labor 12,520

AR Software & Hardware 7,202

Leasehold Improvement 2,500

Total 19.00 25 $31,011
IRS-80 

 Allow Oracle Financial Tool Discoverer system to produce one active contract list for 

all three systems, which will improve acquisition planning and decrease risk of critical 

contract lapses; 

 Allow PRISM and CLM to take advantage of IPS’ clause generating capabilities, 

which will increase efficiency and improve compliance with mandatory clauses; 

 Improve the training and user information available; 

 Reduce licensing costs for multiple procurement systems and training costs, since staff 

will only have to be trained on a single system rather than across multiple systems; and 

 Increase strategic sourcing opportunities across all IRS customers. 

Improve Security at IRS Facilities (+$24.8 million / +14.25 FTE) 

This initiative requests resources to replace outdated security systems and implement solutions to 

vulnerabilities in IRS facilities. 

 Enterprise Physical Access Control System (ePACs) 

The IRS is requesting $22.3 million and 14.25 FTE to update the ePACs. ePACs is 

critical to the IRS’s ability to monitor and protect resources and support life safety 

activity for the public, employees, and contractors. The IRS legacy PAC systems 

originate from forty different vendors in multiple versions of hardware and software 

per vendor. All systems use retired operating systems, hardware, and PAC application 

software versions. The IRS has a growing list of systems that have totally failed. 

Some PAC application vendors have gone out of business. The IRS surveillance 

equipment also has reached the end of life and has serious performance issues. 

Existing Digital Video Recorders (DVR) lack the robustness and sophistication for 

integration with a modern access control system. Some of the most critical systems 

store video on VHS Tape, a retired technology. All systems are characterized as 

Federal Information Security Management Act (FISMA) non-compliant. 

The IRS has updated 115 of 491 IRS facilities to the ePACs. The ePACs is a modern 

access control and surveillance system. The ePACs expansion is projected for 

completion in mid-FY 2022, but without sufficient resources the progress in replacing 

outdated legacy PAC systems has slowed and the IRS’s ability to continue planned 

site upgrades is at risk. 

 Implement Security Countermeasures 

The IRS is also requesting $2.5 million to implement security recommendations 

developed in response to the FY 2010 Facility Risk Assessment. These 

recommendations were made to mitigate the vulnerabilities identified in the 

Assessment and align security resources with updated facility risk levels. 
IRS-81 

These resources will provide for the purchase, implementation, and installation of 

countermeasures such as: 

o Entry Control – Ensures the safety and security of IRS employees and assets; 

o Intrusion Detection Systems – Detects criminal acts; 

o Screening Equipment – Enables controlled access to specific areas of the facility; 

o Barriers – Deters persons from engaging in criminal activities; 

o Alarms – Provides security against loss from fire or mechanical failure; and 

o Cameras at sites Nationwide – Reduces emergency situations involving the safety and 

security of the building. 

Other Direct Costs 

There are no other direct costs associated with this initiative. 
IRS-82 

Maintain Integrity of Revenue Financial Systems 

+$12,136,000 / +8 FTE 

Funding to Maintain Integrity of 

Revenue Financial Systems will 

support and improve the IRS’s 

revenue financial accounting 

systems to ensure timely and accurate reporting of tax data. The revenue financial and 

accounting systems include the general ledger, which is required to reconcile and report to the 

Department of the Treasury (Treasury) on $2.9 trillion in revenue before refunds and 

$364 billion in individual and business tax refunds in FY 2013; produce the annual audited 

financial statements; and perform other operational and financial reporting on unpaid tax 

assessments currently identified by GAO as a material weakness. 

The current revenue financial system does not use commercial software and the IRS is reliant 

on internal funding to maintain its legacy system. This initiative will allow the IRS to make 

the necessary system and programming changes required to comply with Office of 

Management and Budget (OMB) and Treasury mandates, and to stay current with internal 

changes made to the IRS’s tax processing systems for tax administration that also affect 

financial reporting. The investment plan includes funding to: 

 Eliminate manual work-around processes; 

 Make changes to ensure that the IRS’s revenue financial systems comply with 

accounting and system requirements; 

 Merge multiple financial systems into one repository to ensure the integrity of the 

IRS’s financial data needed to improve analyses and reporting to address the 

long-standing GAO-reported material weakness related to unpaid tax assessments; 

 Develop financial system requirements to ensure accurate accounting and reporting for 

both the operational and financial transactions recorded in the tax systems; 

 Reduce or eliminate the need to support and maintain several separate systems 

supporting operational decision-making and the financial audit; and 

 Allow the IRS to implement all required system changes resulting from accounting 

events when changes are made in the tax processing systems (master files) for key 

initiatives, including the Affordable Care Act (Public Law 111-148), CADE 2, identity 

theft, Automated Trust Fund Recovery Penalty, and foreign tax compliance (Foreign 

Account Tax Compliance Act (Public Law 111-147)). 

Development of the new systems also will reduce or eliminate the need to support and 

maintain several separate systems supporting operational decision-making and the financial 

audit. 

Other Direct Costs 

There are no other direct costs associated with this initiative. 

Position Type/Other Costs FTE Positions $000

Maintain Integrity of Revenue Financial Systems 8.00 10 $12,136

Program Analyst 8.00 10 981

Contractual Services 11,155

Total 8.00 10 $12,136
IRS-83 

Expand Virtual Service Delivery (VSD) 

+$7,701,000 / +13 FTE 

Funding to Expand Virtual 

Services Delivery (VSD) will 

develop a unified communication 

platform through the internet to 

facilitate contact between IRS 

employees and taxpayers. VSD technology provides an alternative to face-to-face for 

taxpayers who are: 

 Undergoing an examination audit; 

 Interacting with Appeals to resolve their tax issues without litigation; 

 Needing assistance from the Taxpayer Advocate Service to solve their tax problems; 

 Victims of identity theft; or 

 Living outside of the United States. 

Taxpayer Digital Communications (TDC) will create a secure, web-based, digital 

communications channel via secure online messaging that will lead to greater IRS efficiencies 

and improved taxpayer satisfaction. 

TDC will include an online, web-based, secure message portal, allowing taxpayers and the 

IRS to communicate directly via secure messages. It is envisioned to be a one-hundred 

percent web-based solution only requiring a web-enabled device and an internet connection. 

The solution provides the ability for the IRS and taxpayers to send digital documents and both 

one-way and two-way secure messages, and it involves minimal integration with IRS systems. 

TDC is an iterative process and future expansions will include live chat, video meeting and 

co-browsing. 

TDC paves the way for allowing taxpayers direct interaction on difficult tax-related issues 

while they are at work or at home, or using their mobile device. TDC will improve taxpayer 

service and compliance through faster, more efficient taxpayer interactions while providing 

necessary privacy and security. 

The IRS will achieve significant savings through decreased calls and walk-ins while taxpayers 

will experience a greater level of service, consistent with their expectations when dealing with 

other online transactions. 

The use of this technology is expected to save a considerable amount of time and travel costs 

for employees and taxpayers and will enhance the taxpayer experience in the following areas: 

 Virtual Taxpayer Assistance Centers (TACs) 

Some IRS TACs are not permanently staffed, which requires the IRS to provide 

coverage by circuit-riding (employees travel from their posts-of-duty to the unstaffed 

locations) and then reimbursing employees for their travel expenses. Additionally, 

Position Type/Other Costs FTE Positions $000

Virtual Service Delivery - Taxpayer Digital 

Communication (VSD-TDC) 13.00 18 $7,701

IT Specialist 13.00 18 2,229

Contractual Services 922

Hardware & Software 4,550

Total 13.00 18 $7,701
IRS-84 

some TACs are not sufficiently staffed to handle taxpayer demand, resulting in long 

wait times for taxpayers. Use of online VSD technology will provide an alternative to 

“live” face-to-face service, expand availability of service to taxpayers, and maximize 

IRS resources. 

 Virtual Taxpayer Advocate Service (TAS) Sites 

TAS currently maintains 65 geographic locations nationwide for face-to-face 

interaction with taxpayers and taxpayer representatives, as well as 10 campus 

locations. TAS is required to have local taxpayer advocates in each State to assist 

taxpayers in resolving issues with the IRS, to identify areas in which taxpayers have 

problems dealing with the IRS and, to the extent possible, to propose changes in the 

administrative practices of the IRS to mitigate the problems identified. Use of online 

VSD technology will allow TAS to establish virtual sites to support the National 

Taxpayer Advocate’s goal of increasing taxpayer opportunities for face-to-face service 

options. 

 Virtual Appeals Hearings 

Appeals’ mission (to resolve tax controversies without litigation) frequently requires 

direct interaction with taxpayers through correspondence, telephone, and face-to-face 

meetings (often referred to as Appeals Hearings). In the past, when taxpayers dealing 

with Appeals Campus personnel requested face-to-face interaction, Appeals was 

required to transfer the case to a Field Appeals office, thus delaying the resolution of 

the matter and incurring shipping and transportation costs if the taxpayer did not reside 

close to an Appeals office. The use of VSD online capabilities will allow Appeals to 

resolve taxpayer tax issues in a more timely manner while saving travel and mailing 

costs. 

 Virtual Tax Examinations 

The IRS also is exploring the use of online VSD technology in the tax examination 

process. To ensure the success of virtually delivered audits, the IRS will need 

additional resources to expand functionality to allow the two-way exchange of 

documents, online scheduling of taxpayer appointments, and printing capability at the 

taxpayer’s location. 

Other Direct Costs 

There are no other direct costs associated with this initiative.
IRS-85 

Continue Migration from Aging Tax Administration Systems - Enhance Online Services 

+$16,508,000 / +41 FTE 

The IRS is requesting an increase of $16.5 million and 41 FTE ($829,000 is funded in the 

Operations Support appropriation to fund corporate costs related to the new hires) to fund the 

development of online services projects. 

The FY 2015 Business Systems Modernization (BSM) request will allow the IRS to expand 

the capabilities of CADE 2 relational database and address financial material weaknesses, and 

to complete the design, development, and testing of the Form 1040X, Amended U.S. 

Individual Income Tax Return, so IRS processing systems can accept the form electronically. 

Beginning in 2014 and continuing in 2015, the Return Review Program (RRP) and 

development of online services projects will be part of the BSM program. 

The FY 2015 BSM request of $330.2 million and 528 FTE will allow the IRS to continue the 

modernization of critical information technology systems that support the nation’s revenue 

base. These resources will fund the projects listed in the table below: 

Dollars in Thousands

Business Systems Modernization FY 2013

Enacted 

FY 2014 

Enacted 

FY 2015 

President's 

Budget Request 

CADE 2 (Taxpayer Account Database ) 

Continue the design and development of applications that will modernize core tax processing 

application architecture, address financial material weaknesses and expand capabilities in 

leveraging the CADE 2 relational database.

116,250 119,000 124,300

Enhance Online Services

Lead the IRS transition to the future digital government and define the long-term vision. 

Provide an enhanced taxpayer experience, a broad range of self-service and innovative options, 

build internal capability, and strengthen the operating model.

0 10,000 16,829

Return Review Program

Provide leading-edge technologies to advance IRS effectiveness in detecting, addressing, and 

preventing tax refund fraud and protecting US Treasury revenue. It will replace the legacy 

Electronic Fraud Detection System built in the mid-1990s. 

0 43,475 24,679

Modernized e-File 

Fund the physical design, development, and testing of Release 10, Form 1040X, Amended U.S. 

Individual Income Tax Return and fund the initial requirements and design phases of Release 

11, the implementation of technical improvements and assorted forms to be chosen by MeF’s 

Business partner.

43,400 9,148 24,700

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. 

37,750 24,600 24,600

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.

28,385 25,054 25,054

Management Reserve 5,286 1,701 4,191

Subtotal Capital Investments $231,071 $232,978 $244,353

Labor1 79,645 78,779 84,688

Support 2,222 1,181 1,169

Total BSM $312,938 $312,938 $330,210

 FY 2015 BSM Project Activities

1 The FY 2015 labor amount includes $1.593M in inflation costs, but excludes $829K of corporate costs, which is reflected in the Operations Support appropriation.
IRS-86 

Customer Account Data Engine 2 ($124.3 million) 

In FY 2015, the IRS will focus on preparing the Customer Account Data Engine 2 (CADE 2) 

modernized relational database so that it can be placed into full filing season production in 

2014. The IRS also will make progress on the next transition state of the CADE 2 initiative, 

Transition State 2 (TS2), which addresses the risks associated with continued use of updated 

core taxpayer account processing systems to administer America’s tax system. TS2 will build 

on earlier modernization efforts to establish a solid data foundation for the future and achieve 

long-term viability for the IRS’s core tax processing systems. In FY 2015, the IRS will: 

 Design and develop CADE 2 database conversion capability to prepare for Filing 

Season 2016; 

 Implement enhancements to Penalty & Interest common code for Filing Season 2015; 

 Design initial integrated framework for modernizing core taxpayer account processing 

functions that are currently performed by Individual Master File (IMF) (i.e. posting, 

financial settlement, and account analysis services); 

 Develop a data distribution framework to define standard sets of CADE 2 information, 

as well as modernized data access methods to provide CADE 2 files to downstream 

systems; and 

 Begin migration of initial interfaces to enable the CADE 2 database to become the 

authoritative source for all individual taxpayer account data. This will be 

accomplished by producing financial reports for consumption by downstream systems, 

enabling reporting capabilities, and deploying transcripts delivery capability. 

Enhance Online Services ($16.8 million) 

Funding to Enhance Online Services will simplify the taxpayer’s online experience, provide 

secure digital communications, and add more interactive capabilities to existing web 

self-service products. By providing taxpayers with the option to communicate digitally, the 

IRS estimates it will deliver a greater level of service and achieve significant savings by 

reducing call center phone calls and Taxpayer Assistance Center visits. 

To keep up with the ever-changing state of web technology, the IRS must develop and 

enhance online capabilities and services to taxpayers, tax practitioners, and internal IRS 

stakeholders. In the future, taxpayers should be able to easily find the right tax answers from 

their mobile devices, receive and send digital messages within a secure framework, interact 

with IRS representatives online, and provide electronic documents. 

This funding will deliver new taxpayer services and continue to foster the migration of service 

delivery from offline channels to the World Wide Web through the use of online services such 

as Online Account and Business Authentication, and through the migration of legacy 

applications to the Enterprise e-Authentication Platform. These improvements will help 

provide a better user experience, clearer content, an enhanced portal, and more robust 

analytics to continuously improve the taxpayer experience. 
IRS-87 

This request provides the potential for significant cost savings across the following customer 

service areas by reducing call center phone calls, Taxpayer Assistance Center visits, transcript 

requests, income verification requests, and the number of forms mailed or faxed to taxpayers. 

 Online Account 

Online Account is a multi-phase effort that will provide single sign-on capability for 

taxpayers to access account-related information with links to multiple products such as 

Online Payment Agreement, ACH Debit (Quick Pay), and Where’s My Refund?. 

Funding Online Taxpayer Account will provide the following strategic and operational 

benefits: 

o Resolve account inquiries online, providing better taxpayer control; 

o Create greater access to account actions and allot more time for IRS employees to 

focus on other taxpayer needs; and 

o Increase IRS efficiency and taxpayer satisfaction. 

Additional phases of Online Account will provide the following capabilities: 

o Present an online view of transcripts (HTML version); 

o Integrate solutions with eAuthentication Release 3 to provide single sign-on 

capability; 

o Improve the account management page, allowing taxpayers to make updates to 

their address, contact and notice history, business account access, and account 

delegations to practitioners; 

o Offer mobile browser support across the application; 

o Integrate solutions with Third Party Application Programming Interface (APIs) to 

display refund status and summary of prior year tax information; and 

o Provide Spanish language support across the application. 

 Business Authentication Requirements 

Business Authentication Requirements will allow the IRS to build out system 

functionality to authenticate corporate taxpayers and allow them to access online 

features and products. This funding will enhance the capability and potential audience 

for Electronic Authentication (e-Auth). The e-Auth program verifies and registers 

taxpayer identities and validates credentials for electronic access to IRS systems and 

applications. The current e-Auth enterprise-wide framework must be expanded to 

provide a secure web channel for corporate entities of all sizes to view, send, and 

receive information regarding their tax accounts. 
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 Migration of Legacy Applications to Enterprise e-Authentication Platform 

Migration of Legacy Applications to Enterprise e-Authentication Platform will 

enhance the IRS’s top three legacy applications – e-File, Where’s My Refund?, and 

Online Payment Agreement (Installment Agreements) – by adding more interactive 

capabilities once taxpayers have been authenticated. The IRS will achieve economies 

of scale and reduce redundancy by consolidating the migration of these applications 

rather than handling each application independently. 

Return Review Program ($24.7 million) 

The Return Review Program (RRP) delivers an integrated and unified system that enhances 

IRS capabilities to detect, resolve, and prevent criminal and civil tax noncompliance. The 

RRP provides a flexible and accessible system capable of supporting a cross-functional 

approach to address criminal and civil tax noncompliance. 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. 

The RRP will replace the Electronic Fraud Detection System (EFDS) system that is obsolete 

and presents system limitations making it difficult to maintain, upgrade, or operate. 

Fundamental technology and design limitations of EFDS also render it incapable of 

supporting any significant business changes. As a result, without a replacement, the system is 

vulnerable to structural failure and the potential inability to detect up to $1.5 billion in 

fraudulent refunds each year. 

The RRP implementation will occur in multiple transition states (TS). RRP includes 

interfaces for receiving external data, in-line batch anomaly detection, off-line modifications 

of rules and simulations, a data warehouse, and reporting. Additional features include: 

 Enhanced automatic identification of fraudulent and erroneous returns – with less 

impact on compliant taxpayers – using increasingly sophisticated models through 

entity-based research; 

 Discernible flexibility and scalability to support changing business needs; 

 Strategic identification of theft trends and detection; 

 In-line processing capabilities that applies rules and scoring in several anomaly areas, 

including identity theft and frivolous filer; and 

 Off-line processing capabilities that increase flexibility to implement new models or 

business rules to accommodate changes in process and legislation. 

All functions associated with the In-Line environment, including the Operational Data Store 

(ODS), will be deployed in TS1 release 1.0 (R1.0) in February 2014. Once R1.0 is delivered, 

analysis will immediately start and the RRP can provide information to other IRS programs 

for evaluation, comparison, and use. The IRS will design and plan deployment of functions, 

such as the Solution Data Warehouse (SDW), to the Off-Line environment as part of RRP. 
IRS-89 

RRP will provide connectivity to IRS systems to support seamless workflow, expand user 

capabilities, and compare new taxpayer data. RRP will re-engineer and incorporate current 

EFDS business application functionality, including pre-refund capabilities allowing early 

detection of multiple issues, score card usability, new treatment stream determination (e.g., a 

predefined sequence of remedial steps), and identification and management of Return 

Preparer issues. RRP will deliver full capability for individual taxpayer returns, including 

Off-Line Prevention, In-Line Detection, Systemic Verification of third-party data, Integrated 

Data Warehouse, Management Information System (MIS), and User Interface; using the 

Employee User Portal (EUP). 

RRP is expected to provide the following benefits: 

 Increased fraud detection, resolution, and prevention; 

 Improved case tracking, analysis, and reporting; 

 Generation of a scorecard for questionable returns, evaluating consistency, and 

dependability; 

 Reduction in the percentage of non-fraudulent refund claims frozen by the IRS; 

 Establishment of capabilities to coordinate detection and resolution of criminal and 

civil compliance issues; 

 Prevention of criminal and civil compliance issues; 

 Promotion of increased taxpayer compliance through targeted educational information 

and deterrence activities; and 

 Continued replacement of the current, obsolete EFDS platform. 

Modernized e-File (MeF) ($24.7 million) 

MeF serves as the primary external point of interaction for all electronic tax filings. It 

validates and stores tax return data, allowing authorized IRS users the ability to view tax 

return data securely online. Electronic access to tax return data significantly reduces the 

handling/mailing of paper returns and increases service to the taxpayer. 

MeF Release 8 deployed as planned in January 2013. The release improved system 

performance by implementing storage management, added stability by segregating tasks, and 

improved monitoring by increasing the operational metrics captured. These changes allowed 

MeF to support the Filing Season 2013 volume of e-filed returns. 

In FY 2014, the IRS will complete the implementation of Form 94X, Employment/ 

Unemployment Tax, and Form 1041, U.S. Income Tax Return for Estates and Trusts

(Release 9) to the MeF platform and the RRP interface. In addition, MeF will begin the initial 

requirements and design phases of Release 10, to add Form 1040X, Amended U.S. Individual 

Income Tax Return, to the MeF application. 

The FY 2015 request for MeF will initiate the design for development and deployment of 

Release 10, implementation of Form 1040X, Amended U.S. Individual Income Tax Return. 
IRS-90 

The FY 2015 request also will fund the initial requirements and design phases of Release 11, 

the implementation of technical improvements and assorted forms to be chosen by MeF’s 

business partner. 

By adding Form 94X, Form 1041, and Form 1040X to the MeF platform, taxpayers will 

realize the following benefits: 

 Extensive error checking to improve the accuracy of the tax return; 

 Sophisticated math error validation checking, which increases the likelihood that the 

tax return will be successfully processed; 

 Ability to attach all necessary documents supporting the data on the tax returns; 

 Capability to provide a justification to the taxpayer, third party tax provider, or tax 

software company when the IRS rejects the tax return; 

 Form receipt acknowledgments provided to transmitters within minutes during 

non-peak days (within two hours during peak days), instead of 24-48 hours under the 

legacy system; 

 Expanded availability of electronic filing, beyond the traditional legacy e-file 

shutdown dates; 

 Ability to e-file the current and two prior tax years; and 

 Ability to e-file a balance-due return and, at the same time, authorize an electronic 

funds withdrawal from the taxpayer’s bank account. 

Productivity and IRS efficiency gains include: 

 Improving Customer Service – Once MeF processes 941, 1041, and 1040X forms, the 

IRS Customer Service Representatives (CSRs) will have access to all of the 

information included on each form. This will allow the CSRs to provide responses to 

taxpayers more quickly by viewing the most current Forms 94X, 1041, and 1040X 

data online, eliminating the need for back-end rekeying and data entry. 

 Enhancing Compliance and Enforcement Operations – Online capabilities and 

100 percent data access to 94X, 1041, and 1040X forms will enhance compliance and 

enforcement activities by allowing access to taxpayer data in a timely and accurate 

manner. 

 Enhancing the Production Volumes – Returns submitted through the MeF encounter 

fewer processing errors than paper returns. 

 Retiring the Legacy 94X and 1041 e-File system – Adding Forms 94X and 1041 to 

MeF will allow the IRS to retire the legacy Electronic Management System (EMS) 

and reduce future operations and maintenance budgets. The EMS cannot be retired 

until MeF is able to support these forms. 
IRS-91 

 Implementing Modernized Data Standards – MeF uses the widely accepted, 

industry-standard Extensible Markup Language (XML) format for identifying, storing, 

and transmitting data. XML provides improved data accuracy and protection of 

taxpayer information. MeF provides more information to correct taxpayers’ returns, 

including expanded error code explanations that pinpoint the location of errors. 

Core Infrastructure ($24.6 million) 

This request will continue to provide 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 

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. The core 

infrastructure consists of two primary program elements – Infrastructure Shared Services 

(ISS) and the Development, Integration, and Testing Environment (DITE). In FY 2015, the 

IRS will continue to invest in: 

 ISS to provide capacity planning and performance engineering services for BSM 

projects. This includes additional unit, integration, and testing support to increase the 

reliability of deployed systems. 

 DITE to engineer, install, maintain, and support the development and test 

environments needed for each BSM project through deployment and acceptance in the 

production environment. 

Architecture, Integration and Management ($25.1 million) 

Provides engineering management capabilities, including systems strategy, architecture and 

engineering capabilities across IT Infrastructure, Business Applications, Data Management, 

and IT Security. Provides portfolio control and management processes and tools, including 

governance, enterprise lifecycle support, tiered program management, business rules and 

requirements, transition management, cost estimation, configuration/change managment and 

risk management. 

Management Reserve ($4.2 million) 

This activity maintains funds not otherwise designated for specific projects or programs to 

allow a degree of flexibility in responding to unexpected funding requirements. 
IRS-92 

Labor and Support ($85.8 million / 528 FTE) 

This request provides the labor and support costs associated with the development of projects 

within the BSM portfolio. 

Other Direct Costs 

There are no other direct costs associated with this initiative. 
IRS-93 

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

+$5,000,000 / 0 FTE 

Funding for Transfer to TTB for 

High-Return on Investment (ROI) 

Tax Enforcement Activities will 

transfer $5 million to 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 

FY 2015 Budget Submission. 

Position Type/Other Costs FTE Positions $000

Alcohol and Tobacco Tax and Trade Bureau 

Program Integrity Transfer $5,000

Special Agent 2,699

Training 220

Training Service Contracts 2,041

Support Supplies 8

Equipment 32

Total $5,000
IRS-94 

2.2– Operating Levels Table 

Dollars in Thousands

Appropriation Title: Internal Revenue Service FY 2013

Actuals 

FY 2014

Enacted

FY 2015

Request

FTE 85,881 84,189 91,187

Object Classification:

11.1 Full-Time Permanent Positions $6,047,511 $6,111,463 $6,525,491

11.3 Other than Full-Time Permanent Positions 94,756 83,132 83,840

11.5 Other Personnel Compensation 171,507 256,874 283,325

11.8 Special Personal Services Payments 16,105 16,220 16,366

11.9 Personnel Compensation (Total) $6,329,879 $6,467,689 $6,909,022

12.0 Personnel Benefits 1,887,624 1,914,163 2,130,999

13.0 Benefits to Former Personnel 52,703 52,692 53,187

21.0 Travel 75,155 119,404 176,624

22.0 Transportation of Things 18,353 26,668 30,178

23.1 Rental Payments to GSA 646,857 614,882 633,438

23.2 Rent Payments to Others 13,193 13,606 13,862

23.3 Communications, Utilities, & Misc 348,896 345,664 393,395

24.0 Printing & Reproduction 33,004 34,770 37,746

25.1 Advisory & Assistance Services 627,351 681,322 828,898

25.2 Other Services 108,385 194,651 258,820

25.3 Purchase of Goods & Services from Govt. Accounts 184,118 181,102 195,869

25.4 Operation & Maintenance of Facilities 166,763 163,090 177,081

25.5 Research & Development Contracts 3,950 3,983 4,079

25.6 Medical Care 13,921 13,932 15,778

25.7 Operation & Maintenance of Equipment 75,549 88,377 98,530

25.8 Subsistence & Support of Persons 1,173 3,193 4,872

26.0 Supplies and Materials 42,482 52,687 60,571

31.0 Equipment 276,270 276,612 387,153

32.0 Lands and Structures 9,013 8,867 26,914

33.0 Investments & Loans

41.0 Grants, Subsidies 15,863 27,893 33,893

42.0 Insurance Claims & Indemn 1,979 2,736 2,795

43.0 Interest and Dividends

44.0 Refunds

91.0 Unvouchered 3,630 2,629 2,823

Total Budget Authority $10,936,111 $11,290,612 $12,476,527

Appropriations:

Taxpayer Services $2,119,859 $2,156,554 $2,317,633

Enforcement 4,923,683 5,022,178 5,371,826

Operations Support 3,694,364 3,798,942 4,456,858

Business Systems Modernization 198,205 312,938 330,210

Total Budget Authority $10,936,111 $11,290,612 $12,476,527

1 FY 2014 Enacted includes $92M in funding ($34 million in Taxpayer Services and $58 million in Operations Support).

1
IRS-95 

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, 

[$2,122,554,000,]$2,317,633,000 of which not less than 

$5,600,000 shall be for the Tax Counseling for the Elderly 

Program, of which not less than $10,000,000 shall be available 

for low-income taxpayer clinic grants, of which not less than 

[$12,000,000]$18,000,000, to remain available until 

September 30, [2015]2016, shall be available for a Community 

Volunteer Income Tax Assistance matching grants program for 

tax return preparation assistance[, of which not less than 

$203,000,000 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.]

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 (for 

police-type use, not to exceed [850]100) 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, 

[$5,022,178,000]$5,371,826,000, [of which not less than 

$200,000 shall be for intensive training of employees in the 

Exempt Organizations Unit and] of which not less than 

[$60,257,000]$57,493,000 shall be for the Interagency Crime and 

Drug Enforcement program: Provided, That, of the amounts 

provided under this heading, not less than $237,838,000, 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 

The Budget Request 

includes additional 

resources for the 

Community Volunteer 

Tax Assistance matching 

grants program to 

leverage and educate 

community-based 

partnerships on the tax 

provisions to support 

ACA health coverage 

enrollment and tax filing 

seasons. 

The IRS supports 

adequate funding for the 

Taxpayer Advocate 

Service. Specifying the 

TAS funding level in law 

prevents the IRS from 

proposing an operating 

plan that allocates 

resources in the best 

interest of taxpayers. 

Beginning in FY 2013, 

most of the police-type 

vehicles were leased by 

IRS. 

The $200,000 for 

intensive training of 

employees in the Exempt 

Organizations Unit was a 

one-time earmark in 

FY 2014. 

The Interagency Crime 

and Drug Enforcement 

program earmark was 

changed to reflect the 

reduced compensation as 
IRS-96 

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)); and other services as authorized by 5 U.S.C. 

3109, at such rates as may be determined by the Commissioner; 

[$3,740,942,000]$4,456,858,000, of which not to exceed 

$250,000,000 shall remain available until September 30, 

[2015]2016, for information technology support; of which not to 

exceed $65,000,000 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, [2016]2017, for research; of which 

not less than $2,000,000 shall be for the Internal Revenue 

Service Oversight Board; of which not to exceed $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 House and 

Senate Committees on Appropriations 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 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 

[2015]2016, a summary of cost and schedule performance 

information for its major information technology systems: 

Provided, 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 $241,689,000, 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. 

a result of the reductions 

in the appropriation since 

FY 2012. 

The Budget Request for 

the Enforcement account 

is $5,371,826,000

including a program 

integrity cap adjustment 

of $237,838,000 which, 

when combined with the 

$241,689,000 cap 

adjustment in the 

Operations Support 

account, totals 

$479,527,000 in 

additional appropriation 

for tax enforcement and 

compliance activities. 

The Budget Request for 

the Operations Support 

account is $4,456,858,000

including a program 

integrity cap adjustment 

of $241,689,000 which, 

when combined with the 

$237,838,000 cap 

adjustment in the 

Enforcement account, 

totals $479,527,000 in 

additional appropriation 

for tax enforcement and 

compliance activities. 
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BUSINESS SYSTEMS MODERNIZATION

For necessary expenses of the Internal Revenue Service's 

business systems modernization program, 

[$312,938,000]$330,210,000, to remain available until 

September 30, [2016]2017, 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 

House and Senate Committees on Appropriations 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. 

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 or not to 

exceed 3 percent of appropriations under the heading 

“Enforcement” 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 
IRS-98 

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 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-in-compromise from a taxpayer who 

has been the victim of fraud by a third party payroll tax preparer. 

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, 2018”. 

[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.]

[SEC. 108. None of the funds made available under this Act may 

be used by the Internal Revenue Service to target groups for 

regulatory scrutiny based on their ideological beliefs.] 

[SEC. 109. In addition to the amounts otherwise made available 

in this Act for the Internal Revenue Service, $92,000,000, to be 

available until September 30, 2015, 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 to improve the 

delivery of services to taxpayers, to improve the identification 

and prevention of refund fraud and identity theft, and to address 

international and offshore compliance issues: Provided, That 

such funds shall supplement, not supplant any other amounts 

made available by the Internal Revenue Service for such 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. 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”.

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. 

Section 109 was included 

in the Consolidated 

Appropriations Act of 

2014 and is no longer 

necessary. 

The IRS requests 

Streamlined Critical Pay 

(SCP) authority through 

September 30, 2018. This 

SCP authority expired 

September 30, 2013. 

Without SCP the IRS will 

not be able to continue 

paying, after expiration of 

their current appointment, 

approximately 30 senior 

employees at the salaries 

they have earned over 

several years. The high 

potential attrition, 

principally in information 

technology, jeopardizes 

the IRS’s ability to 

continue modernizing its 

critical IT systems, which 

were just recently 

removed by GAO from its 

High-Risk list. 
IRS-99 

2C – Legislative Proposals 

The legislative proposals included in the FY 2015 President’s Budget request are provided 

below. These legislative proposals are intended to reduce the tax gap and improve tax 

compliance with minimal taxpayer burden. The new tax gap proposals included in the 

FY 2015 President’s Budget are estimated by the Treasury Office of Tax Analysis (OTA) to 

increase revenue by $74.5 billion over the next 10 years, which includes $52 billion generated 

by program integrity cap adjustments. 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 the FY 2015 President’s 

Budget tax gap proposals to be $132.2 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). 

Note that in a few cases estimates are not yet available due to timing. If Congress enacts 

these provisions, the IRS will require additional funds to be included in the authorizing 

legislation in the amounts shown below. 

The Administration proposes to expand information reporting, improve compliance by 

businesses, and strengthen tax administration. Should the Congress enact these provisions, 

Treasury requests that the amounts below be included as part of the authorizing legislation. 

The Budget also proposes to amend the Balanced Budget and Emergency Deficit Control Act 

of 1985 (BBEDCA), as amended, to provide 10-years (FYs 2015-2024) of discretionary caps 

to permit program integrity cap adjustments costing $17 billion and delivering $52 billion in 

additional revenue, thereby generating $35 billion in net savings over the ten-year budget 

window. 

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 information reporting for private separate accounts of life insurance 

companies ($0); 

 Require a certified Taxpayer Identification Number (TIN) from contractors and 

allow certain withholding ($11.5 million); 

 Modify reporting of tuition expenses and scholarships on Form 1098-T, Tuition 

Statement ($0.2 million); 

 Provide for reciprocal reporting of information in connection with the 

implementation of the Foreign Account Tax Compliance Act (FATCA) (new in 

2015); and 

 Provide authority to readily share beneficial ownership information of U.S. 

companies with law enforcement (new in 2015). 
IRS-100 

Improve compliance by businesses – Improving compliance by businesses of all sizes is 

important. Specific proposals to improve compliance by businesses would: 

 Require greater electronic filing of returns ($0.6 million); 

 Implement standards clarifying when employee leasing companies can be held 

liable for their clients’ Federal employment taxes ($2.9 million); 

 Increase certainty with respect to worker classification ($1.9 million); and 

 Increase information sharing to administer excise taxes (new in 2015). 

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); 

 Increase levy authority for payments to Medicare providers with delinquent tax 

debt) ($0.1 million); 

 Implement a program integrity statutory cap adjustment for tax administration 

($17.1 billion); 

 Streamline audit and adjustment procedures for large partnerships ($2.5 million); 

 Revise offer-in-compromise application rules ($17.8 million); 

 Expand the IRS access to information in the National Directory of New Hires for 

tax administration purposes ($12 million); 

 Make repeated willful failure to file a tax return a felony ($0); 

 Facilitate tax compliance with local jurisdictions ($1.2 million); 

 Extend statute of limitations where State adjustment affects Federal tax liability 

($0); 

 Improve investigative disclosure statute ($0); 

 Require taxpayers who prepare their returns electronically but file their returns on 

paper to print their returns with a scannable code ($14.6 million); 

 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); 

 Make e-filing mandatory for exempt organizations ($18.2 million); 

 Authorize the Department of Treasury to require additional information to be 

included in electronically filed Form 5500 annual reports and electronic filing of 

certain other employee benefit plan reports ($11.2 million); 

 Impose a penalty on failure to comply with electronic filing requirements 

($2.5 million); 
IRS-101 

 Provide whistleblowers with protection from retaliation ($0); 

 Provide stronger protection from improper disclosure of taxpayer information in 

whistleblower actions ($0); 

 Index all penalties for inflation ($0.8 million); 

 Extend paid preparer Earned Income Tax Credit (EITC) due diligence 

requirements to the child tax credit ($20.2 million); 

 Extend IRS authority to require a truncated Social Security Number (SSN) on 

Form W-2, Wage and Tax Statement ($0.2 million); 

 Add tax crimes to the Aggravated Identity Theft Statute ($0); 

 Impose a civil penalty on tax identity theft crimes ($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 (new in 2015); 

 Explicitly provide that the Department of Treasury and IRS have authority to 

regulate all paid return preparers (new in 2015); 

 Rationalize tax return filing due dates so they are staggered (new in 2015); 

 Increase the penalty applicable to paid tax preparers who engage in willful or 

reckless conduct (new in 2015); 

 Enhance administrability of the appraiser penalty (new in 2015); and 

 Enhance Unemployment Insurance (UI) program integrity (new in 2015). 

IRS-102 

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, ensuring the availability of taxpayer 

assistance, and providing taxpayer advocacy services. 

The Taxpayer Services President’s Budget request for FY 2015 is $2,317,633,000 in direct 

appropriations and 31,481 FTE. This is an increase of $161,079,000, or 7.47 percent, and 

2,485 FTE more than the FY 2014 Enacted Budget of $2,156,554,000 and 28,996 FTE. 

The performance measures reflected in the Taxpayer Services 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 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 Strategic Plan (FY 2014-2017). 
IRS-103 

2.1 – Budget Adjustments Table 

Taxpayer Services FTE Amount

FY 2013 Operating Level1 29,700 $2,135,553

FY 2014 Enacted2 28,996 $2,156,554

Changes to Base:

Non-Recur FY 2014 Additional Appropriation ($34,000)

Maintaining Current Levels (MCLs): $46,483

Pay Raise 24,564

FERS Contribution Increase 18,724

Non-Pay Inflation Adjustment 3,195

Efficiencies/Savings: (70) ($18,786)

Increase e-File Savings (55) (2,761)

HCTC Program Termination (15) (16,025)

Subtotal FY 2015 Changes to Base (70) ($6,303)

FY 2015 Base 28,926 $2,150,251

Program Changes:

Program Increases:

Taxpayer Service Initiative:

Improve Taxpayer Service and Return Processing 2,355 153,482

Subtotal Taxpayer Service Initiative 2,355 $153,482

Enforcement Initiatives:

Prevent Identity Theft and Refund Fraud 200 13,900

Subtotal Enforcement Initiatives 200 $13,900

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements

Subtotal FY 2015 Program Changes 2,555 $167,382

Total FY 2015 Budget Request 31,481 $2,317,633

Dollars in Thousands

1 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M 

transferred from the Enforcement appropriation to the Taxpayer Services ($13M) and Operations Support ($60M) appropriations. 

2 FY 2014 Enacted includes $34M in funding.
IRS-104 

2.2 – Operating Levels Table 

Dollars in Thousands

Appropriation Title: Taxpayer Services FY 2013

Actuals 

FY 2014

Enacted

FY 2015

Request

FTE 29,646 28,996 31,481

Object Classification:

11.1 Full-Time Permanent Positions $1,495,078 $1,513,047 $1,611,008

11.3 Other than Full-Time Permanent Positions 49,914 36,333 36,629

11.5 Other Personnel Compensation 58,769 78,459 87,803

11.8 Special Personal Services Payments 1 1 1

11.9 Personnel Compensation (Total) $1,603,762 $1,627,840 $1,735,441

12.0 Personnel Benefits 366,923 340,788 395,836

13.0 Benefits to Former Personnel 12

21.0 Travel 8,619 19,198 21,442

22.0 Transportation of Things 953 836 852

23.1 Rental Payments to GSA

23.2 Rent Payments to Others 4 23 24

23.3 Communications, Utilities, & Misc 1,778 1,809 1,845

24.0 Printing & Reproduction 8,573 9,055 9,115

25.1 Advisory & Assistance Services 25,691 22,391 22,838

25.2 Other Services 20,336 39,627 27,411

25.3 Purchase of Goods & Services from Govt. Accounts 60,875 58,557 59,726

25.4 Operation & Maintenance of Facilities 2 2 2

25.5 Research & Development Contracts

25.6 Medical Care

25.7 Operation & Maintenance of Equipment

25.8 Subsistence & Support of Persons 76 1,568 1,600

26.0 Supplies and Materials 5,926 5,677 6,291

31.0 Equipment 79 321 328

32.0 Lands and Structures 18 39 40

33.0 Investments & Loans

41.0 Grants, Subsidies 15,863 27,893 33,893

42.0 Insurance Claims & Indemn 369 930 949

43.0 Interest and Dividends

44.0 Refunds

91.0 Unvouchered

Total Budget Authority $2,119,859 $2,156,554 $2,317,633

Budget Activities:

Pre-filing Taxpayer Assistance & Education $586,896 $604,638 $639,249

Filing & Account Services 1,532,963 1,551,916 1,678,384

Total Budget Authority $2,119,859 $2,156,554 $2,317,633

1 FY 2014 Enacted includes $34M in funding.

1
IRS-105 

2.3 – Appropriation Detail Table 

3A – Pre-Filing Taxpayer Assistance and Education ($639,249,000 in direct 

appropriations, and an estimated $6,400,000 from user fees): This budget activity funds 

services to assist with tax return preparation, 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. 

Dollars in thousands

Taxpayer Services

Resources 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Pre-Filing Taxpayer Assistance and Education 5,474 $586,896 5,610 $605,761 5,489 $604,638 5,681 $639,249 192 $34,611 3.50% 5.72%

Filing and Account Services 24,172 1,532,963 24,090 1,529,792 23,507 1,551,916 25,800 1,678,384 2,293 126,468 9.75% 8.15%

Subtotal New Appropriated Resources 29,646 $2,119,859 29,700 $2,135,553 28,996 $2,156,554 31,481 $2,317,633 2,485 $161,079 8.57% 7.47%

Other Resources:

Reimbursables 594 37,535 594 37,535 623 39,809 623 40,212 403 1.01%

Offsetting Collections - Non Reimbursables

User Fees 558 190,999 558 190,999 558 190,999 558 190,999

Recovery from Prior Years

Unobligated Balances from Prior Years 182 19,303 182 19,304 11,373 11,372 (1) -0.01%

Transfers In/Out

Resources from Other Accounts

Subtotal Other Resources 1,334 $247,837 1,334 $247,838 1,181 $242,181 1,181 $242,583 $402 0.17%

Total Budget Authority 30,980 $2,367,696 31,034 $2,383,391 30,177 $2,398,735 32,662 $2,560,216 2,485 $161,481 -2.59% 6.73%

Actuals Operating Level FY 2015 Request FY 2015 Request 1 Request

1 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M transferred from the Enforcement appropriation to the Taxpayer Services 

($13M) and Operations Support ($60M) appropriations. 

2 FY 2014 Enacted includes $34M in funding.

% Change

Enacted2

$ Change

FY 2013 FY 2013 FY 2014 FY 2015 FY 2014 to FY 2014 to
IRS-106 

FY 2015 Program Changes by Budget Activity 

3.1.1 – Budget and Performance Report and Plan 

Description of Performance 

The IRS timely delivered 58.9 percent of the Critical Individual Filing Season Tax Products to 

the public by the fifth workday of January, falling short of the FY 2013 target of 95 percent. 

The American Taxpayer Relief Act of 2012 (ATRA) was enacted on January 2, 2013. The 

late passage of this legislation directly impacted critical tax products and hindered the IRS in 

meeting its target of 95 percent. As of January 25, 2013, only 16 business days after the 

ATRA enactment, the IRS was still able to post 107 of 112 critical filing season products for 

the January 30 official start date of the filing season. To achieve future targets the IRS will 

release products not expected to be affected by legislation early to have more time to analyze, 

develop, and post or print the tax products affected by legislation. In FY 2014 and FY 2015, 

the IRS expects to meet the target of 95 percent for Critical Individual Filing Season Tax 

Products to the Public. 

The IRS Timeliness of Critical TE/GE and Business Filing Season Tax products to the Public 

reached 83.6 percent, falling short of the FY 2013 target of 95 percent. The timing of the 

passage of ATRA hindered the IRS in meeting the FY 2013 target. The IRS will continue to 

plan, monitor, and coordinate all product development and delivery activities. To ensure 

Dollars in Thousands

Taxpayer Services

Pre-filing Taxpayer Assistance and Education FTE Amount

Taxpayer Service Initiative 192 $22,062

Improve Taxpayer Service and Return Processing 192 22,062

Enforcement Initiatives

Total FY 2015 Program Changes 192 $22,062

Dollars in Thousands

Pre-Filing Taxpayer Assistance & Education 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Resource Level 1, 2 Enacted Enacted Enacted Enacted Enacted Operating 

Level3 Enacted Request

Appropriated Resources $645,253 $661,000 $679,924 $678,204 $625,189 $605,761 $604,638 $639,249

Reimbursable Resources 774 796 862 1,135 96

User Fees 12,827 18,700 5,514 22,460 6,400 6,400 6,400

Budget Activity Total $658,854 $680,496 $686,300 $679,339 $647,745 $612,161 $611,038 $645,649

Pre-Filing Taxpayer Assistance & Education FY 2015

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Request

Measure Actual Actual Actual Actual Actual Actual Target Target

Timeliness of Critical Filing Season Tax Products to the Public (Ot) 92.4% 96.8% 95.3% 96.3% 97.2% 58.9% 95.0% 95.0%

Timeliness of Critical TE/GE & Business Tax Products to the Public (Ot) 89.5% 95.2% 97.7% 96.4% 94.5% 83.6% 95.0% 95.0%

Taxpayer Self-Assistance Rate (E) (L) 66.8% 69.3% 64.4% 70.1% 78.5% 83.3% 85.0% 86.0%

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Long Term Goal

1 The FY 2008 - FY 2012 Appropriated Resources represents the approved Operating Plan.

2 The FY 2008 - FY 2012 columns represent realized resources for reimbursable and user fees.

3 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration.
IRS-107 

future targets are met, the IRS also will continue to evaluate the processes so that mitigation 

strategies can be implemented quickly. In FY 2014 and FY 2015, the IRS expects to meet the 

target of 95 percent for the Critical TE/GE and Business Tax Products to the Public measure. 

The Taxpayer Self-Assistance Rate reached 83.3 percent for FY 2013, exceeding the 

80 percent rate target. This increase is attributed to an increase in web services, with more 

than 200 million taxpayers using the online Where’s My Refund? application to check on their 

refund, a 52 percent increase compared to the same period in FY 2012. Demand for 

self-service assistance continues to increase due to shifting customer preferences as more 

taxpayers choose to use automated applications to resolve issues and questions instead of 

more traditional methods such as contact with the IRS by telephone and written 

correspondence. The IRS will continue to promote the use of self-service applications and 

expects to meet the FY 2014 target of 85 percent and the FY 2015 of 86 percent. 

3B – Filing and Account Services ($1,678,384,000 in direct appropriations, an estimated 

$40,212,000 from reimbursable programs, and an estimated $184,599,000 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. 

 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. 

 Files Most Efficient Organization (MEO) provides staffing, training, and direct 

support for the management associated with the MEO for files in Submission 

Processing. This organization stores the administrative files and the most recent tax 
IRS-108 

returns in process, which are the returns most often requested for research by various 

IRS organizations before forwarding to Federal records centers. 

FY 2015 Program Changes by Budget Activity 

3.1.2 – Budget and Performance Report and Plan 

Dollars in Thousands

FTE Amount

Taxpayer Service Initiative 2,163 $131,420

Improve Taxpayer Service and Return Processing 2,163 131,420

Enforcement Initiatives 200 $13,900

Prevent Identity Theft and Refund Fraud 200 13,900

Total FY 2015 Program Changes 2,363 $145,320

Taxpayer Services

Filing and Account Services

Filing and Account Services 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Resource Level 1, 2, 3 Enacted Enacted Enacted Enacted Enacted Operating 

Level4 Enacted5 Request

Appropriated Resources $1,561,067 $1,647,406 $1,614,418 $1,630,549 $1,614,514 $1,529,792 $1,551,916 $1,678,384

Reimbursable Resources 36,037 37,094 21,993 27,857 20,759 37,535 39,809 40,212

User Fees 139,109 108,300 115,998 128,966 152,136 184,599 184,599 184,599

Budget Activity Total $1,736,213 $1,792,800 $1,752,409 $1,787,372 $1,787,409 $1,751,926 $1,776,324 $1,903,195

Filing and Account Services FY 2015

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Request

Measures Actual Actual Actual Actual Actual Actual Target Target

Percent Individual Returns Processed Electronically (Oe) (L) 57.6% 65.9% 69.3% 76.9% 80.5% 82.5% 84.1% 84.6%

Percent of Business Returns Processed Electronically (Oe) (L) 19.4% 22.8% 25.5% 31.8% 36.7% 40.2% 44.7% 46.5%

Customer Accuracy - Tax Law Phones (Ot) 91.2% 92.9% 92.7% 93.4% 93.2% 95.7% 93.0% 93.0%

Customer Accuracy - Accounts (Phones) (Ot) 93.7% 94.9% 95.7% 96.0% 95.6% 96.0% 95.0% 95.0%

Customer Contacts Resolved per Staff Year (E) 12,634 12,918 10,744 12,419 16,320 20,767 22,750 25,000

Customer Service Representative Level of Service (Oe) (L) * 52.8% 70.0% 74.0% 70.1% 67.6% 60.5% 61.0% 71.0%

Refund Timeliness - Individual (Paper) (Ot) 99.1% 99.2% 96.1% 99.4% 99.7% 99.0% 97.0% 98.0%

Cost per Taxpayer Served ($) (HCTC) (E) $16.94 $13.79 $9.52 $12.36 $14.43 $13.41 n/a n/a

Sign-up Time (Days) - Customer Engagement (HCTC) (Ot) 94.0 91.3 124.0 117.0 116.0 125.2 n/a n/a

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Long Term Goal

* Beginning in FY 2013, target includes an increase in base user fees.

n/a - HCTC program is scheduled to end on December 31, 2013.

Dollars in Thousands

1 The FY 2008 - FY 2012 Appropriated Resources represents the approved Operating Plan.

5 FY 2014 Enacted includes $34M in funding.

3

 FY 2012 and on the resources to administer the health insurance tax credit program were moved to the Taxpayer Services appropriation under the P.L. 112-74. For comparison 

purposes, FY 2007 through FY 2011 include these resources.

2 The FY 2008 - FY 2012 columns represent realized resources for reimbursable and user fees.

4 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $13M transferred from the 

Enforcement appropriation to the Taxpayer Services appropriation. 
IRS-109 

Description of Performance 

Millions of individual and business taxpayers file their returns electronically. For FY 2013 

the IRS achieved an 82.5 percent individual e-file rate (target 80 percent) and a 40.2 percent 

business e-file rate (target 38 percent), exceeding the targets for both measures. Business 

e-file continued to grow due to requirements that certain businesses and exempt organizations 

file electronically and more forms have become available for electronic filing. 

The overall benefits of e-file (i.e. faster refunds, greater accuracy, secure and confidential 

submission, quick confirmation, and the ability to file amended, superseded, and prior year 

returns) continue to drive performance for this measure. The IRS will increase the individual 

e-filing target to 84.1 percent for FY 2014 and 84.6 percent for FY 2015. The business 

e-filing target will increase to 44.7 percent for FY 2014 and 46.5 percent for 

FY 2015. Increases for both e file rates will be achieved by continuing to promote the 

benefits of e-filing. 

In FY 2013, Customer Accuracy – Tax Law was at 95.7 percent, exceeding the target of 

93 percent. IRS will continue to monitor results through data driven analysis of reports 

obtained from Embedded Quality Review System (EQRS) to ensure the achievement of future 

goals. Although responding to legislative changes in tax laws will continue to be a major 

challenge moving forward, the IRS will keep the tax law accuracy target for FY 2014 and 

FY 2015 at 93 percent. 

In FY 2013, the IRS correctly answered 96 percent of account questions via the telephone, 

exceeding the FY 2013 target of 95 percent. The IRS expects to maintain high performance 

on Customer Accuracy – Accounts (Phones) through ongoing efforts to ensure consistent 

quality reviews and provide training to managers and employees to make sure the best service 

is provided to customers. For FY 2014 and FY 2015, the IRS will keep the target for 

Customer Accuracy – Accounts (Phones) at 95 percent. 

The IRS Customer Contacts Resolved Per Staff Year reached 20,767 for FY 2013, exceeding 

the FY 2013 target of 16,754 and FY 2012 performance. This measure includes activities 

such as automated and assistor calls answered and web services completed. The increase is 

attributed to a significant increase in web usage, up 49 percent compared to last year. The 

primary contributor to the increase in Web Services was the Where's My Refund (WMR) 

application. Enhancements to WMR made it more "user friendly" and IRS experienced larger 

than expected traffic. The Customer Contacts Resolved Per Staff Year target will be 22,750 

for FY 2014 and 25,000 for FY 2015. 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 2013, the Customer Service Representative Level of Service was 60.5 percent, falling 

short of the FY 2013 target of 70 percent. The FY 2013 target for Customer Service 

Representative Level of Service was established prior to the notice of sequestration. When 

the sequester cuts took effect, the required funding adjustment severely hindered the IRS’s 

ability to meet the original target. In addition, demand for toll-free service increased over last 
IRS-110 

year by almost 10 percent, further straining reduced resources. The Customer Service 

Representative Level of Service target is 61 percent for FY 2014 and 71 percent for FY 2015. 

The IRS will maintain a balance between responding to taxpayer telephone demand and the 

paper correspondence received to achieve future level of service targets. 

In FY 2013, the Refund Timeliness Rate remained strong at 99 percent, exceeding the 

FY 2013 target of 98 percent. Additionally, the total number of Individual Master File (IMF) 

paper refunds continued its downward trend, contracting 10 percent compared to 2012. The 

IRS will continue to monitor IMF return cycles and inventories through various reports and 

production meetings to ensure future targets are achieved. For FY 2014 the target is 

97 percent and for FY 2015 the target is 98 percent. 

For the Health Insurance Tax Credit Administration (HITCA) program, the IRS exceeded the 

FY 2013 target of $15.00 for Cost per Taxpayer Served (CPTS) but fell just short in achieving 

the FY 2013 target of 125 days for Sign-Up Time. In FY 2013, CPTS was $13.41 compared 

to $14.43 for FY 2012, as fewer taxpayers were served while program costs increased. 

Sign-Up Time was higher, 125.2 days compared to 116 days in FY 2012. It is important to 

note that the Health Coverage Tax Credit (HCTC) program averaged only 15 days from 

receipt of registration to enrollment. However, this measure also included the variable time 

from when taxpayers are notified of their HCTC eligibility until they choose to register for the 

credit. 

The Trade Adjustment Assistance (TAA) Extension Act of 2011 modified the IRS Internal 

Revenue Code, and the HCTC program terminated December 31, 2013. The program 

collected the last monthly payment from HCTC participants in November 2013 for 

December 2013 coverage. While HCTC program operation activities (i.e., support Master 

File, decommission HCTC systems, etc.) will continue beyond the 2013 filing season, no 

payment and/or enrollment activity will take place, rendering both the Cost per Taxpayer 

Served and Customer Engagement Days (Sign-Up Time) measures obsolete starting in 

FY 2014. 

IRS-111 

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 collecting unpaid accounts. 

The Enforcement President’s Budget request for FY 2015 is $5,371,826,000 in direct 

appropriations and 45,757 FTE. This is a $349,648,000, or 6.96 percent, and 2,952 FTE 

increase from the FY 2014 Enacted Budget of $5,022,178,000 and 42,805 FTE. 

To reduce future deficits, a portion of this appropriation, $237,838,000, is requested as part of 

the $479,527,000 total program integrity cap adjustment for the IRS, which includes an 

above-base investment in tax enforcement and compliance programs, of which $5,000,000 

will be transferred to the Alcohol and Tobacco Tax and Trade Bureau for High-Return on 

Investment (ROI) enforcement activities. In conjunction with specified funds provided in the 

Operations Support account, this increment will support tax compliance initiatives expected to 

generate high ROI in the form of increased tax revenues. 

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 Strategic Plan 

(FY 2014-2017). 

 
IRS-112 

2.1 – Budget Adjustments Table 

Enforcement FTE Amount

FY 2013 Operating Level1 44,325 $4,949,178

FY 2014 Enacted 42,805 $5,022,178

Changes to Base:

Maintaining Current Levels (MCLs): $105,719

Pay Raise 57,260

FERS Contribution Increase 41,857

Non-Pay Inflation Adjustment 6,602

Other Adjustment: 329 ($29,221)

Base Adjustments 329 (29,221)

Efficiencies/Savings: ($18,233)

Adjustment for FERS increase (18,233)

Subtotal FY 2015 Changes to Base 329 $58,265

FY 2015 Base 43,134 $5,080,443

Program Changes:

Program Increases:

Enforcement Initiatives:

Address International and Offshore Compliance Issues 332 49,037

Expand Coverage of High Wealth Individuals and Enterprises 141 17,684

Prevent Identity Theft and Refund Fraud 191 16,971

Address Impact of ACA Statutory Requirements 349 36,574

Expand Audit Coverage 541 53,581

Enhance Collection Coverage 540 41,692

Improve Coverage of Partnerships and Flow-Through Entities 240 28,690

Expand Compliance Coverage in the Tax-Exempt Sector 119 13,364

Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 52 9,275

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities 106 14,765

Leverage Digital Evidence for Criminal Investigation (CI) 5 698

Leverage Data to Improve Case Selection 7 4,052

Subtotal Enforcement Initiatives 2,623 $286,383

Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer:

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

Subtotal Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer Initiative $5,000

Subtotal FY 2015 Program Changes 2,623 $291,383

Total FY 2015 Budget Request 45,757 $5,371,826

Dollars in Thousands

1 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M 

transferred from the Enforcement appropriation to the Taxpayer Services ($13M) and Operations Support ($60M) appropriations. 
IRS-113 

2.2 – Operating Levels Table 

Dollars in Thousands

Appropriation Title: Enforcement FY 2013

Actuals 

FY 2014

Enacted

FY 2015

Request

FTE 44,174 42,805 45,757

Object Classification:

11.1 Full-Time Permanent Positions $3,428,416 $3,407,302 $3,560,242

11.3 Other than Full-Time Permanent Positions 34,951 37,732 38,069

11.5 Other Personnel Compensation 96,385 150,535 162,394

11.8 Special Personal Services Payments 16,104 16,219 16,365

11.9 Personnel Compensation (Total) $3,575,856 $3,611,788 $3,777,070

12.0 Personnel Benefits 1,128,180 1,138,229 1,248,331

13.0 Benefits to Former Personnel 25

21.0 Travel 55,294 81,765 123,870

22.0 Transportation of Things 1,319 9,419 11,925

23.1 Rental Payments to GSA 10 10 10

23.2 Rent Payments to Others 402 525 556

23.3 Communications, Utilities, & Misc 3,053 3,732 4,062

24.0 Printing & Reproduction 2,951 3,872 3,939

25.1 Advisory & Assistance Services 47,914 56,927 62,163

25.2 Other Services 30,150 40,279 47,395

25.3 Purchase of Goods & Services from Govt. Accounts 47,490 44,534 49,029

25.4 Operation & Maintenance of Facilities 34 41 42

25.5 Research & Development Contracts 3,950 3,950 4,046

25.6 Medical Care 55 10 10

25.7 Operation & Maintenance of Equipment 1,247 126 237

25.8 Subsistence & Support of Persons 901 1,419 3,062

26.0 Supplies and Materials 18,019 19,473 22,327

31.0 Equipment 1,823 2,047 9,492

32.0 Lands and Structures 3 23 24

33.0 Investments & Loans

41.0 Grants, Subsidies

42.0 Insurance Claims & Indemn 1,377 1,380 1,413

43.0 Interest and Dividends

44.0 Refunds

91.0 Unvouchered 3,630 2,629 2,823

Total Budget Authority $4,923,683 $5,022,178 $5,371,826

Budget Activities:

Investigations $587,944 $613,417 $662,606

Exam & Collections 4,188,328 4,257,836 4,538,881

Regulatory 147,411 150,925 170,339

Total Budget Authority $4,923,683 $5,022,178 $5,371,826
IRS-114 

2.3 – Appropriation Detail Table 

3C – Investigations ($662,606,000 in direct appropriations, an estimated $30,903,000 from 

reimbursable programs, and an estimated $4,709,000 from user fees): 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 international investigations 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

Resources 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Investigations 3,688 $587,944 3,641 $589,751 3,623 $613,417 3,896 $662,606 273 $49,189 7.54% 8.02%

Exam and Collections 39,394 4,188,328 39,597 4,210,108 38,128 4,257,836 40,681 4,538,881 2,553 281,045 6.70% 6.60%

Regulatory 1,092 147,411 1,087 149,319 1,054 150,925 1,180 170,339 126 19,414 11.95% 12.86%

Subtotal New Appropriated Resources 44,174 $4,923,683 44,325 $4,949,178 42,805 $5,022,178 45,757 $5,371,826 2,952 $349,648 6.90% 6.96%

Other Resources:

Reimbursables 54 30,017 54 30,017 56 31,978 56 32,446 468 1.46%

Offsetting Collections - Non Reimbursables 16,579 16,579 27,408 27,408

User Fees 117 17,500 117 20,409 117 20,409 117 20,409

Recovery from Prior Years 2,552

Unobligated Balances from Prior Years 77 19,248 77 20,447 5,510 2,781 (2,729) -49.53%

Transfers In/Out2 97 165 (5,000) (5,000)

Resources from Other Accounts3 5555

Subtotal Other Resources 253 $83,441 253 $90,169 178 $85,305 178 $78,044 ($7,261) -8.51%

Total Budget Authority 44,427 $5,007,124 44,578 $5,039,347 42,983 $5,107,483 45,935 $5,449,870 2,952 $342,387 6.87% 6.70%

FY 2014 to

FY 2015 Request FY 2015 Request

2 Resources from Transfers In/Out include FY 2013 transfers between IRS and the Office of National Drug Control Policy (ONDCP) High Intensity Drug Trafficking Area (HIDTA) Program (net transfer $152K) and prior year 

user fees from the Operations Support and Business Systems Modernization (BSM) appropriations returned to the User Fees account (-$1.356M), and a FY 2015 transfer out to the Alcohol and Tobacco Tax and Trade 

Request

1 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M transferred from the Enforcement appropriation to the Taxpayer 

Services ($13M) and Operations Support ($60M) appropriations. 

FY 2013 FY 2014

Actuals

FY 2013

Operating Level1

3 Resources from Other Accounts include Other Direct FTE funded from the Federal Highway Administration (5 FTE projected for FY 2013, FY 2014 and FY 2015).

FY 2015

Enacted

FY 2014 to

$ Change % Change
IRS-115 

FY 2015 Program Changes by Budget Activity 

3.1.3 – Budget and Performance Report and Plan 

Description of Performance 

Criminal Investigation (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. 

FY 2013 year-end results for CI Completions (5,557) reflect 127.7 percent of the year-end 

target (4,350) and an increase of 12.6 percent compared to FY 2012. The finalization of a 

large number of investigations initiated in previous years contributed to these results in 

addition to an increase in Identity Theft investigations, which generally have a shorter cycle 

time. Continued management focus on the quality of cases selected led to 17.9 percent more 

Dollars in Thousands

FTE Amount

Enforcement Initiatives 188 $33,684

Address International and Offshore Compliance Issues 70 13,437

Prevent Identity Theft and Refund Fraud 42 6,380

Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 52 9,275

19 3,894

Leverage Digital Evidence for Criminal Investigation (CI) 5 698

Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer $5,000

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

Total FY 2015 Program Changes 188 $38,684

Enforcement 

Investigations

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities

Investigations

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Resource Level 1, 2 Enacted Enacted Enacted Enacted Enacted Operating 

Level3 Enacted Request

Appropriated Resources $592,906 $611,601 $639,363 $644,479 $636,386 $589,751 $613,417 $662,606

Reimbursable Resources 49,404 39,639 67,549 63,146 56,895 28,582 30,453 30,903

User Fees 6,935 4,709 4,709 4,709

Budget Activity Total $642,310 $651,240 $706,912 $707,625 $700,216 $623,042 $648,579 $698,218

Investigations FY 2015

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Request

Measure Actual Actual Actual Actual Actual Actual Target Target

Criminal Investigations Completed (Ot) (L) 4,044 3,848 4,325 4,697 4,937 5,557 4,440 4,440

Number of Convictions (Oe) (L) 2,144 2,105 2,184 2,350 2,634 3,311 2,450 2,450

Conviction Rate (Oe) (L) 92.3% 87.2% 90.2% 92.7% 93.0% 93.1% 92.0% 92.0%

Conviction Efficiency Rate ($) (E) (L) $315,751 $327,328 $324,776 $310,029 $270,511 $211,048 $280,000 $315,000

1 The FY 2008 - FY 2012 Appropriated Resources represents the approved Operating Plan.

Dollars in Thousands

2 The FY 2008 - FY 2012 columns represent realized resources for reimbursable and user fees.

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, L - Long Term Goal

3 FY 2013 Operating Level represents the across-the-board recission and reductions required by 
IRS-116 

prosecution recommendations to the Department of Justice (DOJ), while resulting in a 

3.5 percent decrease in discontinued investigations, compared to FY 2012. To ensure 

continued improvement, CI management will continue to leverage interagency partnerships 

and improve case selection methods using advanced technologies. The IRS expects to achieve 

its target of 4,440 completed investigations for FY 2014 and FY 2015. 

FY 2013 year-end results for the Number of Convictions (3,311) reflect 138 percent of the 

year-end target (2,400) and an increase of 25.7 percent compared to FY 2012. A large number 

of quality investigations initiated in previous years now being processed by the DOJ 

contributed to this increase. To ensure continued improvement, 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. The IRS expects to meet its target of 2,450 convictions for FY 2014 and 

FY 2015. 

FY 2013 year-end results for Conviction Rate are slightly higher (0.07 percent) than FY 2012, 

and 1.2 percent above the year-end target of 92 percent. Appropriate case selection and 

effective field performance had a positive effect on 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. In FY 2014 and FY 2015, the IRS 

expects to achieve its target of 92 percent using this strategy. 

The Conviction Efficiency Rate is defined as the cost of the Criminal Investigation program 

divided by the number of convictions. In FY 2013, the number of convictions (target 2,400) 

increased by 26 percent compared to last year and the Conviction Efficiency Rate exceeded 

the target ($285,000) by 26 percent to $211,048. A larger than expected number of 

convictions were completed due to a significant number of quality investigations initiated in 

previous years currently being processed by the DOJ and an increase in identify theft cases. 

CI will continue to monitor its budget and coordinate with DOJ Tax Division and U.S. 

Attorney Offices regarding prosecutorial priorities to ensure this measure is at or below future 

target. The FY 2014 target was lowered to $280,000 to reflect a reduction in the CI financial 

plan, but is increasing to $315,000 for FY 2015 due to proposed increases in Enforcement 

funding and total FTEs. 

3D – Exam and Collections ($4,538,881,000 in direct appropriations and an estimated 

$864,000 from reimbursable programs): 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. 
IRS-117 

 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. 

 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 provides 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). 
IRS-118 

 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. 

 Accounts Management Taxpayer Assurance Program provides support to Accounts 

Management for the review of questionable refunds including Identity Theft functions. 

 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. 

FY 2015 Program Changes by Budget Activity 

Dollars in Thousands

FTE Amount

Enforcement Initiatives 2,310 $236,063

Address International and Offshore Compliance Issues 255 34,240

Expand Coverage of High Wealth Individuals and Enterprises 141 17,684

Prevent Identity Theft and Refund Fraud 149 10,591

Address Impact of ACA Statutory Requirements 293 28,268

Expand Audit Coverage 540 53,366

Enhance Collection Coverage 540 41,692

Improve Coverage of Partnerships and Flow-Through Entities 239 28,442

Expand Compliance Coverage in the Tax-Exempt Sector 87 10,192

59 7,536

Leverage Data to Improve Case Selection 7 4,052

Total FY 2015 Program Changes 2,310 $236,063

Enforcement 

Exam and Collections

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities
IRS-119 

3.1.4 – Budget and Performance Report and Plan 

Exam and Collections 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Resource Level 1, 2 Enacted Enacted Enacted Enacted Enacted Operating

Level3 Enacted Request

Appropriated Resources $4,037,812 $4,355,186 $4,700,345 $4,689,220 $4,504,885 $4,210,108 $4,257,836 $4,538,881

Reimbursable Resources 8,302 8,970 8,729 11,163 6,385 804 854 864

User Fees 12,679 3,103 49

Budget Activity Total $4,058,793 $4,367,259 $4,709,123 $4,700,383 $4,511,270 $4,210,912 $4,258,690 $4,539,745

Exam and Collections FY 2015

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Request

Measure Actual Actual Actual Actual Actual Actual Target Target

Examination Coverage - Individual (Oe) (L) 1.0% 1.0% 1.1% 1.1% 1.0% 1.0% 0.8% 0.8%

Field Exam National Quality Review Score (Oe) (L) 86.0% 85.1% 84.9% 85.8% 87.4% 89.2% 89.6% 89.6%

Office Exam National Quality Review Score (Oe) (L) 90.0% 92.1% 91.6% 90.4% 91.3% 90.3% 90.2% 90.2%

Examination Quatlity - Large Business1 (Oe) (L) 92.0% 90.0% 90.0%

(New in FY 2013)

Examination Coverage - Business (Assets > $10 million) (Oe) (L) 6.1% 5.6% 5.7% 6.2% 6.2% 5.6% 4.2% 4.1%

Automated Underreporter (AUR) Efficiency (E) (L) 1,982 1,905 1,924 2,007 2,041 2,025 1,931 1,950

Automated Underreporter (AUR) Coverage (E) (L) 2.6% 2.6% 3.0% 3.3% 3.2% 2.8% 2.5% 2.7%

Examination Efficiency - Individual (E) (L) 138 138 140 139 142 142 133 124

Collection Coverage - Units (Ot) (L) 55.2% 54.2% 50.1% 50.0% 48.1% 47.0% 42.7% 45.0%

Collection Efficiency - Units (E) (L) 1,926 1,845 1,822 1,952 1,997 2,057 2,007 1,900

Field Collection National Quality Review Score (Ot) (L) 79.0% 80.5% 80.6% 80.3% 80.4% 81.4% 81.0% 81.0%

Automated Collection System (ACS) Accuracy (Oe) 95.3% 94.3% 95.9% 94.9% 94.7% 94.4% 94.0% 94.0%

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 - Large Business 

measure replaced the two previous LB&I quality measures - Examamination Quality - Industry and Coordinated Industry.

1 The FY 2008 - FY 2012 Appropriated Resources represents the approved Operating Plan.

Key: Oe - Outcome Measure, E - Efficiency Measure, L - Long Term Goal, Ot - Output/Workload Measure

Dollars in Thousands

2 The FY 2008 - FY 2012 columns represent realized resources for reimbursable and user fees.

3 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M transferred from the 

Enforcement appropriation to the Taxpayer Services ($13M) and Operations Support ($60M) appropriations. 
IRS-120 

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 performance are 

discussed below. 

The IRS met the FY 2013 Individual Exam Coverage target of 1 percent. There were over 

77,000 fewer audits in FY 2013, a 5.22 percent decrease compared to FY 2012. 

Concurrently, total prior year calendar individual return filings increased by 2.01 percent, 

placing downward pressure on the coverage ratio. Future plans are to continue to decrease 

cycle times, identify workload with short cycle times, and emphasize Individual Master File 

related pickups from Business Master File returns. The IRS expects to achieve an Individual 

Exam Coverage rate of 0.8 percent in FY 2014 and FY 2015. 

In FY 2013, Field Exam National Quality Review Score reached 89.2 percent, exceeding its 

target of 86.9 percent. This increase is due to improvement in 16 of the 17 quality attributes 

during FY 2013. Future efforts will focus on eliminating the leading errors within the 

weakest quality attributes. The IRS expects to achieve a quality score of 89.6 percent in 

FY 2014 and FY 2015. 

The IRS achieved a score of 90.3 percent for the Office Exam National Quality Review Score 

target, missing the FY 2013 target of 91.1 percent by 0.8 percent. Although Office Exam 

showed improvement in 9 of the 17 quality attributes, declines in seven attributes offset the 

improvements and attributed to missing the target. FY 2014 efforts will focus on eliminating 

the leading errors within the weakest quality attributes. The IRS expects to achieve a quality 

score of 90.2 percent in FY 2014 and FY 2015.

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 reported LB&I quality measures Examination Quality – Industry 

and Coordinated Industry. For FY 2013, Examination Quality – Large Business finished at 

92 percent (baseline for measure), with FY 2014 and FY 2015 targets set at 90 percent. For 

FY 2014, LB&I will focus on the importance of meeting the target through direct feedback to 

field teams, partnering with the Industries in Quality Improvement Efforts, Quarterly 

Reports/Memos, and outreach to field teams. 

The IRS exceeded the FY 2013 Business Examination Coverage (assets > $10 million) target 

of 4.6 percent, achieving an Exam coverage rate of 5.6 percent. Exam coverage exceeded 

plan as Large Business Return (LBR) closures increased because the planned realignment of 

resources from working large business returns to supporting OVDI (Offshore Voluntary 

Disclosure Initiative) closures occurred later than expected in the fiscal year. In addition, an 

unexpected allocation of resources to Joint Committee led to an increase in Joint Committee 

return closures. LB&I is projecting a lower coverage rate for FY 2014 and FY 2015 to 4.2 and 

4.1 percent, respectively, as a result of a lower FTE allocation for large business exams due to 
IRS-121 

no initiative hiring, no attrition hiring, and continued reallocation of resources to work OVDI 

returns. 

The IRS did not achieve the FY 2013 Exam Efficiency (Individual) target of 145 due 

to budgetary challenges, more complex paid preparer cases, and delays in closing cases due to 

Hurricane Sandy. The measure demonstrate how effectively resources are expended in closing 

individual returns and is calculated by dividing the total number of individual 1040 returns 

closed by the Full-Time Equivalent (FTE) expended in relation to those individual returns. 

Although the government shutdown decreased closures, IRS-wide emphasis in FY 2014 is to 

continue to decrease cycle times and increase IMF related pickups from BMF returns. The 

IRS expects to achieve its FY 2014 target of 133 and FY 2015 target of 124. 

For FY 2013, AUR efficiency finished at 2,025, below the target of 2,035. While closing over 

4.1 million cases for the 4th consecutive year, AUR efficiency was not met due to budgetary 

challenges and shifting of resources to address non-closure type work such as identity theft. 

The IRS expects to achieve the FY 2014 target of 1,931 and the FY 2015 target of 1,950. 

In FY 2013, Automated Underreporter (AUR) Coverage was 2.8 percent, below the FY 2013 

target of 2.9 percent. Total contact closures decreased 9 percent while individual filings 

increased by 1.8 percent in FY 2013 compared to last year. Because of budgetary challenges 

faced during the year and resources being diverted to identity theft, the target was missed by 

roughly 3 percent. In FY 2014, AUR will continue, on a regular basis, to improve coverage 

through improving the case screening process and increasing notices issued and closures. The 

IRS expects to achieve the FY 2014 target of 2.5 percent and FY 2015 target of 2.7 percent. 

Collection 

The Collection program collects delinquent taxes and secures delinquent tax returns through 

the fair and equitable application of the tax laws and educate taxpayers to improve future 

compliance; thereby protecting and promoting public confidence in the American tax system. 

The performance goals that the IRS uses to gauge collection program performance are 

discussed below. 

Through FY 2013, Collection Coverage was 47 percent, exceeding the FY 2013 target of 

46.4 percent. In FY 2013, net dispositions decreased by 6.7 percent compared to FY 2012. 

Collection is working together to develop options to balance non-filer work with downstream 

capacity. The IRS continues to identify opportunities to improve alignment between cases 

created and capacity for plan delivery. The IRS expects to achieve the FY 2014 target of 

42.7 percent and the FY 2015 target of 45 percent. 

In FY 2013, Collection Efficiency finished at 2,057, above the FY 2013 target of 2,049. In 

FY 2014 Collection will place focus on marketing and promoting the online payment 

agreements increasing dispositions in the notice stream. Automated Clearing House (ACH) 

Debit went online in November which should improve notice dispositions by allowing 

taxpayers to pay online and modify Taxpayer Delinquency Investigation (TDI) creation. The 

IRS expects to achieve the FY 2014 target of 2,007 and the FY 2015 target of 1,900. 
IRS-122 

In FY 2013, the Field Collection National Quality Review Score (NQRS) reached 

81.4 percent, exceeding the FY 2013 target of 80.4 percent. Field Exam showed 

improvement in 16 of the 17 quality attributes during FY 2013. Future efforts will focus on 

eliminating the leading errors within the weakest quality attributes. The IRS expects to 

achieve the FY 2014 and FY 2015 target of 81 percent. 

FY 2013 year-end results for Automated Collection System Accuracy (ACS) 94.4 percent fell 

short of the target of 94.5 percent despite all sites’ continued efforts to address the issues 

impacting Customer Accuracy, including identifying the top drivers impacting the measure 

and sharing and discussing these trends with all levels of management for proper changes. In 

addition, mandatory use of several of the Interactive Tax Assistant Tools became effective 

June 17th which helped reduce Customer Accuracy errors. Continuing Professional Education 

(CPE) is scheduled to be delivered in the first quarter of FY 2014 to address some of the 

greatest Customer Accuracy errors. The IRS expects to achieve the FY 2014 and FY 2015 

target of 94 percent. 

3E – Regulatory ($170,339,000 in direct appropriations, an estimated $679,000 from 

reimbursable programs, and an estimated $15,700,000 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 program activities 

include the following: 

 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. 

 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. 
IRS-123 

FY 2015 Program Changes by Budget Activity 

3.1.5 – Budget and Performance Report and Plan 

Description of Performance 

Tax Exempt and Government Entities (TEGE) Determination Closures include both 

applications for tax-exempt status for employee retirement plans and applications from 

various charitable entities seeking tax-exempt status. The IRS reviews applications to 

determine eligibility and closes them upon approval or disapproval. 

For FY 2013, final year-end results for TEGE Determination Case Closures were 5.4 percent 

above the target of 62,473. The decline in determination case closures was largely due to 

working older Employee Plan (EP) cases, which required more time to complete, resulting in 

a 51 percent decrease in the number of EP closures. The IRS continues to apply resources to 

the in-process aged inventory. In Exempt Organizations (EO), the IRS continues to apply 

more time to cases that close quicker and EO technical specialists complete several hundred 

complex cases. TEGE will continue to review case processing procedures with the Lean Six 

Sigma Office to identify changes that will alleviate the inventory backlog and improve case 

processing efficiencies in the EP and EO programs. These efforts will assist in achieving the 

FY 2014 and FY 2015 targets of 71,219 and 74,475 respectively. 

Dollars in Thousands

FTE Amount

Enforcement Initiatives 125 $16,636

Address International and Offshore Compliance Issues 7 1,360

Address Impact of ACA Statutory Requirements 56 8,306

Expand Audit Coverage 1 215

Improve Coverage of Partnerships and Flow-Through Entities 1 248

Expand Compliance Coverage in the Tax-Exempt Sector 32 3,172

28 3,335

Total FY 2015 Program Changes 125 $16,636

Enforcement 

Regulatory

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities

Regulatory 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Resource Level 1, 2 Enacted Enacted Enacted Enacted Enacted Operating 

Level3 Enacted Request

Appropriated Resources $149,282 $150,480 $164,292 $159,293 $158,096 $149,319 $150,925 $170,339

Reimbursable Resources 435 469 574 654 660 631 671 679

User Fees 168 13,249 12,482 15,700 15,700 15,700

Budget Activity Total $149,885 $150,949 $164,866 $173,196 $171,238 $165,650 $167,296 $186,718

Regulatory FY 2015

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Request

Measure Actual Actual Actual Actual Actual Actual Target Target

TE/GE Determination Case Closures (Ot) 100,050 96,246 105,247 91,205 87,000 65,877 71,219 74,475

Dollars in Thousands

Key: Ot - Output/Workload Measure

1 The FY 2008 - FY 2012 Appropriated Resources represents the approved Operating Plan.

2 The FY 2008 - FY 2012 columns represent realized resources for reimbursable and user fees.

3 FY 2013 Operating Level represents the across-the-board recission and reductions required by 

IRS-124 

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 President’s Budget request for FY 2015 is $4,456,858,000 in direct 

appropriations and 13,380 FTE. This is an increase of $657,916,000, or 17.32 percent, and 

1,520 FTE more than the FY 2014 Enacted Budget of $3,789,942,000 and 11,860 FTE. 

A portion of this appropriation, $241,689,000, is requested as part of the $479,527,000 

program integrity cap adjustment for the IRS tax enforcement and compliance programs, 

which includes an above-base investment in these programs to reduce future deficits. In 

conjunction with specified funds provided to the IRS Enforcement account, this increment 

will support new tax compliance initiatives that are expected to generate high returns on 

investment in the form of increased tax revenues. This appropriation funds the following 

budget activities. 

The performance 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 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 Strategic Plan (FY 2014-2017). 
 IRS-125

2.1 – Budget Adjustments Table 

Operations Support FTE Amount

FY 2013 Operating Level1 11,885 $3,800,943

FY 2014 Enacted2 11,860 $3,798,942

Changes to Base:

Non-Recur FY 2014 Additional Appropriation ($58,000)

Maintaining Current Levels (MCLs): $69,382

Pay Raise 19,399

FERS Contribution Increase 14,014

Non-Pay Inflation Adjustment 35,969

Other Adjustment: 244 $29,221

Base Adjustments 244 29,221

Efficiencies/Savings: ($58,181)

Increase e-File Savings (39)

Adjustment for FERS increase (58,142)

Reinvestment: $16,025

Expand Telecom Infrastructure to Handle Increased Demand 16,025

Subtotal FY 2015 Changes to Base 244 ($1,553)

FY 2015 Base 12,104 $3,797,389

Program Changes:

Program Increases:

Taxpayer Service Initiative:

Improve Taxpayer Service and Return Processing 36 57,776

Subtotal Taxpayer Service Initiative 36 $57,776

Enforcement Initiatives:

Address International and Offshore Compliance Issues 7,773

Expand Coverage of High Wealth Individuals and Enterprises 3,273

Prevent Identity Theft and Refund Fraud 66 34,005

Address Impact of ACA Statutory Requirements 50 19,525

Expand Audit Coverage 45 44,198

Enhance Collection Coverage 37 25,070

Improve Coverage of Partnerships and Flow-Through Entities 4 7,849

Expand Compliance Coverage in the Tax-Exempt Sector 2,731

Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 8,537

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities 2,772

Implement Information Technology (IT) Changes to Deliver the Foreign Account Tax Compliance 

Act (FATCA) 140 32,223

Leverage Digital Evidence for Criminal Investigation (CI) 1 3,674

Leverage Data to Improve Case Selection 39 32,741

Subtotal Enforcement Initiatives 382 $224,371

Infrastructure Initiatives:

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements 818 305,645

Implement Information Technology (IT) Services 10,000

Implement Campus Consolidation and Revitalization Strategy 10,000

Implement eGovernment and Other Administration Priorities 19 31,011

Maintain Integrity of Revenue Financial Systems 8 12,136

Expand Virtual Service Delivery (VSD) 13 7,701

Subtotal Infrastructure Initiatives 858 $376,493

Business Systems Modernization Initiative:

Continue Migration from Aging Tax Administration Systems - Enhance Online Services 829

Subtotal Business Systems Modernization Initiative $829

Subtotal FY 2015 Program Changes 1,276 $659,469

Total FY 2015 Budget Request 13,380 $4,456,858

Dollars in Thousands

1 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M 

transferred from the Enforcement appropriation to the Taxpayer Services ($13M) and Operations Support ($60M) appropriations. 

2 FY 2014 Enacted includes $58M in funding.
 IRS-126

2.2 – Operating Levels Table 

Dollars in Thousands

Appropriation Title: Operations Support FY 2013

Actuals 

FY 2014

Enacted

FY 2015

Request

FTE 11,610 11,860 13,380

Object Classification:

11.1 Full-Time Permanent Positions $1,078,767 $1,137,719 $1,297,590

11.3 Other than Full-Time Permanent Positions 8,884 8,067 8,142

11.5 Other Personnel Compensation 15,259 26,380 31,496

11.8 Special Personal Services Payments

11.9 Personnel Compensation (Total) $1,102,910 $1,172,166 $1,337,228

12.0 Personnel Benefits 378,964 412,262 461,427

13.0 Benefits to Former Personnel 52,666 52,692 53,187

21.0 Travel 11,126 17,487 30,242

22.0 Transportation of Things 16,081 16,413 17,401

23.1 Rental Payments to GSA 646,847 614,872 633,428

23.2 Rent Payments to Others 12,787 13,058 13,282

23.3 Communications, Utilities, & Misc 344,065 340,123 387,488

24.0 Printing & Reproduction 21,480 21,843 24,688

25.1 Advisory & Assistance Services 433,839 395,994 531,802

25.2 Other Services 57,899 114,630 183,858

25.3 Purchase of Goods & Services from Govt. Accounts 75,753 77,805 87,114

25.4 Operation & Maintenance of Facilities 166,727 163,047 177,037

25.5 Research & Development Contracts 33 33

25.6 Medical Care 13,866 13,922 15,768

25.7 Operation & Maintenance of Equipment 74,022 86,251 96,793

25.8 Subsistence & Support of Persons 196 206 210

26.0 Supplies and Materials 18,531 27,531 31,902

31.0 Equipment 257,380 249,376 346,687

32.0 Lands and Structures 8,992 8,805 26,850

33.0 Investments & Loans

41.0 Grants, Subsidies

42.0 Insurance Claims & Indemn 233 426 433

43.0 Interest and Dividends

44.0 Refunds

91.0 Unvouchered

Total Budget Authority $3,694,364 $3,798,942 $4,456,858

Budget Activities:

Infrastructure $874,627 $842,064 $913,677

Shared Services & Support 1,097,565 1,154,960 1,269,176

Information Services 1,722,172 1,801,918 2,274,005

Total Budget Authority $3,694,364 $3,798,942 $4,456,858

1 FY 2014 Enacted includes $58M in funding.

1
 IRS-127

2.3 – Appropriation Detail Table 

3F – Infrastructure ($913,677,000 in direct appropriations, an estimated $760,000 from 

reimbursable programs, and an estimated $5,414,000 from user fees): 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 

services needs, and non-IT equipment. 

 Security covers building security costs related to contract guard services. 

Dollars in thousands

Operations Support

Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Infrastructure $874,627 $886,535 $842,064 $913,677 $71,613 8.50%

Shared Services and Support 5,026 1,097,565 5,120 1,111,317 5,091 1,154,960 5,425 1,269,176 334 114,216 6.56% 9.89%

Information Services 6,584 1,722,172 6,765 1,803,091 6,769 1,801,918 7,955 2,274,005 1,186 472,087 17.52% 26.20%

Subtotal New Appropriated Resources 11,610 $3,694,364 11,885 $3,800,943 11,860 $3,798,942 13,380 $4,456,858 1,520 $657,916 12.82% 17.32%

Other Resources:

Reimbursables 138 26,726 138 26,726 143 28,410 143 28,761 351 1.24%

Offsetting Collections - Non Reimbursables

User Fees 1 182,085 1 184,276 1 184,276 1 184,276

Recovery from Prior Years 2,294 8,175

Unobligated Balances from Prior Years 158 170,069 158 198,489 120,580 113,722 (6,858) -5.69%

Transfers In/Out3 (911)

Resources from Other Accounts

Subtotal Other Resources 297 $381,174 297 $416,755 144 $333,266 144 $326,759 ($6,507) -1.95%

Total Budget Authority 11,907 $4,075,538 12,182 $4,217,698 12,004 $4,132,208 13,524 $4,783,617 1,520 $651,409 12.66% 15.76%

Actuals FY 2015 Request

3 Resources from Transfers In/Out include FY 2013 transfers between IRS and the Office of National Drug Control Policy (ONDCP) High Intensity Drug Trafficking Area (HIDTA) Program (net transfer $152K) and prior year user 

fees from the Operations Support and Business Systems Modernization (BSM) appropriations returned to the User Fees account (-$1.356M), and a FY 2015 transfer out to the Alcohol and Tobacco Tax and Trade Bureau 

(TTB) ($5M)

Operating Level FY 2015 Request 1

$ Change % Change

Enacted2

FY 2013 FY 2015 FY 2013 FY 2014 FY 2014 to FY 2014 to

2 FY 2014 Enacted includes $58M in funding.

1 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M transferred from the Enforcement appropriation to the Taxpayer 

Services ($13M) and Operations Support ($60M) appropriations. 

Request
 IRS-128

FY 2015 Program Changes by Budget Activity 

3.1.6 – Budget and Performance Report and Plan 

Description of Performance 

In FY 2013, there were 89 space reduction projects completed that resulted in the release of 

557,779 rentable square feet of space with annualized rent savings of $15.7 million. 

Approximately 30 space reduction projects have been approved for implementation in 

FY 2014, which would result in the release of 350,000 rentable square feet of space with 

annualized rent savings of approximately $11.3 million. The IRS will continue to implement 

high priority projects in FY 2015 if funds become available. Project identification will 

continue during this budget year. 

Dollars in Thousands

FTE Amount

Taxpayer Service Initiative $16,362

Improve Taxpayer Service and Return Processing 16,362

Enforcement Initiatives $26,009

Address International and Offshore Compliance Issues 2,962

Expand Coverage of High Wealth Individuals and Enterprises 1,260

Prevent Identity Theft and Refund Fraud 3,638

Address Impact of ACA Statutory Requirements 2,190

Expand Audit Coverage 5,240

Enhance Collection Coverage 5,152

Improve Coverage of Partnerships and Flow-Through Entities 2,178

Expand Compliance Coverage in the Tax-Exempt Sector 1,058

Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 462

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities 945

448

Leverage Digital Evidence for Criminal Investigation (CI) 54

Leverage Data to Improve Case Selection 422

Infrastructure Initiatives $10,632

2,618

Implement Campus Consolidation and Revitalization Strategy 7,659

Implement eGovernment and Other Administration Priorities 167

Maintain Integrity of Revenue Financial Systems 67

Expand Virtual Service Delivery (VSD) 121

Business Systems Modernization Initiative $368

Continue Migration from Aging Tax Administration Systems - Enhance Online Services 368

Total FY 2015 Program Changes $53,371

Operations Support

Infrastructure

Implement Information Technology (IT) Changes to Deliver the Foreign Account Tax 

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other 

Infrastructure

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Resource Level 1, 2 Enacted Enacted Enacted Enacted Enacted Operating

Level3 Enacted Request

Appropriated Resources $826,313 $875,538 $895,202 $926,190 $929,634 $886,535 $842,064 $913,677

Reimbursable Resources 149 14,120 505 880 1,016 701 748 760

User Fees 13,049 23,290 57,477 5,414 5,414 5,414

Budget Activity Total $839,511 $889,658 $895,707 $950,360 $988,127 $892,650 $848,226 $919,851

2 The FY 2008 - FY 2012 columns represent realized resources for reimbursable and user fees.

Dollars in Thousands

1 The FY 2008 - FY 2012 Appropriated Resources represents the approved Operating Plan.

3 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer of $15.3M transferred from 

the Enforcement appropriation to Operations Support appropriation. 
 IRS-129

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 

offset the projected rent costs in FY 2014 and beyond. 

3G – Shared Services and Support ($1,269,176,000 in direct appropriations, an estimated 

$18,504,000 from reimbursable programs, and an estimated $33,826,000 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, 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 the Treasury Franchise Fund. 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 decision-making, 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. 

 Treasury Complaint Centers plan and manage the Treasury Complaint Centers. 

 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. 

 Printing and Postage – Media and Publications provides operating divisions with 

printing and postage, including shipping of taxpayer and internal use materials. 
 IRS-130

 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 noncompliance, and for the 

implementation of successful strategies to address taxpayer noncompliance.

 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 Customer Account Data Engine 2 (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. 

FY 2015 Program Changes by Budget Activity 

Dollars in Thousands

FTE Amount

Taxpayer Service Initiative 13 $12,622

Improve Taxpayer Service and Return Processing 13 12,622

Enforcement Initiatives 69 $41,149

Address International and Offshore Compliance Issues 2,804

Expand Coverage of High Wealth Individuals and Enterprises 1,154

Prevent Identity Theft and Refund Fraud 19 7,212

Address Impact of ACA Statutory Requirements 50 15,466

Expand Audit Coverage 4,927

Enhance Collection Coverage 4,769

Improve Coverage of Partnerships and Flow-Through Entities 1,952

Expand Compliance Coverage in the Tax-Exempt Sector 944

Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 579

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities 885

196

Leverage Digital Evidence for Criminal Investigation (CI) 34

Leverage Data to Improve Case Selection 227

Infrastructure Initiatives 8 $8,565

1,096

Implement Campus Consolidation and Revitalization Strategy 192

Implement eGovernment and Other Administration Priorities 6,337

Maintain Integrity of Revenue Financial Systems 8 878

Expand Virtual Service Delivery (VSD) 62

Business Systems Modernization Initiative $191

Continue Migration from Aging Tax Administration Systems - Enhance Online Services 191

Total FY 2015 Program Changes 90 $62,527

Operations Support

Shared Services and Support

Implement Information Technology (IT) Changes to Deliver the Foreign Account Tax 

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other 
 IRS-131

3.1.7 – Budget and Performance Report and Plan 

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 made significant progress toward achieving the strategic goal of becoming the “Best 

Place to Work in Government” and fostering high employee engagement. In FY 2013, 

the IRS: 

 Established a corporate strategy for employee engagement, endorsed by the Human 

Capital Board, supported by the IRS Oversight Board, and collaborated with the 

National Treasury Employees Union to focus on both Bargaining Unit and 

Non-Bargaining Unit employees. 

 Continued to expand the Geographic Leadership Communities (GLCs), which are now 

available in 36 geographic areas. The GLCs are cross-functional groups of executives 

that host development opportunities and community building workshops in specific 

geographic areas to improve engagement and networking and better leverage local 

resources and talent. 

 Increased telework participation, which enhances employee satisfaction and 

engagement while enabling cost savings in other areas, has increased to 26 percent, 

surpassing the IRS’s goal of 24 percent for FY 2013. 

 Implemented the Leadership Succession Review (LSR) IRS-wide, providing 

succession planning data on 4,400 managers and 5,651 employees (non-managers) 

interested in management. LSR also is being used to identify employees for GLC 

participation, systemic skill gap, and developmental opportunities. 

 Increased use of online training courses, resulting in reduced travel costs and timely, 

convenient, and accessible training for all employees. There were over 1.2 million 

online courses completed in FY 2013 (not including briefings), an increase of 

10 percent from FY 2012. 

Shared Services and Support 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Resource Level 1, 2 Enacted Enacted Enacted Enacted Enacted Operating

Level3 Enacted4 Request

Appropriated Resources $1,291,296 $1,269,642 $1,311,127 $1,291,568 $1,214,514 $1,111,317 $1,154,960 $1,269,176

Reimbursable Resources 30,796 20,763 20,315 19,957 31,486 17,175 18,268 18,504

User Fees 19,114 17,887 4,588 14,938 33,826 33,826 33,826

Budget Activity Total $1,341,206 $1,290,405 $1,349,329 $1,316,113 $1,260,938 $1,162,318 $1,207,054 $1,321,506

4 FY 2014 Enacted includes $3.2M in funding.

2 The FY 2008 - FY 2012 columns represent realized resources for reimbursable and user fees.

Dollars in Thousands

1 The FY 2008 - FY 2012 Appropriated Resources represents the approved Operating Plan.

3 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer of $2.1M transferred from the 

Enforcement appropriation to Operations Support appropriation. 
 IRS-132

The IRS will continue to support its mission by investing in human capital strategies and tools 

for engaging, recruiting, hiring, developing, and retaining a highly-skilled and 

high-performing workforce. 

Security 

The IRS collects a tremendous amount of sensitive information, and protecting this 

information is vital to maintaining the public trust. In FY 2013, the IRS monitored, identified, 

and mitigated fraudulent schemes, to protect hardware, software, and taxpayers’ information 

from increasing and evolving online fraud and identity theft schemes. The IRS improved 

threat intelligence gathering capabilities to quickly take down servers and web sites that were 

sending out fraudulent emails aimed at defrauding innocent taxpayers. In FY 2013, the IRS: 

 Identified, mitigated, and responded to more than 1,300 cyber incidents and blocked 

over 5,800 websites to prevent access to malicious or compromised sites. 

 Eliminated 3,119 fraudulent domestic websites including 2,790 fraudulent malware 

websites. 

 Reduced the average elapsed time to notify taxpayers of a data loss from 48.4 days in 

FY 2012 to 40.8 days in FY 2013, a 15.7 percent decrease. 

 Implemented a Safeguarding Personally Identifiable Information Data Extracts 

(SPIIDE) project to advance data protection and reduce inadvertent disclosures. 

 Established a means for the IRS to systematically identify and categorize all 

personally identifiable information (PII) to ensure it is properly labeled and protected 

by implementing the PII Inventory and Classification Project (PIIC). 

 Recognized and quickly shut down 3,542 phishing websites. 

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 noncompliance. The IRS Joint Statistical Research 

Program (JSRP) uses Statistics of Income 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. In FY 2013, the JSRP 

developed an IRS Databank, which provides a new way of looking at tax data at the 

individual level, rather than the return level. This key difference will facilitate better 

understanding of the impact of taxes on individuals. Another research effort under this 

program demonstrated a relationship between taxpayer searches for IRS and third-party 

information on capital gains reporting requirements and the taxpayer’s capital gain 

realizations and reporting activity. 
 IRS-133

3H – Information Services ($2,274,005,000 in direct appropriations, an estimated 

$9,497,000 from reimbursable programs, and an estimated $145,036,000 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 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. 

Information Technology (IT) is responsible for information systems and technology, ranging 

from cyber security and networks to applications development and end user equipment and 

services. The program activities include the following: 

 Enterprise Program Management Office (EPMO) provides oversight and project 

integration into daily IT processes for large scaled development, modernization, and 

enhancement projects. Enables a coordinated, cross functional project planning, 

implementation and performance assessment effort aimed at improving the quality, 

cost, and delivery schedule of IT systems. 

 Cybersecurity delivers IT security services and ensures IRS compliance with federal 

statutory, legislative and regulatory requirements governing confidentiality, integrity 

and availability of IRS electronic systems, services and data. Cybersecurity tracks 

compliance, continuously monitors risk, provides remediation, and more to manage 

the IRS's IT Security Program in accordance with the Federal Information Security 

Management Act. 

 Tier B provides support for small to medium new investment projects (not Operations 

& Maintenance (O&M)), using core data, Business Master File (BMF) and Individual 

Master File (IMF), to support specialized functions (Submission Processing, 

Enforcement, and Taxpayer Service). 

 Management Services provides for the design, development, delivery, and evaluation 

of a wide range of human resource 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. 

 National Headquarters (NHQ) IT Management provides for the management and 

oversight of investments in IT for the Chief of Staff and Research, Analysis and 

Statistics (RAS). The program allows NHQ to manage and leverage IT solutions that 

are responsive to IRS-wide management, tax compliance, enforcement, and strategic 

and tactical research projects. 

 Affordable Care Act – Program Management Office (PMO) manages the strategic 

planning, development, and implementation of new information systems in support of 

business requirements with regard to the healthcare reform initiative. 

 IT Executive Oversight provides support to the immediate Office of the Chief 

Technology Officer, as well as the direct reports for equity, diversity and inclusion, 

and the Director, Stakeholder Management (including Communications Services and 
 IRS-134

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. 

 Application Development performs the analysis, design, development, testing, and 

implementation of approximately 85,000 application programs 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. 

 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. 

 Enterprise Network provides telecommunications service delivery to all customer 

segments, including management of day-to-day operations of the telecommunications 

environment. 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 systems and services, including voice, video, and data 

communications. 

 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. 

 User and Network Services maintains the IRS automated business processes at 

headquarters and field sites, effectively allowing the IRS to fulfill its missions. The 

support includes technical systems and applications software support to end users, 

maintaining legacy operations, local and corporate systems administration activities, 

email and domain user account maintenance. This activity monitors IRS network and 

systems administration by utilizing automated management tools. It performs asset 

management activities, and maintenance of the voice and data infrastructure at the 

territory offices. 

 Strategy and Planning provides the management and oversight of investments in IT, 

demand analysis, project reporting, portfolio management and other IT operational 

priorities. 

 IT Security Certification and Accreditation provides design and operations of security 

controls and the technical mechanisms used by the IRS systems and applications as 
 IRS-135

part of the development of the system security plan, system risk assessment, and IT 

contingency plan. It also supports security testing and evaluation as part of the 

certification process, including time preparing system documentation, interviewing 

contractors, and responding to information requests. 

 Disaster Recovery supports activities related to Enterprise Disaster Recovery 

planning, including testing, evaluations, plan development, and technical and business 

impact assessments. 

 IT Security Training provides training for Federal Information Security Management 

Act (FISMA) reporting purposes. 

 IT Homeland Security Presidential Directive-12 oversees the use of Personal Identity 

Verification (PIV) technology for physical access to Federally controlled facilities and 

logical access to information systems for all Federal employees and contractors who 

require long-term access. 

 IT Infrastructure funds the replacement of IRS IT infrastructure that has reached or 

surpassed its useful life cycle. The IRS consolidates the resources achieved through 

efficiencies in various parts of IT to ensure that replacement of the aging infrastructure 

is addressed centrally. 

 Treasury Franchise Fund (TFF) is a centralized functional area for separating from 

Information Services base budget the resources required to pay Treasury billings for 

services provided through the Treasury Franchise Fund. 

 Integrated Document Solutions Enterprise (IDSE) Campus Operations Most Efficient 

Organization (MEO) captures savings resulting from IDSE MEO activities (i.e., 

activities that reduce FTE, re-engineer processes, and enhances use of technology). 
 IRS-136

FY 2015 Program Changes by Budget Activity 

3.1.8 – Budget and Performance Report and Plan 

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 products 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’s toll-free access 

to tax information. 

Dollars in Thousands

FTE Amount

Taxpayer Service Initiative 23 $28,792

Improve Taxpayer Service and Return Processing 23 28,792

Enforcement Initiatives 313 $157,213

Address International and Offshore Compliance Issues 2,007

Expand Coverage of High Wealth Individuals and Enterprises 859

Prevent Identity Theft and Refund Fraud 47 23,155

Address Impact of ACA Statutory Requirements 1,869

Expand Audit Coverage 45 34,031

Enhance Collection Coverage 37 15,149

Improve Coverage of Partnerships and Flow-Through Entities 4 3,719

Expand Compliance Coverage in the Tax-Exempt Sector 729

Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 7,496

Build Out Tax Return Preparer Compliance and Professional Responsibility Activities 942

140 31,579

Leverage Digital Evidence for Criminal Investigation (CI) 1 3,586

Leverage Data to Improve Case Selection 39 32,092

Infrastructure Initiatives 850 $357,296

818 301,931

Implement Information Technology (IT) Services 10,000

Implement Campus Consolidation and Revitalization Strategy 2,149

Implement eGovernment and Other Administration Priorities 19 24,507

Maintain Integrity of Revenue Financial Systems 11,191

Expand Virtual Service Delivery (VSD) 13 7,518

Business Systems Modernization Initiative $270

Continue Migration from Aging Tax Administration Systems - Enhance Online Services 270

Total FY 2015 Program Changes 1,186 $543,571

Operations Support

Information Services

Implement Information Technology (IT) Changes to Deliver the Foreign Account Tax 

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other 

Information Services 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Resource Level 1, 2 Enacted Enacted Enacted Enacted Enacted Operating

Level3 Enacted4 Request

Appropriated Resources $1,723,500 $1,721,831 $1,877,555 $1,838,958 $1,803,268 $1,803,091 $1,801,918 $2,274,005

Reimbursable Resources 14,310 14,612 17,231 16,286 5,154 8,850 9,394 9,497

User Fees 50,000 9,543 36,081 26,764 59,823 145,036 145,036 145,036

Budget Activity Total $1,787,810 $1,745,986 $1,930,867 $1,882,008 $1,868,245 $1,956,977 $1,956,348 $2,428,538

4 FY 2014 Enacted includes $54.8M in funding.

2 The FY 2008 - FY 2012 columns represent realized resources for reimbursable and user fees.

Dollars in Thousands

1 The FY 2008 - FY 2012 Appropriated Resources represents the approved Operating Plan.

3 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer of $42.6M transferred from 

the Enforcement appropriation to Operations Support appropriation. 
 IRS-137

In addition, in FY 2013, the IRS provided new applications and services to make it easier for 

taxpayers to get assistance and secure tax information. 

 Enhanced the “Where’s My Refund?” web tool to allow taxpayers to find out when 

their tax return was received, when the refund was approved, and when the refund was 

sent. These enhancements reduced the time taxpayers had to wait to get a status of 

their tax returns from 72 hours to 24 hours. The IRS notified taxpayers of the 

enhanced “Where’s My Refund?” web tool by placing questions and answers on 

IRS.gov and producing two YouTube videos, “When Will I Get My Refund?” which 

had over 1.1 million views and “How to Use the Where’s My Refund?” tool, which 

had over 211,000 views. 

 Deployed a new telephone and web tool called “Where’s My Amended Return?” in 

both English and Spanish that allowed taxpayers to check the status of their Form 

1040X amended tax returns for the current year and up to three prior years. The tool 

also provided taxpayers with information such as when their amended return was 

received, adjusted, and completed, as well as specific information regarding offset 

conditions such as a previous IRS tax liability or a past due obligation. 

 Continued to expand on its use of video technology that allows assistors to interact 

with taxpayers virtually at selected IRS walk-in Taxpayer Assistance Centers (TAC). 

The Virtual Service Delivery (VSD) project allowed taxpayers to have face-to-face 

interactions with IRS assistors working in remote locations using video monitors. This 

year, the IRS collaborated with internal and external stakeholders to deploy VSD 

systems in 14 new locations bringing the total to 26 sites and assisted over 

22,000 taxpayers with accounts, tax law questions, and other inquiries. 

 Offered a remote filing method – Facilitated Self Assistance (FSA) at VITA 

sites. More than 82,000 FSA returns were filed at the 330 VITA sites offering the 

FSA remote filing model. Taxpayers with incomes of $57,000 or less, basic computer 

skills, internet access with an e-mail address, and necessary tax preparation documents 

could file their taxes using this model. 

 Enhanced existing online and self-help service options by increasing the amount of tax 

information and services available to taxpayers through IRS.gov. Self-service 

applications on IRS.gov allowed taxpayers to exchange information online with the 

IRS, decreasing service requests from higher-cost channels like telephone assistance. 

In FY 2013 the IRS had a consistent record managing cost and schedule variance for the 

26 non-BSM, information service projects that are part of major programs. Cost variances are 

primarily attributed to cost under runs as a result of budgets operating under Continuing 

Resolutions and Sequestration. These projects comprise a significant component of the overall 

IT funding total and receive the same management approach and scrutiny as the more public 

BSM activity. 
 IRS-138

 

In FY 2014, and beyond, the IRS will continue to focus efforts on expanding capabilities to 

identify fraudulent returns and hinder identity theft, enhance cyber monitoring and IT security 

controls, expand e-services to taxpayers and practitioners, and further modernize and 

consolidate our IT infrastructure as well as continue development and implementation of 

IRS-specific components of the Affordable Care Act legislation. 

Non-BSM Major Projects

Fiscal Year

Percent Within +/- 10%

Cost Variance

Percent Within +/- 10%

Schedule Variance

2013 68% 98%

 IRS-139

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 President’s Budget request for FY 2015 is $330,210,000 in direct appropriations 

and 569 FTE. This is an increase of $17,272,000, or 5.52 percent, and 41 FTE more than the 

FY 2014 Enacted Budget of $312,938,000 and 528 FTE. 

The measures reflected in the Business Systems Modernization 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 Strategic Plan 

(FY 2014-2017). 
 IRS-140

2.1 – Budget Adjustments Table 

Business Systems Modernization FTE Amount

FY 2013 Operating Level1 471 $312,938

FY 2014 Enacted 528 $312,938

Changes to Base:

Maintaining Current Levels (MCLs): $1,593

Pay Raise 859

FERS Contribution Increase 734

Subtotal FY 2015 Changes to Base $1,593

FY 2015 Base 528 $314,531

Program Changes:

Program Increases:

Business Systems Modernization Initiative:

Continue Migration from Aging Tax Administration Systems - Enhance Online Services 41 15,679

Subtotal Business Systems Modernization Initiative 41 $15,679

Subtotal FY 2015 Program Changes 41 $15,679

Total FY 2015 Budget Request 569 $330,210

Dollars in Thousands

1 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M 

transferred from the Enforcement appropriation to the Taxpayer Services ($13M) and Operations Support ($60M) appropriations. 
 IRS-141

2.2 – Operating Levels Table 

Dollars in Thousands

Appropriation Title: Business Systems Modernization FY 2013

Actuals 

FY 2014

Enacted

FY 2015

Request

FTE 451 528 569

Object Classification:

11.1 Full-Time Permanent Positions $45,250 $53,395 $56,651

11.3 Other than Full-Time Permanent Positions 1,007 1,000 1,000

11.5 Other Personnel Compensation 1,094 1,500 1,632

11.8 Special Personal Services Payments

11.9 Personnel Compensation (Total) $47,351 $55,895 $59,283

12.0 Personnel Benefits 13,557 22,884 25,405

13.0 Benefits to Former Personnel

21.0 Travel 116 954 1,070

22.0 Transportation of Things

23.1 Rental Payments to GSA

23.2 Rent Payments to Others

23.3 Communications, Utilities, & Misc

24.0 Printing & Reproduction 4

25.1 Advisory & Assistance Services 119,907 206,010 212,095

25.2 Other Services 115 156

25.3 Purchase of Goods & Services from Govt. Accounts 206

25.4 Operation & Maintenance of Facilities

25.5 Research & Development Contracts

25.6 Medical Care

25.7 Operation & Maintenance of Equipment 280 2,000 1,500

25.8 Subsistence & Support of Persons

26.0 Supplies and Materials 6 6 51

31.0 Equipment 16,988 24,868 30,646

32.0 Lands and Structures

33.0 Investments & Loans

41.0 Grants, Subsidies

42.0 Insurance Claims & Indemn

43.0 Interest and Dividends

44.0 Refunds

91.0 Unvouchered

Total Budget Authority $198,205 $312,938 $330,210

Budget Activities:

IT Investments $198,205 $312,938 $330,210

Total Budget Authority $198,205 $312,938 $330,210
 IRS-142

2.3 – Appropriation Detail Table 

3I – Business Systems Modernization ($330,210,000 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. 

BSM uses best practices and expertise in business solutions and internal management from 

the IRS, businesses, and technology sectors to develop a world-class tax administration 

system. The program provides value to taxpayers, the business community, and government 

and it plays an integral role in reducing the tax gap. This program has delivered improved 

taxpayer service, electronic filing capacity, and data analysis capability and it has maintained 

successful performance in delivering projects within acceptable cost, schedule, and 

performance estimates. 

The following projects are supported by the FY 2015 BSM request of $330.2 million: 

Customer Account Data Engine 2 (CADE 2) (Taxpayer Account Database): The CADE 2 

program implements a single, data-centric solution that provides daily processing of taxpayer 

accounts. A major component of the CADE 2 program is an authoritative database and data 

model for all individual taxpayers that provides the foundation for more efficient and effective 

tax administration. The CADE 2 authoritative database will provide the capability to view the 

taxpayer account data stored in the CADE 2 database, and will feed downstream systems such 

as the Integrated Data Retrieval System (IDRS) for online transaction processing by IRS 

customer service representatives and analytical reporting for more meaningful business 

intelligence and expanded opportunities to increase compliance. 

The second phase of the CADE 2 initiative, Transition State 2, will ensure the long-term 

viability of the IRS tax processing systems by addressing risks associated with the antiquated 

legacy core tax processing systems and associated programming languages in the current IRS 

environment. The IRS will continue the design and development of applications that expand 

the capabilities of the relational database while addressing current financial material 

weakness. 

Enhance Online Services (OLS): Enhance Online Services will simplify the taxpayer’s online 

experience, provide secure digital communications, and add more interactive capabilities to 

Dollars in thousands

Business Systems Modernization

Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Business Systems Modernization 451 $198,205 471 $312,938 528 $312,938 569 $330,210 41 $17,272 7.77% 5.52%

Subtotal New Appropriated Resources 451 $198,205 471 $312,938 528 $312,938 569 $330,210 41 $17,272 7.77% 5.52%

Other Resources:

Reimbursables

Offsetting Collections - Non Reimbursables 10

User Fees

Recovery from Prior Years 2,902

Unobligated Balances from Prior Years 59,854 97,408 154,194 137,426 (16,768) -10.87%

Transfers In/Out2 (458)

Resources from Other Accounts

Subtotal Other Resources $59,854 $99,862 $154,194 $137,426 ($16,768) -10.87%

Total Budget Authority 451 $258,059 471 $412,800 528 $467,132 569 $467,636 41 $504 7.77% 0.11%

Enacted

FY 2013 FY 2013 FY 2014 to

1 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M transferred from the Enforcement appropriation to the Taxpayer 

Services ($13M) and Operations Support ($60M) appropriations. 

2 Resources from Transfers In/Out include FY 2013 transfers between IRS and the Office of National Drug Control Policy (ONDCP) High Intensity Drug Trafficking Area (HIDTA) Program (net transfer $152K) and prior 

year user fees from the Operations Support and Business Systems Modernization (BSM) appropriations returned to the User Fees account (-$1.356M), and a FY 2015 transfer out to the Alcohol and Tobacco Tax and 

Trade Bureau (TTB) ($5M).

Actuals Request FY 2015 Request

$ Change % Change

FY 2015 FY 2014 to

Operating Level1 FY 2015 Request

FY 2014
 IRS-143

existing web self-service products. By providing taxpayers the option to communicate 

digitally, the IRS estimates it will achieve significant savings through decreased calls and 

walk-ins and deliver a greater level of service. 

Return Review Program (RRP): RRP delivers an integrated and unified system, which 

enhances IRS capabilities to detect, resolve, and prevent criminal and civil tax 

noncompliance. The RRP provides a flexible and accessible system capable of supporting a 

cross-functional approach to address criminal and civil tax noncompliance. 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. 

Modernized e-File (MeF): MeF provides a standard filing structure for all IRS return types, a 

robust platform that can meet 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 over the Internet. Once fully implemented, all tax returns and transmission 

files will adhere to IRS rules/schemas. 

Core Infrastructure: The Core Infrastructure provides mission-critical services to BSM 

projects. In FY 2015, this activity will continue to provide mission-critical services in 

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 

practices. This includes updating the access portals 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. The core 

infrastructure consists of two primary program elements – Infrastructure Shared Services 

(ISS), and the Development, Integration, and Testing Environment (DITE): 

 ISS provides integrated architectural and engineering services required to deploy and 

deliver the BSM projects, including infrastructure requirements identification and 

management, security engineering, systems engineering, performance engineering, 

capacity planning, configuration management, and expanded e-services and online 

filing. The continued development and management of this infrastructure incorporates 

the identification and development of common infrastructure, security, and application 

integration services for use and reuse by the BSM projects and reduces delivery time, 

application development, and operations and maintenance costs. 
 IRS-144

 DITE is comprised of a Virtual Development Environment (VDE) and an Enterprise 

Integration and Test Environment (EITE). The VDE provides a software development 

environment for modernization projects such as MeF and CADE 2 that allows 

geographically distributed developers access to standardized tools, information, and 

services. EITE provides the more structured, production-like, comprehensive 

integration and testing environment necessary to test end-to-end system capabilities 

and performance before release into the BSM production environment. The enhanced 

environment allows for the execution of extensive performance and capacity tests in a 

more production-like environment, increasing the probability of success when the 

product is moved into the production environment. This approach provides for 

significant cost savings when compared to replicating the production environment on a 

project-by-project basis. 

Architecture, Integration and Management (AI&M): The AI&M program provides 

engineering management capabilities essential to delivering a program of the magnitude and 

complexity of BSM. It also delivers essential IRS systems strategy, architecture, and 

engineering capabilities to 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. 

Management Reserve: The 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. 

FY 2015 Program Changes by Budget Activity 

Dollars in Thousands

FTE Amount

Business Systems Modernization Initiative 41 $15,679

41 15,679

Total FY 2015 Program Changes 41 $15,679

Business Systems Modernization

Information Technology Investments

Continue Migration from Aging Tax Administration Systems - Enhance Online Services
 IRS-145

3.1.9 – Budget and Performance Report and Plan 

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 which track the percentage of major BSM projects that are within +/- 10 percent 

Cost and Schedule variance threshold. For FY 2013, the IRS did not meet its Schedule 

Variance and Cost Variance targets. As listed in the tables below, there were six project 

segments completed in FY 2013. 

Zero out of six (0 percent) project segments met the cost variance threshold. Three of the six 

project segments came in lower than the projected costs. 

 MeF R8 milestones 4b and 5 required additional funds to support unplanned and 

unfunded software/hardware costs, adding automated monitoring capabilities and 

to cover higher than anticipated costs of Unified Work Requests. 

 MeF R9 milestone 2, 3 and 4a infrastructure support costs were significantly lower 

than planned. 

 CADE 2 TS1 milestone 5 required additional funds for contracting support to 

optimize processes surrounding the CADE 2 database and for continued support 

for database implementation activities. 

Business Systems Modernization 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Resource Level 1, 2 Enacted Enacted Enacted Enacted Enacted Operating

Level3 Enacted Request

Appropriated Resources $267,090 $229,914 $263,897 $263,369 $330,210 $312,938 $312,938 $330,210

Reimbursable Resources

User Fees 88,948

Budget Activity Total $267,090 $229,914 $263,897 $352,317 $330,210 $312,938 $312,938 $330,210

Business Systems Modernization FY 2015

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Request

Measure Actual Actual Actual Actual Actual Actual Target Target

Percent of BSM Projects within +/- 10% Cost Variance (E) 92.0% 60.0% 40.0% 71.4% 50.0% 0.0% 90.0% 90.0%

Percent of BSM Projects within +/- 10% Schedule Variance (E) 92.0% 90.0% 100.0% 100.0% 90.0% 83.3% 90.0% 90.0%

Key: E - Efficiency Measure

Dollars in Thousands

1 The FY 2008 - FY 2012 Appropriated Resources represents the approved Operating Plan.

2 The FY 2008 - FY 2012 columns represent realized resources for reimbursable and user fees.

3 FY 2013 Operating Level represents the across-the-board recission and reductions required by 
 IRS-146

In FY 2013, five out of the six (83.3 percent) projects were within the schedule variance 

threshold, as improved planning and project management continues to have a positive effect 

on the projects. 

 CADE 2 TS1 milestone 5 exit was delayed due to an unforeseen slow-down 

because of large volumes generated by TIN updates to the database. While the 

resulting schedule variance for CADE 2 TS1 MS 5 exceeds the acceptable 

threshold level, the overall schedule variance for CADE 2 TS1 is still within 

tolerance. 

Going forward, CADE2 and MeF will continue to rigorously monitor program activities and 

address any issues associated with cost/schedule variance on a timely basis. 

MeF R8 4b 13,900 25,749 11,849 85% NO

MeF R8 5 2,900 6,900 4,000 138% NO

MeF R9 2 4,000 1,283 (2,717) -68% NO

MeF R9 3 7,500 3,117 (4,383) -58% NO

MeF R9 4a 9,500 5,500 (4,000) -42% NO

CADE 2 Trans. State 1 5 30,000 37,977 7,977 27% NO

Cost Variance for Project Segments Completed in FY 2013

Project Release MS Planned 

Cost 

Current 

Cost 

Variance 

($000)

Variance 

(%)

Within 

Acceptable 

MeF R8 4b 01/03/13 01/02/13 -1 -1% YES

MeF R8 5 05/17/13 05/07/13 -8 -9% YES

MeF R9 2 11/30/12 12/04/12 2 1% YES

MeF R9 3 02/22/13 02/25/13 1 2% YES

MeF R9 4a 05/14/13 05/14/13 0 0% YES

CADE 2 Trans. State 1 5 09/30/12 11/05/12 24 15% NO

Schedule Variance for Project Segments Completed in FY 2013

Project Release MS Planned 

Finish 

Current 

Finish 

Variance 

(days)

Variance 

(%)

Within 

Acceptable 
IRS-148 

Section 4 – Supplemental Information 

4.1 – Summary of Capital Investments 

Dollars in Thousands

Investments / Funding Source

FY 2012 

Actuals

FY 2013 

Actuals

% Change from 

FY12 to FY13

FY 2014 

Enacted

% Change from 

FY13 to FY14

FY 2015 CJ 

Request

% Change from 

FY14 to FY15 

Major IT Investments 

Account Management Services (AMS) $19,734 $17,018 -13.8% $17,349 1.9% $27,208 56.8%

IRS Operations Support 015-45-0919 19,734 17,018 17,349 27,208

Affordable Care Act (ACA) $248,336 $344,952 38.9% $323,883 -6.1%

IRS Operations Support 015-45-0919 178,628 156,952 323,883

IRS Operations Support User Fees 015-45-5432 69,708 188,000 000

CADE 2 $214,928 $146,506 -31.8% $164,978 12.6% $170,514 3.4%

IRS BSM 015-45-0921 210,482 140,453 158,765 164,193

IRS Operations Support 015-45-0919 4,446 6,053 6,213 6,321

e-Services $13,093 $10,649 -18.7% $10,838 1.8% $11,046 1.9%

IRS Operations Support 015-45-0919 13,093 10,649 10,838 11,046

Electronic Fraud Detection System (EFDS) $17,832 $18,132 1.7% $16,324 -10.0% $16,607 1.7%

IRS Operations Support 015-45-0919 14,318 14,502 12,694 12,915

IRS EITC 015-45-0919-0 3,515 3,630 3,630 3,692

Return Review Program (RRP) $23,740 $42,849 80.5% $67,678 57.9% $49,465 -26.9%

IRS Operations Support 015-45-0919 23,739 22,879 14,624 14,936

IRS BSM 015-45-0921 000 000 53,054 34,528

IRS Operations Support User Fees 015-45-5432 000 19,970 000 000

IRS EITC 015-45-0919-0 001 000 000 000

Individual Master File (IMF) $8,055 $11,293 40.2% $13,680 21.1% $13,947 2.0%

IRS Operations Support 015-45-0919 8,055 11,293 13,680 13,947

Information Reporting and Document Matching (IRDM) $21,760 $18,892 -13.2% $22,591 19.6% $23,014 1.9%

IRS Operations Support 015-45-0919 21,757 18,892 22,591 23,014

IRS EITC 015-45-0919-0 003 000 000 000

IRS End User Systems and Services (EUSS) $235,612 $194,595 -17.4% $182,322 -6.3% $207,564 13.8%

IRS Operations Support 015-45-0919 235,605 193,394 182,306 207,549

IRS EITC 015-45-0919-0 006 013 015 016

IRS Operations Support User Fees 015-45-5432 000 1,188 000 000

IRS Main Frames and Servers Services and Support (MSSS) $481,790 $473,912 -1.6% $411,025 -13.3% $637,880 55.2%

IRS Operations Support 015-45-0919 432,328 460,297 380,821 425,057

IRS BSM 015-45-0921 48,900 13,616 000 12,823

IRS Private Collection Agent Program 015-45-5510 563 000 000 000

IRS Operations Support User Fees 015-45-5432 000 000 30,204 200,000

IRS Telecommunications Systems and Support $336,736 $297,413 -11.7% $301,736 1.5% $338,221 12.1%

IRS Operations Support 015-45-0919 334,750 286,958 300,664 337,130

IRS Operations Support User Fees 015-45-5432 000 9,383 000 000

IRS Private Collection Agent Program 015-45-5510 764 000 000 000

IRS EITC 015-45-0919-0 1,073 1,072 1,073 1,091

IRS Txpyr. Scvs., Enfor.(0912, 0913) Multi-yr, Health Care/ACA(09A9), 

Rcvry., Asset Forfeiture 149 000 000 000

Integrated Customer Communications Environment (ICCE) $16,622 $15,136 -8.9% $15,489 2.3% $15,797 2.0%

IRS Operations Support 015-45-0919 16,622 15,136 15,489 15,797

Integrated Data Retrieval Systems (IDRS) $18,098 $15,951 -11.9% $18,057 13.2% $18,432 2.1%

IRS Operations Support 015-45-0919 18,098 15,951 18,057 18,432

Integrated Financial System/CORE Financial System (IFS) $17,495 $16,705 -4.5% $15,449 -7.5% $15,995 3.5%

IRS Operations Support 015-45-0919 17,260 16,705 15,449 15,995

IRS BSM 015-45-0921 234 000 000 000

Integrated Submission and Remittance Processing System (ISRP) $16,087 $11,891 -26.1% $10,167 -14.5% $10,350 1.8%

IRS Operations Support 015-45-0919 $16,087 $11,891 $10,167 $10,350

Internal Revenue Service.gov (IRS.gov) $63,534 $84,930 33.7% $16,250 -80.9% $23,703 45.9%

IRS Operations Support 015-45-0919 63,534 44,130 16,250 23,703

IRS Operations Support User Fees 015-45-5432 000 39,165 000 000

IRS BSM 015-45-0921 000 1,636 000 000

Internal Revenue Service

FY 2015 Congressional Justification Submission

Capital Investments
 IRS-149

4.1 – Summary of Capital Investments (Continued) 

Investments / Funding Source

FY 2012 

Actuals

FY 2013 

Actuals

% Change from 

FY12 to FY13

FY 2014 

Enacted

% Change from 

FY13 to FY14

FY 2015 CJ 

Request

% Change from 

FY14 to FY15 

Major IT Investments (Continued)

Foreign Account Tax Compliance Act (FATCA) $7,120 $8,575 20.4% $46,576 443.1% $39,305 -15.6%

IRS Operations Support 015-45-0919 7,120 4,906 46,576 39,305

IRS Operations Support User Fees 015-45-5432 000 3,669 000 000

Modernized e-File (MeF) $77,885 $72,479 -6.9% $39,900 -44.9% $55,694 39.6%

IRS BSM 015-45-0921 57,186 52,167 19,364 34,783

IRS Operations Support 015-45-0919 20,699 20,312 20,536 20,911

Service Center Recognition/Image Processing System (SCRIPS) $18,209 $12,062 -33.8% $9,256 -23.3% $16,523 78.5%

IRS Operations Support 015-45-0919 18,209 12,062 9,256 16,523

Subtotal, Major IT Investments $1,608,329 $1,717,325 6.8% $1,724,617 0.4% $2,015,147 16.8%

Non-Major IT Investments $869,734 $567,503 -34.7% $683,629 20.5% $814,351 19.1%

TOTAL IT Investments $2,478,063 $2,284,828 -7.8% $2,408,245 5.4% $2,829,498 17.5%

Major Non-IT Investments

Criminal Investigations Capital Assets $756 $399 -47.2% $600 50.2% $927 54.5%

IRS Enforcement (One Year) 043 000 000 327

IRS Enforcement (Reimbursable) 714 000 000 000

IRS Enforcement (Forfeiture) 000 399 600 600

Security Equipment $2,500 $1,684 -32.6% $1,206 -28.4% $2,644 119.3%

IRS Operations Support (One Year) 2,500 1,684 1,206 2,644

Leasehold Improvements $12,400 $5,989 -51.7% $3,405 -43.2% $18,169 433.6%

IRS Operations Support (One Year) 12,400 5,989 3,405 18,169

Total Major Non-IT Investments $15,656 $8,073 -48.4% $5,210 -35.5% $21,741 317.2%

Total Capital Investments $2,493,719 $2,292,901 -8.1% $2,413,456 5.3% $2,851,239 18.1%

Internal Revenue Service

FY 2015 Congressional Justification Submission

Capital Investments
 IRS-150

4A – Capital Investment Strategy 

IT is a key enabler for efficient and effective tax administration. Today, the role of IT is more 

important than ever as the IRS faces the increasing complexity of tax administration, 

accelerating globalization, and an explosion in electronic data, online interactions, and related 

security risks. IRS IT investments address these new challenges while ensuring that the IRS 

continues to deliver on its core mission and meets ongoing business needs. The IRS evaluates 

new technologies to deliver comprehensive IT solutions that focus on improving electronic 

filing of tax returns, enhancing services to taxpayers and third party practitioners, and 

strengthening compliance and criminal enforcement of tax laws. To ensure the public trust, 

the IRS also is making significant investments to secure infrastructure, data, and applications. 

With continued investment in new technologies and the modernization of existing IT systems, 

the IRS is improving service to taxpayers, achieving productivity gains, and distinguishing 

itself as a model of tax administration around the world. 

 

The IRS also has established world-class practices and tools to manage and implement its 

portfolio of IT investments more efficiently. One element of the strategy, the Integrated 

Release Plan (IRP), provides a multi-year view of essential technology initiatives noting 

schedule, budgetary, and human capital data and a link to the IT Technology Roadmap. The 

IRS continues to develop and refine the IRP to encompass a larger proportion of its IT 

investments each year. The IRP allows the IRS to assess proposed and current essential 

investments, ensuring alignment to strategic goals while illuminating budget or staffing 

constraints. This improves the IRS’s ability to use limited resources efficiently and practice 

sound investment management. 

IT Technology Roadmap 

Another tool, the IT Technology Roadmap (illustration shown below), provides a multiyear 

strategic view defined in 18-month segments or waves. Each wave identifies the critical 

people, process, and technology needed to support the IRS mission. This guiding strategic 

document integrates with the more tactical Integrated Release Plan. 
 IRS-151

Technology Roadmap 2011 – 2017 

Delivering a Balanced Portfolio of Investments 

While the annual tax-filing season and legislative changes are the IRS’s highest priorities each 

year, the IT strategy ensures that the IRS also explores new technologies in areas such as 

communications to complement its existing portfolio of IT investments. Projects such as 

Bring Your Own Device, for example, allow employees to use their personal smart phones and 

tablets for both professional and personal communications; Network Convergence embraces 

the power of the internet for voice, data, and visual communications; and IRS portal 

modernization is streamlining navigation and enhancing search capabilities to make it easier 

for taxpayers and other stakeholders to find information and resources quickly. The IRS 

balances these technologically advanced investments that allow for more effective use of 

resources against other IT investments that support revenue collections, such as third party tax 

information reporting and document matching, faster return reviews in processing to prevent 

tax refund fraud, and foreign account tax reporting. 

Managing Performance as part of IRS’s IT Strategy 

The IRS monitors major IT investments using baselines identified in Exhibit 300B. The 

monthly review includes a comparison of the projected cost, schedule, and performance 

estimates to those in the approved Business Case and generates reports for internal and 

external stakeholders. Every month an Executive Steering Committee (ESC) reviews the 

overall status, cost, schedule, and scope for each investment and makes needed 

recommendations. Any changes to the cost, schedule, or scope of the investment require a 

formal Baseline Change Request (BCR). The IRS employs remediation strategies for 
 IRS-152

investments that are not meeting their stated performance goals, including conducting internal 

TechStat meetings for investments with a “yellow” (or below) rating in the areas of cost, 

schedule, or Treasury CIO rating. 

IRS Portfolio of Major Investments 

The following is a comprehensive list of assets that make up the foundation of the IRS’s 

investment strategy. Also included are details regarding the immediate and full life-cycle 

costs, actual obligations through FY 2013, projected useful life, anticipated benefit(s), 

performance measurement criteria, and remediation strategy specific to each asset. 

Account Management Services 

Account Management Services (AMS) is a strategic program that delivers improved customer 

support for managing taxpayer accounts by leveraging existing IRS applications. It is a 

web-based resource that brings various IRS systems together into one common view. The 

AMS application allows IRS case managers to access and update taxpayer accounts 

instantaneously, provides data presentation services to display and validate updates, and 

facilitates management actions (such as assignments, transfers, case creation and closure, and 

the generation of letters to taxpayers). AMS provides front-end functions for adjustments, 

penalties, interest, abatements, credit and debit transfers, name and address changes, 

bankruptcies, installment agreements, changes to the automated treatment streams, follow-up 

activity or deferred actions, and many other taxpayer account-related functions required for 

customer service and compliance. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life cycle cost of the asset: 

FY 2014 - FY 2015: $ 44,556,442 

Life-cycle Cost: $204,421,463 

Actual Obligations to Date: $ 10,570,857 

Start Date of Investment: 2009 

The projected useful life of the current asset: estimated 2017. 

Timeframe for the “development, modernization, and enhancement” (DME) or 

“operations and maintenance” (O&M) phase of the investment for FY 2015: 

AMS deployed in December 2010 and is now in the O&M phase. 

The anticipated benefit(s) of the investment: 

AMS cost-effectively and expeditiously decreases taxpayer burden and improves taxpayer 

service by providing customer service representatives and other users, such as Tax 

Examiners, with tools to access taxpayer and filer data. AMS supports the IRS’s mission 

to provide America's taxpayers quality service by helping them understand and meet their 

tax responsibilities and enforce the law with integrity and fairness. 
 IRS-153

How performance will be measured and evaluated: 

 Core Application Availability: The percentage of uptime that the AMS system is 

available for users. The Core Application allows users to handle a variety of account 

management actions. This measure indicates the percentage of available, scheduled 

up-time and considers the application servers and the infrastructure components of the 

AMS Core Application; 

 Databases Availability: This technical measure indicates the percentage of scheduled 

up-time of the four AMS databases that provide the data needed by users; 

 Imaging Inventory Application Availability: More than 8000 users respond to 

taxpayers using the Imaging Inventory. This measure indicates the percentage of 

scheduled up-time that the application is available to customer service representatives. 

This technical measure considers the availability of the application servers, workflow 

system, and content management system components of the Imaging Inventory; 

 Accuracy of adjustments and responses to Taxpayer Correspondence: The percent of 

adjustments to taxpayer accounts and answers to taxpayer issues provided by 

correspondence units that are accurate; and 

 Telephone Level of Service: The percent of time that taxpayers calling the IRS 

toll-free operations successfully reach a live assister. 

Affordable Care Act (ACA) Administration 

The ACA Administration investment encompasses the planning, development, and 

implementation of IT systems needed to support IRS's tax administration responsibilities 

associated with key provisions of the ACA legislation. The work is organized into 6 major 

releases. Each release encompasses multiple projects that need to be delivered at a specific 

point in time. ACA 1.0 and 2.0, already in production, involve changes to existing systems, 

along with the initial release of the Branded Prescription Drug (BPD) Industry Fee project. 

ACA 3.0 through 6.0 addresses work to support the Health Insurance Exchanges and tax 

compliance activities as well as annual updates for non-exchange provisions in the law. ACA 

3.0, also in production, provides the technical solution to support Health Insurance Exchange 

open enrollment. This includes establishing the secure connection between IRS and the 

Department of Health and Human Services (HHS)/Centers for Medicare and Medicaid 

Services (CMS) for transactional data exchange. ACA 4.0 will increase data flows from the 

HHS Hub into the IRS Coverage Data Repository (CDR), allowing the IRS to prepare for 

filing/post-filing compliance activities in 2015 and beyond. ACA 4.1 will support information 

returns and many non-exchange provisions. ACA 5.0 would enable at-filing checks of a tax 

return for reporting a premium tax credit, leveraging third party data from the Health 

Insurance Exchanges. ACA 6.0 will focuses on pre-refund compliance activities related to 

healthcare credits claimed by citizens. 
 IRS-154

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life cycle cost of the asset: 

FY 2014 – FY 2015: $ 668,834,453 

Life-cycle Cost: $1,986,808,331

Actual Obligations to Date: $ 650,646,000 

Start Date of Investment: 2010 

The projected useful life of the current asset: estimated 2018 

Timeframe for the “development, modernization, and enhancement” (DME) or 

“operations and maintenance” (O&M) phase of the investment for FY 2015: 

 Release ACA 3.0 went live October 2013. It supports the eligibility and enrollment of 

the exchange programs by providing income and family size information from the 

most recently filed tax return and by providing a calculation of maximum advanced 

premium tax credit upon request from the HHS/CMS data services hub. This includes 

establishing the secure connection between the IRS and HHS/CMS for transactional 

data exchange; 

 Release ACA 4.0 will go live June 2014 to support the increased data flows from the 

HHS/CMS data hub into the IRS’s CDR, allowing the IRS to prepare for filing and 

post filing activities. A key component of this release is the receipt of the exchange 

periodic data; and 

 Release ACA 4.1 will go live March 2014 to support Information Sharing and 

Reporting (IS&R) by implementing non-exchange provisions that require new builds 

and modifications to existing systems, including the BPD Industry Fee and the 

Insurance Provider Fee (IPF). 

The anticipated benefit(s) of the investment: 

This investment is needed to ensure the full implementation of the Affordable Care Act 

(ACA), which was passed by Congress and signed into law by the President in March of 

2010. The ACA legislation represents landmark reform and changes to the healthcare 

system in the United States. The IRS IT organization will provide data models, databases, 

and information technology systems and operations to support the implementation of the 

ACA. If this investment is not fully funded, the IRS will not be able to fulfill the 

requirements as specified in the law. 

How performance will be measured and evaluated: 

 ACA applications in production requiring software code changes via P1/P2 defects; 

 Percent of successful transactions; 

 Response Time Performance - Average Response Time in Seconds; 

 Branded Prescription Drug Fee Statutory "Allocated Amount" Collected; and 

 End-to-End Metric - Branded Prescription Drug. 
 IRS-155

Customer Account Data Engine 2 

The Customer Account Data Engine 2 (CADE 2) program implements a single, data-centric 

solution that provides daily processing of taxpayer accounts. CADE 2 is one of the key IRS 

modernization programs. Once fully implemented, it will provide state-of-the-art individual 

taxpayer account processing and will provide a solid data foundation for the future. It will 

allow the IRS to collect, consolidate, access, and analyze taxpayer data more effectively, to 

drive improvements in service to taxpayers and enhancements in tax administration. After 

more than 50 years of weekly posting of returns, payments, and other types of transactions, 

CADE 2 moved the IRS to a daily cycle for tax processing and posting of individual taxpayer 

accounts and for feeding downstream systems. This means application programs that formerly 

took hours or days to complete now run in minutes or seconds. The new CADE 2 daily 

processing capability enhances IRS tax administration and improves service by enabling 

faster refunds for more taxpayers. 

The IRS will implement CADE 2 through two Transition States. The first phase is Transition 

State 1 (TS1), which established the target CADE 2 data model, database, and uses the data to 

provide individual taxpayer account information to select external systems. Updated daily 

from the individual taxpayer account core processing applications, the database establishes 

the foundation for developing the CADE 2 solution and is critical to addressing the IRS 

financial statement audit material weakness. The TS1 solution primarily leverages security 

controls provided by existing systems, including the Security and Communications System 

(SACS) for account viewing. Transition State 2 (TS2) builds upon the foundation established 

in TS1. Core applications will directly access and update the CADE 2 database implemented 

in TS1. TS2 will focus on the most complex and critical financial management applications 

and address financial material weaknesses. Capturing taxpayer account data on a daily basis 

and storing it in new multi-level, connected, and relatable formats will allow the IRS to do 

sophisticated searches and comparisons to identify trends revealing critical areas of 

noncompliance. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 335,491,315

Life-cycle Cost: $1,022,222,962

Actual Obligations to Date: $ 686,730,962

Start Date of Investment: 2009 

The projected useful life of the current asset: estimated 2020. 

The anticipated benefit(s) of the investment: 

With the exit of Milestone 5, the IRS met its goals for CADE 2 TS1 by providing the 

following business functionality and benefits: a single database that stores all individual 

taxpayer accounts; enhanced processing, including daily batch processing; more timely 

posted data to the IRS's key customer service operational database, IDRS; tools for 

business users to access the CADE 2 Database and Integrated Production Model (IPM) for 
 IRS-156

analytical reporting; enhanced data security; and downstream systems feeds to support 

daily processing. 

How performance will be measured and evaluated: 

 Faster Notices. The percentage of daily notices generated by CADE 2 (versus weekly 

notices); 

 Faster Refunds: The percentage of refunds processed daily; 

 Increased percentage of transactions processed daily: The percentage of transactions 

processed daily compared to the total transactions processed by IRS; 

 Daily Updates to IDRS: The percent of business days the CADE 2 solution will 

process transactions within 48 hours of receipt from submissions processing for days 

in which there are transactions to process; and 

 Faster updates to account information. Percent of taxpayer accounts updated in 

Refund Information File and posted to the Web by the next day. Seasonal metric. 

e-Services 

e-Services is a suite of web-based, self-assisted services that allow authorized individuals to 

conduct business with the IRS electronically. Currently, e-Services products are available to 

tax practitioners, payers, and other third parties. The services include Registration, Tax 

Identification Number (TIN) Matching, e-File Application, Disclosure Authorization (DA), 

Electronic Account Resolution (EAR), Transcript Delivery System (TDS), Reporting Agents, 

and Automated Electronic Fingerprinting. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 21,884,277 

Life-cycle Cost: $207,262,021 

Actual Obligations to Date: $172,707,218 

Start Date of Investment: 1999 

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

e-Services provides a faster way for authorized individuals to interact and conduct 

business electronically with the IRS. 

How performance will be measured and evaluated: 

 Number of TIN Matching Requests processed through the TIN Matching application; 

 Number of transcripts processed through the Transcript Delivery System (TDS); 

 Percentage of scheduled eServices availability per the approved Service Level; 
 IRS-157

 Agreement as documented monthly by IRS Enterprise Services; 

 Number of defect transmittals to the production environment; and 

 Number of Priority 2 tickets opened and are related to eServices applications. 

Electronic Fraud Detection System 

The Electronic Fraud Detection System (EFDS) is a major, steady state, automated client 

server-based system used to maximize fraud detection at the time that tax returns are filed to 

eliminate the issuance of fraudulent tax refunds. EFDS supports the Department of the 

Treasury strategic goal to “Manage the Government's Finances Effectively.” EFDS allows 

IRS Criminal Investigation Investigative Aides/Analysts and Wage and Investment (W&I), 

Business Performance Solutions, and Accounts Management Taxpayer Assistance Program 

(AMTAP) Tax Examiners to protect government revenue by detecting potentially fraudulent 

tax refund claims and preventing the issuance of fraudulent tax refunds. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 32,930,986 

Life-cycle Cost: $162,410,866 

Actual Obligations to Date: $110,552,937 

Start Date of Investment: 1996 

The projected useful life of the current asset: estimated 2021. 

The anticipated benefit(s) of the investment: 

The EFDS will protect government revenue by detecting potentially fraudulent tax refund 

claims and stopping the issuance of fraudulent tax refunds at the time a return is filed. As 

of December 6, 2013, the EFDS has processed 138,764,018 returns and a total of 

$13.08 billion in fraudulent refunds have been stopped during Filing Season 2013. 

How performance will be measured and evaluated: 

 Number of confirmed fraudulent returns identified by the data models, expressed as 

percent of the seasonal target; 

 Percentage of Questionable Refund Program refunds identified as false that are 

stopped by Return Integrity and Correspondence Services (RICS); 

 Percentage of scheduled system availability per the approved Service Level 

Agreement; 

 Percentage of completed verifications which are potentially fraudulent; and 

 Percentage of primary investigations that are accepted by CI as subject criminal 

investigations. 
 IRS-158

Foreign Account Tax Compliance Act 

The Foreign Account Tax Compliance Act (FATCA) project is a system under development 

that will improve tax compliance by identifying U.S. taxpayers that attempt to shield or divert 

assets by depositing funds in foreign accounts. The system will consist of a registration 

component and a document-matching component. FATCA legislation requires foreign 

financial institutions to report to the IRS information regarding financial accounts held by 

U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership 

interest. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 85,880,850 

Life-cycle Cost: $162,402,883 

Actual Obligations to Date: $ 16,591,581 

Start Date of Investment: 2011 

The projected useful life of the current asset: estimated 2020 

The anticipated benefit(s) of the investment: 

The primary beneficiaries of this investment are the federal government and the U.S. 

taxpayers. FATCA will allow the IRS to increase international service and enforcement 

through examinations of employment tax, specialty program audits, individual audits, 

business audits, and criminal investigation case closures, ensuring taxpayers meet their tax 

obligations. 

How performance will be measured and evaluated: 

The FATCA investment has yet to deploy and performance measures are under 

development. 

Individual Master File 

The Individual Master File (IMF) is the authoritative data source for individual taxpayer 

accounts. Within the IMF, accounts are updated, taxes are assessed, and refunds are 

generated as required during each tax filing period. Virtually all IRS information system 

applications and processes depend on output, directly or indirectly, from this data source. 

IMF Daily Processing is a key component in the development efforts of CADE 2. While 

today IMF remains the system of record for individual taxpayer account data, CADE 2 will 

continue to migrate the IRS away from the current IMF tape-based architecture for tax 

processing towards its target state of a more modern system architecture based on 

relational database technologies. 
 IRS-159

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 27,627,707 

Life-cycle Cost: $165,981,764 

Actual Obligations to Date: $ 81,845,499 

Start Date of Investment: 1999 

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

 Performs daily processing of tax returns allowing faster issuance of refunds; and 

 Performs identity-theft related checks on individual tax returns filed on paper. 

How performance will be measured and evaluated: 

 Completes planned processing schedule (e.g., daily, weekly) to meet refund, notice 

and on-line access deadlines. Measurement available on Enterprise Operations weekly 

reports; 

 Refund Error rate with Systemic Errors: The error rate is the ratio of total incorrect 

refunds compared to the total number of refunds. Measurement data is provided by 

W&I and SB/SE in the Submission Processing Measures Analysis and Reporting Tool 

(SMART) database. Systemic errors (errors attributed to incorrect programming, less 

than ideal products from properly working systems, and incorrect Internal Review 

Manual procedures) are also included in the rates which indicate “with systemic 

errors.” – Customer Account Services (CAS) sets the yearly target for this measure in 

January; 

 The percentage of scheduled system availability per the approved Service Level 

Agreement, as documented monthly by IRS Enterprise Services in the IT Performance 

Report; 

 Interest paid on taxpayer refunds per 1 Million Dollars. This figure represents total 

Refund Interest divided by total refund dollars issued on original settlement. 

Measurement data is provided by W&I and SB/SE in the SMART database. The 

Business target for this measure is established by CAS every January, with a yearly 

goal and cumulative planned projection for each month. The results report the variance 

against the target, and the monthly cumulative target is reported in the comments; and 

 Percent of Taxpayer refunds (paper returns only) issued within 40 days. Timeliness 

measured by sampling taxpayers receiving refunds. Measurement data is provided by 

W&I and SB/SE in Submission Processing (SMART) database. The Business target 

for this measure is established by CAS every January, with a yearly goal and 

cumulative planned projection for each month. The results report the variance against 

the target, and the monthly cumulative target is reported in the comments. 
 IRS-160

Information Reporting and Document Matching 

Information Reporting and Document Matching (IRDM) is a program to improve business 

taxpayer compliance by automatically matching the tax return filings to third party 

information returns. The goals of IRDM are to increase voluntary compliance and enhance 

accurate reporting of income by establishing a new business tax return and information 

returns that focus on merchant card payments and securities basis reporting. IRDM supports 

IRS business utilizing information systems that sort, match, identify, manage, and report on 

returns that are likely sources of tax gap-reducing revenue. Closing the tax gap through 

IRDM increases Federal Government revenues and benefits the vast majority of taxpayers 

who voluntarily file accurate returns. To accomplish this, the IRS requires operational 

resources and systems be put in place to implement business and technology changes that will 

expand and improve automated matching of data on information returns to the data submitted 

on tax returns filed. This automation will improve the use of third party data to increase 

compliance, provide improved access to information to enhance the quality of customer 

services, accelerate issue identification and resolution, and increase the productivity and 

quality of tax administration. 

IRDM has many dependent relationships; it interacts with other systems across the IRS, 

including data submission systems, databases, data transport functionality, and data 

processing systems. 

IRDM relies heavily on submission processing systems, corporate data systems, and newly 

implemented infrastructure to identify potential under-reporters and non-filers. IRDM will 

utilize corporate data master file data, such as Information Return Master File (IRMF) and 

Business Master File (BMF), extracted and stored in the Integrated Production Model (IPM). 

IRDM consists of new functionality developed to assimilate, correlate, select, and manage 

potential cases. In addition, it supplies data during the management process to as many as 19 

external systems to resolve cases and provide the disposition of a case to other systems 

within the IRS. 

IRDM is a component of the overall Tax Gap Initiative. The effectiveness of other efforts, as 

well as funding for compliance personnel, will influence how much and how quickly IRDM 

reduces the Tax Gap. Reducing the tax gap through IRDM will increase Federal Government 

revenues and benefit the vast majority of taxpayers who voluntarily file accurate returns by 

improving the use of third party data to increase compliance and provide improved access to 

information. This will enhance the quality of customer services, accelerate issue 

identification and resolution, and increase the productivity and quality of tax administration. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 45,605,553 

Life-cycle Cost: $185,665,750

Actual Obligations to Date: $ 70,056,892 

Start Date of Investment: 2009 
 IRS-161

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

 Reduce the Tax Gap through IRDM, which will increase Federal Government 

revenues and benefit the vast majority of taxpayers who voluntarily file accurate 

returns; and 

 Improve the use of third party data to increase compliance, provide improved access to 

information to enhance the quality of customer services, accelerate issue identification 

and resolution, and increase the productivity and quality of tax administration. 

How performance will be measured and evaluated: 

 Production Problem Resolution and Reporting - Number of high priority trouble 

tickets (P1) not closed within 4 hours; 

 Production Problem Resolution and Reporting - Number of priority trouble tickets 

(P2) not closed timely within 24 hours; 

 Percentage of scheduled system availability per the approved 

Service Level Agreement, as documented monthly by IRS Enterprise Services in the 

IT Performance Report; 

 SB/SE Business Underreporter (BMF-AUR) Contact Closures per FTE – Number of 

contact closures by BMF-AUR divided by the total FTEs expended during the same 

timeframe; and 

 SB/SE Business Underreporter (BMF-AUR) Contact Closures - Sum of all contact 

closures by BMF-AUR. 

Integrated Customer Communication Environment 

The Integrated Customer Communication Environment (ICCE) directly supports the IRS 

Strategic Goal of improving service to make voluntary compliance easier. Consolidating 

logic for telephone applications reduces overall costs because it applies standard solutions to 

what was a specialized arena. ICCE provides a set of telephone and web applications that 

allow individual taxpayers to interact directly with their accounts, as described below: 

 The Online Payment Agreement Application allows the taxpayer or authorized 

representative (i.e., Power of Attorney) to apply for and receive on-line approval for a 

short term extension of time to pay or set up a monthly installment agreement; 

 The Internet Refund Fact of Filing provides tax refund status information via the web 

to 1040 series filers; 

 The Internet Refund Address change allows taxpayers who have not received paper 

refunds after a specific amount of time to initiate a refund trace; 

 The Personal Identification Number (PIN) applications are intended to be used as 

common modules, available for use by any Interactive Application, which callers use 

to establish their identity. Callers establish their identity by either correctly entering a 
 IRS-162

previously established PIN or by successfully passing an automated Identification and 

Authentication Interview and establishing a PIN; 

 The Address Module supports multiple ICCE Web applications, providing taxpayers 

with the ability to initiate a change of address of record as well as information on 

refund status and undelivered refund checks; 

 The Modernized Internet Employer Identification Number (EIN) application is a 

component of ICCE Web Applications and the Business Web Application Servers. It 

allows the general public to apply for an EIN over the web and receive the number in 

the same session; 

 The Send My Transcripts, eTranscript offers an additional method for requesting Tax 

Return or Tax Account transcripts via the web. Taxpayers can request their current 

year and three prior years of Tax Account and/or Tax Return transcripts. The 

transcripts are delivered to a secured mailbox for retrieval by a third party; and 

 The Foreign Account Tax Compliance Act Registered User Portal Application 

provides an online registration process for Foreign Financial Institutions to register 

and enter into an agreement with the IRS to comply with FATCA regulations. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 31,286,645 

Life-cycle Cost: $524,296,910 

Actual Obligations to Date: $482,418,165 

Start Date of Investment: 1992 

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

 Allows the taxpayer or an authorized representative (i.e., Power of Attorney) to apply 

for and receive online approval for a short term extension of time to pay or set up a 

monthly installment agreement; 

 Allows taxpayers who have not received (lost or destroyed) paper refunds after a 

specific amount of time to initiate a refund trace (or re-issuance of their refund check); 

and 

 Provides taxpayers the ability to initiate a change of address of record and provide a 

phone number (optional) based on a refund status that indicates an undeliverable 

refund check and other criteria have been met. 

How performance will be measured and evaluated: 

 The percentage of taxpayers utilizing IRS web applications and automated Phone 

Service versus Customer Service Representatives in order to find solutions and answer 

questions related to tax matters. This is a periodic measure; 
 IRS-163

 The number of times a taxpayer accesses IRS web applications to request refund status 

and other web services: Internet Refund Fact of Filing, Internet Employee 

Identification Number, or Online Payment Agreement; 

 The percentage of scheduled system availability per the approved Service Level 

Agreement, as documented monthly by IRS Enterprise Services in the IT Performance 

Report; 

 Customer Satisfaction (IRS.gov American Customer Satisfaction Index Score); and 

 Reduction in the number of transmittals or requests for corrective changes to 

production environment, as evidence of improved efficiency. 

Integrated Data Retrieval System: 

Operational since 1973, Internal Data Retrieval Systems (IDRS) is a secure, reliable, flexible, 

mission-critical system consisting of databases and programs supporting IRS employees 

working active tax cases. It would not be possible to run the Federal Government tax filing 

season without IDRS or some equivalent system. About 60,000 of the 100,000 IRS 

employees rely on it daily to do their work. It provides for systemic review of case status, 

alleviating staffing needs and providing consistency in case control. For example, each time a 

taxpayer calls the IRS, the person answering the phone uses IDRS to log the call and answer 

questions. IDRS issues notices and processes installment agreements, offers in compromise, 

and adjustments. Actions taken via IDRS include penalty and interest computations and 

explanations, credit and debit transfers among accounts, and research of taxpayer accounts for 

resolution of taxpayer inquiries. IDRS manages data retrieved from the Tax Master Files 

(Business, Individual, and Employee Plan) allowing IRS employees to take actions on 

taxpayer issues, track status and post updates back to the Master Files. Using data analytics, 

IDRS allows the IRS to evaluate taxpayer data efficiently to inform enforcement and secure 

compliance, both domestically and internationally. 

In addition to IRS employees, IRS internet applications depend on IDRS to provide back-end 

services to allow them to help taxpayers. For example, tens of millions of taxpayers ask 

Where's My Refund? at IRS.gov annually and millions of business taxpayers obtain Employer 

Identification Numbers via IRS.gov instead of via paper. IDRS allows businesses providing 

payroll services to submit tax data on behalf of millions of taxpayers and collaborates with tax 

practitioners registered with IRS to reduce the burden of filing Powers of Attorney and 

Taxpayer Information Authorizations, allowing them to request access to other e-Services. 

IDRS produces many kinds of tax information to support sending and receiving information 

to and from other systems within the IRS, Social Security Administration, Bureau of the 

Fiscal Service (BFS), State and local governments, and tax practitioners. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 36,488,254 

Life-cycle Cost: $336,080,692 

Actual Obligations to Date: $201,782,240 

Start Date of Investment: 1973 
 IRS-164

The projected useful life of the current asset: estimated 2020 

The anticipated benefit(s) of the investment: 

 Allows the IRS to evaluate taxpayer data efficiently to inform enforcement and secure 

compliance, both domestically and internationally. 

How performance will be measured and evaluated: 

 Individual taxpayer usage of Where's My Refund? feature through IRS.gov, IRS2Go 

Smartphone application or automated, toll-free telephone number. This feature relies 

on IDRS to operate and provides convenient, high-quality, taxpayer-centered service 

without the assistance of a Federal employee. The target for this steady state 

performance metric is usage equal to 100 percent of the average usage during typical 

processing years; 

 IRS staff usage of IDRS. IDRS enables approximately 60,000 taxpayer-facing IRS 

employees, using a variety of methods, to retrieve taxpayer records quickly, 

accurately, and securely to authorized staff while responding to taxpayer inquiries and 

conducting examinations. The command code TXMOD displays tax data for specific 

taxpayers for specific periods. The target for this steady state performance metric is 

TXMOD usage equal to 100 percent of the average usage during typical processing 

years; 

 The percentage of scheduled system availability. To measure this steady state 

performance metric, calculate the cumulative average percentage of system 

availability per an approved service level agreement as documented by IRS 

Information Technology Enterprise Services for “Essential Business Systems”; 

 Business taxpayer usage of IRS.gov to obtain Employer Identification Numbers 

(EINs). This feature relies on IDRS to operate and lets taxpayers obtain EINs without 

assistance of a Federal employee instead of mailing form SS-4 "Application for EIN.” 

It reduces the expense and difficulty of doing business with the Government and 

environmental impact. The target for this steady state performance metric is usage 

equal to 100 percent of the average usage during typical processing years; and 

 The percentage of certified letters printed centrally versus locally. These notify 

business and individual taxpayers of issues. This aligns with IRS goals to improve 

taxpayer service and enhance enforcement of tax law. To measure this steady state 

performance metric, calculate the percentage of certified letters printed centrally 

versus locally out of all certified letters printed. 

Integrated Financial System 

The Integrated Financial System (IFS) is the core financial system used by the IRS for budget, 

payroll, accounts payable, accounts receivable, general ledger functions, and financial 

reporting. The IFS system provides accountants, budget, and financial management analysts 

the ability to effectively manage Federal Government finances for the IRS and respond to 

audit requests in support of a clean audit opinion. 
 IRS-165

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 31,444,182 

Life-cycle Cost: $493,762,670 

Actual Obligations to Date: $414,083,740 

Start Date of Investment: 2001 

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

 Allows the IRS to make informed and timely performance-based business and 

budgetary decisions; and 

 Eliminates redundant data management by providing a single master data repository. 

How performance will be measured and evaluated: 

 Complete monthly financial close process and submit Treasury Information Executive 

Repository (TIER) report within 3 days after month end; 

 The number of calendar days required to run cost assessment allocation cycles for 

internal and external customers; 

 The percentage of scheduled system availability per the approved Service Level 

Agreement, as documented monthly by IRS Enterprise Services; 

 Obtain clean audit opinion from GAO; and 

 Percentage of end user issues (aka, Priority 1 and Priority 2 tickets, equating to 

severity) eliminated or remediated within timeframes established in the approved 

Service Level Agreement. 

Integrated Submission and Remittance Processing System 

The Integrated Submission and Remittance Processing (ISRP) system is a mission critical 

operations and maintenance project that processes tens of millions of tax returns and deposits 

billions of dollars to the U.S. Treasury on a yearly basis. ISRP is an integrated suite of 

hardware, software, and network components that provides the interfaces for data entry 

perfection and transmission of data to IRS Corporate data storage. ISRP Data Entry 

Operators enter the information from various paper documents that are then converted into 

electronic data used by downstream operations such as Financial Information Systems. ISRP 

also updates tax forms to comply with legislative changes in tax laws. 
 IRS-166

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 20,517,006 

Life-cycle Cost: $187,655,308 

Actual Obligations to Date: $143,347,049 

Start Date of Investment: 1998 

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

 Processes tens of millions of paper tax returns supporting the core business of IRS; 

and 

 Processes billions of dollars of remittances to the U.S. Treasury on a yearly basis. 

How performance will be measured and evaluated: 

 The percentage of daily ISRP deposits made in accordance with Internal Revenue 

Manual (IRM) 3.0.275; 

 Production Problem Resolution and Reporting - Number of high priority trouble 

tickets (P1) not closed within 4 hours; 

 System Availability (Uptime) - Percent of up time hours (actual uptime hours/planned 

uptime hours); 

 Production Problem Resolution and Reporting - Number of priority trouble tickets 

(P2) not closed timely within 24 hours; and 

 Scanner/ Transport HARDWARE Response Timeliness - Percentage of Priority 

Trouble Tickets (P1) Maintenance Response within 2 hours. 

IRS End User Systems and Services 

The End User Systems and Services (EUSS) program supports the IRS’s day-to-day end user 

products, services, and support for over 100,000 IRS employees at headquarters and field 

sites. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 389,886,003 

Life-cycle Cost: $1,932,771,995 

Actual Obligations to Date: $ 705,367,363 

Start Date of Investment: 1970 

The projected useful life of the current asset: estimated 2019 
 IRS-167

The anticipated benefit(s) of the investment: 

 Provides the IT infrastructure to allow the IRS to process tax returns, collect revenue, 

and issue refunds; 

 Decreases the obsolescence rate of “in use” assets; 

 Optimizes use of technology and tools allowing incidents to be resolved remotely; and 

 Equips high-mobility employees with tools and technologies for network connectivity 

from off-site locations. 

How performance will be measured and evaluated: 

 Call Handle Time - Average time it takes a Customer Service Representative to 

complete a service call; 

 EUSS Percent on Time Priority 3 - Timeliness of resolution against the standards 

contained in the Master Service Level Agreement (MSLA). Includes both Interactions 

and EUSS worked Incidents closed within a specified time period with a category of 

“Incident”; 

 United States Government Configuration Baseline (USGCB) Compliance - Percentage 

of workstations that have settings configured that are compliant to pass baseline 

security scans; 

 First Level Resolution - Percentage of IT interactions closed at the First Level (i.e. by 

the Enterprise Service Desk (ESD)). Includes closed non-escalated interactions plus 

ESD worked Incidents and ESD worked Line Items; and 

 Service Desk Speed of Answer - Average time a customer waits in the Service Desk 

queue before reaching a Service Desk Representative. The time does not include the 

time an employee spends listening to the Front End Message (FEM). 

IRS Mainframes and Servers, Services and Support 

The Mainframes and Servers, Services and Support (MSSS) program provides for the design, 

development, and deployment of server, middleware and large systems as well as enterprise 

storage infrastructures, including systems software products, databases and operating systems 

for these platforms. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 968,816,600 

Life-cycle Cost: $7,317,261,494 

Actual Obligations to Date: $4,093,693,794 

Start Date of Investment: 1970 

The projected useful life of the current asset: estimated 2019 
 IRS-168

The anticipated benefit(s) of the investment: 

 Enables the IT infrastructure to allow the IRS to process tax returns, collect revenue, 

and issue refunds; 

 Provides 24x7 IT Operations and Maintenance to all Tier I and Tier II production 

systems responsible for the daily operation of the IRS batch and online processing 

environments; 

 Ensures server computer resources maintain sufficient capacity to meet system 

functional and performance demands; and 

 Develops, installs, maintains, and modifies the infrastructure required for various 

on-going Tax Processing Unisys mainframe systems. 

How performance will be measured and evaluated: 

 The percentage of Server Environment Virtualized; 

 The percentage of Uptime for the ACS, ICS and IDRS Databases; 

 The success Rate Percentage for Automated Deployment of Infrastructure Component 

Packages to Production - Using the Package Based Promotion Tool; 

 The number of Standard Employee IDs with Elevated Access are Reduced; and 

 The percentage of Priority Tickets that are Triaged/Resolved by Service Operations 

Command Center Systems Administrators. 

IRS Telecommunications Systems and Support 

The Telecommunications Systems and Support (TSS) program falls under the jurisdiction of 

the Users and Networks Services (UNS) organization that is responsible for the management 

of voice and data networks, video services, and engineering throughout the IRS. This 

includes providing remote access, voice telephony, voicemail, contact centers, cell phones, 

pagers, and video conferencing. UNS network is composed of wide area networks, local area 

networks, servers, switches, and control devices. The investment supports the IT 

Infrastructure services related to the federally mandated transition to IPV6. 

Network Convergence replaces aged voice, voicemail, and video infrastructure, and combines 

these services on a common network. It provides operational efficiencies, supports agency 

initiatives to reduce real estate (through projects such as the shared workspaces initiative, 

universal workspace design, and home as point of duty), and reduces risks posed by aged 

legacy assets. The Video Conferencing System (VCS) infrastructure has aged devices that 

need replacing. The original equipment manufacturer no longer supports these devices. 

Enterprise eFax provides desktop fax capability to IRS employees nationwide. The fax 

capability will help support decreases in paper, hardware, and toner costs and help support 

telework-related initiatives. 

UNS manages a large-scale contact center infrastructure to assist its customers with 

tax-related problems and questions. It is in the planning stages of upgrading the existing 
 IRS-169

Aspect Automated Call Distributor (ACD) platforms. ACDs distribute calls among local and 

remote agents at more than 30 centers within the United States and Puerto Rico. The ACD 

platforms are reaching end-of-life and need replacing. Replacement will provide features 

necessary to replicate primary functionality of the ACDs while supporting integration with the 

existing application and other Contact Center production systems. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 639,957,783 

Life-cycle Cost: $2,387,578,466 

Actual Obligations to Date: $1,007,403,330 

Start Date of Investment: 1970 

The projected useful life of the current asset: estimated 2019 

The anticipated benefit(s) of the investment: 

 Provides the IT infrastructure to allow the IRS to process tax returns, collect revenue, 

and issue refunds; 

 Supports agency initiatives to reduce real estate (through projects including the shared 

workspaces initiative, universal workspace design, and home as post of duty); 

 Reduces risks posed by aged legacy assets; and 

 Supports IRS’s Sustaining Infrastructure goal to retire aged assets and reduce 

obsolescence enterprise-wide. 

How performance will be measured and evaluated: 

 Internet Access Availability - Average availability of the IRS to be able to reach a 

select number of external websites through the three Common Communication 

Gateways (CCG); 

 LAN Availability - Availability based on KISAM tickets and the customer impact on 

making the network available. Percent is derived from multiplying the total number of 

hours per month with the total number of sites divided by the hours a site is not 

available; 

 WAN Availability - Availability based on KISAM tickets and the customer impact on 

making the network available. Percent is derived from multiplying the total number of 

hours per month with the total number of sites divided by the hours a site is not 

available; and 

 Percent of GSP Compliance - Guidance’s, Standards, and Procedures (GSP) - UNS 

Router/Switch GSPs exist to ensure standardized security configurations for the 

network devices used in the IRS User & Network Services. NetDoctor is the 

enforcement tool used for ensuring GSP compliance. It enforces the GSP rules against 

the IRS’s network device configurations. 
 IRS-170

IRS.gov - Portal Environment 

The Integrated Enterprise Portals (IEP) are critical to the IRS mission and foundational to IRS 

electronic tax administration and to IRS business operations. The IRS has adapted these 

mission-critical systems over the years to meet the changing needs of the tax paying 

population; however, current portal design limitations and available systems capacity will not 

meet the needs of the future investment portfolio. The new IRS IEP will provide seamless 

one-stop web-based services to internal and external users, such as taxpayers, business 

partners, IRS employees, and other government agencies. The objective of the new portal 

project is to continue to maintain and operate secure and reliable portals to meet the goals of 

the agency by competitively acquiring managed services for the establishment and 

management of a new infrastructure, hosting, help desk, content management, search, and 

reporting solution, and the transition of the existing portal capabilities and services to the new 

IRS Web environment transparent to external users. By transitioning to the new IEP 

environment, it improves the IRS capability to increase IT services to meet the changing 

needs of the taxpaying public. The IRS will build the new IEP environment in phases, with 

the final phase to be completed in FY 2013. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 39,952,561 

Life-cycle Cost: $650,872,562 

Actual Obligations to Date: $487,488,652 

Start Date of Investment: 1996 

The projected useful life of the current asset: estimated 2017 

The anticipated benefit(s) of the investment: 

 Improves web environment, efficiencies, effectiveness, quality, and process maturity; 

 Provides visibility into program cost drivers; and 

 Delivers year over year unit cost reductions to the IRS. 

How performance will be measured and evaluated: 

 The percentage of the calls answered by Help Desk representative within 40 seconds; 

 Providing a public facing web portal environment availability of 99.99 percent that 

allows taxpayers to meet their tax obligations timely; 

 Web portal environment is available 99.99 percent to meet the internal user's needs 

with minimum interruption; 

 The percentage of the e-mails responded to within 24 business hours with scripted 

e-mail response; and 

 The percentage of all new applications successfully deployed in the IRS.Gov 

production environment within five business days must equal 100 percent. 
 IRS-171

Modernized e-File 

The Modernized e-File (MeF) system is a mixed life-cycle investment that is the primary 

system to receive and process all tax returns submitted electronically. When MeF receives an 

electronic tax return, the system determines if it satisfies the acceptance rules required for 

further processing. 

One of the benefits of MeF is the extensive error checking and data validation that occurs 

before the return is fully processed. MeF creates an acknowledgment telling the transmitter 

that the return was either accepted or rejected, and it provides information about the cause(s) 

of rejection. This acknowledgment is generally available to the transmitter within minutes of 

tax return submission. MeF forwards accepted returns to IRS systems used for processing tax 

returns. If MeF rejects a return due to errors, the transmitter can correct the identified issues 

and re-submit. These up-front checks help ensure successful processing of returns by 

downstream tax systems. 

The MeF program provides a secure web platform for electronically filing tax and 

information returns by registered Electronic Return Originators (ERO). This system uses a 

browser-based and application-to-application solution to provide ERO end users with 

optimized return filing. MeF is becoming the primary system for electronic filing of 

business and individual tax returns and forms. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 95,593,982 

Life-cycle Cost: $638,630,949 

Actual Obligations to Date: $375,955,489 

Start Date of Investment: 2001 

The projected useful life of the current asset: estimated 2020 

The anticipated benefit(s) of the investment: 

 Beneficiaries include the tax preparation community and the taxpayers they represent; 

 Benefits large corporations and tax-exempt organizations that are required at a specific 

asset threshold to file their tax returns or annual information returns electronically by 

reducing the handling/mailing of voluminous paper returns that sometimes exceed 700 

attachments/schedules; 

 Extensive error checking and data validation that occurs before the return is processed; 

and 

 The system delivers tax returns that do not pass these error checks to the transmitter 

for correction. These up-front checks help ensure successful processing of returns by 

the downstream tax systems. 
 IRS-172

How performance will be measured and evaluated: 

 The percent of business tax returns processed electronically by MeF; 

 The average number of minutes within which electronic filers receive 

acknowledgement of their electronically filed tax returns; 

 The percentage of scheduled system availability per the approved Service Level 

Agreement, as documented monthly by IRS Enterprise Services; 

 Error rate for electronically filed tax returns; 

 The percent of individual tax returns processed electronically; and 

 Total quarterly cost savings derived from electronically filed tax returns. Percentage 

of savings achieved is based on $3.5M target savings per quarter. This is a periodic 

metric. 

Return Review Program 

The Return Review Program (RRP) is a system that uses leading-edge technologies to 

advance IRS effectiveness in detecting, addressing, and preventing tax refund fraud and 

protecting United States Treasury revenue. It will replace the legacy EFDS which was built 

in the mid-1990s. The entirely new RRP fraud framework is critical for IRS success in 

tackling ever-evolving tax schemes in a sophisticated, scalable, and adaptable manner. Based 

on specific business models from Criminal Investigation (CI) and the Return Integrity and 

Correspondence Services (RICS) Office, RRP will support the new cross-functional approach 

to criminal and civil tax noncompliance, including identity theft. 

With RRP, predictive fraud detection models will seek out subtle data patterns to determine 

the reliability of return data, including the filer's identity. RRP will generate a scorecard for 

questionable returns, evaluating consistency and dependability on each. RRP will evaluate 

returns against the prior three years of filing history and other external data sources to provide 

a robust perspective. The IRS will be able to respond to multiple issues of noncompliance on 

a single return. Using massively parallel processing, the system's capacity will promote speed, 

even during the peak of tax filing season. This speed will serve taxpayers not only by 

supporting fast refunds, but also by quickly recognizing patterns and redirecting fraudulently 

filed returns. The database query speed will be more than 10 times that of the current EFDS 

system. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $117,142,552 

Life-cycle Cost: $252,541,945 

Actual Obligations to Date: $102,919,393 

Start Date of Investment: 2010 
 IRS-173

The projected useful life of the current asset: estimated 2020

The anticipated benefit(s) of the investment: 

 IRS will be able to respond to multiple issues of noncompliance on a single return; and 

 Using massively parallel processing, the system's capacity will promote speed, even 

during the peak of tax filing season. This speed will serve taxpayers not only by 

supporting fast refunds, but also by quickly recognizing patterns and redirecting 

fraudulently filed returns. 

How performance will be measured and evaluated: 

The RRP investment has yet to deploy and the IRS is developing performance measures. 

Service Center Recognition/Image Processing System 

The Service Center Recognition/Image Processing System (SCRIPS) is a major paper input 

processing system specifically designed to automate the processing of Information Return 

Processing (IRP) forms, Schedule K-1s (Forms 1041 K-1, 1065 K-1, and 1120 K-1), Form 

941 (and associated Schedules B and Schedule R), and Form 940 (and associated Schedule A 

and Schedule R). SCRIPS scans and stores images of all tax documents processed, saving 

time by converting the scanned images and data to computer-readable code and providing 

hardcopy images when requested. This is accomplished using the Optical Character 

Recognition/Intelligent Character Recognition (OCR/ICR) engine in addition to utilizing 2D 

bar code recognition that optimizes and automates data entry of the taxpayer data. 

SCRIPS is one of the front-end input systems that operates at four IRS Submission Processing 

Centers where the IRS receives, sorts, and sends forms to the scanning areas. SCRIPS sends 

the electronic taxpayer data to the IRS downstream tax processing systems, including 

Generalized Mainline Framework (GMF) and Master File for posting to the IRS database, and 

also Service-Wide Employment Tax Research System (SWETRS) and Statistics Of Income 

(SOI) for compliance. The IRS archives and retains the images on the system. IRS Customer 

Service Representatives can request hard copies of images through the IDRS. 

The immediate cost (defined as the base FY 2014 budget plus the FY 2015 request) as 

well as the full life-cycle cost of the asset: 

FY 2014 - FY 2015: $ 25,778,834 

Life-cycle Cost: $202,734,527 

Actual Obligations to Date: $157,291,609 

Start Date of Investment: 1991 

The projected useful life of the current asset: estimated 2019. 
 IRS-174

The anticipated benefit(s) of the investment: 

SCRIPS scans and stores images of all tax documents processed, saving time by 

converting the scanned images and data to computer-readable code and providing 

hardcopy images when requested. 

How performance will be measured and evaluated: 

 Maintain a character recognition error rate on scanned forms of no more than 

4 percent per month; 

 The percent of tax return image print requests fulfilled within 2 days; 

 The percentage of time the SCRIPS system is available per month for processing 

(system up-time); 

 The average number of tax return-related documents processed per hour; 

 Number of High Priority (P1) trouble tickets not closed within 4 hours; and 

 Number of Moderate Priority (P2) trouble tickets not closed within 24 hours. 

Criminal Investigations (CI) Capital Assets 

These capital assets are used to protect CI special agents from threats and bodily injury when 

performing their law enforcement duties including conducting investigations concerning 

alleged criminal tax fraud violations, financial crimes, and other related offenses. 

Security Equipment 

The IRS purchases security equipment such as cameras, digital video recorder system 

(DVRs), access control panels, and card readers. The IRS uses facility-specific security 

assessments to prioritize asset needs and develop criteria for replacing equipment in a given 

facility. Additionally, emergency needs arise over the course of the year. These needs are 

ranked and funded according to the effect the equipment has on the overall security posture. 

Performance is measured through security reviews, testing, and the assessment of individual 

facilities for their overall security posture using a number of criteria including location, size, 

number of employees, and type of work done in the facility. These criteria are used to 

develop an overall security posture. This posture is then compared to existing equipment in 

the facility to determine additional needs. If a facility has a large divergence from the 

posture, equipment is ordered. Reviews are done on a regular basis to measure and evaluate 

performance. 

The useful life of security equipment is usually five years. The need for equipment can arise 

at any time, such as when employees are moved into a new building, during internal moves, 

or intermittently when equipment needs to be replaced. The benefit of this capital asset 

investment is that it supports the IRS priority to provide a safe and secure environment for its 

employees, equipment, and facilities. 
 IRS-175

Leasehold Improvements 

Many projects undertaken by IRS entail the design, alteration, and furnishing of space either 

upon acquisition, at lease renewal, or for other purposes, such as supporting space 

consolidation or reduction. The portion of the project that is captured as a capital asset is 

reflected in OMB Object Class 3200, Land and Structures, and includes alterations to 

buildings; fixtures such as elevators, plumbing, power-plant boilers, fire-alarm systems, 

lighting, heating systems, air-conditioning systems, flooring, and carpeting. The total figure 

is a sum of the expenditures in that object class for all IRS projects in that particular year. 

The IRS employs a scheme to rank projects in priority order and keeps a comprehensive list 

of projects across the territories. Projects are considered based on the critical need for the 

project. Projects approved but not funded in the current year are deferred to the following 

year. Proposed projects are identified throughout the year and are prioritized and added to list 

as appropriate. 

Performance is measured utilizing the following measures: 

 Project Spend per usable square feet (USF) on Closed Projects; 

 Total USF Touched by Projects; and 

 Percent of Total USF Under Management; Percent Customers Satisfied With 

Completed Space Projects. 

The useful life of these alterations is usually five years or the remaining fixed term of the 

lease. The fixed term of most leases is five years, with options to renew or to extend for some 

additional period. The need for alterations can arise at any time, including, but not limited to: 

 Adding personnel workspaces; 

 Consolidating functions; and 

 Addressing other space issues. 

The benefit of these alterations is that they provide the means for the business unit occupants 

to perform their mission efficiently and in user-friendly space. In addition to space reduction 

associated rent savings, a portion of the investment may provide a savings such as in the area 

of energy consumption. 

A summary of capital investment resources, including major information technology and 

non-technology investments can be viewed/downloaded here: 

http://www.treasury.gov/about/budget-performance/Pages/summary-of-capitalinvestments.aspx.
 IRS-176

4.2 – Summary of Cost and Schedule Performance for Major IT Systems 

Investment Funding 

Type

1

Cost 

Variance % 

Schedule 

Variance %

Account Management Services (AMS) O 0.00% 0.00%

Affordable Care Act Administration (ACA) D 0.00% 0.00%

Customer Account Data Engine 2 (CADE 2) B -2.22% -6.86%

Electronic Fraud Detection System (EFDS) O 0.00% 0.00%

e-Services (e-SVS) B 0.00% 0.00%

Foreign Account Tax Compliance Act (FATCA) D 1.66% 0.00%

Individual Master File (IMF) B -5.41% 0.00%

Information Reporting and Document Matching (IRDM) B 0.97% 0.00%

Integrated Customer Communication Environment (ICCE) B 0.00% 0.00%

Integrated Data Retrieval System (IDRS) B 2.06% 0.00%

Integrated Financial System/CORE Financial System 

(IFS) B -8.02% 0.00%

Integrated Submission and Remittance Processing 

System (ISRP) B 0.00% 0.00%

IRS End User Systems and Services (EUSS) O 0.00% 0.00%

IRS Main Frames and Servers Services and Support 

(MSSS) O 0.00% -2.66%

IRS Telecommunications Systems and Support (TSS) O 10.50% -4.36%

IRS.GOV - Portal Environment B 0.00% 0.00%

Modernized e-File (MeF) B 0.00% 0.00%

Return Review Program (RRP) - (Replaces EFDS) D 0.00% 0.00%

Service Center Recognition/Image Processing System 

(SCRIPS) B 0.35% 2.70%

Based on data submitted to Treasury, January 2014

1

 D – Development/Modernization/Enhancement (DME)

 O – Operations and Maintenance (O&M)

 B – Both DME and O&M
 IRS-177

4.3 – IRS Performance Measure Table 

Performance Measures Type of 

Measure

FY2008 

Actual

FY2009 

Actual

FY2010 

Actual

FY2011 

Actual

FY2012 

Actual

FY2013 

Actual

FY2014 

Planned

FY2015 

Planned

Customer Service Representative Level of Service 

(LOS)1 Oe, L 52.8% 70.0% 74.0% 70.1% 67.6% 60.5% 61.0% 71.0%

Customer Contacts Resolved per Staff Year E 12,634 12,918 10,744 12,419 16,320 20,767 22,750 25,000

Customer Accuracy - Tax Law (Phones) Ot 91.2% 92.9% 92.7% 93.4% 93.2% 95.7% 93.0% 93.0%

Customer Accuracy - Accounts (Phones) Ot 93.7% 94.9% 95.7% 96.0% 95.6% 96.0% 95.0% 95.0%

Timeliness of Critical Filing Season Tax Products to the 

Public Ot 92.4% 96.8% 95.3% 96.3% 97.2% 58.9% 95.0% 95.0%

Timeliness of Critical TE/GE & Business Tax Products to 

the Public Ot 89.5% 95.2% 97.7% 96.4% 94.5% 83.6% 95.0% 95.0%

Percent Individual Returns Processed Electronically Oe, L 57.6% 65.9% 69.3% 76.9% 80.5% 82.5% 84.1% 84.6%

Cost per Taxpayer Served ($) (HCTC) E $16.94 $13.79 $9.52 $12.36 $14.43 $13.41 n/a n/a

Sign-Up Time (Days) - Customer Engagement (HCTC) Ot 94.0 91.3 124.0 117.0 116.0 125.2 n/a n/a

Percent of Business Returns Processed Electronically Oe, L 19.4% 22.8% 25.5% 31.8% 36.7% 40.2% 44.7% 46.5%

Refund Timeliness - Individual (Paper) Ot 99.1% 99.2% 96.1% 99.4% 99.7% 99.0% 97.0% 98.0%

Taxpayer Self-Assistance Rate E, L 66.8% 69.3% 64.4% 70.1% 78.5% 83.3% 85.0% 86.0%

Examination Coverage - Individual Oe, L 1.0% 1.0% 1.1% 1.1% 1.0% 1.0% 0.8% 0.8%

Field Exam Nat'l Quality Review Score Oe, L 86.0% 85.1% 84.9% 85.8% 87.4% 89.2% 89.6% 89.6%

Office Exam Nat'l Quality Review Score Oe, L 90.0% 92.1% 91.6% 90.4% 91.3% 90.3% 90.2% 90.2%

Examination Quality - Large Business2

 (new for FY13) Oe, L 92.0% 90.0% 90.0%

Examination Coverage - Business (Assets > $10 million) Oe, L 6.1% 5.6% 5.7% 6.2% 6.2% 5.6% 4.2% 4.1%

Examination Efficiency - Individual E, L 138 138 140 139 142 142 133 124

Automated Underreporter Efficiency E, L 1,982 1,905 1,924 2,007 2,041 2,025 1,931 1,950

Automated Underreporter Coverage E, L 2.6% 2.6% 3.0% 3.3% 3.2% 2.8% 2.5% 2.7%

Collection Coverage (Units) Ot, L 55.2% 54.2% 50.1% 50.0% 48.1% 47.0% 42.7% 45.0%

Collection Efficiency (Units) E, L 1,926 1,845 1,822 1,952 1,997 2,057 2,007 1,900

Field Collection Nat'l Quality Review Score Ot, L 79.0% 80.5% 80.6% 80.3% 80.4% 81.4% 81.0% 81.0%

Automated Collection System Accuracy Oe 95.3% 94.3% 95.9% 94.9% 94.7% 94.4% 94.0% 94.0%

Criminal Investigations Completed Ot, L 4,044 3,848 4,325 4,697 4,937 5,557 4,440 4,440

Number of Convictions Oe, L 2,144 2,105 2,184 2,350 2,634 3,311 2,450 2,450

Conviction Rate Oe, L 92.3% 87.2% 90.2% 92.7% 93.0% 93.1% 92.0% 92.0%

Conviction Efficiency Rate ($) E, L $315,751 $327,328 $324,776 $310,029 $270,511 $211,048 $280,000 $315,000

TE/GE Determination Case Closures Ot 100,050 96,246 105,247 91,205 87,000 65,877 71,219 74,475

Percent of BSM Projects within +/- 10% Cost Variance E 92.0% 60.0% 40.0% 71.4% 50.0% 0.0% 90.0% 90.0%

Percent of BSM Projects within +/- 10% Schedule 

Variance E 92.0% 90.0% 100.0% 100.0% 90.0% 83.3% 90.0% 90.0%

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 will replace the two 

previous LB&I quality measures - Examination Quality - Industry and Coordinated Industry.

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.

n/a - not applicable, HCTC Program is scheduled to end on December 31, 2013.
 IRS-178

 

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.

Cost per Taxpayer Served ($) (HCTC) The costs associated with serving the taxpayers including program kit correspondence, registration and program 

participation.

Sign-Up Time (Days) – Customer Engagement 

(HCTC) The length of time between the first Program Kit mailing and first payment received.

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 BSM Projects within +/- 10% Cost 

Variance 

The percentage of BSM projects that are within the +/-10% threshold for cost. The cost variance is measured from 

the initial cost estimate versus current cost estimate.

Percent of BSM Projects within +/- 10% Schedule 

Variance 

The percentage of BSM projects that are within the +/-10% threshold for schedule. The schedule variance is 

measured from the initial schedule estimate to the current schedule estimate.

Budget Level Performance Measure Descriptions
 IRS-179

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, within the Operations Support multi-year appropriation, to upgrade and 

modernize the aging legacy Information Technology (IT) infrastructure for non-Business 

System Modernization projects. The process is built on leading business practices that 

support the IRS mission and strategic objectives while ensuring compliance with Federal laws 

and agency oversight. 

The SI program establishes its infrastructure investment timetable by overlaying the annual 

budget into the prioritization process. Extending beyond legacy systems, investments in 

innovation such as network convergence and desktop virtualization allow the IRS to gain 

efficiencies such that foreseeable budgets will meet the requirements to replace aged assets. 

This innovation element, as part of the SI program, is a key component to IRS’s long-term 

infrastructure viability. 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 

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. 
 IRS-180

The benefits of the SI prioritization process include: 

 Reducing the overall operational infrastructure cost of the IT Organization (IT) 

wherever possible; 

 Reducing equipment diversity and quantity; 

 Improving infrastructure capacity; 

 Improving governance; 

 Increasing IT security; 

 Improving disaster recovery operations; and 

 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 Associate Chief Financial Officer (ACIO) 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 is used to prioritize IT investments to align 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. 
 IRS-181

 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 

modifications that may be needed, and revise the investment management process 

based on lessons learned. 
 IRS-182

4C – Opportunity, Growth, and Security Initiative 

Three months ago, through the Bipartisan Budget Act of 2013 (BBA), Congress came 

together on a bipartisan basis and took an important first step toward replacing the damaging 

cuts caused by sequestration with longer-term reforms. Recognizing the importance of the 

two-year budget agreement Congress reached in December, the President’s Budget adheres to 

the BBA’s discretionary funding levels for 2015, giving Congress a roadmap for how to write 

a budget at those levels that promotes growth and opportunity, enhances national security, and 

makes important reforms. 

However, the BBA levels are not sufficient to expand opportunity to all Americans or to drive 

the growth our economy needs. The BBA replaced half the sequestration cut for 2014 but just 

one-fifth of the scheduled cut in the discretionary funding level for 2015. As a result, taking 

into account unavoidable growth in programs such as veterans’ medical care and other 

factors, the BBA non-defense discretionary funding levels for 2015 are below the levels 

Congress provided in the bipartisan Consolidated Appropriations Act of 2014. They are also 

below the 2007 funding levels adjusted for inflation, even though the need for pro-growth 

investments in infrastructure, education, and innovation has only increased due to the Great 

Recession and its aftermath. 

For that reason, the Budget also includes a separate, fully paid for $56 billion Opportunity, 

Growth, and Security Initiative. The Opportunity, Growth, and Security Initiative, which will 

be split evenly between defense and non-defense funding, shows how additional discretionary 

investments in 2015 can spur economic progress, promote opportunity, and strengthen 

national security. 

Moreover, the Opportunity, Growth, and Security Initiative is fully paid for with a balanced 

package of spending cuts and tax loophole closures, showing that additional pro-growth 

investments are easily affordable without increasing the deficit if Congress will enact 

common-sense spending and tax reforms. 

By providing an additional $165 million for the IRS the Opportunity, Growth, and Security 

Initiative will support additional IRS customer service improvements, including increasing 

toll-free telephone level of service by 11 percentage points to over 80 percent, driving 

responsiveness to taxpayers through correspondence inventory reduction, and bolstering 

resources to help tackle more highly burdensome identity theft and refund fraud cases. 
 IRS-183

4D – Summary of FY 2013 Savings Realized 

The IRS FY 2013 President’s Budget request of $12,761.2 million included $70.9 million and 

614 FTE in reductions to the IRS FY 2012 base budget. The IRS FY 2013 Enacted budget 

was $11,198.6 million after rescission and sequestration, $618.1 million less than the 

FY 2012 Enacted budget of $11,816.7 million, and $309.6 million less than FY 2012 actual 

expenditures from new appropriated resources of $11,508.2 million. Total actual reductions 

to personnel and related support costs in FY 2013 were $566,484,822 and 3,605 FTE. 

FY 2013 savings were realized as follows: 

Savings projected: -$70,850,000 / -614 FTE 

Actual savings realized: -$112,187,992 / -627 FTE 

 Targeted Program Reductions: -$59,706,000 / -437 FTE 

Actual savings realized: -$45,018,400 / -418 FTE 

The IRS realized savings of $45 million and 418 FTE in FY 2013 from a reduction in 

the Taxpayer Service, Enforcement, and Business Systems Modernization (BSM) 

programs achieved by increasing efficiency, reducing costs, and streamlining 

operations. These savings included: 

 $34.5 million from the reduced staffing in enforcement overhead support and 

analysis functions that helped gain efficiencies through greater consolidation of 

activities such as communications, human resources, and research, both at the 

program and enterprise level; 

 $4.6 million from the transition of stakeholder relationship programs within 

the IRS’s customer facing divisions from building relationships to maintaining 

effective relationships; 

 $5.1 million from the expansion of the use of less expensive service delivery 

models; and 

 $0.8 million from reduced supply costs in information technology. 

 Increased e-File Savings: -$8,566,000 / -177 FTE 

Actual savings realized: -$11,001,600 / -209 FTE 

The IRS realized savings of $11 million and 209 FTE in FY 2013 are a result of 

increases in electronically filed returns. The savings exceeded the projected savings by 

$2.4 million and 32 FTE. In FY 2013, the IRS received 3.5 million fewer paper 

returns compared to FY 2012 and an increase of 4.2 million returns filed 

electronically. 
 IRS-184

 Reduce Travel: -$2,578,000 / 0 FTE 

Actual savings realized: -$56,167,992 / 0 FTE 

The IRS projected savings in specific travel areas of $2.6 million in the FY 2013 

President’s Budget. The IRS reduced agency-wide non-technical training and 

non-case related travel by making greater use of technology generating a savings of 

$56.2 million, exceeding the projection by $53.6 million. 

Other FY 2013 Cost Reductions: Actual savings realized: -$474,193,745 / -2,978 FTE 

In addition to the $112.2 million in savings realized for the areas identified in the FY 2013 

President’s Budget, the IRS reduced costs in other areas, primarily through attrition, in order 

to reach the FY 2013 post-rescission, post-sequestration operating level of $11,198.6 million. 

The IRS absorbed these reductions through: 

 Attrition and Furloughs: 

Actual reductions realized: -$310,778,548 / -2,978 FTE 

The IRS significantly reduced spending on labor to reach the FY 2013 post-rescission, 

post-sequestration operating level. Full-time equivalents (FTEs) decreased by more 

than 2.7 percent from FY 2012 through the use of attrition and hiring freezes that did 

not replace attrition. Additionally, the IRS generated savings of $88.5 million due to 

labor reductions from three furlough days in FY 2013. 

 Contractual Services:

Actual reductions realized: -$63,793,803 / 0 FTE 

The IRS reduced contracting expenses by by $63.8 million by decreasing contracted 

program support, renegotiating non-IT contracts for more favorable pricing, and 

changing contract vehicles. 

 Lands and Structure:

Actual reductions realized: -$30,648,191 / 0 FTE 

In FY 2013, the IRS reduced resources for leasehold improved by more than 

$30.6 million to generate resources to fund mandatory expenses such as rent. 

 Equipment:

Actual reductions realized: -$27,935,278 / 0 FTE 

In FY 2013, the IRS reduced spending on equipment such as purchases of furniture, 

document processing equipment such as photocopiers, television studio equipment, 

and other office equipment by $27.9 million. 
 IRS-185

 Supplies:

Actual reductions realized: -$18,661,946 / 0FTE 

The IRS reduced supply costs by limiting spending to critical operational needs and 

negotiating contracts for improved pricing. 

 Telecommunications:

Actual reductions realized: -$18,153,855 / 0 FTE 

The IRS decreased expenditures on telecommunications equipment by $18.2 million, 

primarily by reducing local telephone service and more efficiently managing mobile 

telephones. 

 Transportation of Things: 

Actual reductions realized: -$2,293,473 / 0 FTE 

The IRS reduced expenditures on transportation of things by $2.3 million, primarily 

by decreasing postage and relocation expenses.

 Printing and Reproduction: 

Actual reductions realized: -$1,928,651 / 0 FTE 

 

The IRS reduced printing and reproduction expenses by more than $1.9 million. 

Though the IRS achieved more than $586.4 million in savings as described above, the actual 

net savings achieved totaled $566.5 million due to increased costs for rent and utilities in 

FY 2013. 

 
 IRS-186

4E – IRS Use of Evidence and Innovation 

The IRS continues to strengthen and improve program performance by applying existing 

evidence about what works and by using research and innovation to improve program 

delivery. 

Improving Program Outcomes by Harnessing Data 

Enhancing Voluntary Compliance through the National Research Program Reporting 

Compliance Study

The IRS National Research Program (NRP) within Research, Analysis, and Statistics (RAS) 

is a comprehensive cross-functional effort to assess taxpayers’ voluntary compliance with the 

Federal tax law at a strategic level and to produce data that support the development of 

improved IRS systems for identifying noncompliant taxpayers. The program evaluation is 

built on annual, random research audits of taxpayers, designed specifically to shed light on the 

broad range of taxpayer compliance behavior. 

The IRS examination (audit)-based reporting compliance studies provide valuable data on the 

tax return reporting accuracy of taxpayers. These studies use stratified random sampling in 

order to provide an unbiased sample of returns that is representative of the population of 

returns covered by the study. This selection method allows the result of the examinations to 

be used for broad-based analytical and research purposes in order to improve the efficiency 

and effectiveness of overall tax administration and to enhance voluntary compliance. Projects 

where RAS is using NRP reporting compliance study data include: 

 Individual Income Tax Return Discriminant Function (DIF) Examination Workload 

Selection Models 

The annual individual income tax, Form 1040, studies allow the IRS to evaluate and 

update the DIF models. These models are used to calculate a DIF score (a selection 

tool for returns) for individual income tax returns as the returns are filed and 

processed. A higher DIF score indicates a higher likelihood of errors on the return. 

Because returns are filed with different forms and schedules, separate models are 

developed for returns with different form/schedule characteristics. These groupings of 

returns by forms/schedules are called examination activity codes. Analysis of 

individual reporting compliance study data for tax years (TY) 2006 through 2009 

identified improvements that could be made to enhance the effectiveness of the DIF 

models for several examination activity codes. New DIF models were implemented 

for processing year 2013 for two examination activity codes and new models will be 

implemented in processing year 2014 for four examination activity codes. 

 Issue-based and Expert Rules Examination Workload Selection Models 

NRP Form 1040 study data are being used to develop and evaluate issue-based and 

expert rules workload selection models. The IRS conducts a significant number of 

correspondence examinations using its campus-based examination staff. This method 

of examination is most suited to examinations that are limited to only one or a few 

issues that can be resolved readily through correspondence. RAS has ongoing analysis 
 IRS-187

using NRP data to evaluate existing campus workload selection methods and develop 

alternative models that perform better than the existing models. 

 Analysis of EITC Reporting Compliance 

The IRS completed an analysis of TY 2006 through TY 2008 NRP Form 1040 study 

data of taxpayers claiming EITC. The analysis provided a comprehensive overview of 

EITC compliance, revisiting and updating information previously reported by the IRS 

in Compliance Estimates for Earned Income Credits Claimed on 1999 Returns, and

will be used to inform the IRS in its administration of the credit. 

Affecting Taxpayer Behavior through Market Segmentation Models 

The IRS Market Segmentation Compliance Program (MSCP) seeks to establish a data-driven 

decision matrix for implementing approaches that work for the individual taxpayer. By 

integrating market segmentation with internal IRS data and certain external data, the IRS can 

incorporate taxpayer perspectives, compliance behavior, and attitudes to design and tailor 

compliance treatments so that the right treatment is delivered to the right taxpayer at the right 

time. RAS is currently working on an effort with enforcement programs, i.e., Examinations, 

Collections, Offer in Compromise (OIC), and Underreporter, to influence and improve 

taxpayer compliance. 

Social science research reveals that the traditional deterrence theory, fear of detection and/or 

punishment, contributes a portion to actual compliance rates. Recent studies indicate that 

social norms, personal values, and attitudes may have a large impact on compliance decisions. 

Market segmentation approaches – behavioral, psychographic, and attitudinal, are widely used 

in commercial marketing to develop, design, and position products and services towards the 

right customer base. The knowledge gained from both social science and marketing research 

can assist the IRS with appropriate identification and alignment to the proper taxpayer. The 

MSCP is helping the IRS improve its methods of communication with taxpayers. For 

example, response rates from taxpayers improved after several notices were tailored for 

specific taxpayer segments. 

Increasing Program Participation through Data Driven Taxpayer Outreach 

In addition to combating improper payments of the EITC, the IRS is engaged in efforts to 

ensure those eligible for the EITC are able to benefit from the credit. With the goal to identify 

inexpensive ways to increase participation among eligible individuals, RAS conducted a pilot 

program in which the IRS reached out to taxpayers who filed a paper return in 2010 and were 

likely eligible for the EITC for the first time in 2011. Although the results did not show an 

increase in overall participation, taxpayers who received the mailing selected software more 

often than they selected paid preparers. Because the cost of software is generally less 

expensive than the fee for paid preparation, more of the EITC stayed with the taxpayer. 

For 2013, the IRS revised this effort to focus on taxpayers who did not file a 2011 income tax 

return, but appear to be eligible for the EITC based on information return documents for that 

tax year. The taxpayers in the study will be observed in the next filing season to determine 

whether there is an EITC participation rate increase among that population. The outreach 
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effort also provides the opportunity to bring nonfilers into filing compliance and to study 

behavioral responses to tailored outreach messages. The messaging explains that if a 2010, 

2011, or 2012 return has not yet been filed, it is not too late to file it and claim tax benefits. 

Information on how to obtain tax information documents and to file a return are provided in 

the messaging. 

Improving the Effectiveness of Programs 

 Voluntary Filing Rate 

The IRS invests resources to study the Voluntary Filing Rate (VFR) and determine the 

factors that affect its variation. Evaluating the variation while considering 

macro-economic sources such as changes in the unemployment rate, statutory 

changes, and IRS administrative practice changes, has laid the foundation for ongoing 

work to better isolate the impact of IRS administrative changes from other sources of 

variation. The potential benefit from determining these impacts will lead to more 

effective administration of the IRS. 

 Return Preparer Regulation 

RPO currently manages registration of tax returns preparers. To estimate the impact 

of regulations requiring tax return preparers to register, RAS compared Automated 

Underreporter (AUR) notices from registered and non-registered preparers. The 

preliminary findings indicated that returns prepared by registered and credentialed 

preparers contain fewer math errors than those prepared by unenrolled preparers. 

Preliminary findings suggest that registration is associated with a decrease in some 

types of taxpayer errors. 

High-quality, Low Cost Evaluation and Rapid, Iterative Experimentation

Combating Refund Fraud with Real Time Impact Evaluations 

The Office of Compliance Analytics (OCA) was established in 2011 as the Internal Revenue 

Service’s core data analytics organization reporting to the IRS Commissioner with a charter 

to: 

 Strategically use data to materially enhance tax compliance results; and 

 Build an enhanced data-driven decision-making culture across the IRS. 

The OCA has innovatively used data analytics to significantly reduce improper payments 

associated with the EITC and related child tax credits. 

In 2012, the OCA and the Wage and Investments (W&I) Division designed a small 

data-driven pilot to identify a group of tax return preparers with a history of submitting 

incorrect or fraudulent tax returns improperly claiming the EITC. Using the data from the 

EITC Real Time Return Preparer pilot, the IRS then designed and implemented interventions 

with these preparers to stop improper claims. The interventions included letters, calls, and 

visits to selected preparers, both prior to and “real time” during tax filing season. A control 
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group received no such interventions. These efforts reduced improper payments in 2012 by 

an estimated $198 million. 

An expanded pilot protected an additional $590 million in revenue during Filing Season 2013. 

The 2013 test included a broader set of randomly selected preparers and a broader set of 

interventions, including the addition of preparer-focused taxpayer audits (for returns that 

otherwise would have qualified for audit even absent the pilot). Many preparers who did not 

improve in the 2012 pilot did so in 2013 when subject to a second more aggressive 

intervention such as a site visit subsequent to filing season. Preparers who improved due to 

IRS interventions during the initial 2012 pilot generally maintained their improved filing 

behavior in 2013, again submitting fewer improper claims than the control group. 

Cumulatively, the EITC Real Time Return Preparer pilot program has generated 

approximately $940 million in value during 2012 and 2013, including both revenue protected 

and the assessment of preparer penalties associated with a preparer’s failure to adhere to due 

diligence requirements. Program costs over the two years have totaled approximately 

$15 million, yielding a very high return on investment. 

The IRS’s ability to strategically and operationally “test and learn” has enabled it to 

innovatively address EITC enforcement in a “wholesale” manner – engaging EITC tax 

preparers, not just taxpayers – and thereby improve the IRS’s efficiency, lower taxpayer 

burden, and materially curtail improper claims and payments. 

The IRS is working to take the lessons from these pilot tests and incorporate them into EITC’s 

FY 2014 operations, with continued small-scale testing of selected strategies and ongoing 

monitoring of all key program elements. 

Applying Behavioral Research to Improve Tax Compliance 

RAS conducts studies to observe how a small group of volunteers react in a simulated taxpaying environment in order to investigate individual behavior in response to changes in the 

level of service or enforcement. Such information is not obtainable from either administrative 

data or random taxpayer audits. 

The IRS is currently investigating differences in taxpayer reporting behavior between a riskbased audit and a random audit. Previously, studies of this kind were conducted on a broad 

range of compliance topics including: 

 Estimating the indirect effect of taxpayer audits; 

 Encouraging filing participation and social network effects; 

 Assessing the impact of service availability and reliability on tax filing and reporting; 

 Classifying (segmenting) taxpayers to receive specific services based on their 

observed reporting behaviors; and 

 Understanding the marginal impact of tax withholding and information reporting. 
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This low-cost method of determining the most effective ways of improving taxpayer 

compliance continues to influence IRS policies and procedures. 

Making Informed Resource Decisions Based on Return on Investment Analyses 

Every year, as part of the budgeting process, RAS produces revenue estimates for budget 

initiatives which increase enforcement activity. This low-cost method to determine value for 

enforcement hires uses evidence of the return associated with particular enforcement work to 

project the return of future enforcement activity. The initial estimate of revenue generated by 

a particular initiative is based on specifics such as job classification of the proposed 

enforcement staff, the type of work they are expected to perform, and the historic return 

associated with that work. The initial revenue estimates are tempered to account for other 

factors, such as marginality and productivity. Marginality addresses the fact that each case 

worked will likely generate less revenue than the one prior. Productivity adjustments reflect 

the expected learning curve associated with new employees. 

This information is one of the factors used by the IRS to evaluate the benefits of new 

investments. 

Strengthening Agency Capacity to Use Evidence 

Leveraging Outside Experts to Improve Evidence-Based Policy 

Through the Joint Statistical Research Program, RAS uses Statistics of Income’s data to study 

the effects of existing tax policies on individuals, businesses, and the economy by researchers 

outside the Federal Government. This research should provide new understandings of 

taxpayer behavior that could affect the administration of the tax system. The program 

benefits employees by providing developmental opportunities through collaborations with 

leading economic researchers. The call for proposals in late 2012 resulted in the selection of 

18 projects. Four of these projects include external researchers who are now working on 

Intergovernmental Personnel Act (IPA) assignments. 

Increasing Electronic Deposits for Tax Refunds 

The Department of the Treasury, Bureau of the Fiscal Service (BFS), has made great strides in 

reducing the number of non-tax related paper checks issued by the government. Most notably 

the mandate for electronic deposit of Federal benefits had a significant impact. BFS has 

significantly lowered paper check payments from 19.2 million through January of FY 2013 to 

7.3 million through January of FY 2014. IRS refunds remain the single largest contributor to 

paper checks, with only 28.8 percent of tax refunds issued electronically through January of 

FY 2014, versus 96.8 percent for non-tax payments during the same period. The IRS is 

partnering with BFS in an effort to increase the electronic deposit take-up rate for tax refunds. 

The effort includes analysis of the taxpayer segments receiving paper refunds and a pilot 

outreach program. The pilot targets taxpayers that received a paper check in Tax Year 2012, 

but also received electronic benefits from the federal government. Two types of letters, and a 

follow-up postcard, were tested on two 35,000 taxpayer samples. We will be monitoring 

responses to the outreach over the Tax Year 2013 filing season. This is in support of the 
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administration’s electronic government initiative and will increase efficiency while decreasing 

government costs and taxpayer burden. 

For the first phase of this effort, the focus will begin with individual taxpayers. For Tax 

Year 2011, 17.6 million or 65 percent of all 27.2 million refunds were issued via paper check. 

Working with BFS, RAS will use a data-driven approach to determine the characteristics of 

those individuals receiving paper check refunds. The IRS will review filing characteristics, 

income levels, and the proportion already receiving electronically deposited Federal benefits. 

Leveraging this data, the IRS will develop a strategy for communications and outreach, which 

may include pilots for letters, to increase participation with electronic deposits of refunds. 

Supporting Program Integrity through Quality Assurance Reviews

To ensure the integrity of its programs, RAS office provides statistical consulting services for 

various operating divisions in the IRS. Based on the needs of the programs and discussions 

with the program area specialists, statisticians design samples, select specific cases for quality 

review, provide specifications for databases and automated reports, create data collection 

instruments for capturing quality data, weight the data, and calculate estimate variability, as 

well as provide ad hoc statistical expertise. 

Recent projects include: 

 Volunteer Site Quality Review – Each year approximately 2.5 million taxpayers visit 

more than 10,000 volunteer-run taxpayer assistance sites during the filing season. 

RAS supports the effort to use statistical sampling to evaluate the accuracy of the 

returns prepared by the volunteers working in these sites. 

 Lockbox Quality – The IRS uses private banks, called lockboxes, to process 

approximately 60 million taxpayer payments totaling more than $340 billion annually. 

RAS develops and updates quality reviews, designs and evaluates scorecards, 

compiles and explains results, and consults with IRS analysts and bank management to 

help ensure the integrity and quality of the lockboxes. 

 Correspondence and Closed Case Quality Review - Notices and cases involving 

various types of correspondence sent to taxpayers are reviewed by IRS operations for 

accuracy and timeliness. The RAS team designs the sampling plans and provides 

instructions for selecting cases for the sample which improves the consistency and 

quality of reviews. 
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4.4 – Cost of IRS Operating Activities 

FY 2013 Cost of IRS Operating Activities 

The following charts provide the FY 2013 cost of IRS operating activities by appropriation 

and by major expense category. The charts include all expenditures, regardless of the fiscal 

year the funds were appropriated, that occurred in FY 2013 except for imputed costs 

(i.e., costs associated with services obtained by other agencies such as the Department of the 

Treasury and the Office of Personnel Management that are provided to the IRS, but are not 

reimbursed). 

The first chart shows the FY 2013 actual costs by appropriation. 

The second chart shows the FY 2013 actual costs by major expense category.

Notes: 

1

Other includes Contractual Services, Supplies, Printing, Postage, Travel and Training 2

Enforcement includes Non-Labor Enforcement Expenses of $122M (1.1%) 

Labor Costs represent 77.45% of total expenses and are included in Taxpayer Service, Enforcement, Operations 

Support, and HCTC 
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4.5 – Return on Investment (ROI) for IRS Major Enforcement Programs 

The actual cost and actual revenue collected for FY 2009 through FY 2013 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 individuals, 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 1099s, 

W-2s, 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, so it is generally inappropriate to compare revenue 

collected in a given fiscal year to the staffing available for that same year. 

In addition, it also is important to note that these data reflect the average return on investment 

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. 
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Dollars in Millions

Enforcement Program Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI

IRS Total $6,068.3 $48,886 8.1 $6,581.1 $57,592 8.8 $6,542.7 $55,229 8.4 $6,241.5 $50,187 8.0 $5,883.0 $53,345 9.1

Examination 3,965.2 17,446 4.4 4,371.0 23,563 5.4 4,333.0 18,924 4.4 4,232.4 14,476 3.4 3,965.3 16,662 4.2

Collection 1,880.3 26,871 14.3 1,948.4 29,105 14.9 1,939.4 31,060 16.0 1,741.7 30,442 17.5 1,659.6 31,396 18.9

Automated Underreporter (AUR) 222.8 4,569 20.5 261.7 4,924 18.8 270.3 5,245 19.4 267.4 5,269 19.7 258.1 5,287 20.5

FY 2012 FY 2013

1

The cost of the enforcement programs was calculated using budget data from the Integrated Financial System (IFS), Business Warehouse, Status of Available Funds (SOAF) Cost Center Internal Order 

(IO) Report, Periods 000 - 012.

FY 2009 FY 2010 FY 2011

Return on Investment for IRS Major Enforcement Programs 
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4.6 – Alignment of the FY 2015 Initiatives to the Department of the Treasury and IRS 

Strategic Documents 

FY 2015 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

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

Electronic 

Interaction 

Enablement

Telephone 

Service 

Enhancements

Partner Services Outreach and Education Marketing and Promotion

Improve Taxpayer Service and Return Processing     

Prevent Identity Theft   Address Impact of ACA Statutory Requirements   Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements  Address International and Offshore Compliance Issues  Expand Coverage of High-Wealth Individuals and Enterprises  Expand Audit Coverage  Enhance Collection Coverage  Improve Coverage of Partnerships and Flow-Through Entities  Expand Compliance Coverage in the Tax-Exempt Sector  Pursue Fraud Referrals, Employment Tax and Abusive Tax Schemes  Built Out Tax Return Preparer Compliance and Professional Responsibility Activities  Implement Information Technology (IT) Changes to Deliver the Foreign Account Tax Compliance Act (FATCA)  Leverage Digital Evidence for Criminal Investigation (CI)  Leverage Data to Improve Case Selection  Improving Information Technology Services Implement Campus Consolidation and Revitalizing Strategy Implement eGovernment and Other Administration Priorities Maintain Integrity of Revenue Financial Systems Expand Virtual Service Delivery (VSD)     Continue Migration from Aging Tax Administration Systems- Enhance Online Services    

Strategic Foundation 

for Organizational 

Excellence

Service Improvement Categories

Taxpayer Assistance Blueprint (TAB)

Priority Goals Goal #2

Strategic Goals

IRS Treasury

Strategic Goal 3-

Objective 3.3 Goal #1
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4.7 – Summary of IRS FY 2015 Affordable Care Act (ACA) Budget Request 

Dollars in Thousands

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

FY 2014 Enacted

Reinvestment:

Expand Telecom Infrastructure to Handle Increased Demand 16,025 16,025

Subtotal FY 2015 Changes to Base $16,025 $16,025

FY 2015 ACA Program Increases:

Improve Taxpayer Service and Return Processing 58,248 822 15,699 7 73,947 829

Address Impact of Affordable Care Act (ACA) Statutory Requirements 36,574 349 19,525 50 56,099 399

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements 305,645 818 305,645 818

Subtotal FY 2015 ACA Program Increases $58,248 822 $36,574 349 $340,869 875 $435,691 2,046

Total FY 2015 ACA Budget Request $58,248 822 $36,574 349 $356,894 875 $451,716 2,046

TOTAL OPERATIONS 

SUPPORT TAXPAYER SERVICES ENFORCEMENT FY 2015

 Affordable Care Act (ACA)
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4.8 – Summary of Program Integrity Cap Adjustment Bureau: Internal Revenue Service Summary of Proposed FY 2015 Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE FY 2013 Operating Level1 $2,135,553 29,700 $4,949,178 44,325 $3,800,943 11,885 $312,938 471 $11,198,612 86,381 FY 2014 Enacted2 $2,156,554 28,996 $5,022,178 42,805 $3,798,942 11,860 $312,938 528 $11,290,612 84,189 Changes to Base: Non-Recur FY 2014 Additional Appropriation ($34,000) ($58,000) ($92,000) Maintaining Current Levels (MCLs): $46,483 $105,719 $69,382 $1,593 $223,177 Pay Raise 24,564 57,260 19,399 859 102,082 FERS Contribution Increase 18,724 41,857 14,014 734 75,329 Non-Pay Inflation Adjustment 3,195 6,602 35,969 45,766 Other Adjustment: ($29,221) 329 $29,221 244 573 Base Adjustments (29,221) 329 29,221 244 573 Efficiencies/Savings: ($18,786) (70) ($18,233) ($58,181) ($95,200) (70) Increase e-File Savings (2,761) (55) (39) (2,800) (55) Adjustment for FERS Increase (18,233) (58,142) (76,375) HCTC Program Termination (16,025) (15) (16,025) (15) Reinvestment: $16,025 $16,025 Expand Telecom Infrastructure to Handle Increased Demand 16,025 16,025 Subtotal FY 2015 Changes to Base ($6,303) (70) $58,265 329 ($1,553) 244 $1,593 $52,002 503 FY 2015 Base $2,150,251 28,926 $5,080,443 43,134 $3,797,389 12,104 $314,531 528 $11,342,614 84,692 Program Changes: Program Increases Before Cap Adjustment: Improve Taxpayer Service and Return Processing 153,482 2,355 57,776 36 211,258 2,391 Prevent Identity Theft and Refund Fraud 13,900 200 16,971 191 34,005 66 64,876 457 Continue Migration from Aging Tax Administration Systems - Enhance Online Services 829 15,679 41 16,508 41 Address Impact of ACA Statutory Requirements 36,574 349 19,525 50 56,099 399 Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements 305,645 818 305,645 818 Subtotal Program Increases Before Cap Adjustment $167,382 2,555 $53,545 540 $417,780 970 $15,679 41 $654,386 4,106 Total Request Before Cap Adjustment $2,317,633 31,481 $5,133,988 43,674 $4,215,169 13,074 $330,210 569 $11,997,000 88,798 Cap Adjustment Program Increases:

Enforcement Initiatives:

Address International and Offshore Compliance Issues 49,037 332 7,773 56,810 332Expand Coverage of High Wealth Individuals and Enterprises 17,684 141 3,273 20,957 141Expand Audit Coverage 53,581 541 44,198 45 97,779 586Enhance Collection Coverage 41,692 540 25,070 37 66,762 577Improve Coverage of Partnerships and Flow-Through Entities 28,690 240 7,849 4 36,539 244Expand Compliance Coverage in the Tax-Exempt Sector 13,364 119 2,731 16,095 119Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 9,275 52 8,537 17,812 52Build Out Tax Return Preparer Compliance and Professional Responsibility Activities 14,765 106 2,772 17,537 106Implement Information Technology (IT) Changes to Deliver the Foreign Account Tax Compliance Act (FATCA) 32,223 140 32,223 140Leverage Digital Evidence for Criminal Investigation (CI) 698 5 3,674 1 4,372 6Leverage Data to Improve Case Selection 4,052 7 32,741 39 36,793 46

Subtotal Enforcement Initiatives $232,838 2,083 $170,841 266 $403,679 2,349

TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT BSM TOTAL
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4.8 – Summary of Program Integrity Cap Adjustment (Continued) Bureau: Internal Revenue Service Summary of Proposed FY 2015 Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE Infrastructure Initiatives: Implement Information Technology (IT) Services 10,000 10,000 Implement Campus Consolidation and Revitalization Strategy 10,000 10,000 Implement eGovernment and Other Administration Priorities 31,011 19 31,011 19 Maintain Integrity of Revenue Financial Systems 12,136 8 12,136 8 Expand Virtual Service Delivery (VSD) 7,701 13 7,701 13 Subtotal Infrastructure Initiatives $70,848 40 $70,848 40 Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer: Transfer to TTB for High-Return on Investment (ROI) Tax Enforcement Activities 5,000 5,000 Subtotal Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer Initiative $5,000 $5,000 Subtotal FY 2015 Cap Adjustment $237,838 2,083 $241,689 306 $479,527 2,389 Total FY 2015 Budget Request $2,317,633 31,481 $5,371,826 45,757 $4,456,858 13,380 $330,210 569 $12,476,527 91,187 Dollar/FTE Change FY 2015 Budget Request over FY 2014 Enacted $161,079 2,485 $349,648 2,952 $657,916 1,520 $17,272 41 $1,185,915 6,998 Percent Change FY 2015 Budget Request over FY 2014 Enacted 7.47% 8.57% 6.96% 6.90% 17.32% 12.82% 5.52% 7.77% 10.50% 8.31% Dollar/FTE Change FY 2015 Request Before Cap Adjustment over FY 2014 Enacted $161,079 2,485 $111,810 869 $416,227 1,214 $17,272 41 $706,388 4,609 1 Percent Change FY 2015 Request Before Cap Adjustment over FY 2014 Enacted 7.47% 8.57% 2.23% 2.03% 10.96% 10.24% 5.52% 7.77% 6.26% 5.47% FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M transferred from the Enforcement appropriation to the Taxpayer Services ($13M) and Operations Support ($60M) appropriations. 2 FY 2014 Enacted includes $92M in funding ($34 million in Taxpayer Services and $58 million in Operations Support). TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT BSM TOTAL
 IRS-199

4.9 – Summary of IRS FY 2015 Budget Request Bureau: Internal Revenue Service Summary of Proposed FY 2015 Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE FY 2013 Operating Level1 $2,135,553 29,700 $4,949,178 44,325 $3,800,943 11,885 $312,938 471 $11,198,612 86,381 FY 2014 Enacted2 $2,156,554 28,996 $5,022,178 42,805 $3,798,942 11,860 $312,938 528 $11,290,612 84,189 Changes to Base: Non-Recur FY 2014 Additional Appropriation ($34,000) ($58,000) ($92,000) Maintaining Current Levels (MCLs): $46,483 $105,719 $69,382 $1,593 $223,177 Pay Raise 24,564 57,260 19,399 859 102,082 FERS Contribution Increase 18,724 41,857 14,014 734 75,329 Non-Pay Inflation Adjustment 3,195 6,602 35,969 45,766 Other Adjustment: ($29,221) 329 $29,221 244 573 Base Adjustments (29,221) 329 29,221 244 573 Efficiencies/Savings: ($18,786) (70) ($18,233) ($58,181) ($95,200) (70) Increase e-File Savings (2,761) (55) (39) (2,800) (55) Adjustment for FERS increase (18,233) (58,142) (76,375) HCTC Program Termination (16,025) (15) (16,025) (15) Reinvestment: $16,025 $16,025 Expand Telecom Infrastructure to Handle Increased Demand 16,025 16,025 Subtotal FY 2015 Changes to Base ($6,303) (70) $58,265 329 ($1,553) 244 $1,593 $52,002 503 FY 2015 Base $2,150,251 28,926 $5,080,443 43,134 $3,797,389 12,104 $314,531 528 $11,342,614 84,692 Program Changes: Program Increases: Taxpayer Service Initiative: Improve Taxpayer Service and Return Processing 153,482 2,355 57,776 36 211,258 2,391 Subtotal Taxpayer Service Initiative $153,482 2,355 $57,776 36 $211,258 2,391 Enforcement Initiatives: Address International and Offshore Compliance Issues 49,037 332 7,773 56,810 332

Expand Coverage of High Wealth Individuals and Enterprises 17,684 141 3,273 20,957 141Prevent Identity Theft and Refund Fraud 13,900 200 16,971 191 34,005 66 64,876 457Address Impact of ACA Statutory Requirements 36,574 349 19,525 50 56,099 399Expand Audit Coverage 53,581 541 44,198 45 97,779 586Enhance Collection Coverage 41,692 540 25,070 37 66,762 577Improve Coverage of Partnerships and Flow-Through Entities 28,690 240 7,849 4 36,539 244Expand Compliance Coverage in the Tax-Exempt Sector 13,364 119 2,731 16,095 119Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 9,275 52 8,537 17,812 52Build Out Tax Return Preparer Compliance and Professional Responsibility Activities 14,765 106 2,772 17,537 106Implement Information Technology (IT) Changes to Deliver the Foreign Account Tax Compliance Act (FATCA) 32,223 140 32,223 140Leverage Digital Evidence for Criminal Investigation (CI) 698 5 3,674 1 4,372 6Leverage Data to Improve Case Selection 4,052 7 32,741 39 36,793 46

Subtotal Enforcement Initiatives $13,900 200 $286,383 2,623 $224,371 382 $524,654 3,205

TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT BSM TOTAL
 IRS-200

4.9 – Summary of IRS FY 2015 Budget Request (Continued) Bureau: Internal Revenue Service Summary of Proposed FY 2015 Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE Infrastructure Initiatives: Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements 305,645 818 305,645 818 Implement Information Technology (IT) Services 10,000 10,000 Implement Campus Consolidation and Revitalization Strategy 10,000 10,000 Implement eGovernment and Other Administration Priorities 31,011 19 31,011 19 Maintain Integrity of Revenue Financial Systems 12,136 8 12,136 8 Expand Virtual Service Delivery (VSD) 7,701 13 7,701 13 Subtotal Infrastructure Initiatives $376,493 858 $376,493 858 Business Systems Modernization Initiative: Continue Migration from Aging Tax Administration Systems - Enhance Online Services 829 15,679 41 16,508 41 Subtotal Business Systems Modernization Initiative $829 $15,679 41 $16,508 41 Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer: Transfer to TTB for High-Return on Investment (ROI) Tax Enforcement Activities 5,000 5,000 Subtotal Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer Initiative $5,000 $5,000 Subtotal FY 2015 Program Changes $167,382 2,555 $291,383 2,623 $659,469 1,276 $15,679 41 $1,133,913 6,495 Total FY 2015 Budget Request $2,317,633 31,481 $5,371,826 45,757 $4,456,858 13,380 $330,210 569 $12,476,527 91,187 2 Dollar/FTE Change FY 2015 Budget Request over FY 2014 Enacted $161,079 2,485 $349,648 2,952 $657,916 1,520 $17,272 41 $1,185,915 6,998 Percent Change FY 2015 Budget Request over FY 2014 Enacted 7.47% 8.57% 6.96% 6.90% 17.32% 12.82% 5.52% 7.77% 10.50% 8.31% FY 2014 Enacted includes $92M in funding ($34 million in Taxpayer Services and $58 million in Operations Support). 1 FY 2013 Operating Level represents the across-the-board recission and reductions required by sequestration and an interappropriation transfer $73M transferred from the Enforcement appropriation to the Taxpayer Services ($13M) and Operations Support ($60M) appropriations. TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT BSM TOTAL