Fiscal Year

2023

Congressional

Budget

Justification

& Annual

Performance

Report and Plan

Publication 4450 (Rev. 3-2022) Catalog Number 39720Z

Department of the Treasury Internal Revenue Service www.irs.gov
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Table of Contents

Commissioner’s Message..........................................................................................................................................................3

Section I – Budget Request.......................................................................................................................................................4

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

1.1 – Appropriations Detail Table.......................................................................................................................................4

B – Summary of the Request..............................................................................................................................................10

1.2 – Budget Adjustments Table........................................................................................................................................12

C – Base Adjustment and Program Changes Description...............................................................................................13

Maintaining Current Levels ..............................................................................................................................................13

Pay Annualization (2.7%)................................................................................................................................................13

Pay Raise (4.6%) .............................................................................................................................................................13

Non-Pay...........................................................................................................................................................................13

Base Adjustment.................................................................................................................................................................13

Program Increases..............................................................................................................................................................14

1.3 – Object Classification (Schedule O) Obligations......................................................................................................18

D – Appropriations Language and Explanation of Changes ..........................................................................................19

E – Legislative Proposals....................................................................................................................................................28

Section II – Budget and Performance Plan...........................................................................................................................29

A – Strategic Alignment .....................................................................................................................................................29

Taxpayer Services...............................................................................................................................................................31

2.1 – Budget Adjustments Table...................................................................................................................................31

2.2 – Object Classification Obligations........................................................................................................................32

2.3 – Appropriation Detail Table..................................................................................................................................33

2A – Pre-Filing Taxpayer Assistance and Education .................................................................................................33

2.1.1 – Budget and Performance Report and Plan......................................................................................................36

2B – Filing and Account Services.................................................................................................................................36

2.1.2 – Budget and Performance Report and Plan......................................................................................................40

Enforcement........................................................................................................................................................................41

2.1 – Budget Adjustments Table...................................................................................................................................42

2.2 – Object Classification Obligations........................................................................................................................43

2.3 – Appropriation Detail Table..................................................................................................................................44

2C – Investigations.........................................................................................................................................................44

2.1.3 – Budget and Performance Report and Plan......................................................................................................47

2D – Exam and Collections ...........................................................................................................................................47

2.1.4 – Budget and Performance Report and Plan......................................................................................................52

2E – Regulatory..............................................................................................................................................................53

2.1.5 – Budget and Performance Report and Plan......................................................................................................55

Operations Support ............................................................................................................................................................56

2.1 – Budget Adjustments Table...................................................................................................................................57

2.2 – Object Classification Obligations........................................................................................................................58
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2.3 – Appropriation Detail Table..................................................................................................................................59

2F – Infrastructure........................................................................................................................................................59

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

2G – Shared Services and Support ...............................................................................................................................62

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

2H – Information Services.............................................................................................................................................66

2.1.8 – Budget and Performance Report and Plan......................................................................................................69

Business Systems Modernization.......................................................................................................................................70

2.1 – Budget Adjustments Table...................................................................................................................................70

2.2 – Object Classification Obligations........................................................................................................................71

2.3 – Appropriation Detail Table..................................................................................................................................72

2I – Business Systems Modernization ..........................................................................................................................72

2.1.9 – Budget and Performance Report and Plan......................................................................................................75

B - FY 2021 - FY 2023 IRS Integrated Modernization Business Plan............................................................................76

C – Changes in Performance Measures............................................................................................................................79

Section III – Supplemental Information................................................................................................................................80

3.1 – Summary of Capital Investments.............................................................................................................................80

3.2 –IRS Performance Measures Table............................................................................................................................86

3.3 – Return on Investment (ROI) for IRS Major Enforcement Programs...................................................................87

Section IV – Appendix............................................................................................................................................................89

4.1 - COVID-19 Supplemental Funding............................................................................................................................89

4.2 - Carryover Investments from FY 2022 Congressional Justification.......................................................................90

4.3 – Summary of IRS FY 2023 Cyber Security Budget Request.................................................................................101

4.4 – Summary of IRS FY 2023 Budget Request ...........................................................................................................102
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Commissioner’s Message

The Internal Revenue Service (IRS) is the primary source of funding 

for the United States government and collected more than $4 trillion 

in gross taxes in FY 2021. As the past year shows, we are more than a 

tax administration agency. We also make it possible for the 

government to perform its vital functions and be effective on 

everything from education to defense. The unprecedented events of 

the last two years illustrate the significant role the IRS plays in the 

overall economic health of our country. We have effectively 

supported economic growth and recovery while fulfilling our core 

mission, including delivery of two extended tax filing seasons. Now 

we’re planning for a new organizational structure and an increase in 

our workforce that will position us well for the future. These 

endeavors will also further the IRS’s efforts in delivering a stellar 

taxpayer experience. Given the importance of the IRS to the nation, I 

believe it is essential for me to leave the agency in a stronger 

position, with greater resources, when my term ends in November 2022.

At a time when the IRS has faced consequential resource challenges, we have taken on new responsibilities affecting almost 

every American. IRS employees’ heroic efforts during this national crisis included distributing three rounds of Economic 

Impact Payments totaling more than $800 billion as well as more than $500 billion in individual refunds since the spring of 

2020. In 2021, we were called upon to implement portions of the American Rescue Plan Act, including the provision for 

advance payments of the 2021 Child Tax Credit (CTC) to provide much needed help to eligible Americans. We issued the 

first round of more than 35 million Advance CTC payments on July 15, and further monthly payments were made through 

the end of calendar year 2021. The IRS worked hard to deliver this program quickly, efficiently, and on time. In June, we 

sent more than 36 million letters to people who may be eligible, to let them know about this benefit, and stood-up an online 

portal allowing taxpayers to make updates to their accounts or opt out from receivingthe advance CTC.

Like all federal agencies, the IRS is best able to fulfill its mission –providing the services Americans deserve and 

appropriately enforcing the tax laws – when it receives the resources it needs. We anticipate over 60 percent of our 83,000 

employees will retire within the next six years. Building back a strong workforce, augmenting taxpayer services, and 

establishing proper support functions are my top priorities - and the premise of this budget request. An appropriate level of 

consistent, multi-year funding will allow the IRS to continue enhancing the taxpayer experience,narrowing the tax gap to 

ensure equitable administration of the tax code, protecting IRS systems and taxpayer data, and modernizing our information 

technology systems. This request will address the IRS’s paper inventory, bolster our telephone level of service, and continue 

developing innovative approaches to understanding, detecting, and resolving potential noncompliance to maintain taxpayer 

confidence in the tax system. Efforts to expand the use of data, analytics, and artificial intelligence across all lanes in the 

audit process, from selection to examination will persist. 

We are making a difference and we want to continue to successfully pursue our mission on behalf of our great country.

Chuck Rettig 

Commissioner 
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Section I – Budget Request

A – 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 – Appropriations Detail Table

Dollars in Thousands

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Taxpayer Services 25,989 $2,587,606 27,990 $2,763,606 32,865 $3,385,723 33,041 $3,684,593 17.42% 22.51% 18.05% 33.33%

Pre-Filing Taxpayer Assistance and 

Education 4,514 657,618 5,536 720,276 5,967 803,873 6,003 866,539 7.79% 11.61% 8.44% 20.31%

Filing and Account Services 21,475 1,929,988 22,454 2,043,330 26,898 2,581,850 27,038 2,818,054 19.79% 26.36% 20.42% 37.91%

Enforcement 34,989 $5,004,622 35,604 $5,004,622 38,607 $5,861,649 38,831 $6,272,313 8.43% 17.12% 9.06% 25.33%

Investigations 3,012 678,193 2,965 667,279 3,223 785,121 3,243 838,596 8.70% 17.66% 9.38% 25.67%

Exam and Collections 30,987 4,170,886 31,615 4,160,748 34,331 4,883,575 34,530 5,228,803 8.59% 17.37% 9.22% 25.67%

Regulatory 990 155,543 1,024 176,595 1,053 192,953 1,058 204,914 2.83% 9.26% 3.32% 16.04%

Operations Support 12,037 $4,104,102 11,631 $3,928,102 11,923 $4,543,268 11,523 $3,833,734 2.51% 15.66% -0.93% -2.40%

Infrastructure 886,713 918,659 1,039,852 405,408 13.19% -55.87%

Shared Services and Support 5,122 1,046,754 5,067 1,109,740 5,183 1,200,105 4,783 1,125,014 2.29% 8.14% -5.60% 1.38%

Information Services 6,915 2,170,635 6,564 1,899,703 6,740 2,303,311 6,740 2,303,312 2.68% 21.25% 2.68% 21.25%

Business Systems Modernization 394 $222,724 308 $222,724 412 $310,027 412 $310,027 33.77% 39.20% 33.77% 39.20%

Subtotal New Appropriated Resources 73,409 $11,919,054 75,533 $11,919,054 83,807 $14,100,667 83,807 $14,100,667 10.95% 18.30% 10.95% 18.30%

Other Resources:

Reimbursables 694 98,412 585 157,000 614 164,851 614 164,851 4.96% 5.00% 4.96% 5.00%

Offsetting Collections - Non 

Reimbursables 66,504 10,000 10,500 10,500 5.00% 5.00%

User Fees 81 502,449 86 414,364 1,006 340,733 1,006 340,733 1069.77% -17.77% 1069.77% -17.77%

Recovery from Prior Years 35,304 19,476 19,476 19,476

Unobligated Balances from Prior 

Years 1,590 652,599 3,144 1,332,422 41 421,908 41 421,908 -98.70% -68.34% -98.70% -68.34%

Transfers In/Out 140 140 140

Recoveries Paid 3,398 3,398 3,398

Resources from Other Accounts4

334 138,409 460 117,243 821 146,057 34 146,057 78.48% 24.58% -92.61% 24.58%

Subtotal Other Resources 2,699 $1,493,677 4,275 $2,054,043 2,482 $1,107,063 $1,695 $1,107,063 -41.94% -46.10% -60.35% -46.10%

Total Budgetary Resources 76,108 $13,412,731 79,808 $13,973,097 86,289 $15,207,730 $85,502 $15,207,730 8.12% 8.84% 7.13% 8.84%

% Change

FY 2022 to FY 2023 

Request with Technical 

Adjustment

% Change

FY 2021

Operating Plan1, 2

FY 2022

Annualized CR3

FY 2023

Request

FY 2022 to FY 2023 

Request

1 FY 2021 Other Resources represent actuals.

3 FY 2022 Annualized CR includes an interappropriation transfer of $208 million from Enforcement to Taxpayer Services.

FY 2023

Request with Technical 

Adjustment

4

Resources from Other Accounts reflect planned spending from Private Collection Agency retained earnings.

2 FY 2021 Operating Plan includes an interappropriation transfer from Enforcement ($208 million) to Taxpayer Services ($32 million) and Operations Support ($176 million).

Note: The new appropriated resources do not include the $15 million in the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), $750.7 million under the Coronavirus Aid, Relief, and 

Economic Security (CARES) Act (P.L. 116-36), the $509 million provided in the Consolidated Appropriations Act, 2021 (P.L. 116-260), and the $1.86 billion provided by the American Rescue Plan 

(ARP) (P.L. 117-2). Unobligated balances in FY 2022 and FY 2023 inlcude ARP funding.
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Introduction 

The Internal Revenue Service (IRS) Fiscal Year (FY)2023budget request is $14.1billion, $2.2billion(18percent) more 

than the FY 2022 Annualized Continuing Resolution (ACR) level of $11.9 billion, to administer the nation’s tax system 

fairly, collect more than$4 trillion in gross taxes to fund the government, and strengthen tax compliance. The Budget 

comprises initiatives to improve the taxpayer’s experience with the IRS, that will ultimately lead to increased voluntary tax 

compliance. The request also aims to ensure we stay current withthe paper inventory and improve telephone and in-person 

service; facilitate better oversight of high income and corporate tax returns; and accelerate the development of digital tools to 

enable smarter communication with taxpayers. In addition, the Administration continues to support a multiyear investment in 

IRS enforcement to increase tax compliance and revenues that the President has previously proposed.

An extensive enforcement program will generate and protect billions in additional revenue while reducing the tax gap. The 

IRS has an overall enforcement return on investment (ROI) of about $5for every $1 investedcompared to the IRS appropriated 

budget, excluding significant deterrence effects. Overall, this request proposes new and enhanced strategies for refininghow 

the taxpayer interacts with the IRS byimplementing strategies that put taxpayers first, bringingservices to underserved 

communities and providingnew and improved online tools for taxpayers to communicate with the IRS easily and quickly. 

An appropriate level of funding will allow the IRS to continue enhancing the taxpayer experience, narrowing the tax gap to 

ensure equitable administration of the tax code, protecting IRS systems and taxpayer data, and modernizing our information 

technologysystems. Taxpayer services is only one component of funding required to serve taxpayers effectively. During the 

pandemic, for example, the Information Technology (IT) division provided the equipment necessary to allow thousands of 

IRS customer service representatives to telework, which enabledphone assistance to continue during a period of 

overwhelming demand while keeping our employees safe. 

The IRS dedicates itself to improving the taxpayer experience so that taxpayers and their representatives can understand and 

meet their tax obligations with minimal burden. The aim is to increase voluntary compliance by simplifying the tax filing, 

correction, and payment processes. To help achieve this, we will focus on improving education and outreach on taxpayer 

rights and obligations and enhancing service channels to meet taxpayer needs. In addition to improving the taxpayer 

experience, another priority is to ensure taxpayers comply with federal tax laws. To this effect we continue to develop 

innovative approaches to understanding, detecting, and resolving potential noncompliance to maintain taxpayer confidence in 

the tax system.

The IRS expanded its taxpayer services through proactive outreach efforts to connect with underserved communities such as 

those with limited English proficiency (LEP), lower-income earners, military, veterans, retired and homeless, among other 

communities. We engaged hundreds of local and national groups, religious organizations, and numerous others to help 

contact underserved communities ensuring all eligible recipients could benefit from the Economic Impact Payments and 

Advance Child Tax Credit. We expanded communication options for LEP communities, such as releasing a Spanish version 

of Form 1040 and debuting Schedule LEP. In 2021, IRS translated 75-80percent of the most popular pages on IRS.govinto 

seven languages. 

Expanding our offerings in multiple languages is just one way the IRS is working to enhance the taxpayer experience. 

Another way is by providing new virtual services and online tools to tax professionals so they can better assist their clients. 

Enhancing the experience of taxpayers and tax professionals is essential to maintaining a voluntary tax system. Ensuring fair 

enforcement of the tax laws is just as critical as the services we provide. The IRS makes it possible for the government to 

perform its vital functions, helping fund the great work of our nation on everything from education to defense.

Though enforcement and taxpayer services efforts continue to expand, the IRS’s budget has decreased by approximately 15 

percent in real terms since FY 2010. As a result of this decrease in funding, Taxpayer Services FTEs have not increased and 

Enforcement FTEs have declined by 30percent from FY 2010 through FY 2021, while real Gross Domestic Product (GDP) 
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has increased by 29 percent (see Figure 1.1). Current staffing levels are close to 1974 levels (see figure 1.2 for the past 12-

year history).

Reduced FTEs have crippled tax administration bandwidth and significantly diminished the IRS’s ability to:

• Deliver meaningful customer service, 

• Maintain sufficient audit coverage of entities and individuals contributing the most to the tax gap, 

• Collect taxes taxpayers acknowledge they owe but have not paid, 

• Reduce the tax gap through a coordinated effort of both meaningful guidance and enforcement, 

• Fund the government, and 

• Modernize IT systems and facilities.

Figure 1.1
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Figure 1.2

Note: FTE shown are funded through IRS annual appropriations as well as through funding provided in administrative provisions and supplemental legislation passed in addition to the annual 

appropriations. In FY 2020, this includes 2,144 FTE funded through the CARES Act. In FY 2021, this includes 2,933 FTE funded through supplemental appropriations within the Consolidated 

Appropriations Act, 2021 and the American Rescue Plan.
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Reductions to enforcement staffing levels over the last decade factored pointedly into reduced total enforcement revenue 

collected (TERC) by around $95billion.

While a portion of the unpaid tax obligations that make up the tax gap result from a lack of knowledge or ambiguity and 

complexity in tax law, willful evasion is a significant contributing factor. The IRS could help remedy this with the funding of 

a multi-year enforcement initiative, that would include targeted investments in enforcement activities designed to increase 

revenue and lower the tax gap. The FY 2023 request and legislative proposals provide the IRS with a blueprint to address 

various facets of the tax gap. 

Figure 1.3
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Restructuring IRS Appropriations to Align Support Costs to Mission Costs

With this budget, the Administration proposes a change to the appropriations language that would allow Taxpayer Services 

and Enforcement funding to be used for certain associated support costs that are currently reserved for Operations Support 

funding. Currently, Taxpayer Services and Enforcement funding only pays for an employee’s labor cost, not the cost to hire 

the employee or the IT equipment and space neededto make them productive. There are significant benefits to this change –

future IRS budgets would reflect the full cost of Taxpayer Services and Enforcement, to include their necessary support costs. 

The changes would also prompt IRS Business Units to be more efficient with their support costs because they stand to 

directly benefit from savings.

The IRS proposes using an internal reimbursable agreement process to carry out the proposed funding structure. In FY 2023, 

rental and Chief Financial Officer (CFO) costs will be reallocated from Operations Support to Taxpayer Services and 

Enforcement with more costs planned to move out of Operations Support in the future. A total of $710 million will be shifted

from Operations Support to Taxpayer Services ($299 million) and Enforcement ($411 million) (see figure 1.4). For additional 

information, please see section D – Appropriations Language and Explanation of Changes includes a more detailed 

description and justification of this proposal.

FY 2023 

Request Rent CFO

Adjustment

Total

Proposed 

Funding Levels

3,385,723 265,830 33,040 298,870 3,684,593

5,861,649 368,613 42,051 410,664 6,272,313

4,543,268 (634,443) (75,091) (709,534) 3,833,734

310,027 310,027

Grand Total $14,100,667 - - - $14,100,667

Proposed Adjustments 

Appropriation

Taxpayer Services

Enforcement

Operations Support

Business Systems Modernization 

FY 2023 

Request Rent CFO

Adjustment

Total

Proposed 

Funding Levels

3,385,723 265,830 33,040 298,870 3,684,593

5,861,649 368,613 42,051 410,664 6,272,313

4,543,268 (634,443) (75,091) (709,534) 3,833,734

310,027 310,027

Grand Total $14,100,667 - - - $14,100,667

Proposed Adjustments 

Appropriation

Taxpayer Services

Enforcement

Operations Support

Business Systems Modernization 

Figure 1.4
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B – Summary of the Request

The IRS is responsible for administering the nation’s tax system and meeting the needs of America’s taxpayers by helping 

them understand their tax responsibilities and by enforcing the law with integrity and fairness. The IRS’s core operations 

include collection of individual and corporate taxes, examination of returns, taxpayer assistance, and oversight of tax-exempt 

organizations, as well as administering multiple refundable tax credits and other specialized programs. 

In FY 2021, the IRS collected more than$4trillion in taxes (gross receipts before tax refunds) and collects nearly all the 

revenue that supports the federal government’s operations. With the U.S. tax base becoming more complex, one of the IRS’s 

key responsibilities is to make it easier for taxpayers to understand and meet their tax obligations.

The IRS’s FY 2023 budget request is composed of strategic investments that are aligned with the President’s Management 

Agenda, as well as with mission driven efforts that will perpetuate the trajectory of the agency to better serve the taxpayer –

warrant an impartial tax system –and lessen the tax gap. The FY 2023 Budget requests a total program increase of $1.3 

billion including: 

• $320.2 million for continuing the Taxpayer First Act implementation activities;

• $469.3 million for continuing enforcement strategies that ensure a fair tax system;

• $389.1 million for implementing strategies to enhance taxpayer services;

• $78.1 million for building and enhancing IT systems that will improve taxpayer services;

• $39.5 million to enhance and increase IT operations; and

• $10.2 million to establishthe Mississippi Delta hiring initiative designed to provide job opportunities for those who 

live in underdeveloped communities and develop a pipeline of talent.

269M $4.1T $1,691 $75.0B

Federal Tax

Returns

and Forms

Processed

Collected in

Gross Taxes

Average

Individual

Refund

Enforcement

Revenue

Collected
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FY 2023 Budget Request and Priorities

The FY 2023request is $14.1 billion, $2.2 billion or 18.3percent more than the FY 2022 ACR of $11.9billion. The Budget 

request includes, $12.8 billionin base resources and $1.3 billion in program increases to carry out the IRS mission, including:

• Putting Taxpayers First ($320 million), 

• Ensure Fairness of the Tax System ($469 million), 

• Enhance Taxpayer Service ($389 million), 

• Integrated Modernization Business Plan ($78 million), 

• Critical IT Operations ($39 million), and 

• Focused Strategies for Reaching Underserved Communities ($10 million).

Appropriation Account (Status Quo) ($ in Millions)

Taxpayer Services $3,385.7

Enforcement 5,861.6

Operations Support 4,543.3

Business Systems Modernization 310.0

Total Appropriated Resources $14,100.7

The following appropriation levels reflect the FY 2023 proposed appropriations language change, outlined in section D, that 

charges $710 million of support costs that were historically part of Operations Support to Taxpayer Services and 

Enforcement, for costs associated with rent and the Chief Financial Officer. When consideringthe proposed request, the 

appropriation levels for the FY 2023 budget are as follows:

Appropriation Account (with Change) ($ in Millions)

Taxpayer Services $3,684.6

Enforcement 6,272.3

Operations Support 3,833.7

Business Systems Modernization 310.0

Total Appropriated Resources $14,100.7
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1.2– Budget Adjustments Table

Dollars in thousands

Bureau: Internal Revenue Service 

Summary of Proposed FY 2023 Request FTE Amount

FY 2022 Annualized CR (ACR) 75,533 $11,919,054

Changes to Base:

Maintaining Current Levels (MCLs) $436,363

Pay Annualization (2.7% average pay raise) 62,546

Pay Raise (4.6% average pay raise) 321,837

Non-Pay 51,980

Base Adjustment 1,183 $438,882

Adjustment to Reach Current Operating Levels 1,183 438,882

Subtotal FY 2023 Changes to Base 1,183 $875,245

FY 2023 Current Services 76,716 $12,794,299

Program Changes:

Program Increases

Putting Taxpayers First 573 320,170

User Authentication 81,000

Taxpayer Experience Strategy 573 239,170

Ensure Fairness of the Tax System 2,513 469,253

Enhance Taxpayer Service 3,858 389,112

Integrated Modernization Business Plan 104 78,143

Critical IT Operations 36 39,521

Focused Strategies for Reaching Underserved Communities 7 10,169

Subtotal FY 2023 Program Increases 7,091 $1,306,368

Total FY 2023 Budget Request 83,807 $14,100,667

See footnotes in 1.1 -- Appropriations Detail Table

This table does not include the proposed technical adjustment that would move certain support activities from Operation 

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. 

The adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and 

increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.
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C – Base Adjustment and Program Changes Description

Maintaining Current Levels...................................................................................... +$436,363,000/ 0 FTE

Pay Annualization (2.7%) +$62,546,000 / 0 FTE

Funds are requested for annualization of the January 2022 2.7 percent average pay raise. 

Pay Raise (4.6%) +$321,837,000 / 0 FTE

Funds are requested for a 4.6 percent average pay raise in January 2023.

Non-Pay +$51,980,000 / 0 FTE

Funds are requested for non-labor expenses such as travel, contracts, rent, supplies, and equipment. 

Base Adjustment...........................................................................................+$438,882,000 / +1,183 FTE

The FY 2023 base begins at the FY 2022 ACR level of $11.9billion. In addition to $436 million to maintain current staffing 

levels, the base was adjusted by $439 million dollars to reach current operating funding levels.
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Program Increases ........................................................................................ +$1,306,368,000 / +7,091 FTE

Collectivelythe following proposed FY 2023investments total $390,808,000 with 1,832 FTE; the remaining $915,560,000 

with 5,259 FTE is made up of the carried over FY 2022 investments – which are displayed in the Program Increase Table 

below and discussed in section 4.2.

Putting Taxpayers First +$141,118,000 / +279 FTE 

Public Law 116-25, The Taxpayer First Act (TFA), requires the IRS to develop and implement a Taxpayer Experience 

Strategy (TXS) to improve the American taxpayer’s experience with the IRS. To fulfill the TXS requirement, the IRS’s 

Taxpayer First Act Office (TFAO), in partnership with key internal and external stakeholders and subject matter experts, 

identified certainareas of focus to inform the development and implementation of the TFA TXS. The FY 2023 funding 

concentrates on: 

• Expanding an application to protect taxpayers’ personallyidentifiable information, 

Bureau: Internal Revenue Service 

Summary of FY 2023 Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE

FY 2023 Program Increases:

Putting Taxpayers First 83,575 138 15,461 55 42,082 86 141,118 279

User Authentication 54,000 54,000

Taxpayer Experience Strategy 29,575 138 15,461 55 42,082 86 87,118 279

Ensure Fairness of the Tax System

Enhance Taxpayer Service 156,000 1,510 44,000 200,000 1,510

Critical IT Operations 39,521 36 39,521 36

Focused Strategies for Reaching Underserved Communities 10,169 7 10,169 7

Subtotal FY 2023 Program Increases $239,575 1,648 $15,461 55 $135,772 129 $390,808 1,832

FY 2022 Program Increases:

Putting Taxpayers First 40,036 54 38,870 97 100,146 143 179,052 294

User Authentication 27,000 27,000

Taxpayer Experience Strategy 13,036 54 38,870 97 100,146 143 152,052 294

Ensure Fairness of the Tax System 370,857 2,493 98,396 20 469,253 2,513

Enhance Taxpayer Service 148,167 2,348 40,945 189,112 2,348

Integrated Modernization Business Plan 78,143 104 78,143 104

Subtotal FY 2022 Program Increases $188,203 2,402 $409,727 2,590 $239,487 163 $78,143 104 $915,560 5,259

Total FY 2023 Program Increases $427,778 4,050 $425,188 2,645 $375,259 292 $78,143 104 $1,306,368 7,091

TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT BSM TOTAL

Position Type/Other Costs FTE Positions $000

 User Authentication $54,000

 Contract Services 54,000

Proactive Outreach and Education 102 204 $34,439

Revenue Agent 24 48 4,785

Attorney 13 26 2,316

Other 65 130 11,126

Contract Services 16,212

Focused Strategies for Reaching 

Underserved Communities 61 122 $17,119

Other 61 122 8,119

Contract Services 9,000

Taxpayer Experience Office 67 134 $15,484

Other 67 134 15,484

 Human Resources Support 49 98 20,076

Other 49 98 20,076

Total 279 558 $141,118
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• Expanding strategies that increase the IRS’s outreach and taxpayer education efforts, 

• Developing strategies to reach underserved communities, and 

• Providing human resources support for implementing the TFA.

User Authentication +$54,000,000 / 0 FTE

Section 2304 of the TFA requires the IRS to verify the identity of any individual opening an IRS online account before such 

individual canuse online applications, includingonline tools for tax professionals. IRS will utilize the services of a thirdparty vendor, which charges for each new taxpayer who signs up for an IRS online account. Funding will provide 

authentication services for approximately 15 millionestimatedadditional taxpayers who will sign up for online services such 

as applying for an identity protection PIN, obtaining a transcript, viewing account information, entering into an Online 

Payment Agreement, and functionalities of the Tax Pro Account application.

Proactive Outreach and Education +$34,439,000 / +102 FTE

The optimal taxpayer experience is for taxpayers to have all the information they need to comply with their tax obligations 

without expending any additional effort. To optimize the impact of an enhanced taxpayer experience, improved outreach, and 

a better understanding by taxpayers of their obligations is foundational. Building out a system of Proactive Outreach and 

Education will allow the IRS to use various channels, languages, and personalized messaging to reach taxpayers at the right 

time through the right format. Equipping taxpayers with this information proactively minimizes the likelihood of them having 

to contact the IRS, freeing up IRS resources to address other taxpayer needs. Educating taxpayers will increase confidence in 

the agency, enable them to meet tax obligations, and enable the IRS to better anticipate and respond to taxpayer needs. The 

following are highlights of what will be accomplished with funding:

• Provide taxpayers with updates through their online accounts or push information to their mobile devices. This will 

include information on how to open online accounts andincreasing usage of self-service digital options;

• Deliver information and education through additional social media platforms:

- Capture data and analytics from platforms to understanddemographic profiles;

- Apply emerging technology that customizes messaging to the right taxpayer groups through their optimal 

platform at the right time;

• Issue simplified and improved notices;

• Analyze data to determine language translations needed for social media; and

• Use evidence-based approaches to design easy to understand plain language communications.

Focused Strategies for Reaching Underserved Communities +$17,119,000 / +61 FTE

The IRS leverages outreach relationships through two grant programs with local and national partners to educate and inform 

taxpayers about meeting their tax obligation. The Volunteer Income Tax Assistance (VITA) program provides underserved 

communities withfree tax filing assistance and aids low-to-moderate-income taxpayers who cannot prepare their own tax 

returns, including the elderly, persons with disabilities, and those with limited English proficiency. The Tax Counseling for

the Elderly Program (TCE) offers free tax counseling and assistance to elderly individuals (60 or older) in preparing their 

federal income tax returns. Additional funding will further expand IRS outreach and tax assistance services along with 

resources to address projected program staffing needs andsupport anticipated partner cultivation and growth of the two grant 

programs.
IRS - 16

Taxpayer Experience Office (TXO) +$15,484,000 / +67 FTE

In the Taxpayer First Act Report to Congress, the IRS identified as part of its key organizational structure the establishment 

of a new office designed to improve taxpayer experiences with the IRS. The Taxpayer Experience Office (TXO) drives 

strategic direction for improving the taxpayer experience across the IRS and helps ensure a consistent voice and experience 

across all taxpayer segments by developing agency-wide guidelines and expectations. Collaborating with peers across the 

entire agency, this office promotes an enterprise-level holistic view of the taxpayer experience with teams of experts in the 

areas of customer experience, research, behavioral analytics, human-centered design, and service delivery. The TXO 

provides IRS organizational units with information on industry trends and ways to apply customer service best practices 

within the framework of IRS operations and federal limitations.

Human Resources Support +$20,076,000 / +49 FTE

Funding for this initiative will continue the implementation of a service-wide training strategy, as required in section 2402 of 

the TFA. Key areas of this strategy will focus on organizational awareness, career paths, people first training, employee 

online forums, organizational liaisons, internal concierge service, and enhanced training technologies. Resources are also 

required to coordinate IRS-wide efforts for recruiting, hiring, onboarding, enabling, and training new employees to efficiently 

focus on large business, high-income and high-wealth taxpayers, partnerships, abusive crypto-currency transactions, and 

promoter-related examinations. Funding is requested to identify resource gaps, assess, and improve the way the IRS selects 

qualified individuals, and develop an integrated approach to hiring, recruitment, and training. Onboarding employees who 

have technical expertise in these areas will be critical. The IRS will also create a Center of Excellence for employee 

development that will be available to the Department as a shared service. 

Enhance Taxpayer Service +$200,000,000 / +1,510 FTE 

This investment will allow the IRS to increase the telephone level of service (LOS) to 85percent assuming phone demand 

returns to pre-pandemic levels and the IRS can provide in-person services at pre-pandemic levels. This investment will build 

on the IRS’s efforts to improve telephone services for underserved communities such as those who are deaf or hard of 

hearing, LEP communities, and victims of tax related identity theft. During the 2021 filing season, the IRS’s level of service 

fell short of its targets because of the Coronavirus (COVID-19) pandemic and legislation aimed at providing relief that 

resulted in massively increased demand for the toll-free lines. Individual and Business taxpayer telephone demand increased 

by 456 percent and 244 percent, respectively during the 2021 filing season. In FY 2021, the number of taxpayers calling to 

schedule appointments at Taxpayer Assistance Centers (TACs) was 3.9 million above the same period in the prior year.

In addition to expanding LOS for underserved communities, funding for this initiative will improve the way taxpayers 

interact with IRS by enhancing and expanding the range of modern, digital tools provided by IRS to deliver a service 

experience comparable to those available in the private sector. By empowering taxpayers to address certain needs without 

requiring live assistance, development of these tools is essential to IRS’s long-term success in satisfying taxpayer 

expectations and meeting the ongoing growth in demand for assistance. These resources will enable IRS to address strategic 

service needs, such as:

Position Type/Other Costs FTE Positions $000

Increase Telephone Level of Service 1,510 1,520 $200,000

Customer Service Rep 1,500 1,500 172,800

Manager 10 20 2,487

Contractual Services/ IT 24,713

Total 1,510 1,520 $200,000
IRS - 17

• Expanding the features of individual Online Account to provide more personalized content and the ability to update 

and store information used for key activities like alerts, payments and estimating withholding;

• Developing a robust Business Online Account to provide business taxpayers (and their representatives) an 

integrated online account experience that enables them to securely manage and fulfill their federal tax obligations;

• Providing critical electronic payment capabilities in light of the planned decommissioning of Direct Pay and the 

Electronic Federal Tax Payments System (EFTPS); and

• Making improvements to IRS.gov to provide a modern and consistent experience that provides taxpayers the 

information they need in a timely, searchable, and mobile-adaptive environment.

Critical Information Technology Operations +$39,521,000 / +36 FTE 

The IRS continues to transform its technological landscape and has made progress on its modernization journey to provide 

taxpayers with a seamless customer experience, while empowering employees with the tools and systems needed to provide 

top quality services and enforce tax law. These successes have increased the need to sustain critical IT operations to maintain 

optimum network performance and functionality. The IRS continues to deploy and incorporate new, modernized tools for 

taxpayers, tax professionals, and employees. Taxpayer service improvements (additional digital services, real-time account 

information, etc.), enterprise efficiency advances (automation, artificial intelligence, machine learning, etc.) and new 

employee tools (case management, collaboration, learning platforms, etc.) all require additional bandwidth to sustain a high 

volume of users processing digitalized capabilities.

Economic Development in Underserved Communities +$10,169,000 / +7 FTE

The IRS will cultivate new opportunities for adults and students in underserved communities by partnering with state labor 

and human services officials to identify talent and design training programs for adult candidates. Additionally, the IRS will 

develop a talent pipeline by partnering with colleges, universities (with a special focus on Historically Black Colleges and 

Universities and other minority servicing institutions) and high schools to design training programs to prepare participants for 

IRS careers. These partnerships will foster equitable economic growth, establish long-term federal employment options, and 

develop a continual stream of talent suited to further enhance the taxpayer experience and support the IRS mission. As a first 

step, the IRS plans to create a center in the Mississippi Delta Region, which currently has the highest rate of poverty in the 

United States, excluding the U.S. Territories.

Position Type/Other Costs FTE Positions $000

IT Specialist 36 72 7,031

Contractual Services 32,490

Total 36 72 $ 39,521

Position Type/Other Costs FTE Positions $000

Analyst 7 14 7,640

Contractual Services 2,529

Total 7 14 $ 10,169
IRS - 18

1.3– Object Classification (Schedule O) Obligations

Dollars in thousands

Internal Revenue Service

Object Classification

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

11.1 Full-Time Permanent Positions 6,106,908 6,264,496 7,105,375

11.3 Other than Full-Time Permanent Positions 86,008 93,663 98,308

11.5 Other Personnel Compensation 301,867 336,242 372,976

11.8 Special Personal Services Payments 29,681 30,239 49,677

11.9 Personnel Compensation (Total) 6,524,464 6,724,640 7,626,336

12.1 Personnel Benefits 2,400,621 2,527,702 2,881,499

13.0 Benefits to Former Personnel 20,240 13,728 14,297

Total Personnel and Compensation Benefits $8,945,325 $9,266,070 $10,522,132

21.0 Travel 69,038 75,642 141,505

22.0 Transportation of Things 23,288 23,568 37,972

23.1 Rental Payments to GSA 579,736 609,019 634,381

23.2 Rent Payments to Others 7,196 280 306

23.3 Communications, Utilities, & Misc. 317,043 298,292 346,087

24.0 Printing & Reproduction 32,307 32,421 36,108

25.1 Advisory & Assistance Services 1,021,157 695,468 1,139,330

25.2 Other Services 89,204 91,615 170,157

25.3 Purchase of Goods & Services from Govt. Accounts 155,815 172,736 194,947

25.4 Operation & Maintenance of Facilities 199,042 202,780 223,733

25.5 Research & Development Contracts

25.6 Medical Care 15,097 17,724 44,877

25.7 Operation & Maintenance of Equipment 70,123 46,150 62,282

25.8 Subsistence & Support of Persons

26.0 Supplies and Materials 32,281 28,408 34,462

31.0 Equipment 269,122 249,320 362,726

32.0 Land and Structures 32,645 45,987 76,858

33.0 Investments & Loans

41.0 Grants, Subsidies 54,000 54,000 63,000

42.0 Insurance Claims & Indemnities 2,135 2,074 2,115

43.0 Interest and Dividends

44.0 Refunds

91.0 Unvouchered 4,500 7,500 7,690

Total Non-Personnel $2,973,729 $2,652,984 $3,578,535

New Appropriated Resources $11,919,054 $11,919,054 $14,100,667

Appropriations:

Taxpayer Services 2,587,606 2,763,606 3,385,723

Enforcement 5,004,622 5,004,622 5,861,649

Operations Support 4,104,102 3,928,102 4,543,268

Business Systems Modernization 222,724 222,724 310,027

New Appropriated Resources $11,919,054 $11,919,054 $14,100,667

FTE 73,409 75,533 83,807

See footnotes in 1.1 -- Appropriations Detail Table

Note 1: This table does not include the proposed technical adjustment that would move certain support activities from Operations 

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment 

would reduce the Operations Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer Services 

appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Note 2: This table does not include the $15 million in the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), $750.7 million 

under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-36), the $509 million provided in the Consolidated 

Appropriations Act, 2021 (P.L. 116-260), the $1.86 billion provided by the American Rescue Plan (ARP) (P.L. 117-2)
IRS - 19

D – Appropriations Language and Explanation of Changes

Appropriations Language Explanation of Changes

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, associated support costs, and other 

services as authorized by 5 U.S.C. 3109, at such rates as 

may be determined by the Commissioner, $3,684,593,000; 

of which not to exceed $100,000,000 shall remain available 

until September 30, 2024; of which not less than 

$11,000,000 shall be for the Tax Counseling for the Elderly 

Program; of which not less than $26,000,000 shall be 

available for low-income taxpayer clinic grants, including 

grants to individual clinics of up to $200,000; of which not 

less than $30,000,000, to remain available until September 

30, 2024, shall be available for the Community Volunteer 

Income Tax Assistance Matching Grants Program for tax 

return preparation assistance; and of which not less than 

$235,000,000 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 $5,500,000 shall be for identity theft 

and refund fraudcasework.

Note.—A full-year 2022 appropriation for this account was 

not enacted at the time the budget

was prepared; therefore, the budget assumes this account is 

operating under the Continuing

Appropriations Act, 2022 (Division A of P.L. 117–43, as 

amended). The amounts included for

2022 reflect the annualized level provided by the 

continuing resolution.

ENFORCEMENT

For necessary expenses for tax enforcement activities of the 

Internal Revenue Service to determine and collect owed 

taxes, to provide legal and litigation support, to conduct 

criminal investigations, to enforce criminal statutes related 

to violations of internal revenue laws and other financial 

crimes, to purchase and hire passenger motor vehicles (31

U.S.C. 1343(b)), associated support costs, and to provide 

Adding “associated support costs” would allow the IRS to 

reallocate service-related support costs from Operations 

Support to Taxpayer Services, to ensure that Taxpayer 

Services reflects the full cost of delivering mission critical 

activities. See the following section titled Restructuring 

IRS Appropriations to Align Support Costs to Mission 

Costs, on page IRS-25, for more information regarding this 

proposal.

Allowing $100,000,000 to remain available until 

September 30, 2024, in the Taxpayer Services account 

provides IRS with needed relief in the event that IRS is not 

successful in hiring thousands of employees in extremely 

tight labor markets where IRS has campus facilities.

Adding “associated support costs” would allow the IRS to 

reallocate service-related support costs from Operations 

Support to Enforcement, to ensure that Enforcement 

reflects the full cost of delivering mission critical activities. 

See the following section titled Restructuring IRS 

Appropriations to Align Support Costs to Mission Costs, on 

page IRS-25, for more information regarding this proposal.
IRS - 20

other services as authorized by 5 U.S.C. 3109, at such rates 

as may be determined by the Commissioner, 

$6,272,313,000; of which not to exceed $250,000,000 shall 

remain available until September 30, 2024; of which not 

less than $60,257,000 shall be for the Interagency Crime 

and Drug Enforcement program; and of which not to 

exceed $21,000,000 shall be for investigative technology 

for the Criminal Investigation Division: Provided, That the 

amount made available for investigative technology for the 

Criminal Investigation Division shall be in addition to 

amounts made available for the Criminal Investigation 

Division under the "Operations Support" heading.

Note.—A full-year 2022 appropriation for this account was 

not enacted at the time the budget was prepared; therefore, 

the budget assumes this account is operating under the 

Continuing Appropriations Act, 2022 (Division A of P.L. 

117–43, as amended). The amounts included for 2022 

reflect the annualized level provided by the continuing 

resolution.

OPERATIONS SUPPORT

For necessary expenses to operate the Internal Revenue 

Service, including headquarters; the hire of passenger 

motor vehicles (31 U.S.C. 1343(b)); the operations of the 

Internal Revenue Service Oversight Board; and other 

services as authorized by 5 U.S.C. 3109, at such rates as 

may be determined by the Commissioner; $3,833,734,000; 

of which not to exceed $275,000,000 shall remain available 

until September 30, 2024; of which not to exceed 

$10,000,000 shall remain available until expended for 

acquisition of equipment and construction, repair and 

renovation of facilities; of which not to exceed $1,000,000 

shall remain available until September 30, 2025, for 

research; and of which not to exceed $20,000 shall be for 

official reception and representation expenses: Provided, 

That not later than 30 days after the end of each quarter, 

the Internal Revenue Service shall submit a report to the 

Committees on Appropriations of the House of 

Representatives andthe Senate and the Comptroller 

General of the United States detailing major information

technology investments in the Internal Revenue Service 

Integrated Modernization Business Plan portfolio, 

including detailed, plain language summaries on the status

of plans, costs, and results; prior results and actual 

The administrationproposes editing the following verbiage 

from the Operations Support language: For necessary 

expenses to operate the Internal Revenue 

Service, including; headquarters

This change would allow the IRS to reallocate servicerelated support costs from Operations Support to the 

mission-specific appropriations, Taxpayer Services or 

Enforcement, to reflect the full cost of delivering mission 

critical activities in those taxpayer-facing accounts. See the 

following section titled Restructuring IRS Appropriations 

to Align Support Costs to Mission Costs, on page IRS-25, 

for more information regarding this proposal.

The administrationproposes to remove the following 

statement [from the IRS FY 2023 Operations Support 

language]: “of which not less than $10,000,000, to remain 

available until expended, shall be available for 

establishment of an application through which entities 

registering and renewing registrations in the System for 

Award Management may request an authenticated 

electronic certification stating that the entity does or does 

not have a seriously delinquent tax debt,”. With the FY 

2022 enacted budget, the IRS has received $30,000,000of 
IRS - 21

expenditures of the prior quarter; upcoming deliverables 

and costs for the fiscal year; risks and mitigation strategies 

associated with ongoing work; reasons for any cost or 

schedule variances; and total expenditures by fiscal year: 

Provided further, That the Internal Revenue Service shall 

include, in its budget justification for fiscal year 2024, a 

summary of cost and schedule performance information for 

its major information technology systems.

Note.—A full-year 2022 appropriation for this account was 

not enacted at the time the budget was prepared; therefore, 

the budget assumes this account is operating under the 

Continuing Appropriations Act, 2022 (Division A of P.L. 

117–43, as amended). The amounts included for 2022 

reflect the annualized level provided by the continuing 

resolution.

BUSINESS SYSTEMS MODERNIZATION

For necessary expenses of the Internal Revenue Service's 

business systems modernization program, $310,027,000, to 

remain available until September 30, 2025, for the capital 

asset acquisition of information technology systems, 

including management and related contractual costs of 

said acquisitions, including related Internal Revenue 

Service labor costs, and contractual costs associated with 

operations authorized by 5 U.S.C. 3109: Provided, That not 

later than 30 days after the end of each quarter, the 

Internal Revenue Service shall submit a report to the 

Committees on Appropriations of the House of 

Representatives and the Senate and the Comptroller 

General of the United States detailing major information 

technology investments in the Internal Revenue Service 

Integrated Modernization Business Plan portfolio, 

including detailed, plain language summaries on the status 

of plans, costs, and results; prior results and actual 

expenditures of the prior quarter; upcoming deliverables 

and costs for the fiscal year; risks and mitigation strategies 

associated with ongoing work; reasons for any cost or 

schedule variances; and total expenditures by fiscal year.

Note.—A full-year 2022 appropriation for this account was 

not enacted at the time the budget was prepared; therefore, 

the budget assumes this account is operating under the 

Continuing Appropriations Act, 2022 (Division A of P.L. 

117–43, as amended). The amounts included for 2022 

no year funds earmarked for this effort from since FY 

2020. The IRS is committed to completing this project and 

will use those earmarked funds to complete it. If funding 

needs arise beyond those available funds, the IRS would 

use current year funds to complete the project.
IRS - 22

reflect the annualized level provided by the continuing 

resolution.

ADMINISTRATIVE PROVISIONS-INTERNAL 

REVENUE SERVICE (INCLUDING TRANSFER OF 

FUNDS)

SEC. 101. Not to exceed 4 percent of the appropriation 

made available in this Act to the Internal Revenue Service 

under the "Enforcement" heading, and not to exceed 5 

percent of any other appropriation made available in this 

Act to the Internal Revenue Service, may be transferred to 

any other Internal Revenue Service appropriation upon 

advance notice to the Committees on Appropriations of the 

House of Representatives and the Senate: Provided, That 

an additional 2 percent of the appropriation made 

available in this Act to the Internal Revenue Service under 

the "Enforcement" heading may be transferred to the 

appropriation made available in this Act to the Internal 

Revenue Service under the "Taxpayer Services" heading 

upon advance notice to the Committees on Appropriations 

of the House of Representatives and the Senate.

SEC. 102. The Internal Revenue Service shall maintain an 

employee training program, which shall include the 

following topics: taxpayers' rights, dealing courteously 

with taxpayers, cross-cultural relations, ethics, and the 

impartial application of tax law. 

SEC. 103. The Internal Revenue Service shall institute and 

enforce policies and procedures that will safeguard the 

confidentiality of taxpayer information and protect 

taxpayers against identity theft. 

SEC. 104. Funds made available by this or any other Act to 

the Internal Revenue Service shall be available for 

improved facilities and increased staffing to provide 

sufficient and effective 1–800 help line service for 

taxpayers. The Commissioner shall continue to make 

improvements to the Internal Revenue Service 1–800 help 

line service a priority and allocate resources necessary to 

enhance the response time to taxpayer communications, 

particularly with regard to victims of tax-related crimes. 

SEC. 105. The Internal Revenue Service shall issue a notice 

of confirmation of any address change relating to an 

This change will allow IRS to transfer up to 6 percent into 

the Taxpayer Services account from Enforcement in case 

this flexibility is still needed in FY 2023 to address 

inventory issues, while still retaining the existing 4 percent 

transfer authority out of Enforcement to the Operations 

Support or BSM accounts, and the existing 5 percent 

transfer authority out of any of the other accounts. 
IRS - 23

employer making employment tax payments, and such 

notice shall be sent to both the employer's former and new 

address and an officer or employee of the Internal Revenue 

Service shall give special consideration to an offer-incompromise from a taxpayer who has been the victim of 

fraud by a third-party payroll tax preparer.

SEC. 106. 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. 107. None of the funds made available in this Act 

may be used by the Internal Revenue Service to target 

groups for regulatory scrutiny based on their ideological 

beliefs. 

SEC. 108. None of funds made available by this Act to the 

Internal Revenue Service shall be obligated or expended on 

conferences that do not adhere to the procedures, 

verification processes, documentation requirements, and 

policies issued by the Chief Financial Officer, Human 

Capital Office, and Agency-Wide Shared Services as a 

result of the recommendations in the report published on 

May 31, 2013, by the Treasury Inspector General for Tax 

Administration entitled "Review of the August 2010 Small 

Business/Self-Employed Division's Conference in Anaheim, 

California" (Reference Number 2013–10–037). 

SEC. 109. None of the funds made available in this Act to 

the Internal Revenue Service may be obligated or 

expended— (1) to make a payment to any employee under a 

bonus, award, or recognition program; or (2) under any 

hiring or personnel selection process with respect to rehiring a former employee; unless such program or process 

takes into account the conduct and Federal tax compliance 

of such employee or former employee. 

SEC. 110. None of the funds made available by this Act 

may be used in contravention of section 6103 of the 

Internal Revenue Code of 1986 (relating to confidentiality 

and disclosure of returns and return information).

SEC. 111. Notwithstanding any Congressional notification 

requirements for a reprogramming of funds in this Act, 
IRS - 24

funds provided in this Act for the Internal Revenue Service 

shall be available for obligation and expenditure through a 

reprogramming of funds that augments or reduces existing 

programs, projects, or activities by up to $10,000,000 

without prior Congressional notification of such action.
IRS - 25

Structural Changes to IRS Appropriations to Improve Mission Delivery and Transparency

With this Budget, the Administration proposes structural changes to IRS appropriations that would align the IRS funding for 

support activities with mission delivery activities. The current appropriations language segments many support activities into 

Operations Support. The Operation Support appropriation language specifies it must be used to fund support costs such as:

... 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 ...

By separating funding for these activities from the mission activities that they support, this structure obscures the full cost of 

delivering the IRS mission. The administration proposes a multi-year process to shift activities from Operations Support into 

the mission appropriations, so the IRS budget better reflects the full cost of its mission programs. This shift in resources 

would improve full-cost transparency, mission delivery and long-term accountability.

Challenges

The Operations Support account currently funds multiple activities that directly contribute to and ensure that IRS personnel 

funded in Enforcement and Taxpayer Service accounts can execute their missions. For example, while revenue agent salaries 

are funded in the Enforcement account, the facilities (and the resulting rent and physical security) and the computer 

equipment and systems that the agents use to conduct their work are funded in the Operations Support account. The Program 

Integrity Allocation Adjustment (PIAA), like similar proposals includedin previous budgets provides anillustrative example 

–its mission is solely focused on tax law enforcement, but a third of its funds were needed in the Operations Support 

appropriation. Aligningthese support costs in the mission appropriation would better reflect the full cost of those mission 

programs –providing improved transparency.

The effect of the current language as written is that Taxpayer Services and Enforcement fund mostly salaries and benefits, 

while Operations Support funds most other costs. This distortion is apparent when comparing the relative amounts of IRS 

labor and nonlabor in Taxpayer Services and Enforcement (91percent labor) to Operations Support (45percent labor) in this 

budget.

Figure 1.5
IRS - 26

The separation between IRS labor and its associated, often non-labor, support complicates efficiency tradeoffs and creates 

prioritizationchallenges. For example, the IRS must prioritize Operations Support funding for IT investment requests coming 

from different business units. If the funding of these activities came from the business units’ appropriations, which is a 

long-term goal of this project, they could potentially contribute from their own funding –allowing business units to invest in 

IT to deliver ontheir mission. 

The reimagined IRS under the Taxpayer First Act calls for modernization and technology enhancements to advance the IRS 

into the 21st century with more user-friendly electronic interactions, secure digital accounts, and self-service options. This 

mandate continues the growth trend of IT, currently funded exclusively by Operations Support and Business Systems 

Modernization (BSM), even as IT becomes increasingly intertwined with IRS operations. The costs of maintaining aged 

information systems, complying with cybersecurity mandates, and implementing other mandates, drive further growth. 

Orienting funding by mission appropriation would alsoimprove business unit leaders’ ability to allocate resources to their 

highest priority needs. It would improve the alignment between performance metrics for the units and their funding. By 

making business unit leaders directly responsible for the funding, and by extension the performance of their programs, these 

changes make leaders more accountable to Congress and the American public.

Remedy

To address this problem, the administrationproposes changes to its appropriations language and an attendant shift between 

appropriations. The specified appropriation language changes would allow IRS to fund certain support activities from 

Taxpayer Services and Enforcement appropriations using cost pools. Cost pools would be created using IRS internal 

reimbursable arrangements. For FY 2023, the Administration proposes to implement the capability by funding Rent and CFO 

Services from the mission appropriations. We expect the change would result in more efficient use of IRS resources and 

constitute progress towards implementing cost pools for additional support activities, including IT.

Implementing cost pools for IT, a future goal for this effort, would allow IRS leaders to make tradeoff decisions to fund key 

technology enhancements. Such enhancements would allow the IRS to accomplish its mission to provide American taxpayers 

with top quality service in understanding and meeting their tax responsibilities and to apply the tax law with integrity and 

fairness for all. For example, an Enforcement activity could deploy IT robotic process automation to reduce its time to close a 

Budget Activity FY 2023 Request Rent CFO

Proposed 

Funding

Pre-Filing Taxpayer Assistance & Education 804 56 7 867

Filing & Account Services 2,582 210 26 2,818

Taxpayer Services 3,386 266 33 3,685

Investigations 785 50 4 839

Exam & Collections 4,883 308 37 5,228

Regulatory 193 11 1 205

Enforcement 5,861 369 42 6,272

Infrastructure 1,040 (635) - 405

Shared Services & Support 1,200 - (75) 1,125

Information Services 2,304 - - 2,304

Operations Support 4,544 (635) (75) 3,834

Business Systems Modernization 310 - - 310

Business Systems Modernization 310 - - 310

Grand Total 14,101 - - 14,101

Proposed Changes 
IRS - 27

case by providing its own enforcement funds to IT to fund the automation effort. Currently, such an innovation would have to 

be prioritized with all other Operation Support costs.

Incremental Transition

The IRS plans and proposes to incrementally transition from its current structure to the new, full-cost focused mission 

appropriations and a significantly reduced Operations Support appropriation over the next three years. This gradual transition 

would provide time to test associated business processes, such as assigning or allocating shared costs from multiple business

units to cost pools and implement updates to the accounting system before requesting additional funding shifts from 

Operations Support. Activities are currently expected to include: 

• Information Technology, 

• Communications, 

• Facilities Management, 

• Human Capital Organization, 

• Enterprise Change and Innovation, 

• Procurement,

• Chief Financial Officer,

• Printing and Postage, and 

• Other shared services.

While much is expected to be shifted, the IRS requests to retain the Operations Support appropriation to fund certain support 

activities, such as the National Headquarters costs incurred for IRS leadership.

With the noted appropriation changes, the IRS is targeting to shift the full costs of the missions to their respective 

appropriation by FY 2025. To accomplish this, the IRS plans to shift more functions and funds from the Operations Support 

appropriation to the Taxpayer Service and Enforcement appropriations going forward. 
IRS - 28

E – Legislative Proposals

For information on the FY 2023 revenue legislative proposals, please follow this link:https://home.treasury.gov/policyissues/tax-policy/revenue-proposals

Reduce Paperwork Burden by Permanently Authorizing Current Home to Work Transportation for the IRS Commissioner

The IRS requests that the IRS Commissioner position be permanently added to 31 U.S.C. § 1344(b)(6) as one of the 

government officials authorized home-to-work transportation. The IRS Criminal Investigations unit completed an extensive 

assessment of the Commissioner’s threat environment and has classified the threat status as high. 

PROPOSAL: 

Amend Title 31 U.S.C. § 1344(b)(6) to include “the Commissioner of Internal Revenue” as a federal executive with 

authorization for passenger carrier transportation between residence and place of employment. 

REASONS FOR CHANGE:

As head of one of the most controversial organizations in the Federal government, the Commissioner is the “face of the IRS” 

and a frequent fixture in national media. Historically, Commissioners average multiple formidable threats per year directed at 

them and their family members, including threats of assassination. The internet has allowed anyone with a web browser to 

access personal information of government officials, including photos and home addresses. Instances of individuals phoning, 

mailing, or visiting a Commissioner’s residence, including the current Commissioner, are common and well documented. 

Dignitary protection experts have long recognized the vulnerability of protected individuals who are engaged in predictable

activities, such as commuting to/from the workplace andfor many years IRS Criminal Investigation Division (CI) has 

consistently provided transportation for the IRS Commissioner from Home to Work under recurring 90-day authorizations. 

The administrative burden of compiling, organizing, and summarizing the information required for the recurring90-day 

Home to Workauthorizations is significant, requiring executive approval from IRS’s Chief of Criminal Investigations, 

Treasury’s Assistant Secretary for Management, and the Secretary of the Treasury.

Fund the Federal Payment Levy Program via Collections (proposal also included in the Fiscal Service CJ)

Estimated costs: $220 million in Fiscal Service costs to operate the Tax Levy Program in the Treasury Offset Program over 

10 years. Fiscal Service is currently being reimbursed for this cost from IRS appropriated funding. 

This proposal improves the way the Fiscal Service collects its reimbursement from IRS to cover Fiscal Service’s costs in 

developing and operating the Federal Payment Levy Program (FPLP), which utilizes the Treasury Offset Program to process 

levies of federal payments to collect delinquent tax debts. Under the Economy Act, the IRS pays fees to Fiscal Service from 

the IRS annual discretionary appropriation. This proposal authorizes Fiscal Service to recover its costs from levy collections, 

rather than from IRS’s direct appropriation, which reduces administrative and overhead costs for both Fiscal Service and IRS. 

It would also allow IRS to re-direct the use of appropriated dollars that are currently needed to fund FPLP to other initiatives 

that will aid in the collection of delinquent tax debt.
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Section II – Budget and Performance Plan

A – Strategic Alignment

The IRS is developing its FY 2022 –2026 Strategic Plan to serve as a roadmap to help guide its programs and operations. 

IRS’s strategic priorities align with Treasury’s FY 2022 – 2026 strategic priorities to improve the taxpayer experience, 

enforce the tax law fairly and efficiently, foster a diverse workforce and transform our operations to be more sustainable and 

efficient. The IRS Strategic Plan will be published by Spring 2022.

This budget supports the following Treasury Strategic Objectives for FY 2022 – FY 2026 and Agency Priority Goals for FY 

2022- FY 2023 for all appropriations:

IRS co-leads the following objective with the Department Office of Tax Policy:

Goal 1: Promote Equitable Economic Growth and Recovery 

• Objective 1.1 Tax Administration and Policy

IRS supports the following eight objectives:

Goal 2: Enhance National Security

• Objective 2.1 Cyber Resiliency of Financial Systems and Institutions

• Objective 2.4 Transparency in the Financial System

Goal 3: Protect Financial Stability and Resiliency 

• Objective 3.3 Financial Innovation

Goal 4: Combat Climate Change

• Objective 4.4 Sustainable Treasury Operations

Goal 5: Modernize Treasury Operations 

• Objective 5.1 Recruit and Retain Diverse and Inclusive Workforce

• Objective 5.2 Future Work Routines

• Objective 5.3 Better Use of Data 

• Objective 5.4 Customer Experience Practices

Agency Priority Goals (APGs): IRS supports the Bureau of Fiscal Service’s Improving the Payment Experience APGs for 

FY 2022 – FY 2023.

Bureau of Fiscal Service Improving the Payment Experience: Create a modern, seamless, inclusive, and secure Federal 

payment experience for the public that meets customer needs while reducing costs, expanding financial inclusion, and 

improving climate sustainability of Treasury’s operations. By September 30, 2023, Treasury will:

• Increase the electronic payment rate for Treasury-disbursed payments to 96.56% by the end of FY 2023, compared 

with 96.18% in FY 2021; and

− Achieving this increased electronic payment rate would lead to an estimated reduction of 4.8 million 

checks. (Assuming FY 21 payment volume data, which excludes Economic Impact Payments and Advance Child Tax Credit 

payments) Note: Future legislation related to payment processing may impact these target measures.
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• Increase the electronic payment rate for IRS individual tax refunds to 81.00% by the end of FY 2023, compared 

with 80.34% in FY 2021.

Accomplishments and Priorities

IRS’s FY 2021 accomplishments include: 

• Launched the Child Tax Credit Update Portal in support of the American Rescue Plan;

• Identity Protection PIN program was expanded to all 50 states, the District of Columbia, Puerto Rico, Virgin 

Islands, and military personnel living overseas in January 2021, fully implementing the requirements of the 

Taxpayer First Act Provision Section 2005 three-years earlier than requested;

• Registered over 169,000 taxpayers with Secure Access Virtual Assistant, resulting in a savings of over $11 million;

and,

• Expanded electronic processing of amended returns to include a direct deposit of refunds in support of the of 

reducing paper checks APG.

FY 2023 IRS Initiatives 

The following are IRS’s FY 2023 strategic priorities with initiatives to support Treasury’s goals and objectives. IRS rolled 

over FY 2022 initiatives Putting Taxpayers First, Ensure Fairness of the Tax System, and Integrated Modernization Business 

Plan.

• Putting Taxpayers First initiative will support the following Treasury Strategic Objectives: 1.1 - Tax Administration 

and Policy, 2.1 - Cyber Resiliency of Financial Systems and Institutions, 3.3 - Financial Innovation, 5.1 - Recruit 

and Retain a Diverse and Inclusive Workforce, 5.3 - Better Use of Data, and 5.4 - Customer Experience Practices. 

• Ensure Fairness of the Tax System initiative will support Treasury Strategic Objectives: 1.1 - Tax Administration 

and Policy and 2.4 - Transparency in the Financial System.

• Enhance Taxpayer Experience initiative will support Treasury Strategic Objectives: 1.1 - Tax Administration and 

Policy and 5.4 - Customer Experience Practices. 

• Integrated Modernization Business Plan initiative will support Treasury Strategic Objectives: 1.1- Tax 

Administration and Policy, 3.3 - Financial Innovation, 5.2 - Future Work Routines, 5.3 - Better Use of Data, and 5.4 

- Customer Experience Practices. 

• Augment IT Operations initiative will support Treasury Strategic Objective: 1.1 - Tax Administration and Policy.

• Economic Development in Underserved Communities initiative will support Treasury Strategic Objective: 1.1 - Tax 

Administration and Policy and 5.1 - Recruit and Retain a Diverse and Inclusive Workforce.
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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, taxpayer 

assistance, providing taxpayer advocacy services, and supporting activities. 

The Taxpayer Services budget request for FY 2023is $3,385,723,000 in direct appropriations and 32,865 FTE, excluding the 

proposed technical adjustment. This amount is an increase of $622,117,000or 22.51 percent, and an increase of 4,875 FTE, 

or 17.42percent from the FY 2022 ACR of $2,763,606,000 and 27,990 FTE.

2.1 – Budget Adjustments Table

Dollars in thousands

Taxpayer Services

Summary of Proposed FY 2023 Request FTE Amount

FY 2022 Annualized CR (ACR) 27,990 $2,763,606

Changes to Base:

Maintaining Current Levels (MCLs) $108,631

Pay Annualization (2.7% average pay raise) 17,105

Pay Raise (4.6% average pay raise) 88,016

Non-Pay 3,510

Base Adjustment 825 $90,285

Adjustment to Reach Current Operating Levels 825 90,285

Subtotal FY 2023 Changes to Base 825 $198,916

FY 2023 Current Services 28,815 $2,962,522

Program Changes:

Program Increases

Putting Taxpayers First 192 119,034

User Authentication 81,000

Taxpayer Experience Strategy 192 38,034

Enhance Taxpayer Service 3,858 304,167

Subtotal FY 2023 Program Increases 4,050 $423,201

Total FY 2023 Budget Request 32,865 $3,385,723

See footnotes in 1.1 -- Appropriations Detail Table

This table does not include the proposed technical adjustment that would move certain support activities from Operation 

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. 

The adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and 

increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.
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2.2 – Object Classification Obligations

Dollars in thousands

Taxpayer Services

Object Classification

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

11.1 Full-Time Permanent Positions 1,599,164 1,668,445 1,991,237

11.3 Other than Full-Time Permanent Positions 53,855 67,240 70,141

11.5 Other Personnel Compensation 122,409 149,810 166,410

11.8 Special Personal Services Payments 9,750 10,154

11.9 Personnel Compensation (Total) 1,775,428 1,895,245 2,237,942

12.1 Personnel Benefits 576,632 625,520 762,029

13.0 Benefits to Former Personnel 19,887 13,334 13,887

Total Personnel and Compensation Benefits $2,371,947 $2,534,099 $3,013,858

21.0 Travel 5,162 5,966 10,668

22.0 Transportation of Things 671 599 611

23.1 Rental Payments to GSA

23.3 Communications, Utilities, & Misc. 1,290 1,258 1,285

24.0 Printing & Reproduction 9,791 9,783 10,437

25.1 Advisory & Assistance Services 45,729 55,802 139,505

25.2 Other Services 25,190 27,032 49,534

25.3 Purchase of Goods & Services from Govt. Accounts 68,677 70,401 76,079

25.7 Operation & Maintenance of Equipment 51 51 52

26.0 Supplies and Materials 4,209 3,872 4,461

31.0 Equipment 400 254 374

41.0 Grants, Subsidies 54,000 54,000 63,000

42.0 Insurance Claims & Indemnities 489 489 498

Total Non-Personnel $215,659 $229,507 $371,864

New Appropriated Resources $2,587,606 $2,763,606 $3,385,723

Budget Activities:

Pre-filing Taxpayer Assistance & Education 657,618 720,276 803,873

Filing & Account Services 1,929,988 2,043,330 2,581,850

New Appropriated Resources $2,587,606 $2,763,606 $3,385,723

FTE 25,989 27,990 32,865

See footnotes in 1.1 -- Appropriations Detail Table

Note 1: This table does not include the proposed technical adjustment that would move certain support activities from Operations 

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment 

would reduce the Operations Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer Services 

appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Note 2: This table does not include the $15 million in the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), $750.7 million 

under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-36), the $509 million provided in the Consolidated 

Appropriations Act, 2021 (P.L. 116-260), the $1.86 billion provided by the American Rescue Plan (ARP) (P.L. 117-2)
IRS - 33

2.3 – Appropriation Detail Table 

2A – Pre-Filing Taxpayer Assistance and Education ($803,873,000 in direct appropriations and an estimated $201,000 in 

reimbursable programs): This budget activity funds direct labor and some non-labor expenses to assist with tax return 

preparation, including tax law interpretation, publication, production, and advocate services. The program activities include: 

• Pre-Filing Services Management supports headquarters staffing and support for Taxpayer Advocate Service and 

Customer Assistance Relationship and Education (CARE) program activities. CARE provides pre-filing taxpayer 

assistance and education. 

• Taxpayer Communication and Education researchcustomer needs; develops and manages educational programs; 

establishes partnerships with stakeholder groups; and disseminates tax information to taxpayers and the 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. 

• Wage and Investment (W&I) HQ Management and Administration provides staffing, training, and direct support 

for W&I management activities of strategic planning, communications and liaison, finance, human resources, 

equity, diversity and inclusion, business modernization, and embedded training. 

Dollars in thousands

Taxpayer Services

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Pre-Filing Taxpayer Assistance and Education 4,514 657,618 5,536 720,276 5,967 803,873 431 83,597 7.79% 11.61%

Filing and Account Services 21,475 1,929,988 22,454 2,043,330 26,898 2,581,850 4,444 538,520 19.79% 26.36%

Subtotal New Appropriated Resources 25,989 $2,587,606 27,990 $2,763,606 32,865 $3,385,723 4,875 $622,117 17.42% 22.51%

Other Resources:

Reimbursables 514 39,449 429 45,000 450 47,250 21 2,250 4.90% 5.00%

Offsetting Collections - Non Reimbursables 6,281

User Fees 71 64,900 71 78,900 991 78,900 920 1295.77%

Recovery from Prior Years 21,760 7,268 7,268

Unobligated Balances from Prior Years 877 190,789 3,100 276,216 (3,100) (276,216) -100.00% -100.00%

Transfers In/Out

Recoveries Paid 4 4

Resources from Other Accounts 1 50

Subtotal Other Resources 1,463 $323,229 3,600 $407,388 1,441 $133,422 (2,159) ($273,966) -59.97% -67.25%

Total Budgetary Resources 27,452 $2,910,835 31,590 $3,170,994 34,306 $3,519,145 2,716 $348,151 8.60% 10.98%

See footnotes in 1.1--Appropriations Detail Table

Change % Change

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

FY 2022 to FY 2023 

Request

FY 2022 to FY 2023 

Request

The new appropriated resources in this table do not include the proposed technical adjustment that would move certain support activities from Operation Support and charge the 

full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment would reduce the Operation Support appropriation by $709.5 million 

for rent and CFO adjustments and increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.6 million.
IRS - 34

• Taxpayer Services Research provides resources to support taxpayer services by conducting taxpayer behavioral 

studies, data analysis, and uses advanced analytics to deliver results and conclusions to inform business decisions to 

improve IRS products and services. 

• National Distribution Center processes orders for IRS forms and publications received from individual taxpayers, 

tax practitioners, and IRS tax return preparation partners. 

Description of FY 2021 Performance – Pre-Filing and Taxpayer Assistance

In FY 2021, the Timeliness of Critical Individual Filing Season (CIFS) Tax Products to the Public (i.e., tax forms, schedules, 

instructions, and publications) was 92 percent (81 out of 88 products delivered timely), exceeding the FY 2021 target of 

85percent. This accomplishment was partially due to the enactment of the P.L. 116-260, Consolidated Appropriations Act of 

2021, which determined the February 12 filing season start date. The legislation provided more time to meet the annual goal. 

Additional factors that contributed to exceeding this year’s target and are proven models for future success include 

prioritizing work on the release of critical products; planning for legislative changes to quickly re-prioritize work targeted to 

critical products impacted by the law; granting of overtime, credit, and compensatory time during workdays, weekends, and 

holidays; and workload planning and monitoring by management as well as the efforts of our employees. The IRS expects to 

achieve a target of 89 percent for FY 2022 and FY 2023. 

In FY 2021, the IRS Timeliness of Critical Tax TE/GE and Business (CTB) Filing Season Tax products to the Public was 

92.9 percent, exceeding the target of 85 percent. These results were achieved due to the enactment of the P.L. 116-260, 

Consolidated Appropriations Act of 2021, which determined the February 12 filing season start date. The legislation provided 

more time to meet the annual goal. Additional factors that contributed to exceeding this year’s target and are proven models 

for future success include prioritizing work on the release of critical products; planning for legislative changes to quickly 

reprioritize work targeted to critical products impacted by the law; granting of overtime, credit, and compensatory time 

during workdays, weekends, and holidays; and workload planning and monitoring by management as well as the efforts of 

our employees. The IRS expects to achieve a target of 89 percent for FY 2022 and FY 2023.

Figure 2.1
IRS - 35

The Enterprise Self-Assistance Participation Rate (ESAPR) represents the percent of taxpayers whouse one of the IRS’s selfassistance service channels (e.g., automated calls, web services) versus needing support from an IRS employee (e.g., face-toface, over the phone, or via paper correspondence). The FY 2021 ESAPR was 92.3 percent, exceeding the target by 

3.7percent. The web services that had the largest percent change are: Where’s My Amended Return (226.4 percent); Online 

Accounts Sessions (117.8 percent); and Get Transcripts Online (108.1 percent). Compared to FY 2020, total services 

increased by36.4 percent, self-assisted services increased by 38.9 percent and assisted services rose 12.4 percent. In FY 

2022, IRS will update the existing Online Payment Agreements (OPA) and Installment Agreements (IA) applications to 

include business taxpayers andinclude a new chatbot application for OPAs and IAs for small business andself-employed 

taxpayers. The IRS expects to achieve a target of 91 percent for FY 2022 and 91 percent for FY 2023.

FY 2023 Changes by Budget Activity

Dollars in thousands

Pre-Filing Taxpayer Assistance & Education FTE Amount

FY 2022 Annualized CR (ACR) 5,536 $720,276

Changes to Base:

Maintaining Current Levels (MCLs) $26,645

Pay Annualization (2.7% average pay raise) 4,185

Pay Raise (4.6% average pay raise) 21,536

Non-Pay 924

Base Adjustment $5,952

Adjustment to Reach Current Operating Levels 5,952

Subtotal FY 2022 Changes to Base $32,597

FY 2022 Current Services 5,536 $752,873

Program Increases:

Putting Taxpayers First 81 17,649

Taxpayer Experience Strategy 81 17,649

Enhance Taxpayer Service 350 33,351

Subtotal FY 2023 Program Increases 431 $51,000

Total FY 2023 Request 5,967 $803,873

Dollar/FTE Change FY 2023 Request over FY 2022 ACR 431 $83,597

Percent Change FY 2023 Request over FY 2022 ACR 7.79% 11.61%

This table does not include the proposed technical adjustment that would move certain support activities from Operation 

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The 

adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the 

Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.
IRS - 36

2.1.1 – Budget and Performance Report and Plan 

2B – Filing and Account Services

($2,581,850,000 in direct appropriations, $47,049,000 from reimbursable programs, and $78,900,000 from user fees): This 

budget activity funds direct labor and non-labor expenses that provide filing and account services to taxpayers, process paper 

and electronically submittedtax returns, issue refunds, and maintain taxpayer accounts. The public continues to file more

returns electronically (approximately93.6percent of individual returns were filed electronically during the 2021filing 

season). The program activities include:

• 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 (EPSS) provides centralized operations and support capabilities for the 

IRS suite of electronic products, including e-help desk, technology support, and operations support. 

• Electronic Tax Administration (ETA) markets and administers electronic tax administration products and services. 

• Business Performance Lab initiates, recommends, and manages systemic solutions for the detection and treatment 

of improper refunds while ensuring effective treatment for payment of valid refund claims, leads the development 

of innovative business processes and technology solutions and represents ReturnIntegrity & Compliance Services 

(RICS) interest in support of the service-wide revenue protection strategy.

• Health Care Tax Administration provides funds to administer the health insurance tax credit portion of the Trade 

Adjustment Assistance Reform Act of 2002. 

• 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 (CSR) accuracy; and management of the enterprise telephone database. 

Dollars in thousands

Pre-Filing Taxpayer Assistance & Education FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Resource Level Actual Actual Actual Actual Actual Annualized CR Request

Appropriated Resources1 $594,962 $640,379 $621,907 $632,893 $658,344 $720,276 $803,873

Reimbursable Resources2 4 260 118 578 142 191 201

User Fees2

Budget Activity Total $594,966 $640,639 $622,025 $633,471 $658,486 $720,467 $804,074

1

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.

Pre-Filing Taxpayer Assistance & Education FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2021 FY 2022 FY 2023

Measure Actual Actual Actual Actual Actual Target Target Target

Timeliness of Critical Filing Season Tax Products to the Public 

(Ot, L) 93.1% 59.6% 92.6% 78.4% 92.0% 85.0% 89.0% 89.0%

Timeliness of Critical TE/GE & Business Tax Products to the 

Public (Ot, L) 96.7% 100.0% 96.1% 96.0% 92.9% 85.0% 89.0% 89.0%

Enterprise Self Assistance Participation Rate (E, L)3 79.0% 82.0% 85.4% 90.6% 92.3% 89.0% 91.0% 91.0%

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Strategic Goal Measure

3

In FY 2017, the IRS renamed the Taxpayer Self Assistance Rate measure to Enterprise Self Assistance Participation Rate.
IRS - 37

Description of FY 2021 Performance – Filing and Account Services

In FY 2021, Customer Accuracy – Tax Law, the IRS answered 92.8 percent of tax law questions over the telephone correctly,

exceeding the target of 90.0percent by 3.1 percent. IRS will continue to monitor results through data-driven analysis of 

reports to achieve future goals. Ongoing efforts have and will continue to focus on production meetings with field sites, 

promoting coding consistency of product reviews, and providing training to managers and employees to ensure quality 

service to customers. For FY 2022 and FY 2023, the IRS set the Tax Law Accuracy target at 89.0percent. 

For Customer Accuracy – Accounts, the IRS answered 93.0percent of account questions over the telephone correctly, 

exceeding the FY 2021 target of 91.0percent. IRS will continue to monitor results through data-driven analysis of reports to 

achieve future goals. Ongoing efforts have and will continue to focus on production meetings with field sites, promoting 

coding consistency of product reviews, and providing training to managers and employees to ensure quality service to 

customers. For FY 2022 and FY 2023, the IRS set the Accounts Accuracy target at 89.0percent.

The Customer Service Representative (CSR) Level of Service (LOS) measures the relative success rate of taxpayers wanting 

to speak with a CSR. In FY 2021, CSR LOS was 18.5 percent, falling short of the 32.0percent target. New legislation 

resulted in added, unplanned demand for toll-free assistance. Compared to FY 2020, total assistor demand was up more than 

200.0 percent, with some lines seeing increases of more than 2 million calls. Despite these challenges, the IRS was able to 

answer 3.8 million more calls in FY 2021 than the prior year. The IRS will continue to monitor demand in real time and shift 

staff between telephones and paper processing to address demand. During the pandemic, IRS processed more than 450 

million Economic Impact Payments and over 200 million advance payments of the Child Tax Credit. Prioritizingpandemic 

response, combined with pandemic disruptions to on-site work, delayed tax return processing, taxpayer correspondence, and 

other critical services, resulting in unprecedented increases in correspondence inventory levels. As a result, the IRS lowered

its FY 2022 LOS target to 30.0percent, in order, to devote more resources towards processingcorrespondence inventory. 

With the additional resources requested inthis budget, the IRS will increase the FY 2023 LOS target to 85.0percent

assuming phone demand returns to pre-pandemic levels the IRS can provide in-person services at pre-pandemic levels andas 

inventories are expected toreach normal levels.

Figure 2.2
IRS - 38

The Taxpayers Satisfied with the IRS indicator, the All-Individual Tax Filers Score, is based on the annual American 

Customer Satisfaction Index (ACSI) Survey, which is the only uniform, cross-industry/government measure of customer 

satisfaction with the quality of goods and services available to U.S. residents. The measure is calculated as a weighted 

combination of the ACSI Individual Electronic Tax Filer and Individual Paper Tax Filer Customer Satisfaction Index scores 

based on a 100-point scale. The Taxpayers Satisfied with the IRS measure declined four points in 2021 to 70as shown above, 

due to a statistically significant decrease in the electronic filer score, following impacts from the COVID-19 pandemic.

Figure 2.3
IRS - 39

FY 2023 Changes by Budget Activity

Dollars in thousands

Filing and Account Services FTE Amount

FY 2022 Annualized CR (ACR) 22,454 $2,043,330

Changes to Base:

Maintaining Current Levels (MCLs) $81,986

Pay Annualization (2.7% average pay raise) 12,920

Pay Raise (4.6% average pay raise) 66,480

Non-Pay 2,586

Base Adjustment 825 $84,333

Adjustment to Reach Current Operating Levels 825 84,333

Subtotal FY 2023 Changes to Base 825 $166,319

FY 2023 Current Services 23,279 $2,209,649

Program Increases:

Putting Taxpayers First 111 101,385

User Authentication 81,000

Taxpayer Experience Strategy 111 20,385

Enhance Taxpayer Service 3,508 270,816

Subtotal FY 2023 Program Increases 3,619 $372,201

Total FY 2023 Request 26,898 $2,581,850

Dollar/FTE Change FY 2023 Request over FY 2022 ACR 4,444 $538,520

Percent Change FY 2023 Request over FY 2022 ACR 19.79% 26.36%

This table does not include the proposed technical adjustment that would move certain support activities from Operation 

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The 

adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the 

Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.
IRS - 40

2.1.2 – Budget and Performance Report and Plan

Dollars in thousands

Filing and Account Services FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Resource Level Actual Actual Actual Actual Actual Annualized CR Request

Appropriated Resources1 $1,564,488 $1,712,511 $1,872,175 $1,901,467 $1,927,220 $2,043,330 $2,581,850

Reimbursable Resources2 30,147 34,905 62,794 72,769 39,307 44,809 47,049

User Fees2 40,553 69,987 3,900 64,900 78,900 78,900

Budget Activity Total $1,635,188 $1,817,403 $1,938,869 $1,974,236 $2,031,427 $2,167,039 $2,707,799

1

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.

Filing and Account Services FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2021 FY 2022 FY 2023

Measures Actual Actual Actual Actual Actual Target Target Request

Customer Accuracy - Tax Law (Phones) (Ot) 96.7% 95.5% 91.6% 91.0% 92.8% 90.0% 89.0% 89.0%

Customer Accuracy - Accounts (Phones) (Ot) 96.0% 96.1% 94.3% 93.5% 93.0% 91.0% 89.0% 89.0%

Customer Service Representative (CSR) Level of Service (LOS) (Oe)3 77.1% 75.9% 65.4% 53.1% 18.5% 32.0% 30.0% 85.0%

Taxpayers Satisfied with the IRS (based on a 100 point scale) (Ot, L)4 74 74 73 74 70 Indicator Indicator Indicator

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Strategic Goal Measure

3

The CSR LOS includes toll-free telephone lines answered by Accounts Management assistors only. These lines service 82 percent of all telephone traffic. Achieving the FY 2023 LOS 

target of 85 percent requires timely enactment of appropriations so the IRS can complete hiring and training ahead of the filing season and assumes that demand and in person services 

return to pre-pandemic levels. The IRS’s Automated Collection System (ACS) toll-free line is used by taxpayers for compliance related inquiries. For FY 2021, the ACS LOS was 37.8 

percent. These are both included in the Enterprise LOS, which measures the relative success rate of taxpayers calling to speak with an IRS Assistor on any IRS toll-free telephone line. 

The Enterprise LOS in FY 2021 was 21.3 percent.

4

Based on the American Customer Satisfaction Index (ACSI) survey; the All-Individual Tax Filer score is calculated from separate ACSI Individual Paper Filer and Electronic Filer customer 

satisfaction index scores; available on an annual basis at the end of January and computed on a 100-point scale. 
IRS - 41

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 statues relating to detection and investigation of criminal violations of the internal 

revenue laws; identification of underreporting of tax obligations; securing of unfiled tax returns; collection of unpaid 

accounts; and supporting activities. 

The Enforcement budget request for FY 2023is $5,861,649,000 in direct appropriations and 38,607 FTE, excluding the 

proposed technical adjustment. This amount is an increase of $857,027,000or 17.12 percent, and 3,003 FTE or 8.43 percent

more than the FY 2022 ACR of $5,004,622,000 and 35,604 FTE. It is important to note, as mentioned in the introduction, 

although not included in the request, the IRS along with the Administration are still committed to the attainment of multi-year 

funding for an extensive enforcement program initiative that will generate and protect billions of dollars in additional revenue 

while reducing the tax gap.
IRS - 42

2.1 – Budget Adjustments Table

Dollars in thousands

Enforcement

Summary of Proposed FY 2023 Request FTE Amount

FY 2022 Annualized CR (ACR) 35,604 $5,004,622

Changes to Base:

Maintaining Current Levels (MCLs) $202,663

Pay Annualization (2.7% average pay raise) 32,228

Pay Raise (4.6% average pay raise) 165,832

Non-Pay 4,603

Base Adjustment 358 $229,176

Adjustment to Reach Current Operating Levels 358 229,176

Subtotal FY 2023 Changes to Base 358 $431,839

FY 2023 Current Services 35,962 $5,436,461

Program Changes:

Program Increases

Putting Taxpayers First 152 54,331

Taxpayer Experience Strategy 152 54,331

Ensure Fairness of the Tax System 2,493 370,857

Subtotal FY 2023 Program Increases 2,645 $425,188

Total FY 2023 Budget Request 38,607 $5,861,649

See footnotes in 1.1 -- Appropriations Detail Table

This table does not include the proposed technical adjustment that would move certain support activities from Operation 

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. 

The adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and 

increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.
IRS - 43

2.2 – Object Classification Obligations

Dollars in thousands

Enforcement

Object Classification

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

11.1 Full-Time Permanent Positions 3,130,581 3,206,471 3,629,712

11.3 Other than Full-Time Permanent Positions 26,773 21,384 22,901

11.5 Other Personnel Compensation 145,294 145,755 162,644

11.8 Special Personal Services Payments 29,500 19,739 38,741

11.9 Personnel Compensation (Total) 3,332,148 3,393,349 3,853,999

12.1 Personnel Benefits 1,327,649 1,380,796 1,563,995

13.0 Benefits to Former Personnel 323 358 373

Total Personnel and Compensation Benefits $4,660,120 $4,774,503 $5,418,366

21.0 Travel 55,527 60,269 118,808

22.0 Transportation of Things 8,581 8,300 21,349

23.2 Rent Payments to Others 282 243 268

23.3 Communications, Utilities, & Misc. 4,208 5,880 6,140

24.0 Printing & Reproduction 2,770 2,982 3,402

25.1 Advisory & Assistance Services 173,410 50,446 121,080

25.2 Other Services 34,826 31,962 69,407

25.3 Purchase of Goods & Services from Govt. Accounts 30,394 33,322 42,155

25.4 Operation & Maintenance of Facilities 5 4 4

25.6 Medical Care 125 119 9,470

25.7 Operation & Maintenance of Equipment 1,966 1,762 8,446

26.0 Supplies and Materials 20,830 19,381 22,625

31.0 Equipment 6,108 7,027 11,498

42.0 Insurance Claims & Indemnities 970 922 941

91.0 Unvouchered 4,500 7,500 7,690

Total Non-Personnel $344,502 $230,119 $443,283

New Appropriated Resources $5,004,622 $5,004,622 $5,861,649

Budget Activities:

Investigations 698,193 667,279 785,121

Exam & Collections 4,120,886 4,160,748 4,883,575

Regulatory 185,543 176,595 192,953

New Appropriated Resources $5,004,622 $5,004,622 $5,861,649

FTE 34,989 35,604 38,607

See footnotes in 1.1 -- Appropriations Detail Table

Note 1: This table does not include the proposed technical adjustment that would move certain support activities from Operations 

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment 

would reduce the Operations Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer Services 

appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Note 2: This table does not include the $15 million in the Families First Coronavirus Response Act (FFCRA) (P.L 116-127), $750.7 million 

under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-36), the $509 million provided in the Consolidated 

Appropriations Act, 2021 (P.L. 116-260), the $1.86 billion provided by the American Rescue Plan (ARP) (P.L. 117-2)
IRS - 44

2.3 – Appropriation Detail Table

2C –Investigations

($785,121,000 in direct appropriations, and an estimated $55,922,000 from reimbursable programs): This budget activity 

funds the Criminal Investigation (CI) programs that explore potential criminal and civil violations of tax laws; enforce 

criminal statutes relating to violations of tax laws and other financial crimes; and recommend prosecution as warranted. The 

program activities include: 

• General Management and Administration supports the headquarters management activities of strategic planning, 

communications, finance, and human resources for CI activities. 

• Identity Theft, through CI's collaboration with internal and external business partners, combats the inherent risks of 

Stolen Identity Refund Fraud (SIRF) by focusing on significant tax investigations, prosecutions to maximize 

deterrence, and preventing the IRS from issuing fraudulent refunds. 

• CI 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 involving both legal and illegal sources of income and 

recommends prosecution as warranted. This includes the investigation and prosecution of tax and moneylaundering 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, nonresident aliens, expatriates (U.S. citizens living abroad who have renounced their citizenship), 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.). 

• Cybersecurity supports CI’s cyber-efforts around inherent risks to CI’s networks and systems, while focusing 

enforcement and investigative actions on the criminals that pose those threats. This activity also supports security 

Dollars in thousands

Enforcement

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Investigations 3,012 678,193 2,965 667,279 3,223 785,121 258 117,842 8.70% 17.66%

Exam and Collections 30,987 4,170,886 31,615 4,160,748 34,331 4,883,575 2,716 722,827 8.59% 17.37%

Regulatory 990 155,543 1,024 176,595 1,053 192,953 29 16,358 2.83% 9.26%

Subtotal New Appropriated Resources 34,989 $5,004,622 35,604 $5,004,622 38,607 $5,861,649 3,003 $857,027 8.43% 17.12%

Other Resources:

Reimbursables 101 3,891 80 57,000 84 59,850 4 2,850 5.00% 5.00%

Offsetting Collections - Non Reimbursable 59,965 10,000 10,500 500 5.00%

User Fees 54 (54) -100.00%

Recovery from Prior Years 1,670 1,453 1,453

Recoveries Paid 3,175 3,175

Unobligated Balances from Prior Years 544 254,643 252,301 2,000 (250,301) -99.21%

Transfers In/Out 140 140

Resources from Other Accounts 331 113,931 433 88,951 787 108,455 354 19,504 81.76% 21.93%

Subtotal Other Resources 976 $434,100 513 $413,074 871 $185,573 358 ($227,501) 69.79% -55.08%

Total Budgetary Resources 35,965 $5,438,722 36,117 $5,417,696 39,478 $6,047,222 3,361 $629,526 9.31% 11.62%

See footnotes in 1.1--Appropriations Detail Table

Change % Change

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

FY 2022 to FY 2023 

Request

Note: The new appropriated resources in this table do not include the proposed technical adjustment that would move certain support activities from Operation Support and 

charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment would reduce the Operation Support appropriation by 

$709.5 million for rent and CFO adjustments and increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.6 million.

FY 2022 to FY 2023 

Request
IRS - 45

program management that protects the safeguarding of all data and systems within CI while adhering to all federal 

regulatory security compliance mandates and local security policies. 

Description of FY 2021 Performance –Investigations

Criminal Investigation 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. CI uses 

the following measures to evaluate its success in achieving its mission.

In FY 2021, CI completed 2,766 Criminal Investigations, exceeding the year-end target of 2,600 by 6.4 percent. Cases of a 

Legal nature completeddecreased 14.1 percent compared to the same period in FY 2020, while Illegal and Narcotics cases 

increased 12.4 percent and 25.9 percent, respectively. Legal source cases include people that earn their income legally, but 

willfully violate the tax laws (tax evasion). Examples of illegal cases include embezzlement, mortgage fraud, telemarketing 

fraud, and money laundering. Narcotics cases are similar toillegal cases; however, these cases are specific to profits and

financial gains of organized drug groups involved in narcotics, narcotics trafficking, and money laundering. Although 

Criminal Investigations Completed increased compared to last year, COVID-19 continues to impact day-to-day investigative 

activities thereby contributing to a higher cycle time for investigations completed. Based on projected staffing levels, 

setbacks and challenges presented due to the COVID-19 pandemic and its impact on future performance, IRS set a target of 

2,600 for FY 2022 and 2,500 for FY 2023.

Figure 2.4
IRS - 46

The FY 2021 Conviction Rate of 89.4 percent was 2.8 percent below the year‐end target of 92.0 percent while convictions 

are up 6.4 percent. The COVID-19 pandemic continues to limit court availability throughout the country and impact day-today investigative activities in support of the judicial system thereby contributing to fewer cases being processed. 

Additionally, decreases in the number of special agents in previous years has led to a decline in the total amount of cases 

initiated and consequently recommended for prosecution. Despite this, appropriate case selection and effective field 

performance continue to positively affect the quality of cases resulting in convictions. The IRS will keep the Conviction Rate 

targets for FY 2022 and FY 2023 at 92 percent.

Figure 2.5
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2.1.3 – Budget and Performance Report and Plan 

2D – Exam and Collections

($4,883,575,000 in direct appropriations, and an estimated $3,062,000 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: 

Dollars in thousands

Investigations FTE Amount

FY 2022 Annualized CR (ACR) 2,965 $667,279

Changes to Base:

Maintaining Current Levels (MCLs) $25,934

Pay Annualization (2.7% average pay raise) 3,955

Pay Raise (4.6% average pay raise) 20,352

Non-Pay 1,627

Base Adjustment 30 16,996

Adjustment to Reach Current Operating Levels 30 16,996

Subtotal FY 2023 Changes to Base 30 $42,930

FY 2023 Current Services 2,995 $710,209

Program Increases:

Putting Taxpayers First 9 3,529

Taxpayer Experience Strategy 9 3,529

Ensure Fairness of the Tax System 219 71,383

Subtotal FY 2023 Program Increases 228 $74,912

Total FY 2023 Request 3,223 $785,121

Dollar/FTE Change FY 2023 Request over FY 2022 ACR 258 $117,842

Percent Change FY 2023 Request over FY 2022 ACR 8.70% 17.66%

This table does not include the proposed technical adjustment that would move certain support activities from Operation Support 

and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment 

would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer 

Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Dollars in thousands

Investigations FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY2022 FY 2023

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 $589,295 $581,680 $595,686 $619,227 $630,093 $667,279 $785,121

Reimbursable Resources2 33,618 28,295 27,749 41,233 1,950 53,259 55,922

User Fees2

Budget Activity Total $622,913 $609,975 $623,435 $660,460 $632,043 $720,538 $841,043

2

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.

Investigations FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2021 FY 2022 FY 2023

Measures Actual Actual Actual Actual Actual Target Target Target

Criminal Investigations Completed (Ot) 3,089 3,051 2,797 2,624 2,766 2,600 2,600 2,500

Conviction Rate (Oe) 91.5% 91.7% 91.2% 90.4% 89.4% 92.0% 92.0% 92.0%

1

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation 

transfers.

Key: Oe - Outcome Measure, Ot - Output/Workload Measure
IRS - 48

• Compliance Services Management supports management associated with exam and compliance program activities. 

• Payment Compliance – Correspondence Collection supports IRS collection activities by initiating contact and 

collecting delinquent taxpayer liabilities through written notices and other means. 

• Automated Collections and Support initiates contact and collects delinquent taxpayer liabilities through the 

centralized Automated Collection System (ACS). 

• Payment Compliance – Field Collection conducts field investigations and collection efforts associated with 

delinquent taxpayer and business entity liabilities, including direct taxpayer contact and outreach programs to 

protect the interest of the federal government in delinquent tax liability situations. 

• Tax Reporting Compliance – Document Matching supports the Automated Underreporter (AUR), Combined 

Annual Wage Reporting (CAWR), Federal Unemployment Tax Act (FUTA), and other document matching 

programs. 

• Tax Reporting Compliance – Electronic/Correspondence Exam initiates written correspondence with taxpayers 

related to tax issues arising from claims on their tax returns. 

• Tax Reporting Compliance – Field Exam compares taxpayer income levels and corresponding tax liabilities to 

ensure the accuracy of taxpayer returns. 

• Fraud/Bank Secrecy Act enforces the anti-money laundering provisions of the Bank Secrecy Act of 1970 (BSA) 

and the USA Patriot Act of 2001. It examines non-bank financial institutions for compliance with these laws, 

receives and processes more than 15 million financial reports annually, and manages a centralized database of that 

information for the Financial Crimes Enforcement Network. The Fraud program follows the money trail to support 

the criminal investigation of tax evasion operations. Fraud technical advisors and revenue agents supply 

investigative leads and referrals to federal, state, and local law enforcement agencies. 

• Appeals supplies 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 (U.S. citizens living 

abroad who have renounced their citizenship), 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.). 

• Enforcement 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 treatments of taxpayer noncompliant behavior. 

• 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. 

• Earned Income Tax Credit (EITC) Management and Administration supports headquarters management associated 

with EITC. 
IRS - 49

• Integrity & Verification Operations supports civil fraud detection and prevention efforts in a pre-refund 

environment including monitoring performance and developing policy, procedures, and guidance for processing 

civil revenue protection programs. 

• ID Theft Victim Assistance has end-to-end responsibility and accountability for identity theft victim assistance 

policy and operations, which includes paper inventories from tax-related ID theft, the Identity Theft Protection 

Specialized Unit, and Return Preparer Misconduct. 

• Whistleblower Office provides staffing, training, and direct support to process, assess, and analyze tips from 

individuals who identify tax problems duringtheir daily business, regardless of where encountered (including 

workplace). 

• 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 compliance 

with disclosure and privacy laws. 

• Return Integrity, Verification & Program Management provides policy and program oversight of revenue protection 

efforts such as detection, prevention, and treatment of improper refunds (identity theft and non-compliance), 

including managing systemic solutions regarding payment of valid refund claims and the development of 

innovative technology solutions supporting IRS-wide revenue protection strategies. 

Description of FY 2021 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 metrics IRS uses to gauge the 

Examination program’s performance are discussed below. 

To highlight IRS’s strategic direction, focusing on large businesses, high-income taxpayers, and partnerships, and to 

complement the inclusion of “in process” examinations in the IRS Data Book, three new indicators were developed for 

FY 2021 reporting. These new indicators allow IRS to track the progress of examinations throughout the year, allowing for a 

direct and clear picture of IRS activities. Some examinations close within a year while others take several years to close.

These indicators focus on starts rather than closures which provide a better view of where resources are being applied in the 

current fiscal year. 

Exam Starts – High Income Individuals indicator was created for FY 2021 reporting to monitor resources associated with 

examinations of individual return filers reporting over $10M of Total Positive Income (TPI). 

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Exam Starts – High-Income Individuals1 1,941 2,307 2,108 2,693 2,227

1 New indicator added for FY 2021; historical data provided for comparative purposes.

While continuing to allocate resources to work the exams started in prior fiscal years, the IRS started 2,227new High-Income 

Individual tax return examinations in FY 2021. Throughout the year, the IRS will monitor resources, work in-progress and 

planned starts while continuing to devote senior level staff to train new hires. 

Exam Starts – Partnership’s indicator was created for FY 2021 reporting to monitor resources associated with the 

examination of Partnership returns. 

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Exam Starts – Partnerships1 10,221 9,033 5,823 4,106 4,327

1 New indicator added for FY 2021; historical data provided for comparative purposes.
IRS - 50

While continuing to allocate resources to work the exams started in prior fiscal years, the IRS started 4,327new Partnership 

tax return examination in FY 2021. Compared to the same period in FY 2020, Exam Starts-Partnerships increased 4.5 

percent. Projected examinations are trending downward due to other competing priorities and training of new hires.

Exam Starts – Large Corporations indicator was created for FY 2021 reporting to monitor resources associated with 

examinations of large corporate returns reporting assets of $250 million and above. 

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Exam Starts – Large Corporations1 2,577 2,396 2,009 1,700 1,490

1 New indicator added for FY 2021; historical data provided for comparative purposes.

While continuing to allocate resources to work the exams started in FY 2020, the IRS started 1,490 new Large Corporation 

tax return examinations in FY 2021. Projected examinations are trending slightly downward due to other priority work and 

the training of new hires. 

Exam Efficiency –Individual is the sum of all individual 1040 returns closed divided by the total FTE expended in relation 

to those individual returns. While total exam closures and FTEs increased 48.3 percent and 2.4 percent, in FY 2021, 

compared to FY 2020, Exam Efficiency –Individual was 108, falling short of the 111 target. Based on prior year hiring and 

the most current FTE data available, the IRS lowered the target to 100 for FY 2022 as qualified Exam staff will be reassigned 

to work unprecedented correspondence inventory levels. The FY 2023 target is set at 114 as inventory is expected to go back 

to normal. The IRS will closely monitor starts and inventory levels to ensure the targets are met.

 

 

Time to Start Compliance Resolution is the percentage of all individual income tax enforcement cases started within six 

months of the return posting date. This indicator reflects the effect of expedited issue detection and more integrated 

enforcement approaches. It supports expedited document matching, enhanced anomaly detection leading to faster issue 

identification, and data and analytics to improve issue identification and treatment selection. While the percent of individual 

enforcement cases started within 6 months was 66 percent, which is consistent with FY 2021 and much higher than previous 

years, the percent of Exam cases started showed a significant increase of 32 percent (39.3percent vs. 52.0percent), compared 

to Collection and AUR cases.

 

 

Time to Resolve Compliance Issue After Filingis the median time it takes to close all individual income tax enforcement 

cases in days. This indicator reflects the complete life cycle from return filing to resolution. It also reflects the effect of 

process enhancements, such as new self-correction capabilities, including Online Account. It supports expedited document 

Time to Start1 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Collection 86.2% 86.7% 80.1% 85.6% 86.0%

 Bal Due 90.1% 90.3% 90.5% 90.2% 88.0%

Automated Underreporter (AUR) 0.1% 0.1% 0.1% 0.1% 0.0%

Exam 40.9% 41.8% 39.3% 39.3% 52.0%

Total 58.8% 60.1% 60.9% 66.3% 66.0%

Time to Resolve1 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Collection: Bal due notice 379 368 330 400 286

Collection: non-notice 650 755 373 345 491

AUR 556 581 602 618 756

Exam 507 502 551 597 626

Total 491 494 469 491 484

1

New indicator added for FY 2020; historical data provided for comparative purposes.

1

New indicator added for FY 2020; historical data provided for comparative purposes.
IRS - 51

matching and enhanced anomaly detection, which will lead to faster issue identification. For FY 2021, the overall Time to 

Resolve Compliance Issue After Filing was 484 days, with the time to resolve Collection cases with balance due notices 

showing the most significant reductionas taxpayers may have used the Economic Impact Payments and Additional Child Tax 

Credit to pay down debt.

Repeat Non-Compliance Rate measures the percentage of individual taxpayers with repeat non-compliance two years after 

the initial tax year for filing, payment, or reporting compliance. This indicator supports expedited document matching, 

enhanced anomaly detection leading to faster issue identification, and Enterprise Case Management. It also promotes 

improved customer service through expanded access to new self-correction capabilities and improved behavioral analytics. It 

allows the IRS to better understand and change non-compliant taxpayer behavior. For FY 2021, the Repeat Non-Compliance 

Rate was 30.7 percent compared to 35.6 percent for FY 2020.

Description of FY 2021 Performance ‒ Collection

The Collection program collects delinquent taxes, secures delinquent tax returns through the fair and equitable application of 

tax laws, and provides education to customers to promote future compliance. The performance goals that the IRS uses to 

gauge collection program performance are discussed below. 

The Collection Coverage measure is calculated by taking the total volume of collection work completed divided by total 

collection work available. Collection Coverage was 41.2 percent, exceeding the FY 2021 target of 33 percent. The increase is 

attributed to net dispositions increasing 32.5percent while total available inventory grew 12.3 percent from FY 2020, to more 

than 53 million. Based on the need to reassignqualified Collection staff to work the unprecedented inventory caused by the 

COVID-19 pandemic, the target will be set at 36.5percent for FY 2022 and 32.1 percent for FY 2023. 

The Cost to Collect to $100is computed as total operating costs divided by gross collection and then multiplied by 100. 

Total operating costs include dollars obligated, expended, and disbursed against appropriated funds; excluded are costs 

reimbursed by other federal agencies and private entities for services performed for these external parties. Gross collections 

are before refunds are issued and include penalties and interest in addition to taxes collected. The FY 2021 Cost to Collect 

$100 was 33 cents, compared to 35 cents for FY 2020. Total operating costs were approximately $13.7 billion while gross 

collections were approximately $4.1 trillion. Operational efficiencies and economic activity contributed to the lower cost to 

collect.

Repeat Non-Compliance Rate1 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Reporting 7.3% 7.4% 7.7% 8.1% 5.5%

Filing 39.1% 38.1% 39.8% 43.9% 39.6%

Payment 30.0% 30.5% 29.9% 28.6% 29.0%

Total 29.2% 30.0% 31.4% 35.6% 30.7%

1

New indicator added for FY 2020; historical data provided for comparative purposes.
IRS - 52

FY 2023 Changes by Budget Activity

2.1.4 – Budget and Performance Report and Plan 

Dollars in thousands

Exam and Collections FTE Amount

FY 2022 Annualized CR (ACR) 31,615 $4,160,748

Changes to Base:

Maintaining Current Levels (MCLs) $169,465

Pay Annualization (2.7% average pay raise) 27,100

Pay Raise (4.6% average pay raise) 139,447

Non-Pay 2,918

Base Adjustment 318 206,676

Adjustment to Reach Current Operating Levels 318 $206,676

Subtotal FY 2023 Changes to Base 318 $376,141

FY 2023 Current Services 31,933 $4,536,889

Program Increases:

Putting Taxpayers First 129 48,365

Taxpayer Experience Strategy 129 48,365

Ensure Fairness of the Tax System 2,269 298,321

Subtotal FY 2023 Program Increases 2,398 $346,686

Total FY 2023 Request 34,331 $4,883,575

Dollar/FTE Change FY 2023 Request over FY 2022 ACR 2,716 $722,827

Percent Change FY 2023 Request over FY 2022 ACR 8.59% 17.37%

This table does not include the proposed technical adjustment that would move certain support activities from Operation Support 

and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment 

would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer 

Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Dollars in thousands

Exam and Collections FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Resource Level Actual Actual Actual Actual Actual Annualized CR Request

Appropriated Resources1 $3,901,041 $3,875,098 $3,907,290 $3,933,597 $3,987,323 $4,160,748 $4,883,575

Reimbursable Resources2 450 3,289 240 249 1,719 2,916 3,062

User Fees2 42 2,454 54

Budget Activity Total $3,901,491 $3,878,387 $3,907,572 $3,936,300 $3,989,042 $4,163,718 $4,886,637

1

The FY 2016 - FY 2020 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2016 - FY 2020 columns represent realized resources for reimbursables and user fees.

Exam and Collections FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2021 FY 2022 FY 2023

Measures Actual Actual Actual Actual Actual Target Target Target

Exam Starts - High Income Individuals (new FY21) (Ot, L)3 1,941 2,307 2,108 2,693 2,227 Indicator Indicator Indicator

Exam Starts - Partnerships (new FY21) (Ot, L)3 10,221 9,033 5,823 4,106 4,327 Indicator Indicator Indicator

Exam Starts - Large Corporations (new FY21) (Ot, L)3 2,577 2,396 2,009 1,700 1,490 Indicator Indicator Indicator

Examination Efficiency - Individual (E) 121 131 109 76 108 111 100 114

Time to Start Compliance Resolution (new FY20) (E, L)3 58.8% 60.1% 60.9% 66.3% 66.0% Indicator Indicator Indicator

Time to Resolve Compliance Issue After Filing (new FY20) (E,L)3 491 494 469 491 484 Indicator Indicator Indicator

Repeat Non-Compliance Rate (new FY20) (Oe, L)3 29.2% 30% 31.4% 35.6% 30.7% Indicator Indicator Indicator

Collection Coverage - Units (Ot) 42.2% 41.6% 41.3% 34.9% 41.2% 33.0% 36.5% 32.1%

Cost to Collect $100 (E) $0.34 $0.34 $0.33 $0.35 $0.33 Indicator Indicator Indicator

3

Historical data provided for comparison.

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Strategic Goal Measure
IRS - 53

2E – Regulatory

($192,953,000 in direct appropriations and an estimated $866,000 from reimbursable programs): This budget activity funds 

the development of published IRS guidance materials; interpretation of tax laws; internal advice to IRS on general non-tax 

legal issues; enforcement of regulatory rules, laws, and approved business practices; and support for taxpayers in the areas of 

pre-filing agreements, determination letters, and advance pricing agreements. The activities include: 

• Tax Law Interpretation and Published Guidance interprets 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 - 54

Description of FY 2021 Performance - Regulatory

In FY 2021, IRS published 196 items: 136 Priority Guidance Plan (PGP) projects and 60 ministerial rulings. Ministerial 

projects are publications that only involve ministerial matters (such as applicable federal interest rates and monthly bond 

factor amounts). They are usually published on an annual basis. Many items published in FY 2021 involved complex and 

novel issues. For example, two of the published items pertain to a provision added by the Tax Cuts and Jobs Act (TCJA) 

creating the deduction for qualified business income and how that applies to cooperative organizations. Another item 

addressed the new unrelated business income tax provision of the TCJA providing that the tax will be computed separately 

for each trade or business. Over one hundred items were published to implement the Families First Coronavirus Response 

Act (FFCRA), the Coronavirus Aid, Relief, and Economic Security Act (CARES), the Consolidated Appropriations Act, 

2021, and the American Rescue Plan Act (ARPA) and provided relief in response to the COVID-19 pandemic emergency, 

including several items relating to employer tax credits - the Credit for Sick and Family Leave, the Employee Retention 

Credit, and Paid Leave Credit for Vaccines. The 2021-2022 PGP, published on September 9, 2021, and covering July 2021 

through June 2022, lists 193 projects.

The Office of Professional Responsibility (OPR) remains firmly committed to educating tax professionals about their 

responsibilities and limitations under Circular 230, and their ethical obligations to taxpayers and tax administration. During 

Fiscal Year 2021, the OPR’s primary education and outreach efforts were directed at minimizing the number of practitioners 

who diverted from their ethical obligations. To the extent practitioners failedto adhere to the tax practice ethics, the OPR 

timely applied the appropriate level of discipline that put the practitioner back-on-track regarding competence and integrity in 

their tax practice.

The OPR performed its outreach activities through presentations conducted in-person and virtually through on-line webinars, 

telephonically, and via video conferencing platforms. The OPR educated tax professionals (mainly tax return preparers) 

about Circular 230 provisions at numerous events, including the IRS Nationwide Tax Forums. The Nationwide Tax Forums 

are an integral part of OPR’s external outreach efforts as thousands of tax professionals attend these forums. These outreach

events helped ensure taxpayers received competent and ethical representation before the agency.
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FY 2023 Changes by Budget Activity

2.1.5 – Budget and Performance Report and Plan 

Dollars in thousands

Regulatory FTE Amount

FY 2022 Annualized CR (ACR) 1,024 $176,595

Changes to Base:

Maintaining Current Levels (MCLs) $7,264

Pay Annualization (2.7% average pay raise) 1,173

Pay Raise (4.6% average pay raise) 6,033

Non-Pay 58

Base Adjustment 10 5,504

Adjustment to Reach Current Operating Levels 10 $5,504

Subtotal FY 2023 Changes to Base 10 $12,768

FY 2023 Current Services 1,034 $189,363

Program Increases:

Putting Taxpayers First 14 2,437

Taxpayer Experience Strategy 14 2,437

Ensure Fairness of the Tax System 5 1,153

Subtotal FY 2023 Program Increases 19 $3,590

Total FY 2023 Request 1,053 $192,953

Dollar/FTE Change FY 2023 Request over FY 2022 ACR 29 $16,358

Percent Change FY 2023 Request over FY 2022 ACR 2.83% 9.26%

This table does not include the proposed technical adjustment that would move certain support activities from Operation Support 

and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment 

would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer 

Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Dollars in thousands

Regulatory FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY2023

Resource Level Actual Actual Actual Actual Actual Annualized CR Request

Appropriated Resources1 $131,662 $170,222 $174,624 $157,374 $132,506 $176,595 $192,953

Reimbursable Resources2 160 593 412 252 222 825 866

User Fees2 9,537

Budget Activity Total $141,359 $170,815 $175,036 $157,626 $132,728 $177,420 $193,819

1

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.
IRS - 56

Operations Support

Appropriation Description 

The Operations Support appropriation as currently defined - funds rent payments; facilities services; printing; postage; 

physical security; headquarters policy and management activities such as corporate support for strategic planning; 

communications and liaison; finance; human resources; equity, diversity, and inclusion; research andstatistics of income; and 

necessary expenses for information systems and telecommunication support, including development, security, and 

maintenance of the IRS’s information systems. 

The Operations Support budget request for FY 2023is $4,543,268,000 in direct appropriations and 11,923 FTE, excluding 

the proposed technical adjustment. This is an increaseof $615,166,000or 15.66percent, and 291 FTE more than the FY 

2022 ACR level of $3,928,102,000 and 11,631 FTE.
IRS - 57

2.1 – Budget Adjustments Table

Dollars in thousands

Operations Support

Summary of Proposed FY 2023 Request FTE Amount

FY 2022 Annualized CR (ACR) 11,631 $3,928,102

Changes to Base:

Maintaining Current Levels (MCLs) $119,339

Pay Annualization (2.7% average pay raise) 12,812

Pay Raise (4.6% average pay raise) 65,928

Non-Pay 40,599

Base Adjustment $115,991

Adjustment to Reach Current Operating Levels 115,991

Subtotal FY 2023 Changes to Base $235,330

FY 2023 Current Services 11,631 $4,163,432

Program Changes:

Program Increases

Putting Taxpayers First 229 146,805

User Authentication

Taxpayer Experience Strategy 229 146,805

Ensure Fairness of the Tax System 20 98,396

Enhance Taxpayer Service 84,945

Critical IT Operations 36 39,521

Focused Strategies for Reaching Underserved Communities 7 10,169

Subtotal FY 2023 Program Increases 292 $379,836

Total FY 2023 Budget Request 11,923 $4,543,268

See footnotes in 1.1 -- Appropriations Detail Table

This table does not include the proposed technical adjustment that would move certain support activities from Operation 

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. 

The adjustment would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and 

increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.
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2.2 – Object Classification Obligations

Dollars in thousands

Operations Support

Object Classification

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

11.1 Full-Time Permanent Positions 1,339,823 1,346,193 1,433,106

11.3 Other than Full-Time Permanent Positions 5,350 4,861 5,062

11.5 Other Personnel Compensation 33,940 40,005 43,150

11.8 Special Personal Services Payments 181 750 781

11.9 Personnel Compensation (Total) 1,379,294 1,391,809 1,482,099

12.1 Personnel Benefits 483,805 506,294 537,789

13.0 Benefits to Former Personnel 30 36 38

Total Personnel and Compensation Benefits $1,863,129 $1,898,139 $2,019,926

21.0 Travel 7,938 9,026 11,925

22.0 Transportation of Things 14,036 14,669 16,012

23.1 Rental Payments to GSA 579,736 609,019 634,381

23.2 Rent Payments to Others 6,914 37 38

23.3 Communications, Utilities, & Misc. 311,545 291,154 338,662

24.0 Printing & Reproduction 19,746 19,656 22,269

25.1 Advisory & Assistance Services 638,496 428,418 643,673

25.2 Other Services 29,188 32,621 51,210

25.3 Purchase of Goods & Services from Govt. Accounts 56,744 69,013 76,711

25.4 Operation & Maintenance of Facilities 199,037 202,776 223,729

25.6 Medical Care 14,972 17,605 20,045

25.7 Operation & Maintenance of Equipment 66,088 44,227 53,530

26.0 Supplies and Materials 7,240 5,143 7,370

31.0 Equipment 255,972 239,949 346,253

32.0 Land and Structures 32,645 45,987 76,858

42.0 Insurance Claims & Indemnities 676 663 676

Total Non-Personnel $2,240,973 $2,029,963 $2,523,342

New Appropriated Resources $4,104,102 $3,928,102 $4,543,268

Budget Activities:

Infrastructure 886,713 918,659 1,039,852

Shared Services & Support 1,024,654 1,109,740 1,200,105

Information Services 2,192,735 1,899,703 2,303,311

New Appropriated Resources $4,104,102 $3,928,102 $4,543,268

FTE 12,037 11,631 11,923

See footnotes in 1.1 -- Appropriations Detail Table

Note 1: This table does not include the proposed technical adjustment that would move certain support activities from Operations 

Support and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment 

would reduce the Operations Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer Services 

appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Note 2: This table does not include the $15 million in the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), $750.7 million 

under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-36), the $509 million provided in the Consolidated 

Appropriations Act, 2021 (P.L. 116-260), the $1.86 billion provided by the American Rescue Plan (ARP) (P.L. 117-2)
IRS - 59

2.3 – Appropriation Detail Table

2F –Infrastructure

($1,039,852,000 in direct appropriations and an estimated $1,041,000 from reimbursable programs): This budget activity 

funds administrative services related to space and housing, rent and space alterations, building services, maintenance, guard 

services, and non-IT equipment. The program activities include:

• Building Delegation oversees and manages the IRS GSA-delegated buildings, including cleaning, maintenance, 

utilities, protection, administrative, and recurring and one-time repair costs. 

• Rent provides resources for all IRS rent needs. 

• Space and Housing/Non-IT Equipment provides management of all IRS building services, maintenance, space 

alterations, guard services, custodial overtime, utility service needs, and non-IT equipment. 

• Security covers all physical security costs, including guard services, security equipment and maintenance, 

countermeasures, Homeland Security Presidential Directive 12 (HSPD-12) and Treasury Enterprise Identity 

Credential and Access Management (TEICAM). 

Description of FY 2021 Performance - Infrastructure

Rent 

The Rentable Square Feet per Person indicator is the amount of rentable square feet the IRS maintains per person requiring 

space. After payroll, rent is the IRS’s largest operating expense; therefore, the IRS continues to take steps to reduce its total 

office space. Through FY 2021, the Rentable Sq. Ft. per Person was 278 -- the same level as FY 2020. Rentable Square Feet 

per Person is driven in the positive direction by either a decrease in square footage, increase in staffing or a combination of 

both. In FY 2021 there was a slight decrease in both staffing and rentable square footage, leaving Rentable Square Feet per 

Person unchanged. The IRS continues to release excess office space through building closures and consolidations; more than 

Dollars in thousands

Operations Support

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Infrastructure 886,713 918,659 1,039,852 121,193 13.19%

Shared Services and Support 5,122 1,024,654 5,067 1,109,740 5,183 1,200,105 116 90,365 2.29% 8.14%

Information Services 6,915 2,192,735 6,564 1,899,703 6,740 2,303,311 176 403,608 2.68% 21.25%

Subtotal New Appropriated Resources 12,037 $4,104,102 11,631 $3,928,102 11,923 $4,543,268 292 $615,166 2.51% 15.66%

Other Resources:

Reimbursables 79 55,072 76 55,000 80 57,751 4 2,751 5.26% 5.00%

Offsetting Collections - Non Reimbursables 258

User Fees 10 408,054 15 335,410 15 261,833 (73,577) -21.94%

Recovery from Prior Years 11,849 5,218 5,218

Recoveries Paid 26 26

Unobligated Balances from Prior Years 166 178,232 28 540,897 41 214,869 13 (326,028) 46.43% -60.28%

Transfers In/Out

Resources from Other Accounts 2 24,428 27 28,292 34 37,602 7 9,310 25.93% 32.91%

Subtotal Other Resources 257 $677,893 146 $964,843 170 $577,299 24 ($387,544) 16.44% -40.17%

Total Budgetary Resources 12,294 $4,781,995 11,777 $4,892,945 12,093 $5,120,567 316 $227,622 2.68% 4.65%

See footnotes in 1.1--Appropriations Detail Table

Change % Change

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

FY 2022 to FY 2023 

Request

The new appropriated resources in this table do not include the proposed technical adjustment that would move certain support activities from Operation Support and charge the full 

cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment would reduce the Operation Support appropriation by $709.5 million for rent 

and CFO adjustments and increase the Taxpayer Services appropriation by $298.9 million and the Enforcement appropriation by $410.6 million.

FY 2022 to FY 2023 

Request
IRS - 60

two million rentable square feet has beenreleased since FY 2017. The IRS continues to look to incorporate new hires into 

existing space, where possible. The IRS target for FY 2022 is 270 sq. ft. and the FY 2023 target is 260 sq. ft.

Security and Safety 

Security of IRS facilities and providing a secure and safe environment for employees are of utmost importance to the IRS. In 

FY 2021, the IRS worked diligently to implement a physical security strategy, which included the accomplishment of four 

goals:

• Providing security related tools, training, mechanisms, and processes to improve workforce effectiveness, agility,

and retention;

• Implementing and monitoring the effectiveness of physical security policies, procedures, and internal controls by 

crafting effective management tools to ensure appropriate monitoring of all aspects of the physical security 

programs;

• Recognizing varying levels of security related performance and ensured employee accountability;

• Coordinating among all the functional areas involved in physical security. The security related improvements 

reduced burden, enhanced monitoring efficiency and increased data reporting reliability of security programs for 

program owners and managers.

At the onset of the COVID-19 pandemic in March 2020, the IRS took unprecedented actions to protect the health and safety 

of its employees and the taxpaying public. This included closing Submission Processing Centers, Taxpayer Assistance 

Centers (TACs), and other offices nationwide. At the beginning of FY 2021, many employees remained on health and safety 

leave, resulting in a significant amount of unopened mail, tax return processing delays, and correspondence. By December 

2020, the IRS had resumed normal mail operations, and by May 2021, TACs were open and accepting face-to-face 

appointments. The work performed at IRS Submission Processing Centers is not conducive to a remote telework 

environment.

Throughout FY 2021, the IRS continued to improve its workspace modifications to enhance safety in IRS facilities, which 

included increased and widespread availability of hand sanitizer, surface sanitizing/disinfecting wipes, and both disposable 

masks and reusable masks. IRS modified custodial contracts for the provision of additional and above standard cleaning 

services. Modifications were made to heating, ventilation, and air conditioningoperations to increase outside air and filter 

efficiencies, where technically feasible, and installed acrylic shields in workstations, when required. IRS developed and 

posted specific pandemic signage and placed them outside IRS entrances to encourage employee COVID-19 symptom selfscreening. IRS ensured appropriate spacing of seating in open work and public gathering areas to enforce social distancing, 

and limited occupancy in bathrooms; elevators; and meeting, training, and break rooms.
IRS - 61

FY 2022 Changes by Budget Activity

2.1.6 – Budget and Performance Report and Plan

Dollars in thousands

Infrastructure FTE Amount

FY 2022 Annualized CR (ACR) $918,659

Changes to Base:

Maintaining Current Levels (MCLs) $18,380

Pay Annualization (2.7% average pay raise) 2

Pay Raise (4.6% average pay raise) 11

Non-Pay 18,367

Base Adjustment

Adjustment to Reach Current Operating Levels

Subtotal FY 2023 Changes to Base $18,380

FY 2023 Current Services $937,039

Program Increases:

Putting Taxpayers First 11,208

Taxpayer Experience Strategy 11,208

Ensure Fairness of the Tax System 42,231

Enhance Taxpayer Service 41,727

Critical IT Operations 1,044

Focused Strategies for Reaching Underserved Communities 6,603

Subtotal FY 2023 Program Increases $102,813

Total FY 2023 Request $1,039,852

Dollar/FTE Change FY 2023 Request over FY 2022 ACR $121,193

Percent Change FY 2023 Request over FY 2022 ACR 13.19%

This table does not include the proposed technical adjustment that would move certain support activities from Operation Support 

and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment 

would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer 

Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Dollars in thousands

Infrastructure FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 $856,655 $870,360 $891,140 $867,354 $885,606 $918,659 $1,039,852

Reimbursable Resources2 634 662 681 747 854 991 1,041

User Fees2 999

Budget Activity Total $857,289 $871,022 $892,820 $868,101 $886,460 $919,650 $1,040,893

2

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.

Infrastructure FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2021 FY 2022 FY 2023

Measure Actual Actual Actual Actual Actual Target Target Target

Rentable Square Feet per Person (Ot) 297 301 298 278 278 280 270 260

1

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and interappropriation transfers.

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Strategic Goal Measure
IRS - 62

2G – Shared Services and Support

($1,200,105,000 in direct appropriations, and an estimated $31,919,000 from reimbursable programs): This budget activity 

funds policy management, IRS-wide support for research, strategic planning, communications and liaison, finance, human 

resources, and equity, diversity, and inclusion programs. It also funds printing and postage, business systems planning, 

security, legal services, and procurement. The program activities include:

• 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. It sets policies and goals, provides leadership and 

direction for the IRS, and builds partner relationships with key stakeholders (Congress, GAO, and OMB). It 

provides policy guidance for conducting planning and budgeting strategies, conducting analyses of programs and 

investments to support strategic decision-making, and developing and managing human resources. It also includes 

official reception and representation expenses. 

• Facilities Management & Security Services provides facilities and security services to deliver a safe, secure, and 

optimal work environment to IRS employees. 

• 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 cross-cutting 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 Facilities Management & Security Services provides resources for shared crossfunctional support, such as 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. 

• 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 behavior. 

• Protection of Sensitive Information 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. 

• W&I Business Modernization Support provides staffing, training, and support for W&I’s enterprise-wide business 

modernization efforts, including 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.
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Description of FY 2021 Performance –Shared Services and Support

Through support activities that include management and administration of human resources, protection and use of identity 

information, and research, Operations Support continues to provide shared services to all IRS programs.

Human Capital 

The future of the IRS depends on a workplace culture that empowers employees to improve the taxpayer experience and 

uphold the tax code fairly. In FY 2021, the IRS: 

• Administered a Future of Work Surveyto all employees that will aid IRS leadership with the development of a 

post-pandemic plan. Survey questions were chosen to gain insight on employee challenges regarding telework, 

returning to the office, resources, work/team collaborations and work/life balance.

• Engaged employees throughout the year using focus groups, virtual seminars, employee recognition, surveys, 

enhanced Public Service Recognition Week programming and launched a virtual idea wall. Online learning courses 

and Self-Help Online Tutorial (SHOT) videos relating to employee engagement were created as tools for 

employees and leadership.

• Developed and deployed strategies to ensure it is well-positioned to recruit, hire, train, support and retain a highly 

skilled workforce needed to achieve the IRS mission. One example is a deliberate rebranding including marketing 

and recruitment strategies through social media, student and graduate programs and collaboration with 

unemployment offices, educational institutions, and federal employment programs to prepare for anticipated hiring 

needs.

Protection and Proper use of Identity Information

The Security Summit, a public-private sector partnership between the IRS, state revenue departments, software developers, 

tax professionals, and financial services groups, is now in its sixth year of establishing repetitive iterative processes that 

support taxpayer security initiatives. During FY 2021, the Security Summit focused on reducing taxpayer burden and 

improving tax identity theft detection through exploring added collaborative efforts with the Information Sharing and 

Analysis Center (ISAC) and opportunities with stakeholders to further combat tax identity theft and fraud. The IRS made 

significant progress through collaboration and enhancements to its tax identity theft detection processes. Since partnering 

with the Security Summit, the IRS has prevented more identity theft than in previous years and as a result, its data analytics 

are detecting fewer fraudulent refund claims.

Research 

The IRS invests in Service-wide research projects to help its leaders make data and evidence-driven improvements to IRS 

operations and taxpayer services. In FY 2021, the IRS:

• Began an enterprise initiative utilizing the OPM Five-Phase Workforce Planning Model methodology to 

proactively develop workforce planning projections. This supports the development of a holistic view of planned 

IRS workforce requirements. As a result, the IRS will have the ability to analyze organizational workforce 

projections to support the development of comprehensive FY 2022 recruitment and hiring strategies. 

• Applied analytics to multiple source datasets in response to COVID-19 to develop data solution tools that enabled 

IRS stakeholders to make data-informed decisions, meet their reporting requirements, facilitate accomplishment of 

workload, maximize employee safety efforts, and pay employees appropriately. This allowed the IRS to rapidly 

respond to the unfolding pandemic and emerging needs.
IRS - 64

• Implemented the Documentation Upload Tool which is a platform that allows taxpayers a secure method to 

submit their response form and supporting documentation in response to an Automated Questionable Credit (AQC) 

notice. The IRS delivered functionality within just 19 days to create an electronic mailroom feature for the AQC 

program.

• Analyzed historical examination results and return data to select work based on measurable criteria. Access to new 

visualization tools, which are becoming an industry standard, are being provided to our managers and analysts to 

make it easier to identify opportunities to enhance our operations. The IRS continued efforts to incorporate the use 

of automated technologies such as Robotics Process Automation (RPA) to improve process efficiencies in workload 

selection.

• Received thousands of survey responses to the inaugural 2020 Customer Experience, Expectations and Needs 

(CEEN) Survey. The survey covered topics such as tax filing, employment taxes, trust with the IRS, and needs for 

compliant tax administration. The survey was designed to help the IRS understand the expectations, needs and 

preferences of small business owners and self-employed taxpayers. Insights gained were from gig workers, 

Spanish-preferred taxpayers, and new small business owners. The CEEN survey is groundbreaking for the IRS and 

the results are foundational research for all IRS programs seeking to improve interactions with taxpayers.

• Strengthened partnerships with the Department of Treasury to better utilize the Enterprise Data Management 

system, which organizes data from disparate systems to provide consolidated analytics and reporting.

• Combining tax expertise with data science principles, IRS is building risk assessment algorithms that will 

improve the IRS’s ability to identify potential high-risk compliance issues across complex pass-through entity tax 

structures. 

• Moving forward with its digitalization strategy. The strategy allows flexibility within inventory management, 

electronic workflows, and business continuity. Benefits include new digital channel options that enhance the 

portability of work and leverage resources across the Service. Additionally, the strategy allows for seamless access 

to taxpayer imaged cases without additional burdens on the taxpayer to provide documents. This transparency 

reduces risk for both taxpayers and the IRS.
IRS - 65

FY 2022 Changes by Budget Activity

2.1.7 – Budget and Performance Report and Plan 

Dollars in thousands

Shared Services and Support FTE Amount

FY 2022 Annualized CR (ACR) 5,067 $1,109,740

Changes to Base:

Maintaining Current Levels (MCLs) $38,001

Pay Annualization (2.7% average pay raise) 4,966

Pay Raise (4.6% average pay raise) 25,555

Non-Pay 7,480

Base Adjustment

Adjustment to Reach Current Operating Levels

Subtotal FY 2023 Changes to Base $38,001

FY 2023 Current Services 5,067 $1,147,741

Program Increases:

Putting Taxpayers First 89 22,138

Taxpayer Experience Strategy 89 22,138

Ensure Fairness of the Tax System 20 23,164

Enhance Taxpayer Service 6,012

Critical IT Operations 86

Focused Strategies for Reaching Underserved Communities 7 964

Subtotal FY 2023 Program Increases 116 $52,364

Total FY 2023 Request 5,183 $1,200,105

Dollar/FTE Change FY 2023 Request over FY 2022 ACR 116 $90,365

Percent Change FY 2023 Request over FY 2022 ACR 2.29% 8.14%

This table does not include the proposed technical adjustment that would move certain support activities from Operation Support 

and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment 

would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer 

Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Dollars in thousands

Shared Services and Support FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 $964,702 $920,283 $900,287 $961,999 $1,040,955 $1,109,740 $1,200,105

Reimbursable Resources2 19,194 27,995 30,360 27,368 27,874 30,399 31,919

User Fees2 1,000 1,000

Budget Activity Total $984,896 $949,278 $930,647 $989,367 $1,068,829 $1,140,139 $1,232,024

2

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.

1

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation 

transfers.
IRS - 66

2H – Information Services 

($2,303,311,000 in direct appropriations, $24,791,000 in reimbursable resources, and $261,833,000 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 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. The program activities include: 

• Enterprise Program Management Office (EPMO) provides oversight and project integration into daily IT processes 

for large-scale development, modernization, and enhancement projects. It enables a coordinated, cross-functional 

project planning, implementation and performance assessment effort aimed at improvingIT systems quality, cost,

and delivery schedule. 

• Cybersecurity protects Taxpayer information and the Internal Revenue Service's electronic systems, services, and 

data from internal and external cyber security related threats. The program operates a 24x7x365 Computer Security 

Incident Response Center (CSIRC) to provide detection, prevention, monitoring, analysis, and reporting of security 

incidents and threats. The program reduces online fraud and prevents critical data loss. It is responsible for 

performing security risk assessments, tracking compliance, monitoring security risk remediation activities, 

performing comprehensive security control testing, managing the system certification and accreditation process, 

and coordinating the enterprise continuous monitoring process. The program also provides security policy 

management and interpretation, delivers security engineering services, and implements cybersecurity and data 

protection solutions.

• 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 Managementprovides 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 – Project 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 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. 

• Applications 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. 
IRS - 67

• 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. 

• End User & 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. 

• Information Technology Security Certification and Accreditation provides design and operations of security 

controls and the technical mechanisms used by the IRS systems and applications as 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 Recoverysupports activities related to Enterprise Disaster Recovery planning, including testing, 

evaluations, plan development, and technical and business impact assessments.

• Infrastructure Currency(IC) funds the upgrade or replacement of outdated and aged technology solutions related to 

the IT hardware, software, and applications development product portfolio. The IC program gathers and assesses 

infrastructure risk to determine mitigation strategies supporting IT software currency. The IC program, through 

continuous IT currency management, coordinates the development and subsequent maintenance of the integrated IT 

asset planning and execution processes that increase the long-term sustainability of the IT infrastructure. By 

managing and maintaining the enterprise IT lifecycle, the IRS is able to reduce risk associated with the use of 

outdated and aged technology solutions and provide timely and continuous product upgrades.

• Enterprise Infrastructure Currency funds the replacement of IRS IT infrastructure that has reached or surpassed its 

useful life cycle. The IRS centralizes the resources achieved through efficiencies in various parts of IT to ensure 

that replacement of the aging infrastructure is addressed corporately.

• Treasury Franchise Fund is a centralized functional area for separating the resources required to pay Treasury 

billings for services provided through the Working Capital Fund from the Information Services base budget.
IRS - 68

Description of FY 2021 Performance –Information Services

The Percent of Aged Hardware is a measure that shows the quantity of IT hardware in operation past its useful life as a 

percentage of total hardware in use. The IRS continued to make great progress reducing the percentage of aged hardware 

within the IT environment from 16 percent at the end of FY 2020 to 9.3 percent at the end of FY 2021. This represents a 

reduction of more than 8,000 aged assets during the fiscal year through efforts such as refreshing employee workstations. 

Since FY 2017, the IRS was able to reduce the percent of aged hardware more than82percent. For FY 2022 and FY 2023, 

the IRS will maintain the target at 20 percent. The industry standard for aged hardware is in the range of 20 –25 percent. IRS 

will monitor progress against FY 2021 aged hardware replacement targets.

Figure 2.6
IRS - 69

FY 2022 Changes by Budget Activity

2.1.8 – Budget and Performance Report and Plan 

Dollars in thousands

Information Services FTE Amount

FY 2022 Annualized CR (ACR) 6,564 $1,899,703

Changes to Base:

Maintaining Current Levels (MCLs) $62,958

Pay Annualization (2.7% average pay raise) 7,844

Pay Raise (4.6% average pay raise) 40,362

Non-Pay 14,752

Base Adjustment 115,991

Adjustment to Reach Current Operating Levels 115,991

Subtotal FY 2023 Changes to Base $178,949

FY 2023 Current Services 6,564 $2,078,652

Program Increases:

Putting Taxpayers First 140 113,459

Taxpayer Experience Strategy 140 113,459

Ensure Fairness of the Tax System 33,001

Enhance Taxpayer Service 37,206

Critical IT Operations 36 38,391

Focused Strategies for Reaching Underserved Communities 2,602

Subtotal FY 2023 Program Increases 176 $224,659

Total FY 2023 Request 6,740 $2,303,311

Dollar/FTE Change FY 2023 Request over FY 2022 ACR 176 $403,608

Percent Change FY 2023 Request over FY 2022 ACR 2.68% 21.25%

This table does not include the proposed technical adjustment that would move certain support activities from Operation Support 

and charge the full cost of certain mission activities to the Taxpayer Services and Enforcement appropriations. The adjustment 

would reduce the Operation Support appropriation by $709.5 million for rent and CFO adjustments and increase the Taxpayer 

Services appropriation by $298.9 million and the Enforcement appropriation by $410.7 million.

Dollars in thousands

Information Services FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 $1,950,191 $2,390,357 $2,126,973 $1,972,916 $2,061,216 $1,899,703 $2,303,311

Reimbursable Resources2 35,307 40,600 27,153 36,456 26,344 23,610 24,791

User Fees2 201,584 204,032 222,399 374,671 408,054 335,410 261,833

Budget Activity Total $2,187,082 $2,634,989 $2,376,525 $2,384,043 $2,495,614 $2,258,723 $2,589,935

1

The FY 2017 - FY 2021 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2017 - FY 2021 columns represent realized resources for reimbursables and user fees.

Information Services FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2021 FY 2022 FY 2023

Measures Actual Actual Actual Actual Actual Target Target Target

Percent of Aged Hardware (Ot, L) 52.3% 45.5% 31.0% 16.0% 9.3% 20.0% 20.0% 20.0%

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Strategic Goal Measure
IRS - 70

Business Systems Modernization

Appropriation Description 

The Business Systems Modernization (BSM) appropriation provides resources for the planning and capital asset acquisition 

of IT to modernize the IRS business systems.

The BSM budget request for FY 2023is $310,027,000in direct appropriations and 412 FTE. This amount is an increase of 

$87,303,000or 39.2percent, and 104 FTE more than the FY 2022 ACR level of $222,724,000and 308 FTE.

2.1 – Budget Adjustments Table

Business Systems Modernization

Summary of Proposed FY 2023 Request FTE Amount

FY 2022 Annualized CR (ACR) 308 $222,724

Changes to Base:

Maintaining Current Levels (MCLs) $5,730

Pay Annualization (2.7% average pay raise) 401

Pay Raise (4.6% average pay raise) 2,061

Non-Pay 3,268

Base Adjustment 3,430

Adjustment to Reach Current Operating Levels 3,430

Subtotal FY 2023 Changes to Base $9,160

FY 2023 Current Services 308 $231,884

Program Changes:

Program Increases

Integrated Modernization Business Plan 104 $78,143

Subtotal FY 2023 Program Increases 104 $78,143

Total FY 2023 Budget Request 412 $310,027

See footnotes in 1.1 -- Appropriations Detail Table
IRS - 71

2.2 – Object Classification Obligations

Dollars in thousands

Business Systems Modernization

Object Classification

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

11.1 Full-Time Permanent Positions 37,340 43,387 51,320

11.3 Other than Full-Time Permanent Positions 30 178 204

11.5 Other Personnel Compensation 224 672 772

11.9 Personnel Compensation (Total) 37,594 44,237 52,296

12.1 Personnel Benefits 12,535 15,092 17,686

Total Personnel and Compensation Benefits $50,129 $59,329 $69,982

21.0 Travel 411 381 104

25.1 Advisory & Assistance Services 163,522 160,802 235,072

25.2 Other Services 6

25.3 Purchase of Goods & Services from Govt. Accounts 2

25.7 Operation & Maintenance of Equipment 2,018 110 254

26.0 Supplies and Materials 2 12 6

31.0 Equipment 6,642 2,090 4,600

Total Non-Personnel $172,595 $163,395 $240,045

New Appropriated Resources $222,724 $222,724 $310,027

Budget Activities:

IT Investments 222,724 222,724 310,027

New Appropriated Resources $222,724 $222,724 $310,027

FTE 394 308 412

This table does not include the $15 million in the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), $750.7 million under 

the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-36), the $509 million provided in the Consolidated 

Appropriations Act, 2021 (P.L. 116-260), the $1.86 billion provided by the American Rescue Plan (ARP) (P.L. 117-2)

See footnotes in 1.1 -- Appropriations Detail Table
IRS - 72

2.3 – Appropriation Detail Table

2I – Business Systems Modernization 

($310,027,000 in direct appropriations): This budget activity funds the planning and capital asset acquisition of information 

technology to modernize IRS business systems and processes, including labor and related contractual costs, in support of the 

IRS mission. The IRS is implementing its multiyear modernization plan to address the long-term sustainability and 

affordability of its technological environment, eliminating organizational silos, and driving efficiencies and cost savings 

throughout the enterprise. The plan defines the scope of capabilities, sets timelines, and targets, describes milestones, and 

includes outcome measures for each investment. BSM funds are strictly used for development, modernization and 

enhancement activities, and do not fund operations and maintenance once a project is developed. The following projects are 

currently under development using BSM funds:

• Web Applications ($30 million): The IRS will continue to expand online account capabilities to improve the 

taxpayer experience, enhancing self-service options to create and submit payment plans as well as to make and 

view tax payments. In addition, it will expand the Tax Pro effort benefiting authorized tax professionals with 

capabilities that modernize certain paper-based processes to help resolve issues with the IRS on behalf of their 

clients. In FY 2023, the IRS will continue to expand the Tax Pro capabilities to include the ability to view and 

manage authorizations and enable taxpayers to initiate new authorization requests. These capabilities will reduce 

taxpayer and tax professional burden, the number of submitted paper forms, and the time it takes to submit 

authorizations. Taxpayers and tax professionals also benefit from additional data accuracy and security since the 

process confirms and protects their identity. The IRS will continue to improve taxpayer access to digital notices, 

allowing taxpayers the choice to opt in or opt out of receiving paper notices and receive notifications through email 

or text message. This investment will increase taxpayer response rates to notices, reduce burden on taxpayers and 

the IRS, reduce printing and postage requirements, and promote more efficient interactions.

• Customer Account Data Engine 2(CADE2) ($130 million) (Individual Tax Processing): Since the Individual 

Master File (IMF) was built almost 60 years ago, the IRS has made additions to legacy base code to reflect annual 

tax law changes. The result today is a complex system, with decades of tax law changes, written in outdated 

programming language that only an extremely small number of IRS personnel understand. Right now, the CADE 2 

Program is in Transition State 2 (TS2) focused on the Individual Tax Processing Engine (ITPE) Project, whichis 

Dollars in thousands

Business Systems Modernization

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Business Systems Modernization 394 222,724 308 222,724 412 310,027 104 87,303 33.77% 39.20%

Subtotal New Appropriated Resources 394 $222,724 308 $222,724 412 $310,027 104 $87,303 33.77% 39.20%

Other Resources:

Reimbursables

Offsetting Collections - Non Reimbursables

User Fees 29,495

Recovery from Prior Years 25 5,537 (5,537) -100.00%

Recoveries Paid 193

Unobligated Balances from Prior Years 3 28,935 16 205,039 (16) (205,039) -100.00% -100.00%

Transfers In/Out

Resources from Other Accounts

Subtotal Other Resources 3 $58,455 16 $210,769 (16) ($210,576) -100.00% -100.00%

Total Budgetary Resources 397 $281,179 324 $433,493 412 $310,027 88 ($123,273) 27.16% -28.48%

See footnotes in 1.1--Appropriations Detail Table

Change % Change

FY 2022 to FY 2023 

Request

FY 2021

Operating Plan

FY 2022

Annualized CR

FY 2023

Request

FY 2022 to FY 2023 

Request
IRS - 73

converting and thoroughly testing two of the most complex IMF tax processing components (i.e., Runs 12 and 15). 

This project will usher in a new period of modernized core tax processing for Individual Accounts. ITPE will also 

convert approximately 200,000 lines of legacy Assembly Language Code (ALC) to a modern software language. 

This code conversion is a major milestone towards retiring the Individual Master File (IMF). In FY 2023, funding 

will be used to continue the ITPE project’s code conversion and testing activities. Upon completion, the ITPE 

project will provide the foundation for modernization efforts to retire remaining legacy components of the IMF. It 

will also address key technological defects of the IMF such as the length of information that can be stored, improve 

security against threats, implement a logical code representation and enable enhanced data accessibility both within 

the IRS and for taxpayers. CADE 2 will support advanced analytical capabilities addressing key issues of 

compliance, fraud, and identity theft. 

• Customer Account Data Engine (CADE 2) Target State ($15 million): In the final Transition State, the Target State, 

CADE 2 will provide state-of-the-art individual taxpayer account processing and data-centric technologies for 

maintaining and balancing individual taxpayer account data to reduce operations and maintenance costs, provide 

data distribution solutions for downstream systems and end users, improve taxpayer service quality, enhance 

responsiveness to legislative changes, and eliminate financial weaknesses. In FY 2023, CADE 2 Target State will 

consist of two projects: 1) the CADE 2 Data Marketplace (C2DM) project that will develop data distribution 

solutions such as Application Programming Interfaces (APIs), for access to CADE 2 data, and 2) the ITPE Step 2 

project that will retire the IMF sequential files and process off the CADE 2 database. Funding will be used to plan, 

develop, and publish APIs for the C2DM project, and execute requirements, design, engineering, and development 

activities for the ITPE Step 2 project. Completion of CADE 2 Target State will allow the IRS to simplify the IT 

environment by reengineering many of the downstream systems to directly use and update the taxpayer account 

data in CADE 2.

• Enterprise Case Management (ECM) ($75 million): ECM provides the IRS with an enterprise solution for 

streamlining case and workload management processes to improve the quality and effectiveness of case interactions 

with individual taxpayers, small and large businesses, tax-exempt organizations, and a wide spectrum of 

intermediaries. ECM is a cloud-based case management solution that will digitize case information, provide 

business automation, and increase resource alignment across IRS business units to improve customer service and 

reduce the timeframe for case resolution. IRS is building foundational data services to allow users to access 

individual taxpayer data and deliver additional case management functionality to enable further business migration 

to ECM. ECM has integrated case management supporting business processes across the IRS such as Tax 

Exempt/Government Entities Exempt Organizations, Privacy, Governmental Liaison and Disclosure, W&I Grants 

Management, External Referrals, and the Human Capital Office. In FY 2023, the IRS will initiate work on the exam 

line of business, while continuing to expand case management integration to additional prioritized customers and 

enabling further business migration to ECM.

• Cyber Security: 

- Identityand Access Management ($15 million): This investment in user identity controls, privileged access 

protections, building access security, and software security configuration will help the IRS mitigate the risk of 

unauthorized access to tax data as the IRS delivers new online tools to taxpayers and the number of private 

sector data breaches increases.

- Security Operations and Management ($10 million): This investment will deliver a next generation secure 

operations center, improved incident analysis and forensic network investigation, and protect High Value 

Assets by blocking network access for unauthorized users.
IRS - 74

- Vulnerability and Threat Management ($20 million): This investment will enable the IRS to identify and 

provide transparency for risks and potential threats, automate initiation of remediation actions for proactive 

prevention of security incidents, improve the automation of security testing for on-premise and cloud systems, 

apply use cases to enhance security audit analytics and compliance, and enhance data protection through 

encryption.

• Architecture, Integration, and Management ($10 million): 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.

• Management Reserve ($5 million): Funds allow the IRS to cover unanticipated cost adjustments.

Description of FY 2021 Performance – BSM

The IRS’s modernization efforts focus on building and deploying advanced information technology systems, processes, and 

tools to improve efficiency and productivity. The IRS made significant progress delivering on the commitments in the IRS 

Integrated Modernization Business Plan, as well as the fundamental responsibilities to deliver and protect the solutions and 

services that support the nation’s tax system. However, since the IRS received only 55percent of the requested funding, 

replanning of capabilities was necessary. With this replanning, the IRS delivered 19 modernized capabilities in FY 2019, 40 

modernized capabilities in FY 2020, and 29 modernized capabilities in FY 2021. 

Highlighted capabilities in FY 2021 include: delivery of Enterprise Case Management Release 1, expansion of Customer 

Callback to total 16 phone applications, release of Taxpayer Digital Communication – Outbound Notifications priority 

notices to taxpayers, completion of 69percent of code conversion for the Individual Tax Processing Engine project, and 

deployment of CTCUP. For more detail about BSM accomplishments and performance goals, please see Publication 5453, 

Information Technology (IT) Annual Key Insights Report.

Major IT investments are measured by the proportion of projects within +/- 10 percent of budgeted cost and schedule 

variance. The FY 2022 and FY 2023 targets for both measures are 90 percent.

Major IT (BSM and Non-BSM) Investments

Percent of Major IT Investments within +/-10 percent Cost Variance at the Investment Level: Sixteen of 17 major 

investments (94.1 percent) were within the cost variance threshold in FY 2021. Shown below is the one investment that fell 

outside the +/- 10 Cost variance.

• eA3 (Authentication, Authorization, Access) –actual costs incurred were 15 percent lower than planned.

Percent of Major IT Investments within +/-10 percent Schedule Variance at the Investment Level: Seventeen of 17 

major investments (100 percent) were within the schedule variance threshold at the close of FY 2021. All investments fell 

between the +/-10 percent schedule variance in FY 2021. 

Fiscal Year Percent within +/-10% 

Cost Variance

Percent within +/-10% 

Schedule Variance

2021 94.1% 100%
IRS - 75

The IRS will continue to effectively manage our major IT investments and closely monitor cost and schedule variance 

throughout FY 2022.

FY 2023 Changes by Budget Activity

2.1.9 – Budget and Performance Report and Plan 

Dollars in thousands

Business Systems Modernization

Summary of Proposed FY 2023 Request FTE Amount

FY 2022 Annualized CR (ACR) 308 $222,724

Changes to Base:

Maintaining Current Levels (MCLs) $5,730

Pay Annualization (2.7% average pay raise) 401

Pay Raise (4.6% average pay raise) 2,061

Non-Pay 3,268

Base Adjustment 3,430

Adjustment to Reach Current Operating Levels 3,430

Subtotal FY 2023 Changes to Base $9,160

FY 2023 Current Services 308 $231,884

Program Changes:

Program Increases

Integrated Modernization Business Plan 104 $78,143

Subtotal FY 2023 Program Increases 104 $78,143

Total FY 2023 Budget Request 412 $310,027

See footnotes in 1.1 -- Appropriations Detail Table

Dollars in thousands

Business Systems Modernization FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 $166,263 $110,000 $150,000 $180,000 $203,614 $222,724 $310,027

Reimbursable Resources2

User Fees 25,464 77,418 89,713 108,872 29,495

Budget Activity Total $191,727 $187,418 $239,713 $288,872 $233,109 $222,724 $310,027

2

The FY 2016 - FY 2020 columns represent realized resources for reimbursable resources and user fees.

Business Systems Modernization FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2021 FY 2022 FY 2023

Measures Actual Actual Actual Actual Actual Target Target Target

50.0% 72.2% 88.9% 84.2% 94.1% 90.0% 90.0% 90.0%

88.9% 83.3% 88.9% 94.7% 100.0% 90.0% 90.0% 90.0%

Key: E - Efficiency Measure

1

The FY 2016 - FY 2020 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

Percent of Major IT Investments within +/- 10% Cost 

Variance at the Investment Level (E)

Percent of Major IT Investments within +/- 10% Schedule 

Variance at the Investment Level (E)
IRS - 76

B - FY 2021 - FY 2023 IRS Integrated Modernization Business Plan Pillar

Business Systems Modernization

Dollars in thousands

Funding

Category1

FY 2021 

Actuals

FY 2022 

Planned (CR)

FY 2023 

President's 

Budget Request

 FY 2021 / FY 2022 (CR Level) / FY 2023 203,746 222,724 310,027

Carryover Balance 28,806 22,185

User Fees 29,495

Total Funding $262,047 $244,909 $310,027

Capital 204,837 180,806 234,872

Support 3 589 178

Labor 57,207 59,329 69,982

Subtotal Spend $262,047 $240,724 $305,032

 FTE 304 308 412

Management Reserve 4,185 4,995

Total Spend plus MR $262,047 $244,909 $310,027

Web Applications2 $32,594 $28,000 $30,000

Capital 20,919 15,900 15,920

Support 3 300

Labor 11,671 11,800 14,080

FTE 65 60 95

TDC-ON $7,961

Capital 6,255

Support

Labor 1,706

FTE 9

Taxpayer Experience - Subtotal $40,555 $28,000 $30,000

FTE 74 60 95

Taxpayer Experience

The IRS will continue to expand online account capabilities to improve the taxpayer experience, 

enhancing self-service options to create and submit payment plans as well as to make and view 

tax payments. In addition, it will expand the Tax Pro effort benefiting authorized tax 

professionals with capabilities that modernize certain paper-based processes to help resolve 

issues with the IRS on behalf of their clients. In FY 2023, the IRS will continue to expand the Tax 

Pro capabilities to include the ability to view and manage authorizations and enable taxpayers to 

initiate new authorization requests. These capabilities will reduce taxpayer and tax professional 

burden, the amount of paper forms, and the time it takes to submit authorizations. Taxpayers 

and tax professionals also benefit from additional data accuracy and security since the process 

confirms and protects their identities. The IRS will continue to improve taxpayer access to digital 

notices which will increase taxpayer response rates to notices, reduce burden on taxpayers and 

the IRS, reduce printing and postage requirements, and promote more efficient interactions.

Providing taxpayers access to fast, secure, and personalized digital communications delivered 

through a secure messaging platform. The IRS will continue developing digital notices available 

through a secure online account for taxpayers who prefer that channel over mailed 

correspondence. IRS will expand the capability to allow taxpayers the choice to opt in or opt out 

of receiving paper notices and receive notifications through email and text message when a 

notice is available. TDC-ON will allow the IRS to move away from paper-based notifications and 

allow taxpayers to navigate directly to IRS online payment tools, increasing the likelihood of 

taxpayer acts and expediting the resolution of tax-related issues.

1

 Capital Investment funding: capital and contractor labor costs. Support funding: training, travel, supplies costs. Labor funding: IRS employee pay and benefits costs. 

2

 Effective FY 2022, Web Apps and TDC-ON merged under the Web Apps investment.
IRS - 77

Pillar

Business Systems Modernization

Dollars in thousands

Funding

Category1

FY 2021 

Actuals

FY 2022 

Planned (CR)

FY 2023 

President's 

Budget Request

Customer Account Data Engine (CADE 2) (Individual Tax Processing) $98,476 $100,000 $130,032

Capital 74,300 77,946 105,785

Support 41 52

Labor 24,176 22,013 24,195

FTE 125 123 139

Customer Account Data Engine (CADE 2) Target State $15,000

Capital 9,778

Support

Labor 5,222

FTE 30

Enterprise Case Management $60,041 $64,000 $75,000

Capital 43,398 41,757 54,065

Support 248 50

Labor 16,643 21,995 20,885

FTE 89 98 112

Core Taxpayer Services and Enforcement - Subtotal $158,517 $164,000 $220,032

FTE 214 221 281

1

 Capital Investment funding: capital and contractor labor costs. Support funding: training, travel, supplies costs. Labor funding: IRS employee pay and benefits costs. Core Taxpayer Services and Enforcement

Since the Individual Master File (IMF) was built almost 60 years ago, the IRS has made additions to 

legacy base code to reflect annual tax law changes. The result today is a complex system, with 

decades of tax law changes, written in outdated programming language that only an extremely small 

number of IRS personnel understand. Right now, the CADE 2 Program is in Transition State 2 (TS2) 

focused on the Individual Tax Processing Engine (ITPE) Project, which is converting and thoroughly 

testing two of the most complex IMF tax processing components (i.e., Runs 12 and 15). This project 

will usher in a new period of modernized core tax processing for Individual Accounts. ITPE will also 

convert approximately 200,000 lines of legacy Assembly Language Code (ALC) to a modern software 

language. This code conversion is a major milestone towards retiring the Individual Master File (IMF). 

CADE 2 will support advanced analytical capabilities addressing key issues of compliance, fraud, and 

identity theft. 

In the final Transition State, the Target State, CADE 2 will provide state-of-the-art individual taxpayer 

account processing and data-centric technologies for maintaining and balancing individual taxpayer 

account data to reduce operations and maintenance costs, provide data distribution solutions for 

downstream systems and end users, improve taxpayer service quality, enhance responsiveness to 

legislative changes, and eliminate financial weaknesses. Funding will be used to plan, develop, and 

publish APIs for the C2DM project, and execute requirements, design, engineering, and development 

activities for the ITPE Step 2 project. Completion of CADE 2 Target State will allow the IRS to simplify 

the IT portfolio by reengineering many of the downstream systems to directly use and update the 

taxpayer account data in CADE 2. 

ECM provides the IRS with an enterprise solution for streamlining case and workload management 

processes to improve the quality and effectiveness of case interactions with individual taxpayers, 

small and large businesses, tax-exempt organizations, and a wide spectrum of intermediaries. ECM is 

a cloud-based case management solution that will digitize case information, provide business 

automation, and increase resource alignment across IRS business units to improve customer service 

and reduce the timeframe for case resolution. IRS is building foundational data services to allow 

users to access individual taxpayer data and delivers additional case management functionality to 

enable further business migration to ECM. ECM has integrated case management supporting 

business processes across the IRS such as Tax Exempt/Government Entities Exempt Organizations, 

Privacy, Governmental Liaison and Disclosure, W&I Grants Management, External Referrals, and 

Human Capital Office. 
IRS - 78

Pillar

Business Systems Modernization

Dollars in thousands

Funding

Category1

FY 2021 

Actuals

FY 2022 

Planned (CR)

FY 2023 

President's 

Budget Request

Robotics Process Automation $855

Capital 606

Support

Labor 249

FTE 1

Application Program Interface (API) Implementation $3,177

Capital 2,912

Support

Labor 265

FTE 1

Cloud Execution $9,392

Capital 9,387

Support

Labor 5

FTE

Next Generation Infrastructure $69

Capital

Support

Labor 69

FTE 1

Modernized IRS Operations - Subtotal $13,493

FTE 3

Identity and Access Management $8,974 $17,658 $15,000

Capital 8,449 17,158 14,795

Support

Labor 525 500 205

FTE 3 1 2

Security Operations and Management $12,660 $7,081 $10,000

Capital 12,630 6,919 9,845

Support

Labor 30 162 155

FTE 1

Vulnerability and Threat Management $22,652 $17,985 $20,000

Capital 21,640 16,826 17,300

Support

Labor 1,012 1,159 2,700

FTE 6 14 18

Cybersecurity and Data Protection - Subtotal $44,287 $42,724 $45,000

FTE 9 15 21

Architecture, Integration, and Management $5,195 $6,000 $10,000

Capital 4,340 4,300 7,384

Support 76

Labor 856 1,700 2,540

FTE 4 12 15

Subtotal Supporting Projects $5,195 $6,000 $10,000

FTE 4 12 15

This investment will enable the IRS to identify and provide transparency for risks and potential 

threats, automate initiation of remediation actions for proactive prevention of security incidents, 

improve the automation of security testing for on-premise and cloud systems, apply use cases to 

enhance security audit analytics and compliance, and enhance data protection through 

encryption.

1

 Capital Investment funding: capital and contractor labor costs. Support funding: training, travel, supplies costs. Labor funding: IRS employee pay and benefits costs. 

Leveraging cloud technologies to provide value and improved service to taxpayers. The IRS has 

adopted a cloud strategy, which aligns to the Federal strategy, and will migrate various workloads 

to the cloud as appropriate. Because the IRS can securely host tax applications in the cloud, even 

for major efforts like Enterprise Case Management, funding this set of capabilities will be critical 

to stabilizing the cost of operations and maintenance and further enhancing the agency’s security 

posture. Currently, this modernization program is not anticipated to perform planned work 

under either the FY 2022 CR level or FY 2023 President’s Budget.

Providing a more efficient, scalable and flexible architecture. Funding will ensure the 

implementation of advanced IT infrastructure tools and technologies for compute, network and 

storage activities. The combination of these capabilities will help further automate and 

modernize the technology infrastructure and convert legacy code to modern programming 

languages. Currently, this modernization program is not anticipated to perform planned work 

under either the FY 2022 CR level or FY 2023 President’s Budget.

Automating repetitive, rule-based, manual tasks and mitigating human error risks. Robotic 

Process Automation (RPA) has emerged as an effective enabling technology to gain efficiencies by 

doing just this. Combining RPA with Artificial Intelligence (AI) has further enhanced opportunities 

to empower organizations to take on more complex processes and gain value through cognitive 

automation. The goal of the RPA program is to build the capability for IRS to take advantage of 

these emerging technologies. IRS business units are highly motivated to find operational 

efficiencies to improve services and automate workflow for a wide range of taxpayers to 

significantly relieve administrative burden. Funding this effort will ensure that a series of initial 

limited use projects and activities will provide additional functionality and efficiency gains. 

Currently, this modernization program is not anticipated to perform planned work under either 

the FY 2022 CR level or FY 2023 President’s Budget.

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.

Modernized IRS Operations Supporting Projects

This investment in user identity controls, privileged access protections, building access security, 

and software security configuration will help the IRS mitigate the risk of unauthorized access to 

tax data as the IRS delivers new online tools to taxpayers and the number of private sector data 

breaches increases.

This investment will deliver a next generation secure operations center, improved incident 

analysis and forensic network investigation, and protect High Value Assets by blocking network 

access for unauthorized users.

APIs are a set of protocols, routines, functions and/or commands that programmers use to 

develop software or facilitate interaction between distinct systems. In response to growing 

demands to integrate systems internally and externally, the IRS plans to expand the use of APIs 

across its ecosystem. Currently, this modernization program is not anticipated to perform 

planned work under either the FY 2022 CR level or FY 2023 President’s Budget.
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C – Changes in Performance Measures

With the publication of Treasury’s Strategic Plan for FY 2022-2026, the IRS will work to baseline performance against the 

new strategic objectives. This could result in additional changes to performance measures in the FY 2024 budget.

For the FY 2023 Budget and as shown below, the IRS plans to add three and modify one measure.

# Performance Measure or 

Indicator

Proposed Change and Justification

1 Exam Starts – High Income 

Individuals

The number of high-income 

individual examinations with a 

TPI > $10 million started during 

the fiscal year

Addition – This new indicator aligns with the 2020 IRS Table 17 Data Book changes 

which are based on “in process” examinations reported by fiscal year.

This new indicator allows IRS to track the progress of examinations throughout the 

year, allowing for a direct and clear picture of IRS activities. Some examinations are 

closed within a year while others take several years to close. This indicator focuses on 

starts rather than closures which provides a better view of where resources are being 

applied in this fiscal year.

This indicator is effective for FY 2021 reporting in the FY 2023 Congressional 

Justification.

2 Exam Starts – Partnerships

The number of partnership 

examinations started during the 

fiscal year

Addition – This new indicator aligns with the 2020 IRS Table 17 Data Book changes 

which are based on “in process” examinations reported by fiscal year.

This new indicator allows IRS to track the progress of examinations throughout the 

year, allowing for a direct and clear picture of IRS activities. Some examinations are 

closed within a year while others take several years to close. This indicator focuses on 

starts rather than closures which provides a better view of where resources are being 

applied in this fiscal year.

This indicator is effective for FY 2021 reporting in the FY 2023 Congressional 

Justification.

3 Exam Starts – Large 

Corporations 

The number of examinations 

started during the fiscal year of 

large corporate returns reporting 

assets of $250 million and above

Addition – This new indicator aligns with the 2020 IRS Table 17 Data Book changes 

which are based on “in process” examinations reported by fiscal year.

This new indicator allows IRS to track the progress of examinations throughout the 

year, allowing for a direct and clear picture of IRS activities. Some examinations are 

closed within a year while others take several years to close. This indicator focuses on 

starts rather than closures which provides a better view of where resources are being 

applied in this fiscal year.

This indicator is effective for FY 2021 reporting in the FY 2023 Congressional 

Justification.

4 Enterprise Self Assistance 

Participation Rate 

Modify – update the existing Online Payment Agreements (OPA) and Installment 

Agreements (IA) applications to include business taxpayers and include a new chatbot 

application for OPAs and IAs for small business and self-employed taxpayers; 

modified for FY 2022 reporting.
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Section III – Supplemental Information

3.1 – Summary of Capital Investments

I. Introduction

The IRS Information Technology (IT) organization enables the business operations and modernization of the nation’s tax 

system. IT continues to provide critical support needed as the IRS faces an ever-changing and complex tax administration 

environment and has experiencedlarge shifts inoperations since the IRS first embarkedonitsmodernization journey in 2019. 

Since then, the IRS has navigated unexpected changes that have both challenged and accelerated modernization efforts—from 

the emergence of new technology and taxpayer expectations to an ongoing global pandemic. The IRS is at an inflection point,

having concluded the first phase of the six-year IRS Integrated Modernization Business Plan. The IRS will continue to adapt 

as it embraces industry-leading technology and meets taxpayer needs in an ever-evolving digital world.

With the funding provided throughthe American Rescue Plan (ARP) Act of 2021 and other resources, the IRS has strong 

momentum behind modernization, with a clear vision for delivering near-term impact and long-term transformation. How 

quickly the IRS can advance in the modernization journey is dependent on the resources available. As the IRS Commissioner 

has noted, IRS employees are making a difference and want to continue to successfully pursue the mission on behalf of our 

country. The road ahead is full of challenges, both known and unknown, but we are confident that the plan, if adequately 

resourced, paves the way to providing the highest-quality service to taxpayers and the tax community.

The Capital Investment Strategy is guided by the IRS Mission, IT Mission, and IT Vision. These key strategic documents 

provide direction coupled with the Modernization Business Plan presents how the technology initiatives and IT investments 

achieve this vision. 

Figure 3.1
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II. IT Strategic Plan

As part of the Taxpayer First Act, the IRS developed and is implementing a multi-year IT strategic plan that strengthens the 

agency’s ability to communicate and plan for long-term technology needs. The IRS developed the IT Strategic Plan to articulate 

goals and objectives to achieve the IRS technology target state and deliver value to taxpayers. This plan is structured to address 

key factors driving the opportunity for change, including the need to meet the public’s expectations, simplify the existing IRS 

technology base, adopt emerging technology trends, stay ahead of cybersecurity threats, comply with federal mandates and 

guidelines, and support the workforce with the advanced technology training they need to stay current in their skills. The 

implementation of these goals and objectives is captured through the Annual Key Insights Report (AKIR) and the integrated 

enterprise architecture, which includes the Enterprise Technology Blueprint (ETB) and the Target Enterprise Architecture 

(TEA).

Figure 3.2- IT Strategic Goals FY 2020-2024

The IT Strategic goals set the enterprise-wide technological priorities, which then inform the long-term technological vision 

published in the Enterprise Technology Blueprint.

III. Enterprise Technology Blueprint (ETB)

The Enterprise Technology Blueprint articulates the envisioned long-range technology environment and describes how 

technology will be employed in support of the strategic IRS business direction. This artifact depicts the adoption of advancing 

capabilities, modernizing applications and technical services within the IRS production environment. The ETB is organized 

around the interrelated elements of the IRS Enterprise Architecture framework, as shown in Figure 2, to provide a cross-cutting 

frame of reference for analyzing the current state of IRS operations and to envision a future state. It is intended to facilitate 

dialogue among IRS business and IT leaders around future vision and priorities; align business and IT strategies; guide 

enterprise architecture planning and solutions development; and enable line of sight for evaluating investment proposals. The 

ETB also encompasses a set of interrelated views that depict the future of tax systems, IT operations, and IT services to achieve 

the IRS vision. The ETB is a living document that is continuously reviewed and updated as appropriate.
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Figure 3.3 - IRS Enterprise Architecture Framework

The ETB is further defined by the Tax Administration Reference Architecture (Figure 3 below), which is a strategic vision 

for the interconnected set of tax administration functions the IRS will perform in delivering services for customers, and the

technology enablers that will support tax administration. 

Figure 3.4 - Tax Administration Reference Architecture

In combination with the IRS and IT Strategic Plans, the ETB and the Tax Administration Reference Architecture capture the 

enterprise vision for the IRS technology environment. The IRS Integrated Modernization Business Plan, described in Section 

IV, highlights specific technology initiatives and IT investments that realize this vision. 
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IV. IRS Integrated Modernization Business Plan

The IRS Modernization Plan is organized around four modernization Pillars – Taxpayer Experience, Core Taxpayer Services 

& Enforcement, Modernized IRS Operations, and Cybersecurity & Data Protection.

Taxpayer Experience

The IRS will provide taxpayers a wide range of modern options for interacting with the IRS to answer questions 

and resolve tax issues. The agency will deliver real benefits for taxpayers, tax professionals, and the tax 

community, while allowing IRS employees to operate more efficiently and effectively. 

Core Taxpayer Services and Enforcement

The IRS will evolve core tax systems through data-driven operations and decision-making, real-time tax processing, 

and core tax administration systems integration. The agency will use technology to enhance identification of 

noncompliance and fraud while reducing processing time for taxpayers. The IRS will also improve compliance 

through earlier intervention, easier (self) correction options, and powerful enterprise platforms. 

Modernized IRS Operations

The IRS will improve underlying system infrastructure by reducing the complexity of the agency’s technical 

environment, enhancing, and expanding workforce support technologies, and adopting leading industry practices 

and technologies that deliver new and sustained efficiencies like cloud and robotic process automation. 

Cybersecurity and Data Protection

The IRS will ensure taxpayer administration and operational data are safe and secure from all internal and external 

threats. The agency will formally implement a “zero trust” model to enhance management capabilities for 

vulnerability identification, threat assessment, identity verification, access controls, cybersecurity operations, and 

network security. These improvements are necessary to secure information assets in a dynamic cybersecurity 

landscape and to facilitate successful taxpayer interactions in support of the IRS mission. 

For each of these four pillars, the IRS has identified key objectives that represent the impacts and expected outcomes of 

modernization. The objectives are achieved by implementing a set of programs and initiatives in that Pillar. These programs 

are combined into logical Program Groupings that lead to outcomes that streamline delivery and bring real value to taxpayers 

and the workforce. The IRS recognizes that to keep pace with an evolving technological landscape, individual programs may 

change over time. The objectives and program groupings illustrated in Figure 4reflect the IRS’s current plans for 

modernization.
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Figure 3.5 - IRS Modernization Plan Organizing Construct

Fundamental to the success of IRS modernization is a strong technology environment that supports the growth of IRS 

programs and increases operational efficiency. The IRS will establish a robust IT foundation through four Program 

Groupings within the Modernized Operations Pillar depicted in Figure 5. These Technology Modernization Foundation Areas 

(Tech Foundation Areas) are Cloud, Data & Analytics, Artificial Intelligence & Machine Learning, and IT Service 

Management.
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Figure 3.6 - Foundational Areas

This enables the IRS to “future-proof” its technology foundation by implementing flexible, industry-leading platforms and 

infrastructure that can rapidly scale and adapt in the face of new legislation and changing taxpayer needs. Collectively these 

Tech Foundation Areas will enable programs across all four modernization Pillars. For example, cloud technology 

implemented in the Modernized IRS Operations pillar provides a platform on which individual and tax professional accounts 

will be built to adapt quickly and efficiently to future taxpayer needs under the Taxpayer Experience Pillar.

The IRS Integrated Modernization Business Plan is aligned to both the Treasury and IRS Strategic Plan and directly advances 

three cross-agency priority goals included in the President’s Management Agenda:

1. Modernize IT to increase productivity and security

2. Leverage data as a strategic asset

3. Improve customer experience with Federal services
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3.2–IRS Performance Measures Table

NOTE: The IRS is facing unprecedented correspondence inventory levels caused by the COVID-19 pandemic, which will continue to 

contribute to higher call volumes and related inquiries throughout the year. Despite steady progress, funding constraints remain a barrier 

to addressing these significant inventory levels. To substantially reduce the inventory the IRS made a concerted effort to realign 

qualified staff from enforcement. The realignment of resources to work the inventory will affect FY22 year-end taxpayer services and 

enforcement performance results.

Performance Measures

FY2017 

Actual

FY2018 

Actual 

FY2019 

Actual

FY2020 

Actual

FY2021 

Actual

FY2021 

Target

FY2022 

Target

FY2023 

Target

Customer Service Representative Level of Service (LOS)1 77.1% 75.9% 65.4% 53.1% 18.5% 32.0% 30.0% 85.0%

Customer Accuracy - Tax Law (Phones) 96.7% 95.5% 91.6% 91.0% 92.8% 90.0% 89.0% 89.0%

Customer Accuracy - Accounts (Phones) 96.0% 96.1% 94.3% 93.5% 93.0% 91.0% 89.0% 89.0%

Timeliness of Critical Filing Season Tax Products to the Public2 93.1% 59.6% 92.6% 78.4% 92.0% 85.0% 89.0% 89.0%

Timeliness of Critical TE/GE & Business Tax Products to the Public2 96.7% 100.0% 96.1% 96.0% 92.9% 85.0% 89.0% 89.0%

Enterprise Self-Assistance Participation Rate3 79.0% 82.0% 85.4% 90.6% 92.3% 89.0% 91.0% 91.0%

Taxpayers Satisfied with the IRS (based on 100 point scale)4 74 74 73 74 70 Indicator Indicator Indicator

Examination Efficiency - Individual 121 131 109 76 108 111 100 114

Time to Start Compliance Resolution (new FY20)5 58.8% 60.1% 60.9% 66.3% 66.0% Indicator Indicator Indicator

Time to Resolve Compliance Issue After Filing (new FY20)5 491 494 469 491 484 Indicator Indicator Indicator

Repeat Non-Compliance Rate (new FY20)

5 29.2% 30.0% 31.4% 35.6% 30.7% Indicator Indicator Indicator

Collection Coverage (Units) 42.2% 41.6% 41.3% 34.9% 41.2% 33.0% 36.5% 32.1%

Exam Starts - High Income Individuals (new FY21)5 1,941 2,307 2,108 2,693 2,227 Indicator Indicator Indicator

Exam Starts - Partnerships (new FY21)5 10,221 9,033 5,823 4,106 4,327 Indicator Indicator Indicator

Exam Starts - Large Corporations (new FY21)5 2,577 2,396 2,009 1,700 1,490 Indicator Indicator Indicator

Cost to Collect $100 $0.34 $0.34 $0.33 $0.35 $0.33 Indicator Indicator Indicator

Criminal Investigations Completed 3,089 3,051 2,797 2,624 2,766 2,600 2,600 2,500

Conviction Rate 91.5% 91.7% 91.2% 90.4% 89.4% 92.0% 92.0% 92.0%

Rentable Square Feet per Person 297 301 298 278 278 280 270 260

Percent of Aged Hardware 52.3% 45.5% 31.0% 16.0% 9.3% 20.0% 20.0% 20.0%

Percent of Major IT Investments within +/- 10% Cost Variance at the 

Investment Level 50.0% 72.2% 88.9% 84.2% 94.1% 90.0% 90.0% 90.0%

Percent of Major IT Investments within +/- 10% Schedule Variance at the 

Investment Level 88.9% 83.3% 88.9% 94.7% 100.0% 90.0% 90.0% 90.0%
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3.3– Return on Investment (ROI) for IRS Major Enforcement Programs

The actual cost and actual revenue collected for FY 2017through FY 2021for 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 businesses, selfemployed, large corporate businesses, partnerships, international, estate and gift, excise tax and employment tax-exempt 

organizations, 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 section 6020(b) (which allows the IRS to prepare returns if a taxpayer neglects or refuses to file), and provides education 

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 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 TE/GE & Business Tax 

Products to the Public

The percentage of Critical Tax Exempt/Government Entities (TE/GE) and Business (CTB) tax products available to the 

public seven calendar days before the official IRS start of the individual filing season. CTB tax products are forms, 

schedules, instructions, and publications used by large number of TE/GE and Business filers to prepare a complete and 

reasonably accurate return or form by the filing date occurring during the fiscal year (e.g., income tax, excise tax, exempt 

organization return, etc.).

Timeliness of Critical Individual Filing Season Tax 

Products to the Public

The percentage of Critical Individual Filing Season (CIFS) tax products available to the public seven calendar days 

before the official IRS start of the (individual) filing season. CIFS tax products are those tax forms, schedules, 

instructions, and publications required by large number of filers to prepare a complete and reasonably accurate Individual 

Income Tax Return.

Enterprise Self Assistance Participation Rate The percentage of taxpayer assistance requests resolved using self-assisted automated services.

Taxpayers Satisfied with the IRS

The percentage of taxpayers satisfied with the IRS according to the American Customer Satisfaction Index (ACSI) 

survey. The All Individual Tax Filer score is calculated from separate ACSI Individual Paper Filer and Electronic Filer 

Customer Satisfaction Index Scores. Based on a 100 point scale.

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.

Time to Start Compliance Resolution The percentage of all individual income tax enforcement cases started within six months of the return posting date.

Time to Resolve Compliance Issue After Filing The median time it takes to close all individual income tax enforcement cases in days (excluding disaster, bankruptcy, 

and TEFRA cases for exam and collection cases that are not closed as full paid), starting from filing date.

Repeat Non-Compliance Rate The percentage of individual taxpayers in a fiscal year with additional non-compliance two years after the initial tax year 

that contains a filing, payment, or reporting compliance issue, compared to total taxpayers.

Collection Coverage The volume of collection work disposed compared to the volume of collection work available.

Exam Starts - High Income Individuals The number examinations started during the fiscal year of individuals with a total positive income of $10 million and 

above.

Exam Starts - Partnerships The number examinations started during the fiscal year of partnerships.

Exam Starts - Large Corporations The number examinations started during the fiscal year of large corporate returns reporting assets of $250 million and 

above.

Cost to Collect $100 The cost of collecting $100 is computed as total operating costs divided by gross collection divided by 100. 

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. 

Conviction Rate The percent of adjudicated criminal cases that result in convictions.

Rentable Square Feet per Person The amount of Rentable Square Feet the IRS maintains per person requiring space.

Percent of Aged Hardware This measure shows the quantity of IT hardware in operation past its useful life as a percentage of total hardware in use.

Percent of Major IT Investments within +/- 10% 

Cost Variance at the Investment Level 

Number of major IT investments within +/-10 percent variance between planned total cost and projected/actual cost 

within a fiscal year divided by the total number of major IT investments in that fiscal year.

Percent of Major IT Investments within +/- 10% 

Schedule Variance at the Investment Level 

Number of major IT investments within +/-10 percent variance between planned days and projected/actual days within a 

fiscal year divided by the total number of major IT investments in that fiscal year.

Budget Level Performance Measure Descriptions
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to taxpayers to enable future compliance. The cost of the Collection program includes Automated Collection System (ACS), 

Field Collection, and Payment Compliance/Correspondence Collection.

Automated Underreporter (AUR) Program matches payer information returns (Forms 1099, W-2, etc.) against data 

reported to the IRS on individual tax returns. 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, 

the IRS issues a proposed notice and generates a proposed assessment. 

ROI is calculated by dividing revenue by cost. This information provides an indication of the ROI for the three major 

enforcement programs over time. Enforcement revenue collected in a fiscal year includes tax, interest, and penalties from 

multiple taxyears. Some enforcement activities take more than a year to close and may generate revenue over several years. 

In addition, these data reflect the average return on investment for these programs and do not include the indirect effects of 

IRS enforcement activities on voluntary compliance. 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. 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.

Dollars in Millions

Enforcement Program Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI

IRS Total $5,506 $56,914 10.3 $5,559 $59,366 10.7 $5,439 $57,523 10.6 $5,560 $51,084 9.2 $5,634 $74,999 13.3

Examination 3,693 15,102 4.1 3,716 15,017 4.0 3,581 10,877 3.0 3,750 8,253 2.2 3,792 11,275 3.0

Collection 1,600 36,498 22.8 1,635 38,985 23.8 1,631 41,793 25.6 1,616 38,948 24.1 1,593 57,834 36.3

Automated Underreporter (AUR) 214 5,314 24.9 208 5,364 25.7 226 4,853 21.5 194 3,884 20.0 249 5,889 23.7

FY 2017 FY 2018 FY 2019

1

The cost of the enforcement programs was calculated using budget data from the IRS Integrated Financial System (IFS) and includes direct dollars and FTE from the Enforcement appropriation, Exam and 

Collections budget activity, and dollars from the Operations Support appropriation prorated using actual FTE realized for each major enforcement program.

FY 2020 FY 2021
IRS - 89

Section IV – Appendix

4.1 - COVID-19 Supplemental Funding

Table 1: Spend Plan Including Realignments and Obligations through March 20, 2022

The IRS received $15 million in the Families First Coronavirus Response Act and $750.7 million in the Coronavirus Aid, Relief and 

Economic Security Act for the IRS to change its operations to operate during the pandemic and implement EIPs and other tax changes. 

The IRS received an additional $509 million in the Consolidated Appropriations Act, FY 2021, to carry out a second round of EIPs and 

address COVID-related tax administration issues. Finally, the IRS received $1.465 billion in the American Rescue Plan for a third round 

of EIPs and information technology modernization as well as $397.2 million to carry out advance payments for the CTC. For additional 

informationon IRS’s COVID related programs, please reference the Treasury Coronavirus Relief, Response, Aid, and Recovery 

Programs Congressional Justification. 

Appropriation

$ in Thousands Initial Spend Plan Realignments 1

Current Spend 

Plan

Obligations through 

March 20, 2022 Balance

CARES Act and Families First Coronavirus Response - Expired

Taxpayer Services $352,900 $7,891 $360,791 $360,791 $0

CARES Act - Rebates (P.L. 116-136) 293,500 7,891 301,391 301,391 0

CARES Act - Supplemental (P.L. 116-136) 59,400 59,400 59,400 0

Enforcement $79,200 ($16,497) $62,703 $62,642 $61

CARES Act - Rebates (P.L. 116-136) 37,200 (16,497) 20,703 20,685 18

CARES Act - Supplemental (P.L. 116-136) 42,000 42,000 41,957 43

Operations Support $333,600 $8,606 $342,206 $341,675 $531

Families First Coronavirus Response Act (P.L. 116-127) 15,000 15,000 14,988 12

CARES Act - Rebates (P.L. 116-136) 170,000 8,606 178,606 178,566 40

CARES Act - Supplemental (P.L. 116-136) 148,600 148,600 148,121 479

Total CARES Act and Families First Coronavirus Response $765,700 $765,700 $765,108 $592

Consolidated Appropriations Act, FY 2021 (EIP2) - Expired

Taxpayer Services $196,435 $196,435 $196,385 $50

Consolidated Appropriations Act, FY 2021 (P.L. 116-260) 196,435 196,435 196,385 50

Operations Support $312,565 $312,565 $305,739 $6,826

Consolidated Appropriations Act, FY 2021 (P.L. 116-260) 312,565 312,565 305,739 6,826

Total Consolidated Appropriations Act, FY 2021 $509,000 $509,000 $502,124 $6,876

American Rescue Plan

Taxpayer Services $422,125 ($2,845) $419,280 $317,599 $101,681

Advance Tax Year 2021 Child Tax Credit (P.L. 117-2) 206,300 206,300 128,492 77,808

Cost of Economic Impact Payment 3 (P.L. 117-2) 215,825 (2,845) 212,980 189,107 23,873

Operations Support $939,575 $2,845 $942,420 $397,172 $545,248

Advance Tax Year 2021 Child Tax Credit (P.L. 117-2) 190,900 190,900 140,689 50,211

Cost of Economic Impact Payment 3 (P.L. 117-2) 248,675 2,845 251,520 197,649 53,871

Cost to Integrate, Modernize, and Secure IRS Systems (P.L. 117-2) 500,000 500,000 58,834 441,166

Business Systems Modernization $500,000 $500,000 $117,035 $382,965

Cost to Integrate, Modernize, and Secure IRS Systems (P.L. 117-2) 500,000 500,000 117,035 382,965

Total American Rescue Plan $1,861,700 $1,861,700 $831,806 $1,029,894

Total by account

Taxpayer Services 971,460 5,046 976,506 874,775 101,731

Enforcement 79,200 (16,497) 62,703 62,642 61

Operations Support 1,585,740 11,451 1,597,191 1,044,586 552,605

Business Systems Modernization 500,000 500,000 117,035 382,965

Total $3,136,400 $3,136,400 $2,099,038 $1,037,362

1

 Included in the realignments is a $70 million realignment within the same appropriation, Operations Support. Therefore, it will not be reflected in this table. This realignment was within the American 

Rescue Plan - Cost of Economic Impact Payment 3, where $70 million budgeted for IT requirements was realigned to pay for increased postage costs. Spend plan requirements are estimated based on 

current projections and additional realignments may be necessary.

2 For the supplemental funds from the CARES Act (P.L. 116-136) and Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), IRS obligated a total of $765.1 million. The $592 thousand 

balance of the CARES Act funds expired at the end of FY 2021. IRS fully utilized the FFCRA funds. For the supplemental funds from the Consolidated Appropriations Act of FY 2021 (P.L. 116-260), IRS 

obligated $502.1 million. The $6.9 million balance expired at the end of FY 2021. For the supplemental funds from the American Rescue Plan (P.L. 117-2), IRS has obligated $826 million through 

December 31, 2021.
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4.2- Carryover Investments from FY 2022 Congressional Justification

During the latter part of the development of the 2023 Budget, a full year FY 2022 appropriations bill was not enacted. 

Therefore, we assume the starting point to be an annualized CR, the FY 2023 budget includes FY 2022 CJ program increases. 

Although the investments vary slightly in cost, the overall amounts from FY 2022 remain the same. The FY 2022 budget 

levels may impact the prioritization of these investments in FY 2023. The following descriptions are summarized from the 

FY 2022 CJ.

Putting Taxpayers First +$179,052,000 / +294 FTE

User Authentication +$27,000,000 / 0 FTE 

Section 2304 of the Taxpayer First Act (TFA) requires the IRS to verify the identity of any individual opening an e-Services 

account with the Internal Revenue Service before such individual canuse the e-Services tools. IRS will utilize the services of 

a third-party vendor, which charges a variable rate based on the authentication option for each new taxpayer who signs up for 

an IRS online account. Funding will provide authentication services for approximately7.9 million additional taxpayers will 

register for such services as applying for an Identity Protection Personal Identification Number, obtaining a transcript, 

viewing account information, entering into an Online Payment Agreement, and functionalities of the Tax Professional 

Account application. 

Expand Digital Services +$104,720,000 / +168 FTE

Funding for this initiative will enhance the IRS’s Online Account for individual taxpayers and expand this service to tax 

professionals. Some aspects of this initiative will rely on strengthening and expanding use of data. Additional authenticated 

online self-services will include account updates, secure messaging and notice delivery, full interaction history and issue 

status, refund tracking, expand digital payment options, increase electronic receipt of filings and scanning/data capture for 

Position Type/Other Costs FTE Positions $000

 User Authentication 0.00 $27,000

 Contract Services 27,000

Expand Digital Services 168.5 337 $104,720

Appeals Officer 9 18 1,273

Attorney 2 4 484

IT Specialist 157.5 315 25,188

Contract Services 77,775

Seamless Experience 115.5 231 $35,063

Revenue Agent 50 100 12,495

Appeals Officer 16 32 2,966

IT Specialist 49.5 99 15,544

Contract Services 4,058

Focused Strategies for 

Reaching Underserved 

Communities 10 20 $12,269

Tax Law Specialist 3.5 7 456

Program Analyst 6.5 13 7,313

Contract Services 4,500

Total 294 588 $179,052
IRS - 91

paper filings, document upload, and more. Taxpayers will see expanded scope for e-signatures, secure document exchange 

and expanded payment options like Venmo and PayPal, and web chat and other digital assisted services, including: 

• Expanded Online Account features:

- View Payment, Make a Payment, and Create A Payment Planand

- Digital Notices w/ Opt-in Subscription for Notifications.

• Tax Professional Account: Establish Digital Power of Attorney (Form 2848) with eSignature;

• Secure document exchange: Large and Small Business Secure Messaging/File Sharing (Document Upload);

• Digitize more tax forms;

• Expanded payment options to include tools like Venmo, PayPal, Apple Wallet, and Google Pay; and

• Foundational IT infrastructure enhancements for eSignature solutions.

Seamless Experience +$35,063,000 / +116 FTE

The IRS will provide taxpayers with their preferred channel of service (web, phone, in person, etc.) and guide them through 

the necessaryassistance to fulfill their needs. Information about the taxpayer’s entire experience (past and present) will be 

available to every representative of the organization and across all channels in real time. With the introduction of an 

integrated omni channel model, a taxpayer could begin on IRS.gov and then shift to click to-call or chat options to engage an 

assistor without leaving the website. With the introduction of AI and robotics, the IRS can better help the taxpayer. The 

following are highlights of what will be accomplished with FY 2022 funding: 

• Expand Automated Callbackby adding 10additional applications and provide Wait Time Transparency to the 

taxpayer. Currently, there is callback on 5 applications, representing 19percent of total average demand;

• Continue integrating Enterprise Case Management (ECM) systems towards a 360-degree view of the taxpayer for 

all taxpayer-facing employees;

• Expand appointment process and system to all taxpayer-facing employees, including both service and compliance

(currently, taxpayers can only make appointments with Taxpayer Assistance Center (TAC) employees);

• Expand and improve routing options and create an escalation process to resolve issues outside the scope of the 

initial contact employee; and

• Develop AI-Powered Digital Appointments that will allow the taxpayer to use a chatbot to make appointments.

Focused Strategies for Reaching Underserved Communities +$12,269,000 / +10 FTE

Bringing together ongoing efforts within the IRS and leveraging its ecosystem of partnerships, the IRS will establish a 

consolidated program to engage with historically underserved communities to address issues of communication, education, 

transparency, trust, and limited access to quality products and services. As shown by the EITC Underserved Outreach Project 

in 2014, developing specific strategies for underserved communities is crucial to increasing voluntary compliance. The EITC 

project increased filingrates by adding 53,000 filers and $27 million in additional taxes paid. The IRS will develop strategies 

for each underserved segment based on focused research, best practices, and lessons from partners on ways to improve 

interactions within these communities. Immediate benefits to the taxpayer will include new assistance in hard-to-reach areas 

where receiving help is currently difficult, convenience via virtual chatroom authentication procedures, and expanded access 

toadditional information to assist international taxpayers. Aspects of this initiative will rely on improving the IRS’s proactive 

outreach, expanding, and strengthening the IRS’s network of partnerships and leveraging relationships across public, private, 

and non-profit sectors. The following are highlights of what will be accomplished with FY 2022 funding: 

• Establish an organization within the IRS dedicated to developing, overseeing, and implementing these strategies 

with an agency-wide perspective and scope;
IRS - 92

• Establish stronger community presence by hiring and training new staff to add new professionals in hard-to-reach 

communities;

• Use a data-driven approach to identifying content for translationto four additional languages;

• Increase multi-lingual staffing and better leverage employee multilingual skills;

• Authenticate international online accounts;

• Host virtual chat rooms and live forums for international taxpayers; and

• Expand access to information and services to taxpayers living abroad.

Ensure Fairness of the Tax System +$469,293,000 / +2,513FTE

Increase Examination of Large Business, Partnership and High Wealth Individual Returns +$213,125,000 / +915 FTE

This investment will allow the IRS to increase examinations of business organizations and high wealth individuals, which 

have become major sources of compliance risk in recent years. The IRS contends with a wide variety of business 

organizations operating in the United States and abroad with different filing requirements, and their rapid growth represents a 

significant compliance risk. 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. 

The IRS is requesting additional examination employees to offset declines in staffing and enhance its Large Corporate 

Compliance (LCC) program. This program requires additional revenue agent employees and supporting management to 

conduct examinations of taxpayers in the LCC program. The number of large corporate (>$250M Assets) return filings has 

increased from 7,879 for 2010 returns to 12,102 for 2020returns. During that time the decline in staffing has resulted in the 

large corporate audit coverage rate decreasing from 36.5 percent for 2010 returns to 7.7percent for 2016 returns. This results 

in increased risk to the integrity of the nation’s voluntary tax compliance system. 

Another increasing source of compliance risk is high wealth individuals. High wealth individuals frequently operate complex 

enterprises consisting of multiple related entities that often have international components. The IRS takes a unified look at

the entire web of entities controlled by high wealth individuals to better assess the risks of noncompliance. Large Business & 

International’s Global High Wealth (GHW) program uses identification models to filter based on estimated net worth in the 

Position Type/Other Costs FTE Positions $000

Increase Examination of Large Business, 

Partnership and High Wealth Individual Returns 741 1,482 $178,201

Revenue Agent/Mgrs 621.5 1,243 161,504

Techincal/Territory Mgr 3 6 694

Economist/Mgr 7.5 15 2,010

Engineers/Mgr 7.5 15 1,968

Analyst/Clerical Spt 52.5 105 6,396

TE/Aide 49 98 5,629

Other Direct Costs 174 348 $34,908

Attorney 28 56 6,547

Counsel Ad Min Spt 4 8 779

Appeals Officer 107 214 19,929

Revenue Agent 16 32 5,207

Exam Aides/TE's 19 38 2,446

Total 915 1,830 $213,109
IRS - 93

tens of millions using data points including passive vs. non-passive income, interest, dividends, etc. The overall audit rate for 

the identified GHW taxpayer population (which generally ranges from 40,000-60,000 taxpayers per year), those with income 

and assets in the tens of millions of dollars, is 0.2percent. GHW uses a unique enterprise approach, which looks at the 

complete financial picture of high wealth individuals and the enterprises they control, that has proven successful, rather than 

the traditional return by return approach. GHW examiners average roughly $1,300 of recommended adjustments per exam 

hour on taxable entities and over $10,000 of recommended adjustments per exam hour on partnerships. This investment will 

more than double the size of GHW, thereby allowing it to double the number of examinations it conducts once new 

employees have completed training and become fully productive. 

This investment will allow the IRS to:

• Hire additional revenue agents who will be devoted solely to working partnership cases;

• Increase the number of auditors with specialized knowledge in partnership law and audit procedures;

• Double current audit coverage of partnerships within 4 years; and

• Produce additional enforcement revenue of approximately $1.86 billion from FY 2022-2026. 

Once implemented, this investment will allow the IRS to eventually double its compliance efforts on partnerships and high 

wealth returns. The resources sought in this investment will also allow the IRS to devote more resources to its core corporate 

work on large corporate examinations. Finally, this investment will allow the IRS to increase its work in the Cross Border 

and Treaty and Transfer Pricing Operations as needed to fully support corporate, partnership, and high wealth exams.

Expand Cyber Crimes and Applied Data Analytics Efforts +$56,732,000 / +134 FTE

Data sets and data science methodologies now exist to connect the most remote financial transaction between apparent 

disparate actors which can be the key piece of evidence to break open the most complex financial investigation. These 

techniques are integral to the work of the IRS’s Criminal Investigation Division (CI) and criminal case development.

This investment will be used to: 

• Establish a Criminal Data Team to identify existing and new data sources; 

• Hire inventory data and categorize its use; 

• Perform validation as needed; 

• Allow CI to intake, interrogate, mine and operationalize its available data appropriately; and 

• Align leading data practices in the private sector and other innovation opportunities.

Currently, the data created/received through investigations, received from law enforcement partners, and received through 

disclosures and referrals is not categorized or stored in an accessible location. As a result, CI’s ability to use that data for 

analytics and enforcement operations is very limited. New data sources, including open source and data held by other 

agencies, are identified almost daily and in most cases is currently not obtained or mined for its potential. A CI Data Team 

Position Type/Other Costs FTE Positions $000

Expand Cyber Crimes and Applied Data Analytics 

Efforts 129 258 $55,291

Special Agent 57 114 23,832

Analyst 72 144 10,361

Contract Support 21,098

Other Direct Cost 5 10 $1,441

 CT Legal Support-Attorney 5 10 1,441

Total 134 268 $56,732
IRS - 94

responsible for all CI data activities will make data intake and processing routine to enable effortless integration into CI’s 

most complex investigations and ultimately advance CI’s ability to enforce tax compliance.

CI is authorized to use a wide array of investigative techniques, including developing innovative approaches to investigations 

using existing data sets, commercial (purchased) data sets, data sets from other government agencies, and open source data 

sets. Funding is requested to purchase and ingest this data into a modern computing environment available to CI 

users. Additionally, CI partners with internal and external stakeholders to use robust advanced modeling and data-driven 

algorithms to deliver high impact investigations which either preempt or quickly address emerging threats and advance the 

mission of the IRS. A portion of these activities will require contractor funding for lead generation and case development 

using these modern techniques. 

In FY 2020, CI’s new National Analytics team within CI’s Applied Analytics section worked with 9 Field and HQ offices on 

pilot projects to test the efficacy of advanced analytical modeling in case development and field office investigations. As a

result, the need for analytical services across the field offices to pursue criminal tax enforcement far outpaced CI’s Applied 

Analytics capacity. This initiative will hire and train an additional 82 analysts (investigative analysts and data scientists) to 

work across the field offices on larger initiatives using advanced statistical modeling and machine learning techniques to 

identify criminals, criminal patterns, and illicit behaviors. CI’s Applied Analytics would stand up two or more teams to work

with CI’s investigative offices. With this initiative, CI will develop and train Field Office and Headquarters personnel in the 

tools/technology and the methodologies used to grow overall cyber and analytical capabilities. CI will also bring advanced 

modeling initiatives to maturity and provide more opportunities for innovation. In addition, funding will allow the IRS to 

advance IT technology to assist in the efforts of investigating cybercrimes.

CI continues to advance the level and degree of work performed in cybercrimes, whether it pertains to the investigation of 

dark web marketplaces, cryptocurrency-related fraud, or a host of other internet-based activities. The Cyber Support Unit will 

allow the IRS to provide a specialized skillset of capabilities around open-source intelligence, dark web research and 

cryptocurrency tracing aspects in support of ongoing investigations in the field. 

CI traces money all around the world, whether transmitted within the shadows of the dark web or otherwise. An example of 

CI’s ability todetect criminal activity involved a darknet-based Bitcoin Mixing Service. This major case investigated a 

darknet search engine and money laundering service that was integrated into major darknet markets such as AlphaBay, Silk 

Road II, Abraxxas, and many others. It worked by tumbling bitcoins from users and vendors on darknet markets with new, 

“clean” bitcoin to obfuscate the illicit source of the bitcoin. Approximately 356,000 bitcoins moved through the site, with a

value of over $300 million at the time of the transactions. Data obtained from these servers will assist investigations all 

around the world, since criminals use tumblers to obfuscate the crypto trail. Evidence obtained from this investigation will 

serve as the missing link or puzzle piece in many sophisticated bitcoin transaction investigations. 

Cyber Agents will be working the most complex cyber investigations within CI and afforded the necessary access to 

specialized tools and resources needed to prosecute this level of criminals. IRS will use these funds to stand-up and equip the 

Advanced Collaboration and Data Center (ACDC), including Special Agents, tools, technology, and capabilities in one 

physical location. This new center will be able to complete approximately 800 additional criminal investigations from FY 

2023to FY 2027.
IRS - 95

Strengthen Taxpayer Confidence in the Tax-Exempt Sector +$18,581,000 / +115 FTE

The entities that fall with Tax Exempt & Government Entities’ (TE/GE) jurisdiction are diverse in form and function, ranging 

from charitable organizations and small business retirement plans to multi-billion-dollar bond issuances. The one thing they 

share is that they are all exempt from or not subject to federal income tax. Although these organizations are generally exempt 

from taxation on their income, they may be subject to other federal taxes, such as excise and employment taxes, andthey 

contribute substantially to the economy, controlling$47trillionin assets, employing almost 25 percent of the American 

workforce, and accounting for about 20 percent of nearly $1.3 trillion in federal tax expenditures.

Taxpayer confidence in the tax-exempt sector is essential to preserving and protecting charitable tax deductions and the 

retirement savings of everyday Americans. The IRS proposes a multifaceted approach to increase taxpayer confidence and 

ultimately protect these taxpayer investments to include:

• Protect Retirement Plans: requestedpositions will conduct enforcement activities to identify compliance issues with 

sponsored retirement plans and assist small businesses with their regulatory requirements to maintain their tax 

preferred status. These activities ultimately protect their employees’ retirement plan contributions. 

• Protect Tax-Exempt Sector and Government Entities: requestedpositions will address tax-compliance 

responsibilities of organizations exempt from income tax under Internal Revenue Code Section (IRC) 501 including 

charities, private foundations, and other types of exempt organizations, such as business leagues, labor unions, and 

veterans' organizations; Political organizations described in IRC 527. These resources will increase compliance 

with unpaid taxes for taxable activities in the exempt organization sector through enforcement activities. Overall, 

these activities will result in increased compliance, and help preserve the public’s confidence in their charitable 

donations. Inaddition, these resources will facilitate compliance of municipal debt issuance of tax-advantaged 

bonds including tax-exempt bonds, tax credit bonds and direct pay bonds. These resources will also assist Indian 

Tribal Governments, and Federal, State, and Local Governments in meeting their federal tax obligations. Ultimately 

these resources will help various types of tax-exempt and government entities, and tax-exempt bond issuers remain 

compliant with their respective federal tax obligations and support improving taxpayer confidence throughout these 

sectors. 

Position Type/Other Costs FTE Positions $000

Protect Retirement Plans 49.5 99 $7,994

Revenue Agent 45 90 7,314

Manager 3 6 466

Clerk 1.5 3 214

Protect Tax-Exempt Sector and Government 

Entities 49.5 99 $7,994

Revenue Agent 45 90 7,314

Manager 3 6 465

Clerk 1.5 3 214

Fraud Prevention 16 32 $2,593

Revenue Agent 15 30 2,438

Manager 1 2 155

Total 115 230 $18,581
IRS - 96

• Fraud Prevention: requestedpositions will support expanded fraud enforcement activities. While we recognize most 

stakeholders and taxpayers in the tax-exempt sector strive to remain compliant, there are purposeful bad actors 

engaging in increasingly complex transactions and structures to avoid taxation and to mask other illegal activities. 

These resources will be applied to directly address these emerging fraudulent activities and trends in the tax-exempt 

sector.

Once these staffing resources are fully trained, the IRS will be able to conduct an additional 3,192 examination closures. As a 

result, the public’s confidence will be strengthened as retirement plans become more compliant, unrelated business income 

taxes are addressed, and fraud is prevented in these important tax-exempt arenas. 

Increase Pre-Refund Audit and Examination +$45,619,000 / +455 FTE

The Correspondence Examination program fairly and effectively assist taxpayers by providing accurate and consistent 

information to help them understand the refundable tax credits and eligibility requirements. The program alsoaddresses the 

tax gap through increased enforcement throughindividual reporting compliance, such as refundable credits. This investment

will strengthen the integrity of the tax system and protect the public interest by detecting and preventingimproper refunds 

and by educating customers in accordance with the Taxpayer Bill of Rights. The additional staffing will be used to reverse 

and prevent a decline in the audit coverage rate, and simultaneouslyenhance the administration of refundable credits through 

a balanced approach that encourages eligible taxpayers to apply for the credits and reduces the number of claims paid in 

error.

Position Type/Other Costs FTE Positions $000

 Increase Pre-Refund Audit and Examination 455 910 $45,618

Tax Examiners 455 910 44,490

Contractual Services 1,128

Total 455 910 $45,618
IRS - 97

Enhance Enforcement Efforts +$106,525,000 / +809 FTE

This investment will allow additional examination and collection employees to increase efforts in critical Examination and 

Collection activities. The decline in staffing since FY 2010 has led to a decrease in the individual audit coverage rate from

1.0 percent in Tax Year 2010 to 0.43 percent in Tax Year 2017, which increases the risk to the integrity of the nation’s 

voluntary tax compliance system. The collection coverage rate, which is defined as the volume of collection work disposed 

compared to the volume of collection work available, has also seen a decline, dropping from 50.1 percent in FY 2010 to just 

34.9 percent in FY 2020. The additional resources will fund compliance priorities and allow for earlier case assignment and 

resolution.

Examination programs will provide increased emphasis on audits of small corporations and sole proprietors with business 

income. Collection programs will focus their efforts on high income non-filers and delinquent employment taxes. This 

investment is expected to annually produce additional enforcement revenue of $1.1 billion, once the new hires reach full 

potential in FY 2025, an ROI of $6.5 to$1. These resources will:

• Provide 500 additional examination staff to increase the number of audits and close more than 9,300 field 

examination cases and 12,000 correspondence examination cases, and 79,000 Automated Underreporter cases;

• Provide 420 additional collection staff to expand programs that address non-filing and underpayment of taxes to 

handle 21,800 additional field collection cases and 136,600 Automated Collection System cases; 

• Expand several Compliance Services Collection Operations programs that address non-filing of taxes through the 

notice process by 303,600 notice dispositions and cases;

Position Type/Other Costs FTE $000

Collection Programs 339 $40,344

Revenue Officers 116 18,457

Customer Service Representative 116 10,001

Tax Examiner 107 11,886

Support Staff

Examination Programs 348 $45,567

Revenue Agents 181 29,584

Tax Compliance Officers 78.5 7,597

Tax Examiner 83.5 7,860

Support Staff 5 526

Compliance PMOs 10 $1,357

Office of Fraud Enforcement 5 679

Office of Promoter Investigations 5 679

Other Direct Costs 112 $19,257

Appeals 48 9,136

Counsel 36 7,059

SB/SE Operations Support 8 1,136

WAGE - AM & SP 203

PGLD 3 397

HCO 3 385

TAS 14 942

Total 809 $106,525
IRS - 98

• The Office of Fraud Enforcement (OFE) will expand fraud awareness and strengthen ties between the civil and 

criminal enforcement arms of the IRS and with other federal departments and agencies. OFE will expand projects 

that investigate hidden ownership of virtual currencies with a focus on high income individuals and entities; and

• The Office of Promoter Investigations (OPI) will focus on taxpayers and promoters of abusive tax avoidance 

transactions including conservation easements, virtual currencies, and offshore transactions.

Expand Tax Compliance +$28,671,000 / +85 FTE

This investment will enhance overall enforcement efforts, increase the number of convictions, and expand the IRS’s 

capabilities in core tax enforcement areas. With an increase of approximately 400additional criminal investigations 

completed, after agents reach full potential and case time, would result in increased convictions. It serves to enforce the law, 

ensure compliance with tax responsibilities, and aid the IRS in combating fraud. This investment supports the IRS Strategic 

Goals by enforcing domestic and international compliance across all program areas while utilizing innovative approaches and 

strengthening existing expertise. Further, this investment will support initiatives designed to identify trends, detect high-risk 

areas of noncompliance, and prioritize enforcement approaches by applying advanced analytics.

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

administration. They will:

• Enhance cooperation with state and local law enforcement agencies in jurisdictions where prosecutorial actions 

would have the greatest influence;

• Obtain information about ongoing criminal activity involving federal and state tax refunds allowing expedited 

prosecution by the Department of Justice to reduce the financial loss to the IRS and the taxpayer;

• Target larger-scale crime rings for maximum compliance results and publicity; and

• These resources will also support special agents conducting outreach to state and local law enforcement to expand 

the Law Enforcement Assistance Program. 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.

This investment also will provide analysts to support this investment by gathering the data in support of the violations of tax 

and other financial laws and regulations enforced by the IRS. They will provide an analysis of this information, capturing the 

full scope of the identified questionable activities and provide hands on support to the criminal investigation. They will 

develop queries to obtain the necessary information and to perform an assessment of the responses to discern the 

interrelationships to determine impact and possible ramifications of the tax related criminal and financial activities.

Position Type/Other Costs FTE Positions $000

 Expand Tax Compliance 85 170 $28,671

Special Agent 66 132 26,130

Analyst 19 38 2,541

Total 85 170 $28,671
IRS - 99

Improve Live Assistance +$189,112,000 / +2,348 FTE

Increase Telephone Level of Service & Reduce Correspondence Inventory +$157,752,000 / +1,998 FTE 

This investment will allow the IRS to increase the telephone level of service (LOS) and significantly reduce the 

correspondence inventory.1 The IRS toll-free telephone customer service operation is a key part of the IRS’s service delivery. 

This investment provides a projected LOS of 30percent in FY 2022, assuming phone demand returns to pre-pandemic levels 

and the IRS can provide in-person services at pre-pandemic levels. Providing quality taxpayer service is crucial to ensuring 

voluntary compliance.

TAC Optimization Strategy +$31,360,000 / +350 FTE

This investment funds staffing increases to achieve optimal staffing levels for IRS Taxpayer Assistance Centers (TACs), 

improving the taxpayer experience. These staffing levels will allow the IRS to re-open TACs and restore office hours, 

allowing taxpayers to schedule appointments sooner. With increased TAC funding, the IRS anticipates additional contacts 

with over 880,000 taxpayers.

1 The customer service representatives who work the phones during the busy filing season are also the same employees who 

work the paper inventory. Thus, given the current backlog of paper inventory, IRS would be able to use these resources 

immediately for paper inventory reduction efforts if necessary.

Position Type/Other Costs FTE Positions $000

Increase Telephone Level of Service and Reduce 

Correspondence Inventory 1,998 1,998 $157,752

Seasonals 1,050 1,050 80,222

Customer Service Rep 888 888 73,254

Manager 60 60 4,276

Total 1,998 1,998 $157,752

Position Type/Other Costs FTE Positions $000

 Taxpayer Assistance Centers (TAC) 350 350 $31,360

Accounts Management Rep 350 350 12,600

Contractural Services 2135

Other Direct Costs 16,625

Total 350 350 $31,360
IRS - 100

Integrated Modernization Business Plan +$78,143,000 / +104 FTE

The Integrated Modernization Business Plan remains a key IRS priority. The Plan provides a long-term approach to 

technological advances, which will transform the taxpayer experience by making our services simpler, quicker, and more 

responsive. Additionally, the plan will deliver technology to enable a service experience comparable to private industry; 

streamline and integrate IT programs that provide top-quality service; retire and replace legacy systems with more sustainable 

infrastructure; and continue toprotect taxpayer data and address emerging threats.

The IRS continues to make progress implementing the Plan using the American Rescue Plan funding but needs additional 

resources to continue the modernization journey. 

Position Type/Other Costs FTE Positions $000

IT Modernization Plan 104 208 $78,143

IT Specialists 104 208 1,270

Contractual Services 65,045

Hardware/Software 11,828

Total 104 208 $78,143
IRS - 101

4.3– Summary of IRS FY 2023 Cyber Security Budget Request

Bureau: Internal Revenue Service 

Summary of FY 2023 Cybersecurity Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE

FY 2022 Annualized CR (ACR) $16,768 40 $17,258 66 $244,062 548 $38,100 19 $316,188 673

Changes to Base:

FY 2023 Maintaining Current Levels (MCLs) $492 $632 $6,960 $893 $8,977

Pay Annualization (2.7% average pay raise) 49 90 653 12 804

Pay Raise (4.6% average pay raise) 254 463 3,362 63 4,142

Non-Pay 189 79 2,945 818 4,031

Base Adjustment $369 1 $369 1

Adjustment to Reach Current Operating Levels 369 1 369 1

Subtotal FY 2023 Changes to Base $492 $1,001 1 $6,960 $893 $9,346 1

FY 2023 Current Services $17,260 40 $18,259 67 $251,022 548 $38,993 19 $325,534 674

Program Increases:

Putting Taxpayers First 81,000 102 81,102

Integrated Modernization Business Plan 5,348 2 5,348 2

Focused Strategies for Reaching Underserved Communities 1 1

Subtotal FY 2023 Program Increases $81,000 $103 $5,348 2 $86,451 2

Total FY 2023 Request $98,260 40 $18,259 67 $251,125 548 $44,341 21 $411,985 676

Dollar/FTE Change FY 2023 Request over FY 2022 ACR $81,492 $1,001 1 $7,063 $6,241 2 $95,797 3

Percent Change FY 2023 Request over FY 2022 ACR 486.00% 5.80% 1.52% 2.89% 16.38% 10.53% 30.30% 0.45%

TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT BSM TOTAL
IRS - 102

4.4– Summary of IRS FY 2023 Budget Request

Bureau: Internal Revenue Service 

Summary of FY 2023 Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE

FY 2022 Annualized CR (ACR) $2,763,606 27,990 $5,004,622 35,604 $3,928,102 11,631 $222,724 308 $11,919,054 75,533

Changes to Base:

FY 2023 Maintaining Current Levels (MCLs) $108,631 $202,663 $119,339 $5,730 $436,363

Pay Annualization (2.7% average pay raise) 17,105 32,228 12,812 401 62,546

Pay Raise (4.6% average pay raise) 88,016 165,832 65,928 2,061 321,837

Non-Pay 3,510 4,603 40,599 3,268 51,980

Base Adjustment $90,285 825 $229,176 358 $115,991 $3,430 $438,882 1,183

Adjustment to Reach Current Operating Levels 90,285 825 229,176 358 115,991 3,430 438,882 1,183

Subtotal FY 2023 Changes to Base $198,916 825 $431,839 358 $235,330 $9,160 $875,245 1,183

FY 2023 Current Services $2,962,522 28,815 $5,436,461 35,962 $4,163,432 11,631 $231,884 308 $12,794,299 76,716

Program Increases:

Putting Taxpayers First 119,034 192 54,331 152 146,805 229 320,170 573

User Authentication 81,000 81,000

Taxpayer Experience Strategy 38,034 192 54,331 152 146,805 229 239,170 573

Ensure Fairness of the Tax System 370,857 2,493 98,396 20 469,253 2,513

Enhance Taxpayer Service 304,167 3,858 84,945 389,112 3,858

Integrated Modernization Business Plan 78,143 104 78,143 104

Critical IT Operations 39,521 36 39,521 36

Focused Strategies for Reaching Underserved Communities 10,169 7 10,169 7

Subtotal FY 2023 Program Increases $423,201 4,050 $425,188 2,645 $379,836 292 $78,143 104 $1,306,368 7,091

Total FY 2023 Request $3,385,723 32,865 $5,861,649 38,607 $4,543,268 11,923 $310,027 412 $14,100,667 83,807

Dollar/FTE Change FY 2023 Request over FY 2022 ACR $622,117 4,875 $857,027 3,003 $615,166 292 $87,303 104 $2,181,613 8,274

Percent Change FY 2023 Request over FY 2022 ACR 22.51% 17.42% 17.12% 8.43% 15.66% 2.51% 39.20% 33.77% 18.30% 10.95%

Technical Adjustments

Rent Adjustment 265,830 368,613 (634,443)

CFO Adjustment 33,040 176 42,051 224 (75,091) (400)

Subtotal FY 2023 Technical Adjustments $298,870 176 $410,664 224 ($709,534) (400)

Total FY 2023 Request incuding Technical Adjustments $3,684,593 33,041 $6,272,313 38,831 $3,833,734 11,523 $310,027 412 $14,100,667 83,807

Dollar/FTE Change FY 2023 Request Including Technical Adjustments over FY 2022 ACR $920,987 5,051 $1,267,691 3,227 ($94,368) (108) $87,303 104 $2,181,613 8,274

Percent Change FY 2023 Request Including Technical Adjustments over FY 2022 ACR 33.33% 18.05% 25.33% 9.06% -2.40% -0.93% 39.20% 33.77% 18.30% 10.95%

TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT BSM TOTAL