Internal Revenue Service

Program Summary by Budget Activity

Dollars in Thousands

FY 2019 FY 2020 FY 2021 FY 2020 to FY 2021

Budget Activity Operating 

Plan1 Enacted2 Request $ Change % Change 

Taxpayer Services $2,556,554 $2,535,554 $2,562,554 $27,000 1.06%

Pre-filing Taxpayer Assistance and Education 621,907 656,829 667,018 10,189 1.55%

Filing and Account Services 1,934,647 1,878,725 1,895,536 16,811 0.89%

Enforcement $4,677,600 $4,909,500 $5,071,260 $161,760 3.29%

Investigations 595,686 654,285 675,533 21,248 3.25%

Exam and Collections 3,907,290 4,091,953 4,225,886 133,933 3.27%

Regulatory 174,624 163,262 169,841 6,579 4.03%

Operations Support $3,918,400 $3,885,000 $4,104,689 $219,689 5.65%

Infrastructure 891,140 881,654 895,071 13,417 1.52%

Shared Services and Support 900,287 1,012,155 1,063,984 51,829 5.12%

Information Services 2,126,973 1,991,191 2,145,634 154,443 7.76%

Business Systems Modernization $150,000 $180,000 $300,000 $120,000 66.67%

Subtotal Internal Revenue Service $11,302,554 $11,510,054 $12,038,503 $528,449 4.59%

Reimbursables 124,559 170,726 179,262 8,536 5.00%

Offsetting Collections – Non-Reimbursables 9,749 31,781 33,370 1,589 5.00%

User Fees 319,023 530,230 549,930 19,700 3.72%

Recovery from Prior Years 7,515 11,386 11,339 (47) -0.41%

Recoveries from Paid Obligations 3,681 3,681

Unobligated Balances from Prior Years 356,057 168,743 116,142 (52,601) -31.17%

Transfers In/Out 111 

Total Program Operating Level $12,119,568 $12,426,601 $12,932,227 $505,626 4.07%

Direct FTE 72,731 74,544 73,361 (1,183) -1.59%

Reimbursable FTE 642 978 1,027 49 5.01%

User Fee FTE 96 75 1,520 1,445 1926.67%

Unobligated Balances from Prior Years 727 15 15 

Total FTE 74,196 75,612 75,923 311 0.39%

1

FY 2019 Operating Plan amount includes a $194.4 million interappropriation transfer from Enforcement to Operations Support to cover 

anticipated operations and maintenance requirements in FY 2019. FY 2019 amount also includes $77 million for the Section 112 

Administrative Provision to implement requirements under the Tax Cuts and Jobs Act (Public Law 115-97). FY 2019 Other Resources and 

Full-time Equivalents (FTE) reflect actuals. 2

FY 2020 Enacted Amount includes a proposed $76.5 million interappropriation transfer from Enforcement to Operations Support to cover 

anticipated operations and maintenance requirements in FY 2020. FY 2020 Enacted Amount also includes $24 million transfer from 

Enforcement to Taxpayer Services. FY 2021 Request does not include the $400 million Program Integrity Cap Adjustment.

Summary

The IRS FY 2021 budget request is $12.039 billion, $528.449 million (4.6 percent) more than 

the FY 2020 enacted level of $11.510 billion.

The budget includes a program increase of $220 million for the modernization plan and 

implementation of the Taxpayer First Act. The modernization request includes $300 million 

total for the Integrated Modernization Business Plan to continue developing new web 

applications, payment features, electronic notices, secure online customer service assistance, and 

replacements for legacy systems. The Taxpayer First Act request includes $106 million to 

implement several new requirements which will enhance customer service, taxpayer information 

protections, and online service platforms. The budget funds costs associated with two pay raises 
Department of the Treasury – Budget in Brief

and an increase in employee retirement contributions. The budget proposes several important 

legislative changes, including a program integrity cap adjustment of $400 million in FY 2021, 

that when combined with future investments, will generate $64 billion in net savings over 10 

years and provide the Department of the Treasury with additional authority to improve tax 

administration. 

The IRS Strategic Plan FY 2018 – FY 2022 guides resource decisions, programs, and operations. 

The plan aligns with the goals and objectives in Treasury’s strategic plan by administering tax 

laws to help taxpayers meet their obligations, while protecting the integrity of the tax system and 

achieving operational excellence. 

In FY 2019, the IRS delivered a successful filing season that opened on January 28, 2019. 

During the 2019 filing season, the IRS:

• Received about 155 million individual tax returns and issued more than 109 million refunds 

totaling $300 billion with an average individual refund of $2,800. Almost 91 percent of 

these individual returns were filed electronically;

• Achieved a 66.9 percent filing season level of service (LOS), the relative success rate of 

taxpayers calling the toll-free line for assistance, an increase of 1.9 percent over the target of 

65 percent;

• Answered more than 21.5 million calls;

• Served 1.3 million taxpayers, more than 798,000 face-to-face assistor contacts, and more 

than 483,000 taxpayers, who had issues resolved over the phone when calling for an 

appointment;

• Received 422 million visitors to the IRS.gov website with 317 million taxpayers checking the 

Where’s My Refund? tool for the status of their refund. This represents a 9 percent increase 

in the use of IRS.gov and a 20 percent increase in Where’s My Refund? compared to last 

filing season; and

• Received about 32 million business returns, and approximately 29 million were filed 

electronically, an increase of 5.8 percent from 2018.
Department of the Treasury – Budget in Brief

IRS Budget Highlights

Dollars in Thousands

Budget Adjustments

Base Adjustment...........................................................................+$0 / +370 FTE

The FY 2020 enacted level of $11.510 billion assumes a $100.5 million interappropriation 

transfer from Enforcement to Taxpayer Services ($24.0 million) and Operations Support 

($76.5 million) that will be included in the IRS FY 2020 Operating Plan. A total of 370 FTE 

will be added to Taxpayer Services to support delivery of a 60 percent LOS and an estimated 

65 percent LOS for the filing season (January through April) on the Accounts Management 

phone lines in FY 2020. 

 

Maintaining Current Levels (MCLs)...................................... +$452,085,000 / +0 FTE 

Pay Annualization (3.1%) +$67,757,000 / +0 FTE 

Funds are requested for annualization of the January 2020 3.1% average pay raise.

Pay Raise (1.0%) +$66,080,000 / +0 FTE 

Funds are requested for a 1.0% average pay raise in January 2021.

Bureau: Internal Revenue Service 

Summary of FY 2021 Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE

FY 2020 Enacted (Pre-IAT) $2,511,554 26,390 $5,010,000 35,388 $3,808,500 11,970 $180,000 426 $11,510,054 74,174

Planned Interappropriation Transfer 24,000 370 (100,500) 76,500 370

FY 2020 Enacted $2,535,554 26,760 $4,909,500 35,388 $3,885,000 11,970 $180,000 426 $11,510,054 74,544

Changes to Base:

Maintaining Current Levels (MCLs) $107,929 $207,089 $130,866 $6,201 $452,085

Pay Annualization (3.1% average pay raise) 18,078 35,236 13,896 547 67,757

Pay Raise (1.0% average pay raise) 17,631 34,364 13,552 533 66,080

FERS Contribution Increase 26,523 52,345 20,143 989 100,000

Non-Pay 4,058 7,258 41,840 2,188 55,344

Additional Required Labor Costs 41,639 77,886 41,435 1,944 162,904

Efficiencies/Savings ($80,929) (1,082) ($56,589) (454) ($6,277) ($143,795) (1,536)

Increase e-File Savings (4,607) (85) (77) (4,684) (85)

Space Optimization (6,200) (6,200)

Personnel Savings (76,322) (997) (56,589) (454) (132,911) (1,451)

Subtotal FY 2021 Changes to Base $27,000 (1,082) $150,500 (454) $124,589 $6,201 $308,290 (1,536)

FY 2021 Current Services $2,562,554 25,678 $5,060,000 34,934 $4,009,589 11,970 $186,201 426 $11,818,344 73,008

Program Increases:

Integrated Modernization Business Plan 113,799 91 113,799 91

Implementing the Taxpayer First Act 11,260 92 95,100 170 106,360 262

Subtotal FY 2021 Program Increases $11,260 92 $95,100 170 $113,799 91 $220,159 353

Total FY 2021 Request (Before Cap) $2,562,554 25,678 $5,071,260 35,026 $4,104,689 12,140 $300,000 517 $12,038,503 73,361

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted $27,000 (1,082) $161,760 (362) $219,689 170 $120,000 91 $528,449 (1,183)

Percent Change FY 2021 Request over FY 2020 Enacted 1.06% -4.04% 3.29% -1.02% 5.65% 1.42% 66.67% 21.36% 4.59% -1.59%

Cap Adjustment Program Increases

Increase Audit Coverage 123,440 1,325 49,740 8 173,180 1,333

Increase Collection Coverage 119,737 1,334 50,769 8 170,506 1,342

Expand Coverage in the Tax-Exempt Sector 12,102 109 3,664 15,766 109

Expand Cyber and Virtual Currency Compliance Efforts 24,704 101 15,844 40,548 101

Subtotal FY 2021 Cap Adjustment Investments $279,983 2,869 $120,017 16 $400,000 2,885

Total FY 2021 Request Including Cap Adjustment $2,562,554 25,678 $5,351,243 37,895 $4,224,706 12,156 $300,000 517 $12,438,503 76,246

Dollar/FTE Change FY 2021 Request Including cap over FY 2020 Enacted $27,000 (1,082) $441,743 2,507 $339,706 186 $120,000 91 $928,449 1,702

Percent Change FY 2021 Request Including cap over FY 2020 Enacted 1.06% -4.04% 9.00% 7.08% 8.74% 1.55% 66.67% 21.36% 8.07% 2.28%

TAXPAYER SERVICES ENFORCEMENT OPERATIONS 

SUPPORT BSM TOTAL
Department of the Treasury – Budget in Brief

FERS Contribution Increase +$100,000,000 / +0 FTE 

Funds are requested for the 1.3 percent increase to the Federal Employee Retirement System 

(FERS) contribution rates effective FY 2021, for a total employer contribution of 17.3 percent of 

base salaries. This amount is in addition to the 2.4 percent increase absorbed in FY 2020.

Non-Pay +$55,344,000 / +0 FTE 

Funds are requested for inflationary increases in non-labor expenses such as travel, contracts, 

rent, supplies, and equipment. This amount is based on an Office of Management and Budget 

(OMB) Circular A-11 inflation factor of 2 percent.

Additional Required Labor Costs +$162,904,000 / +0 FTE 

Funds are requested to pay for increases in labor resulting from employees moving through 

career ladders, above journey level promotions, manager payband increases, and within-grade 

increases ($117.9 million). These funds will also pay for an increase in employee performance 

awards spending per OMB Circular A-11.

Efficiencies/Savings....................................................... -$143,795,000 / -1,536 FTE

Increase e-File Savings -$4,684,000 / -85 FTE 

The IRS projects a total of 1,300,100 fewer returns filed on paper (623,000 individual and

676,500 business returns). As a result, the IRS will need 85 fewer FTE in submission 

processing, generating a savings of $4.7 million. 

Space Optimization -$6,200,000 / -0 FTE 

The IRS will reduce expenditures on rent and improve usage of office space across the country. 

Since 2013, the IRS released 3.7 million square feet, closing 115 buildings and reducing total 

rent costs by about 11 percent. For FY 2020, the IRS anticipates the release of 500,000 square 

feet with an estimated $10 million in annualized rent savings. The IRS will continue to 

consolidate space in FY 2021, projecting a release of 243,000 square feet for an estimated $6.2 

million in annualized rent savings.

Personnel Savings -$132,911,000 / -1,451 FTE

Although the budget request increases staffing resources to support strategic priorities, the IRS 

must manage its personnel costs through limited attrition replacement and seasonal workforce 

adjustments across many operational areas. These adjustments are necessary to fund the $452 

million in inflationary and labor cost increases for existing personnel, including annualization of 

the 2020 pay raise, the proposed 2021 pay raise, employee promotions, and employee retirement 

contributions. To achieve these savings, the IRS plans to:

• Fill critical vacancies only; 

• Streamline the workforce by reducing administrative, analyst, and other support positions;

and

• Realign mission critical occupations by hiring employees who have the background and 

skills to support the IRS in meeting its strategic goals, objectives, and priorities. 

 
Department of the Treasury – Budget in Brief

Program Increases............................................................ +$220,159,000 / +353 FTE

IRS Integrated Modernization Business Plan +$113,799,000 / +91 FTE 

Modernization is an IRS priority and a key driver of the President’s Management Agenda. The 

plan will enable the IRS to provide consistently superior service to taxpayers and deliver longterm budget efficiencies as the IRS modernizes capabilities currently provided via legacy 

applications. Highlights of the investment include:

• $25 million for web applications to provide taxpayers and tax professionals a digital service 

channel to establish and manage taxpayer/tax professional authority relationships;

• $10 million for digital notices available through a secure online account for taxpayers who 

prefer that channel over mailed correspondence;

• $15 million for the live assistance program to expand customer callback capabilities on IRS 

phone lines;

• $100 million for the Customer Account Data Engine 2 project to continue replacing legacy 

code established almost 60 years ago;

• $64 million for Enterprise Case Management to establish a common cloud infrastructure, 

automate business functions, and enable seamless case transfers; and 

• $46 million to modernize IRS cybersecurity defenses.

Implementing the Taxpayer First Act +$106,360,000 / +262 FTE 

The Taxpayer First Act will usher in dramatic changes in how the IRS engages with taxpayers. 

The Taxpayer First Act’s provisions will improve the experience of taxpayers as they interact 

with the IRS and increase the IRS’s ability to secure taxpayer information, protect taxpayer 

identities, develop additional online capabilities for taxpayers, and develop comprehensive 

training for IRS employees. The IRS needs additional resources to implement the Taxpayer First 

Act’s provisions. Highlights of the investment include:

• $30 million to create a new website that allows taxpayers to prepare, file, and distribute Form 

1099 information returns;

• $14 million to facilitate electronic filing of statements and returns in the Form 990 series or 

Form 8872 (Political Organization Report of Contributions and Expenditures); and 

• $9 million to provide increased staffing for the office of appeals to share case files with 

taxpayers prior to conference and for the IRS whistleblower office to provide periodic 

updates on referral status. 

Legislative Proposals

The FY 2021 budget request includes tax administration legislative proposals. 

Provide the IRS with greater flexibility to address correctable errors: The budget would 

expand the IRS authority to correct errors on taxpayer returns. Current statute only allows the 

IRS to correct errors on returns in certain limited instances, such as basic math errors or the 

failure to include the appropriate social security number or taxpayer identification number. This 

proposal would expand the instances in which the IRS could correct a taxpayer’s return including 

cases where: (1) the information provided by the taxpayer does not match the information 

contained in Government databases or Form W-2, or from other third party databases as the 

Secretary determines by regulation; (2) the taxpayer exceeded the lifetime limit for claiming a 

deduction or credit; or (3) the taxpayer failed to include with his or her return certain 

documentation that is required to be included on or attached to the return. This proposal would 
Department of the Treasury – Budget in Brief

make it easier for IRS to correct clear taxpayer errors, directly improving tax compliance,

reducing EITC and other improper payments, and freeing IRS resources for other enforcement 

activities. 

Increase Oversight of Paid Tax Return Preparers: Paid tax return preparers have an 

important role in tax administration because they assist taxpayers in complying with their 

obligations under the tax laws. Incompetent and dishonest tax return preparers increase 

collection costs, reduce revenues, disadvantage taxpayers by potentially subjecting them to 

penalties and interest because of incorrect returns, and undermine confidence in the tax system. 

To promote high quality services from paid tax return preparers, the proposal would explicitly 

provide that the Secretary of the Treasury has the authority to regulate all paid tax return 

preparers.

Improve clarity in worker classification and information reporting requirements: The 

budget proposes to: (1) establish a new safe harbor that allows a service recipient to classify a 

service provider as an independent contractor and requires withholding of individual income 

taxes to this independent contractor at a rate of five percent on the first $20,000 of payments; and 

(2) raises the reporting threshold for payments to all independent contractors from $600 to 

$1,000 and reduces the reporting threshold for third-party settlement organizations from $20,000 

and 200 transactions per payee to $1,000 without regard to the number of transactions. In 

addition, Form 1099-K would be required to be filed with the IRS by January 31 of the year 

following the year for which the information is being reported. The proposal increases clarity in 

the tax code, reduces costly litigation, and improves tax compliance.

Fund the Federal Payment Levy Program via Collections: This proposal would allow the 

Fiscal Service to retain a portion of the funds collected under the Bureau’s Federal Payment 

Levy Program (FPLP) which processes and collects delinquent tax debts through the Treasury 

Offset Program (TOP). TOP currently recoups its costs from retained amounts from collected 

amounts for all its programs except for the FPLP, but under current law, the IRS must pay these 

costs through annual reimbursement agreements under the Economy Act. This proposal would 

make the FPLP consistent with other TOP programs. Delinquent taxpayers will not be impacted 

by the proposal because they will receive credit for the full amount collected. This proposal 

creates efficiencies because it allows the Fiscal Service to recover its FPLP costs from the IRS in 

the same manner as other TOP programs.

Require a social security number (SSN) that is valid for work to claim child tax credit 

(CTC), earned income tax credit (EITC), and credit for other dependents (ODTC): The 

Administration proposes requiring an SSN that is valid for work to claim the EITC, CTC (both 

the refundable and non-refundable portion), and/or the ODTC for the taxable year. For all 

credits, this requirement would apply to taxpayers (including both the primary and secondary 

filer on a joint return) and all qualifying children or dependents. Under current law, taxpayers 

who do not have an SSN that is valid for work may claim the CTC if the qualifying child for 

whom the credit is claimed has a valid SSN. Furthermore, the ODTC, created by the Tax Cuts 

and Jobs Act, allows taxpayers whose dependents do not meet the requirements of the CTC, 

including the SSN requirement, to claim this non-refundable credit. This proposal would ensure 

that only individuals who are authorized to work in the United States could claim these credits by 

extending the SSN requirement for qualifying children to parents on the tax form for the CTC 
Department of the Treasury – Budget in Brief

and instituting an SSN requirement for the ODTC. While this SSN requirement is already 

current law for the EITC, this proposal also would close an administrative gap to strengthen 

enforcement of the provision.

Program Integrity Cap Adjustment: In addition to the base appropriations request of $12 

billion request, the budget proposes a $400 million discretionary program integrity cap 

adjustment in FY 2021 to fund new and continuing investments in expanding and improving the 

effectiveness and efficiency of the IRS’s overall tax enforcement program. The Budget proposes 

$280 million for the Enforcement account and $120 million for the Operations Support account. 

Additional adjustments are provided in future years to fund new initiatives and inflation. These 

investments will generate $79 billion in new revenue over 10 years and will cost $15 billion, for 

net revenue of $64 billion over 10 years. This return on investment (ROI) is likely understated 

because it does not reflect the effect that enhanced enforcement has on deterring noncompliance. More information on the cap adjustment is available in Section 4.1 of the Appendix 

and in the Budget Process Chapter of the Analytical Perspective volume of the FY 2021 

President’s Budget. 

Performance Highlights

Budget Activity Performance Measures FY 2017 

Actual

FY 2018 

Actual

FY 2019 

Actual

FY 2019 

Target

FY 2020 

Target

FY 2021 

Target

Filing and Account 

Services

Customer Service 

Representative Level of 

Service (LOS)

77.1% 75.9% 65.4% 63.0% 60.0% 60.0%

Exam and Collections Examination Coverage -

Individual 0.6% 0.6% 0.45% 0.50% 0.48% 0.55%

Investigations Criminal Investigations 

Completed 3,089 3,051 2,797 2,800 2,700 2,700

Investigations Conviction Rate 91.5% 91.7% 91.2% 92.0% 92.0% 92.0%

Information Services Percentage of Aged 

Hardware1 52.3% 45.5% 31.0% 43.8% 30.0% 30.0%

1

This is a new budget level metric; the measure definition changed in FY 2018; and, prior-year numbers are reported consistent with the new 

definition.

Description of Performance

In FY 2019, the IRS continued to provide quality service to taxpayers and to enforce the laws with 

integrity and fairness. The IRS continued to deliver improvements in key areas, including 

international, tax exempt, refund fraud, and identity theft. 

Taxpayer Services

The IRS strives to deliver high quality and timely service to taxpayers and stakeholders and help 

them understand and meet their tax obligations. The IRS:

• Achieved an 88.8 percent individual e-file rate and a 57.8 percent business e-file rate;

• Delivered a fiscal year telephone LOS of 65.4 percent; 

• Answered more than 21.5 million calls; and

• Answered 94.3 percent of account questions over the telephone correctly.
Department of the Treasury – Budget in Brief

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

partnerships with state taxing authorities, volunteer groups, and other organizations. Volunteer 

Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites provide free tax 

assistance for the elderly, disabled, and limited English proficient individuals and families.

The Customer Service Representative (CSR) Level of Service (LOS) measures the relative 

success rate of taxpayers wanting to speak with a CSR on telephone lines answered by Accounts 

Management (78 percent of all telephone traffic). In FY 2019, the CSR LOS exceeded the target 

of 63 percent, reaching 65.4 percent. While the target was met, the LOS dropped 10.5 

percentage points from FY 2018 due, in part, to the lapse in appropriations. The LOS target is 

set at 60 percent for FY 2020 with filing season LOS projected to reach 65 percent. The 

FY 2021 target is 60 percent with filing season projected to be 65 percent. 

Enforcement

In FY 2019, the IRS collected $57.5 billion through enforcement programs, a return on 

investment (ROI) of about $5 to $1. This number is likely understated, since the ROI estimate 

does not include the revenue effect of the indirect deterrence value of IRS enforcement 

programs.

The IRS Criminal Investigation (CI) organization program investigates potential criminal 

violations of the Internal Revenue Code and related financial crimes, such as money laundering, 

currency violations, tax-related identity theft fraud, and terrorist financing that adversely affect 

tax administration. In FY 2019, CI completed 2,797 criminal investigations, achieved 

1,735 convictions with a rate of 91.2 percent, and achieved a Department of Justice case 

acceptance rate of 93.0 percent and a U.S. Attorney case acceptance rate of 88.5 percent, which 

compares favorably with other federal law enforcement agencies.

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. In 

FY 2019, Individual Exam Coverage was 0.45 percent, below the target of 0.50 percent. This 

measure tracks the number of individual audits closed in a given fiscal year but does not reflect 

in real time ongoing open audit activities or exam effectiveness. There were about 212,000 

fewer individual audits completed in FY 2019, a 24 percent decrease compared to FY 2018. In

FY 2019, Business Examination Coverage was 1.6 percent, below the target of 2.2 percent. 

Results for these measures were influenced by attrition, the lapse in appropriations, and training 

requirements for new employees. 

Operations Support

The Percentage of Aged Hardware measure shows the quantity of IT hardware in operation past 

its useful life as a percentage of total hardware in use. The IRS made considerable progress 

reducing the percentage of aged hardware from 45.5 percent at the end of FY 2018 to 31 percent 

at the end of FY 2019. For FY 2020 and FY 2021, the IRS will set the target of 30 percent. 
Department of the Treasury – Budget in Brief

Business Systems Modernization

IRS modernization efforts continued in FY 2019. Some key accomplishments were: 

• WebApps - ID Verify Tool: This tool provides an online option for taxpayers whose return 

has been selected as a potential identity theft return by the IRS’s Taxpayer Protection 

Program. With the ID Verify Tool, taxpayers can provide additional identity verification 

information online rather than on the phone or in person. From February through August 29, 

2019, over 131,000 taxpayers successfully logged in and more than 111,000 (85 percent) of 

unique users were able to resolve their account online.

• Live Assistance – Callback - External Application - Balance Due: This feature gives 

taxpayers on the IRS Toll-Free Balance Due line a callback option when calling to discuss or 

pay a balance due rather than having to wait on the phone for an IRS CSR. When offered, 

approximately 77 percent of taxpayers chose to receive a call back and over 90 percent of 

callbacks successfully reconnected the taxpayer with an IRS CSR.

• Live Assistance - Callback - Internal Application - IRS IT Help Desk: This new feature saves 

staff time by providing a callback option for IRS employees calling the internal help desk for 

IT assistance with their workplace technology.