Internal Revenue Service

Program Summary by Appropriations Account and Budget Activity

FY 2015 FY 2016 FY 2017

Budget Activity Actuals Enacted1 Request $ Change % Change 

Taxpayer Services $2,173,684 $2,333,376 $2,406,318 $72,942 3.13%

Pre-filing Taxpayer Assistance and Education 609,196 629,920 643,197 13,277 2.11%

Filing and Account Services 1,564,488 1,703,456 1,763,121 59,665 3.50%

Enforcement $4,767,563 $4,864,936 $5,216,263 $351,327 7.22%

Investigations 601,665 604,620 714,208 109,588 18.13%

Exam and Collections 4,018,292 4,108,566 4,347,684 239,118 5.82%

Regulatory 147,606 151,750 154,371 2,621 1.73%

Operations Support $3,601,436 $3,746,688 $4,314,099 $567,411 15.14%

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

Shared Services and Support 1,126,230 1,141,485 1,197,954 56,469 4.95%

Information Services 1,641,360 1,772,660 2,221,051 448,391 25.29%

Business Systems Modernization $107,745 $290,000 $343,415 $53,415 18.42%

Subtotal Internal Revenue Service $10,650,428 $11,235,000 $12,280,095 $1,045,095 9.30%

Reimbursables 103,474 133,987 140,686 6,699 5.00%

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

User Fees 438,557 509,309 399,730 (109,579) -21.52%

Recovery from Prior Years 1,908 

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

Transfers In/Out2 7 (5,000) (5,000)

Total Program Operating Level $11,499,313 $12,374,450 $13,244,992 $870,542 7.03%

Direct FTE 78,107 81,572 84,803 3,231 3.96%

Reimbursable FTE 612 643 675 32 4.98%

Offsetting Collections - Non Reimbursables 11 12 12 

User Fee FTE 1,344 876 1,530 654 74.66%

Unobligated Balances from Prior Years 428 

Resources from Other Accounts3 290 2 2 

Total FTE 80,792 83,105 87,022 3,917 4.71%

Dollars in Thousands

FY 2016 TO FY 2017

1

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

(ONDCP) High Intensity Drug Trafficking Area (HIDTA) Program (obligations $7K), and a 2017 transfer out to the Alcohol 

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

2

Resources from Other Accounts include Other Direct FTE funded by the Department of Health and Human Services (287 FTE 

in FY 2015) and the Federal Highway Administration (3 FTE projected for FY 2015, and 2 FTE projected for FY 2016 and 

FY 2017).

1

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

million in Taxpayer Services, $4.9 million in Enforcement, and $108.2 million in Operations Support.
Summary

The Internal Revenue Service (IRS) collects 

the revenue to fund the government and 

administer the nation’s tax laws.

In fiscal year (FY) 2015, the IRS processed 

over 244 million tax returns and other forms,

and collected $3.3 trillion in taxes (gross tax 

receipts before tax refunds of $403 billion),

equating to 93 percent of total federal 

government receipts. The IRS is focusing on a 

series of improvements to the tax 

administration system: a more integrated and 

secure delivery of taxpayer services, a 

movement to administer taxes through more 

efficient customer-focused channels, a more 

streamlined compliance program that identifies 

issues sooner and resolves them more 

efficiently, and a stronger set of foundational 

capabilities to support those efforts.

The IRS is committed to making the tax law 

easier to access and understand through 

taxpayer service and enforcement programs 

that protect the flow of revenue to the 

government; to improving voluntary 

compliance in order to reduce the tax gap (the 

difference between taxes owed and taxes paid 

on time); and to pursuing those who evade or 

misrepresent their tax responsibility. 

While the IRS continues to respond to new 

requirements and rapid changes, many of its

innovative and far-reaching programs risk 

delay or cancellation without adequate 

funding. Over the last several years, the IRS 

has experienced significant budget reductions 

that are creating serious obstacles to its ability 

to fulfill its mission. Fortunately, the IRS has 

been able to execute successful filing seasons

despite these cuts, but this success is often at 

the expense of other important but less visible 

activities including service to taxpayers and 

enforcement activities. These reductions put

voluntary compliance, the foundation of our 

tax system, at risk. 

Total resources requested to support IRS 

activities for FY 2017 are $13,244,992,000. 

This includes $12,280,095,000 from direct 

appropriations, of which $514,748,000 is 

provided via a program integrity cap 

adjustment intended to improve the integrity of 

the tax system, and includes a $5,000,000 

transfer to the Alcohol and Tobacco Tax and 

Trade Bureau (TTB) for high return on 

investment enforcement activities. Resources 

also include an estimated $140,686,000 from 

reimbursable programs, an estimated 

$44,937,000 from offsetting collections, an 

estimated $399,730,000 from user fees, and an 

estimated $384,544,000 from prior year 

unobligated balances. The direct 

appropriations before the cap adjustment

represent an increase of $530,347,000 from the 

FY 2016 Enacted level of $11,235,000,000. 

The total Budget request including the 

program integrity cap adjustment is 

$12,280,095 and 84,803 full time equivalents 

(FTEs).

The IRS Strategic Plan guides program and 

budget decisions and supports Goal 3 of the 

Department of the Treasury FY 2014 to 2017

Strategic Plan to “Fairly and effectively 

reform and modernize federal financial 

management, accounting, and tax systems.” 

IRS senior leaders recognize the need to focus 

its investment process on elements that support 

increased digital service delivery while 

preserving its core mission functions. 

Additionally, IRS recognizes the importance of

improving enforcement processes through 

early issue detection and resolution while 

ensuring minimal taxpayer burden, and

simultaneously maximizing revenue by 

prioritizing the highest value work. The IRS 

has established a new investment process and 

created six strategic themes and one focus area 

to guide its investment strategy and resource 

allocation. These themes align with existing 

Strategic Goals and Objectives and clearly 
articulate the strategic outcomes which the IRS 

seeks to achieve. 

The FY 2017 Budget request balances IRS 

priorities with resource availability and 

provides funding to support: 

Theme 1: Facilitate voluntary compliance 

by empowering taxpayers with secure 

innovative tools and support – Drives the 

IRS towards better delivery of tax 

administration by developing a more 

taxpayer-centric service and compliance model 

with a variety of self-service options, early 

error detection, and resolution tools that will 

reduce taxpayer burden and facilitate 

voluntary compliance. Investments will also

support the implementation of necessary 

technology enhancements related to legislative 

mandates, including the Affordable Care Act 

(ACA).

Theme 2: Understand non-compliant 

taxpayer behavior and develop approaches 

to deter and change it – Leverages data and 

behavioral analytics to target the most 

effective non-compliance work in collection 

and enforcement while delivering a 

compressed, efficient enforcement cycle with 

early, upfront error detection and resolution. 

These investments will fund the use of 

network analysis to investigate abusive tax 

schemes, the enforcement and deterrence of 

non-compliance abroad through the 

implementation of the Foreign Account Tax 

Compliance Act (FATCA), and appropriate, 

balanced coverage by improving audit and 

collection coverage rates. 

Theme 3: Leverage and collaborate with 

external stakeholders - While the IRS is not 

requesting new investments in this theme, the 

IRS is continuing existing efforts to improve

partnerships with all its stakeholders. 

Theme 4: Cultivate a well-equipped, 

diverse, skilled workforce – Although no new 

investments are being requested for this theme, 

the IRS will continue to advance it using

available resources. Deliberate workforce 

planning and knowledge management are 

cornerstones to the IRS’s ability to execute a 

new era of tax administration. Knowledge 

management and a diverse, skilled workforce 

will be achieved through active corporate 

workforce planning that identifies and closes 

skill gaps across the organization. 

Theme 5: Select highest value work using 

data analytics and a robust feedback loop –

The IRS is not requesting new investments for 

this theme. With the next generation of 

analytics, the IRS will continuously improve 

tax administration and the taxpayer experience 

by evaluating the effectiveness of data-driven 

approaches for identifying and resolving 

taxpayer issues accurately and early. This 

theme focuses on harnessing data to inform 

work streams and enhance case selection 

capabilities and also includes an internal and

external feedback loop to avert or address 

compliance issues quickly. 

Theme 6: Drive more agility, efficiency, and 

effectiveness in IRS Operations – Ensures

compliance with Federal Records Act of 1950 

as amended (44 U.S.C. Chapter 31), which 

requires all systems to implement an electronic 

retention policy and the Managing 

Government Records Directive (M-12-18)

which instructs agencies to manage electronic 

records more efficiently and effectively. 

Investments in this area enable faster 

responses to customers. Investments include: 

A robust electronic records management 

program, new software for processing

information returns from third parties; 

improvements to the IRS’s revenue financial 

accounting systems; and funds to keep 

Information Technology (IT) infrastructure

current for existing and newly deployed 

systems. 
These investments will increase organizational 

performance by reducing and eliminating 

manual processes and improving the reliability 

of enterprise infrastructure to support new and 

changing requirements from legislation, 

presidential orders, Government 

Accountability Office (GAO)

recommendations, and demands from 

taxpayers.

Focus Area: Strengthen Cybersecurity and 

Eliminate Identity Theft – Provides 

investments that combat Stolen Identity

Refund Fraud and includes detection and 

prevention, assistance to victims, and law 

enforcement. In addition, the IRS plans to 

institute multiple layers of electronic security, 

including multi-factor authentication for 

access to taxpayer-facing systems and 

authentication at the time of filing. The IRS 

will enhance the security of its networks via 

the use of a cyber-threat forensics, 

implementation of a comprehensive patch 

management system, and the adoption of 

government-wide information security 

continuous monitoring tools as parts of a 

layered defense.

IRS FY 2017 Budget Highlights

Internal Revenue Service $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE

FY 2016 Enacted (before Administrative Provision 113) $2,156,554 27,887 $4,860,000 38,840 $3,638,446 11,752 $290,000 440 $10,945,000 78,919

FY 2016 Administrative Provision 113 $176,822 2,483 $4,936 $108,242 170 $290,000 2,653

Improve Taxpayer Service 176,622 2,483 1,800 178,422 2,483

Cyber Security 95,442 170 95,442 170

Strengthening the Prevention of Identity Theft 200 4,936 11,000 16,136

FY 2016 Enacted $2,333,376 30,370 $4,864,936 38,840 $3,746,688 11,922 $290,000 440 $11,235,000 81,572

Changes to Base:

Maintaining Current Levels (MCLs): $33,446 $75,008 $60,994 $900 $170,348

Pay Annualization 6,440 14,952 5,392 191 26,975

Pay Raise 23,856 55,386 19,975 709 99,926

Non-Pay 3,150 4,670 35,627 43,447

Efficiencies/Savings: ($3,708) (72) - ($58) - ($3,766) (72)

Increase e-File Savings (3,708) (72) - (58) - (3,766) (72)

Subtotal FY 2017 Changes to Base $29,738 (72) $75,008 $60,936 $900 $166,582 (72)

FY 2017 Current Services (Base) $2,363,114 30,298 $4,939,944 38,840 $3,807,624 11,922 $290,900 440 $11,401,582 81,500

Program Increases:

Budget Request Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure Innovative 

Tools and Support

Implement Changes to Deliver Tax Credits and Other Requirements for the 

Affordable Care Act 153,240 153,240

Leverage New Technologies to Advance the IRS Mission 973 52,515 29 53,488 29

Improve Taxpayer Service 33,503 604 14,952 9 48,455 613

Subtotal $33,503 604 $169,165 9 $52,515 29 $255,183 642

Drive More Agility and Efficiency in IRS Operations

Enterprise Electronic Records Management Solution 18,543 46 18,543 46

Subtotal $18,543 46 $18,543 46

Strategic Focus: Strengthen Cybersecurity and Eliminate Identity Theft 

Prevent Identity Theft and Refund Fraud and Reduce Improper Payments 9,701 154 44,975 301 35,363 36 90,039 491

Subtotal $9,701 154 $44,975 301 $35,363 36 $90,039 491

Subtotal FY 2017 Budget Request Program Increases $43,204 758 $44,975 301 $223,071 91 $52,515 29 $363,765 1,179

Total FY 2017 Total Budget Request $2,406,318 31,056 $4,984,919 39,141 $4,030,695 12,013 $343,415 469 $11,765,347 82,679

Cap Adjustment Program Increases:

Facilitate Voluntary Compliance by Empowering Taxpayers with Secure Innovative 

Tools and Support

Enterprise Case Management 7,369 22 598 7,967 22

Subtotal $7,369 22 $598 $7,967 22

Understand Non-Compliant Taxpayer Behavior and Develop Approaches to Deter 

and Change It

Increase Collection Coverage 58,213 678 32,254 21 90,467 699

Increase Audit Coverage 74,161 816 54,274 40 128,435 856

Digitizing Form 990 80 1 2,298 6 2,378 7

FATCA: Implement, Expand Filing Coverage, and Combat Criminal Non-compliance 49,889 203 76,850 70 126,739 273

Pursue Employment Tax and Abusive Tax Schemes 7,210 37 8,576 15,786 37

Increase Investigations of Transnational Organized Crime (TOC) 29,422 130 6,142 35,564 130

Subtotal $218,975 1,865 $180,394 137 $399,369 2,002

Drive More Agility and Efficiency in IRS Operations

Operations and Maintenance for Deployed Business Systems Modernization (BSM) 

Projects 92,174 73 92,174 73

Maintain Integrity of Revenue Financial Systems 10,238 27 10,238 27

Subtotal $102,412 100 $102,412 100

Alcohol and Tobacco Tax and Trade Bureau Transfer:

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

Subtotal $5,000 $5,000

Subtotal FY 2017 Cap Adjustment Program Increases $231,344 1,887 $283,404 237 $514,748 2,124

Subtotal FY 2017 Total Program Increases Including Cap Adjustment $43,204 758 $276,319 2,188 $506,475 328 $52,515 29 $878,513 3,303

Total FY 2017 Total Budget Request Including Cap Adjustment $2,406,318 31,056 $5,216,263 41,028 $4,314,099 12,250 $343,415 469 $12,280,095 84,803

Taxpayer Services Enforcement Operations Support BSM TOTAL
IRS Budget Adjustments

FY 2016 Administrative Provision 113 

(Public Law 114-113) 

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

Section 113 of the Department of the Treasury 

Appropriations Act of 2016 provided

$290,000,000 to: measurably improve the 

customer service representative level of 

service (LOS) rate (the percentage of callers to 

the IRS who receive service from an assistor 

or automated system), improve the 

identification and prevention of refund fraud 

and identity theft, and enhance cybersecurity 

to safeguard taxpayer data. 

These resources, supplemented with user fees,

will allow the IRS to achieve a 65 percent 

LOS during the filing season and 47 percent 

for FY 2016; this is a substantial improvement 

over FY 2015 levels. These resources will also 

increase staff and support technology 

innovation efforts in relation to cybersecurity; 

and improve methods of detecting and 

preventing identity theft/refund fraud patterns 

and schemes.

Maintaining Current Level (MCLs)

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

Funds are requested for annualization of the 

January 2016 pay-raise.

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

Funds are requested for the proposed January 

2017 pay raise.

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

Funds are requested for inflation adjustments 

in non-labor costs such as travel, contracts, 

rent, supplies, and equipment.

Efficiency Savings

-$3,766,000 / -72 FTE

These e-file savings are a result of reduced 

paper returns. The IRS projects 1,026,100 

fewer returns filed on paper in FY 2017

(525,100 individual and 501,000 business

returns).

 

FY 2017 Budget Request Program Increases by Theme and Investment

Investments

(dollars in thousands)

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

FY 2017 Budget Request Program Increase $255,183 642 $18,543 46 $90,039 491 $363,765 1,179

Implement Changes for the ACA 153,240 153,240

Improve Taxpayer Service 48,455 613 48,455 613

Leverage New Tech to Adv the IRS Mission 53,488 29 53,488 29

Enterprise eRecords Management 18,543 46 18,543 46

Identity Theft/Refund Fraud 90,039 491 90,039 491

Cap Adjustment $7,967 22 $399,369 2,002 $102,412 100 $5,000 $514,748 2,124

Enterprise Case Management (PMO) 7,967 22 7,967 22

Increase Collection Coverage 90,467 699 90,467 699

Increase Audit Coverage 128,435 856 128,435 856

Digitizing Form 990 2,378 7 2,378 7

FATCA 126,739 273 126,739 273

Emplymt Tax & Abusive Schemes 15,786 37 15,786 37

Transnat'l Organized Crime (TOC) 35,564 130 35,564 130

O & M for Deployed BSM Projects 92,174 73 92,174 73

Maintain Integrity of Rev Fin Sys 10,238 27 10,238 27

Transfer to TTB 5,000 5,000

FY 2017 Budget Request Program Increase 

including Cap $263,150 664 $399,369 2,002 $120,955 146 $90,039 491 $5,000 $878,513 3,303

The table reflects four of our seven strategic themes or focus areas that were the primary emphasis of our FY 2017 request. The remaining themes (Leverage and collaborate with External stakeholders; Cultivate a well-equipped, 

diverse, skilled and flexible workforce; and Select highest value work using data analytics and robust feedback loop) are also key to advancing our strategic vision, but were not the subject of specific investments in the FY 2017 

Theme 1 Theme 2 Theme 6 Focus Area TTB 

Transfer to TTB High-Return 

on Investment (ROI) Tax 

Enforcement Activities Total

Facilitate Voluntary 

Compliance by Empowering 

Taxpayers with Secure 

Innovative Tools and Support

Understand Non-Compliant 

Taxpayer Behavior and 

Develop Approaches to Deter 

and Change It

Drive More Agility, 

Efficiency, and 

Effectiveness in IRS 

Operations

Strengthen Cybersecurity and 

Eliminate Identity Theft 
Program Increases

FY 2017 Budget Request

+$363,765,000 / +1,179 FTE

Implement Changes to Deliver Tax Credits 

and Other Requirements for the Affordable 

Care Act (ACA) +$153,240,000 / +0 FTE

This investment will support established ACA 

systems capabilities by validating tax credits 

claimed on individual tax returns; assessing 

and collecting penalties, taxes, and fees; 

providing federal tax information to non-IRS 

entities in the insurance marketplaces; and 

reconciling reported income, tax credits, and 

individual shared responsibility payments with 

information returns. While the Department of 

Health and Human Services is responsible for 

health care policy and insurance provisions in 

the legislation, the IRS administers more than 

45 specific tax provisions and numerous crossagency sections related to tax administration. 

This funding will also improve technology 

infrastructure and applications support and 

provide necessary, major modifications to 

existing IRS tax administration systems.

This investment supports the Implement 

Legislative Mandates component of Theme 1, 

Facilitate voluntary compliance by 

empowering taxpayers with secure innovative

tools and support.

Leverage New Technologies to Advance the 

IRS Mission +$53,488,000 / +29 FTE

This investment supports voluntary 

compliance through technology projects that 

will enable better tax administration and 

simple, consistent taxpayer interactions 

through the following three investments: Event 

Driven Architecture (EDA), which reduces 

return processing time; Enterprise Case 

Management (ECM), which consolidates and 

improves multiple case management systems; 

and a Business Systems Modernization (BSM) 

expansion to improve core IRS systems and 

develop systems needed to support the IRS’s 

taxpayer service programs by migrating 

services from expensive, traditional channels 

to the internet through the development of 

additional web applications. 

This investment will support the Development 

of Innovative Technology and Tools 

component of Theme 1, Facilitate voluntary 

compliance by empowering taxpayers with 

secure innovative tools and support.

Improve Taxpayer Service 

$48,455,000 / +613 FTE

• This investment, along with an estimated 

$100 million provided from user fees, will 

allow the IRS to increase full year LOS in 

FY 2017 to 70 percent, up from 47 percent 

in FY 2016, and handle additional 

workload from the expansion of 

enforcement programs. Taxpayers’

expectations are evolving as they continue 

to shift to completing more day-to-day 

tasks and responsibilities online. The IRS 

will invest in delivering high quality and 

timely service to reduce taxpayer burden 

and effectively facilitate voluntary 

compliance. The IRS will also: Invest $5.1 

million and 9 FTE for online accounts to 

modernize and improve self-service 

options for individual taxpayers, and 

ultimately business and international 

taxpayers, by creating an integrated and 

easy-to-use source for timely, accurate, 

and consolidated tax filing and tax account 

information. It will provide the ability to 

correct returns online, which will reduce 

the time and money spent on processing 

amended returns. 

• Invest $1.9 million and 14 FTE to support 

both IRS’s Taxpayer Service and 

Enforcement programs by handling the 

downstream impact in the Taxpayer 

Advocate Service (TAS) from increased 

collection and audit coverage. The 

additional TAS specialists will ensure the 

IRS does not create unnecessary burdens 
or compromise taxpayers’ rights. This 

investment will support the Facilitate 

Voluntary Compliance through Taxpayer 

Service component of Theme 1, Facilitate 

voluntary compliance by empowering 

taxpayers with secure innovative tools and 

support.

Enterprise Electronic Records Management 

Solution +$18,543,000 / +46 FTE

This investment will allow the IRS to manage 

official records more effectively by 

implementing new systems to maintain unified 

records of IRS policy, program, and project 

development and to create a unified, 

searchable archive of IRS e-mails to avoid 

redundant archiving. 

This investment will support the Implement 

New Capabilities and Systems component of 

Theme 6, Drive more agility, efficiency, and 

effectiveness in IRS operations.

Prevent Identity Theft and Refund Fraud and 

Reduce Improper Payments 

+$90,039,000 / +491 FTE

This investment will support a variety of 

capabilities and activities that address 

cybercrime, identity theft, and refund fraud. 

The IRS’s investments to combat stolen 

identity refund fraud include detection and 

prevention, assistance to victims, and law 

enforcement. The IRS will protect taxpayer 

data, successfully combat cyber threats, and 

support taxpayer, partner, and IRS business 

needs using innovative, secure technology. 

This investment supports the Address the 

Increased Workload Associated with Identity 

Theft, Refund Fraud, and Improper Payments, 

and Strengthen Technology to Improve the 

Prevention of Refund Fraud and Improper 

Payments components of the IRS’s Focus 

Area.

FY 2017 Budget Request Cap Adjustment 

Program Increases 

+$514,748,000 / +2,124 FTE

Enterprise Case Management 

+$7,967,000 / +22 FTE 

This investment will fund the ECM Project 

Management Office (PMO) to integrate ECM 

implementation throughout the agency and 

ensure alignment with goals and business 

plans. The PMO will manage collaboration 

and alignment with all aspects of case 

management. 

This investment will support the Facilitate 

Voluntary Compliance through Taxpayer 

Service component of Theme 1, Facilitate 

voluntary compliance by empowering 

taxpayers with secure innovative tools and 

support.

Increase Collection Coverage

+$90,467,000 / +699 FTE

This investment provides nearly 400 additional 

field collection staff to handle more than 

30,000 additional collection cases. Resources 

will support more than 350 additional 

Automated Collection System (ACS) staff to 

address an additional 302,000 ACS cases, and 

expand several Compliance Services 

Collection Operations (CSCO) programs that 

address non-filing and underpayment of taxes 

in the notice process by more than 

320,000 notice dispositions.

This investment will also increase collection 

coverage through the Withholding Compliance

(WHC) program by bringing taxpayers who 

have serious under-withholding problems into 

compliance with tax withholding 

requirements. This program will provide a 

single-entry system to populate multiple 

databases, generate WHC correspondence 

letters, and increase efficiency of WHC 

employees and the accuracy of the data. 
This investment supports the Strengthen Core 

Enforcement Programs and Develop 

Innovative Technology components of 

Theme 2, Understand non-compliant taxpayer 

behavior and develop approaches to deter and 

change it.

Increase Audit Coverage 

+$128,435,000 / +856 FTE

This investment will improve the audit 

coverage rate and close over 32,000 additional 

individual examination cases. Resources will 

also expand the Automated Underreporter 

(AUR) program to process more than 

400,000 additional cases. The IRS will 

implement a quality review program for 

penalty and interest computations.

Audit Coverage investments will provide 

resources for the following projects: 

• Correspondence Imaging for Compliance -

creates a central repository for imaged 

correspondence and allows IRS employees 

to collaborate and resolve compliance 

cases more efficiently.

• QuickBooks accounting software -

provides license for QuickBooks software 

to all revenue agents enabling them to 

accept electronic accounting records and 

reducing taxpayer burden.

• Innocent Spouse Application (ISA) in 

Accounts Management System - enhances

letter generation, post-case closing 

transactions, assigns inventory, and create 

reports that can be queried. 

• Corporate Data Initiative (CDI) -

establishes an enterprise service model for 

developing, operating, and maintaining 

small corporate databases and spreadsheets 

originally developed in Microsoft Access 

or Excel.

• 2D Barcoding for Paper Forms 1040, 

1040X - allows paper returns using 2D 

barcodes to be processed electronically.

This investment will support the Strengthen 

Core Enforcement Programs and Develop 

Innovative Technology components of 

Theme 2, Understand non-compliant taxpayer 

behavior and develop approaches to deter and 

change it.

Digitizing Form 990 +$2,378,000 / +7 FTE

This investment will electronically capture 

data from paper-filed Form 990, Return of 

Organization Exempt from Income Tax, and 

implement 2D barcodes on these returns. This 

will increase audit effectiveness and return 

processing speed, reduce transcription errors, 

and reduce the incidence of inadvertent 

disclosure of information resulting from 

manual redaction errors when posting Forms 

990 to public sources. 

This investment will support the Develop 

Innovative Technology components of 

Theme 2, Understand non-compliant taxpayer 

behavior and develop approaches to deter and 

change it.

FATCA: Implement, Expand Filing 

Coverage, and Combat Criminal 

Non-compliance +$126,739,000 / +273 FTE

This investment will provide staff to identify 

and address high priority international issues

that will ensure that financial institutions and 

other entities comply with FATCA 

requirements. Resources will support the 

build-out of FATCA systems requirements. It 

will fund updates to the legacy electronic 

filing system to modify and process FATCA 

forms, add additional capabilities in the webbased registration system, and enhance 

functionality in the systems that facilitate the 

exchange and processing of FATCA data to 

and from withholding agents, Foreign 

Financial Institutions (FFIs) and Host Country 

Tax Authorities and the United States.
This investment will support the Strengthen 

Core Enforcement Programs and Develop 

Innovative Technology components of 

Theme 2, Understand non-compliant taxpayer 

behavior and develop approaches to deter and 

change it.

Pursue Employment Tax and Abusive Tax 

Schemes +$15,786,000 / +37 FTE

This investment will fund a network analysis 

tool that will enable the IRS to link multiple 

potentially abusive returns or information 

items, facilitating identification of any central 

figure behind a scheme.

This investment will support the Strengthen 

Core Enforcement Programs and Develop 

Innovative Technology components of 

Theme 2, Understand non-compliant taxpayer 

behavior and develop approaches to deter and 

change it.

Increase Investigations of Transnational 

Organized Crime (TOC) 

+$35,564,000 / +130 FTE

This investment will allow IRS employees to 

work with the Office of National Drug Control 

Policy (ONDCP) as well as several 

multiple-agency task forces to support 

investigations of illegal drug trafficking and 

money laundering perpetrated by organizations 

involved in TOC. This investment will allow 

the IRS to complete an additional 

360 investigations annually once new hires 

reach full potential in FY 2019.

This investment will support the Strengthen 

Core Enforcement Programs component of 

Theme 2, Understand non-compliant taxpayer 

behavior and develop approaches to deter and 

change it.

Operations and Maintenance for Deployed 

Business Systems Modernization (BSM)

+$92,174,000 / +73 FTE

This investment increases IRS IT operations 

funding for BSM projects. Once systems 

which are developed and modernized using 

funds from the BSM appropriation are 

deployed into regular operation, they must be 

operated and maintained using funds from the 

Operations Support appropriation. This 

investment partially restores the operations 

support base (FTE, hardware, software, and 

contractual services). 

This investment will support the Implement 

New Capabilities and Systems component of 

Theme 6, Drive more agility, efficiency, and 

effectiveness in IRS Operations.

Maintain Integrity of Revenue Financial 

Systems +$10,238,000 / +27 FTE

This investment will support and improve the 

IRS’s revenue financial accounting systems to 

ensure timely and accurate reporting of tax 

data. 

This investment will support the Provide 

Support for Existing Systems component of 

Theme 6, Drive more agility, efficiency, and 

effectiveness in IRS Operations.

 

Transfer to TTB for High-Return on 

Investment (ROI) Tax Enforcement Activities 

+$5,000,000 

The IRS will transfer $5 million to the Alcohol 

and Tobacco Tax and Trade Bureau (TTB) for 

high-ROI tax enforcement activities. More 

detailed information can be found in the TTB 

chapter of this volume. 
Explanation of Budget Activities

Taxpayer Services

The FY 2017 President’s Budget request is 

$2,406,318,000 in direct appropriations, an 

estimated $36,465,000 from reimbursable 

programs, an estimated $116,841,000 from 

user fees, and an estimated $12,000,000 from 

unobligated balances from prior years for a 

total operating level of $2,571,624,000. This 

appropriation funds the following budget 

activities.

Pre-filing Taxpayer Assistance & Education 

($643,197,000 from direct appropriations, an 

estimated +$83,000 from reimbursable 

resources, and an estimated $3,386,000 from 

user fees)

This budget activity funds services to assist 

taxpayers with understanding and meeting 

their tax obligations, including tax law 

interpretation, publication, production, and 

advocate services. 

Filing & Account Services ($1,763,121,000

from direct appropriations, an estimated 

$36,382,000 from reimbursable resources, 

and an estimated $113,455,000 from user 

fees)

This budget activity funds programs that 

provide filing and account services to 

taxpayers, process paper and electronically 

submitted tax returns, issue refunds, and 

maintain taxpayer accounts. The IRS 

continues to make progress in decreasing 

paper returns and increasing the use of 

electronic filing and payment methods.

Enforcement

The FY 2017 President’s Budget request is 

$4,984,919,000 in direct appropriations, an 

estimated $47,222,000 from reimbursable 

programs, an estimated $44,937,000 from 

non-reimbursable offsetting collections, an 

estimated $14,594,000 from user fees, an 

estimated $30,147,000 from unobligated 

balances from prior years, $231,344,000 as 

part of a program integrity cap adjustment, and 

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

Dollars in Millions

Cost Revenue ROI Cost Revenue ROI

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

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

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

Increase Collection Coverage 90.5 160.5 1.8 127.3 1,216.4 9.6

Increase Audit Coverage 117.1 237.0 2.0 155.3 1,426.7 9.2

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

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

Digitizing Form 990 2.4 0.0 0.0 3.1 0.0 0.0

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

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

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

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

FY 2017 Revenue-Protecting Enforcement Initiatives

Dollars in Millions

Cost Revenue ROI Cost Revenue ROI

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

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

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

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

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

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

First Year (FY 2017) Full Performance (FY 2019)
a negative $5,000,000 transfer from the cap 

adjustment request to the TTB. The total FY 

2017 operating level is $5,348,163,000. 

In conjunction with specified funds provided 

in the IRS Operations Support account, the 

program integrity cap adjustment of 

$514,748,000 will support tax compliance 

investments expected to generate high returns 

on investment in the form of increased tax 

revenues. This appropriation funds the 

following budget activities.

Investigations ($714,208,000 from direct 

appropriations, and an estimated 

$45,789 from reimbursable resources)

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. These programs identify and 

document the movement of legal and illegal 

sources of income and instances of suspected

intent to defraud. This budget activity also 

provides resources for international 

investigations involving U.S. citizens residing 

abroad, non-resident aliens, and expatriates, 

and includes investigation and prosecution of 

tax and money laundering violations 

associated with narcotics organizations.

Exam & Collections ($4,347,684,000 from

direct appropriations, an estimated 

$606,000 from reimbursable resources, and 

an estimated $574,000 from user fees)

This budget activity funds programs that 

enforce the tax laws and increase compliance 

through examination and collection and ensure 

proper payment and tax reporting. It also 

includes campus support of the Questionable 

Refund program and appeals and litigation 

activities associated with exam and collection.

Regulatory ($154,371,000 from direct 

appropriations, an estimated $827,000 from 

reimbursable resources, and an estimated 

$14,020,000 from user fees)

This budget activity funds the development 

and printing of published IRS guidance 

materials; interpretation of tax laws; internal 

advice to the IRS on general non-tax legal 

issues such as procurement, personnel, and 

labor relations; enforcement of regulatory 

rules, laws, and approved business practices; 

and support of taxpayers in the areas of 

pre-filing agreements, determination letters, 

and advance pricing agreements. The Return 

Preparer Program is funded within this activity 

as well as the Office of Professional 

Responsibility, which identifies, 

communicates, and enforces Treasury Circular 

230 standards of competence, integrity, and 

conduct of professionals representing 

taxpayers before the IRS.

Operations Support

The FY 2017 President’s Budget request is 

$4,030,695,000 in direct appropriations, an 

estimated $56,999,000 from reimbursable 

programs, an estimated $268,295,000 from 

user fees, an estimated $66,200,000 from 

unobligated balances from prior years, and 

$283,404,000 as part of a program integrity 

cap adjustment, for a total operating level of 

$4,705,593,000. 

In conjunction with specified funds provided 

to the IRS Enforcement account, the program 

integrity cap adjustment of $514,748,000 will 

support new tax compliance investments that 

are expected to generate high returns on 

investment in the form of increased tax 

revenues. This appropriation funds the 

following budget activities.

Infrastructure ($895,094,000 from direct 

appropriations, and an estimated 

$772,000 from reimbursable resources)

This budget activity funds administrative 

services related to space and housing, rent and 
space alterations, building services, 

maintenance, guard services, and non-IT 

equipment.

Shared Services & Support ($1,197,954,000

from direct appropriations, an estimated 

$23,152,000 from reimbursable resources, 

and an estimated $19,574,000 from user fees)

This budget activity funds policy management, 

IRS-wide support for research, strategic 

planning, communications and liaison, 

protection of sensitive information and the 

privacy of taxpayers and employees, finance, 

human resources, and equity, diversity, and 

inclusion programs. It also funds printing and 

postage, business systems planning, physical 

security, corporate training, legal services, 

procurement, and employee benefits programs.

Information Services ($2,221,051,000 from 

direct appropriations, an estimated 

$33,075,000 from reimbursable resources, 

and an estimated $248,721,000 from user 

fees)

This budget activity funds staffing, equipment, 

and related costs to manage, maintain, and 

operate the information systems critical to the 

support of 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 the mainframes, servers, 

personal computers, networks, and a variety of 

management information systems.

Business Systems Modernization

The FY 2017 President’s Budget request is 

$343,415,000 in direct appropriations, and an 

estimate of $276,197,000 from unobligated 

balances from prior years for a total operating 

level of $619,612,000. This appropriation 

funds the following budget activity.

Business Systems Modernization

This budget activity funds the planning and 

capital asset acquisition of IT to modernize 

IRS business systems, including labor and 

related contractual costs. It funds investments 

in systems which enhance the IRS’s capability 

to detect, resolve, and prevent tax 

noncompliance, simplify the taxpayer’s online 

experience, provide secure digital 

communications, and add more interactive 

capabilities to existing web self-service 

products. 

Legislative Proposals

The FY 2017 President’s Budget request 

includes a number of legislative proposals 

intended to reduce the tax gap and improve tax 

compliance with minimal taxpayer burden. 

The Treasury Office of Tax Analysis (OTA) 

estimates these new tax gap proposals will 

increase revenue by $82.2 billion over the next 

ten years, which includes $63.6 billion 

generated by program integrity cap 

adjustments. The IRS estimates the 

implementation costs for the FY 2017

President’s Budget tax gap proposals to be 

$57.2 million (excluding the program integrity 

cap adjustments ten-year cost) over three 

years, including the initial startup, processing, 

and compliance operational costs. Note that in 

a few cases estimates are not yet available. 

The Administration proposes to expand 

information reporting and sharing, improve 

compliance by businesses, and strengthen tax 

administration. The Budget also proposes to 

amend the Balanced Budget and Emergency 

Deficit Control Act of 1985 (BBEDCA), as 

amended, to provide 10-years (FYs 2017-

2026) of discretionary caps to permit program 

integrity cap adjustments, which cost about 

$18 billion while generating approximately 

$64 billion, for a net savings of $46 billion

over the 10-year budget window.

The IRS requests Streamlined Critical Pay 

(SCP) authority through September 30, 2020. 
This authority expired September 30, 2013. 

Currently there are 14 senior employees under 

SCP appointments, down from a peak of 30. 

If the SCP is not renewed, the IRS will face 

challenges recruiting and retaining top-level 

talent through FY 2017 as the remaining SCP 

term appointments expire, especially IT 

professionals who can help protect taxpayer 

data from cyber-attacks and who are working 

to modernize the IRS's IT infrastructure. 

According to Treasury Inspector General for 

Tax Administration report 2015-IE-R001, The 

Internal Revenue Service’s Use of Its 

Streamlined Critical Pay Authority, “Private 

sector expertise had been crucial to 

introducing new leadership to supplement 

in-house expertise, and the IRS had taken 

advantage of the private sector expertise by 

retaining the critical pay appointees whenever 

feasible.”

The IRS requests that the 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 

as high. The Treasury Inspector General for 

Tax Administration (TIGTA) has also 

recommended that precautions continue to be 

taken regarding the Commissioner’s safety due 

to the elevated threat environment.

IRS Performance by Program

Key: DISC – Discontinued 

Description of Performance

In FY 2015, the IRS continued to provide 

quality service to taxpayers and enforce the 

laws with integrity and fairness, but was 

unable to maintain some of its performance 

levels due to resource constraints. 

Nevertheless, the IRS continued to deliver in 

key areas, including international, tax exempt, 

and refund fraud, including identity theft.

Taxpayer Service Customer Contacts Resolved Per 

Staff Year (E) 20,767 21,018 26,245 21,000 28,000 25,700 

Taxpayer Service Customer Service Representative 

(CSR) Level of Service (%) (Oe) 60.5 64.4 38.1 38.0 47.0 70.0

Taxpayer Service Percent of Individual Returns 

Processed Electronically (%) (Oe) 82.5 84.1 85.3 84.6 86.0 86.0

Enforcement Automated Collection System

(ACS) Accuracy (%) (Oe) 94.4 95.2 95.3 94.0 95.0 95.0

Enforcement Automated Underreporter (AUR)

Coverage (%) (E) 2.8 2.6 2.3 2.6 2.2 2.3

Enforcement Examination Efficiency - Individual 

(Form 1040) (E) 142 138 148 135 122 122 

 

FY 2017

Target

FY 2016

Target Programs Performance Measure FY 2013 Actual

FY 2015

Actual

FY 2014

Actual

FY 2015

Target
Taxpayer Services

Providing taxpayers top-quality service and 

helping them understand and meet their tax 

obligations remain top priorities for the IRS. 

The IRS strives to deliver high quality and 

timely service to taxpayers and stakeholders. 

Although the IRS had significant 

accomplishments serving taxpayers in 

FY 2015, budget constraints forced the IRS to 

focus on its top priorities and reduce funding 

in many areas. The IRS achieved the 

following results through September 2015:

• Published more than 90 percent of the 

700 revised or newly created individual 

and business tax products prior to the start 

of the filing season;

• Received more than 139 million individual 

returns, of which 87 percent were filed 

electronically

• Provided a 38.1 percent LOS;

• Answered more than 9.7 million assistor 

calls; and

• Achieved accuracy rates of 95.0 percent 

for tax law questions and 95.5 percent of 

account questions received via the 

telephone.

In FY 2015, the IRS provided valuable 

services to millions of taxpayers while making 

it easier for them to participate in the tax 

system. The IRS:

• Assisted over 217,000 customers with 

return preparation at VITA sites through 

Facilitated Self-Assistance (FSA) and 

30,000 using Virtual VITA;

• Launched the Free File campaign at the 

beginning of the 2015 filing season and 

received more than 650,0000 visits to the 

Free File website in the first week;

• Completed evaluations and onsite visits for 

several countries that have signed or 

agreed-in-substance intergovernmental 

agreements (IGAs) to determine a 

country’s ability to safeguard taxpayer 

information, in accordance with FATCA 

guidelines; 

• Produced 117 Tax Tips (110 with Spanish 

translations) reaching more than 

632,000 e-mail subscribers; and

• Issued 102.6 million refunds to individuals 

totaling $276.9 billion. 

The IRS is building an environment of 

multiple digital service options. In FY 2015, 

the IRS launched or enhanced an array of 

services:

• IRS2Go Mobile, Version 5. IRS2Go 

Mobile enables taxpayers to make 

electronic payments, find the nearest 

location offering free volunteer tax help, 

and uses responsive design to update the 

app for screen sizes of multiple devices. In 

FY 2015, IRS2Go was downloaded more 

than 2.3 million times and had over 3.8 

million active users

• Third Party Data Services Pilot. Enables 

the IRS to share refund status data with 

third parties (tax preparation firms, tax 

preparation software, and state and federal 

agencies) that require individual taxpayer 

information. 

• Online Payment Agreement (OPA). New 

updates improved the user experience for a 

number of functions including log-in and 

authentication, setting up direct debit, and 

providing better access for business users. 

Since its launch, more than 200,000 OPA 

agreements were completed representing 

more than $650 million in revenue from 

web transactions.

• IRS Direct Pay, Release 3. Adds 

responsive design and enhancements; 

email confirmations of payments, 

cancellations, or reversals, and a Spanish 

language version. Since the November 

2013 launch, the IRS has collected 

$17 billion through this application, of 

which $14.9 billion was collected in 

FY 2015.

• Directory of Federal Preparers with 

Credentials and Select Qualifications. 

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

January 2015, customers performed more 

than 200,000 searches.

• Payment Mix Comparison Tool. Enables 

preparers, on behalf of the business 

taxpayer community, to compare the 

portion of gross receipts from credit card 

receipts to the business plans of similar 

businesses from prior years. This tool is 

intended to encourage accurate reporting 

by payment recipients and help close the 

tax gap.

• Optimized Virtual Service Technology 

Delivery (VSD). Allows taxpayers to have 

face-to-face interactions with an IRS 

assistor who is working in a remote 

location by using video monitors stationed 

at non-IRS owned taxpayer support sites. 

So far, IRS has deployed this technology at 

five sites. 

These new services improved existing 

in-person assistance and phone service to help 

the IRS collect $3.3 trillion in revenue for 

FY 2015 and process 244 million tax returns 

and other forms. 

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 

provided free tax assistance for the elderly, 

disabled, and limited English proficient 

individuals and families. More than 

3.6 million tax returns were filed at Volunteer 

Income Tax Assistance/Tax Counseling for the 

Elderly volunteer sites.

Enforcement

In FY 2015, the IRS collected more than 

$54.2 billion, a 9 percent decrease from 

FY 2014. This is the sixth consecutive year 

the IRS exceeded $50 billion in enforcement 

revenue for a total IRS-wide ROI of $5.0 to 

$1. It is important to note, however, that a 

variety of factors beyond the IRS’s control 

impact enforcement revenue collections, 

including changes in tax policy and the health 

of the macroeconomy. Thus, the relatively 

stable revenues should not be interpreted to 

suggest that budget cuts have not reduced 

IRS’s enforcement capabilities. In fact, the 

individual examination coverage rate has 

steadily declined from 1.1 percent in FY 2010 

to 0.8 percent in FY 2015. If IRS enforcement 

funding had remained at FY 2010 levels, 

FY 2015 collections would have been higher. 

Figure 1: IRS Enforcement Revenue

The ROI estimate does not include the revenue 

effect of the indirect deterrence value of these 

investments and other IRS enforcement 

programs, which is conservatively estimated to 

be at least three times the direct revenue 

impact.

The IRS CI 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. Highlights of IRS CI’s

Enforcement performance through FY 2015

include:

• Completed 4,486 criminal investigations 

and obtained 2,879 convictions;

• Identified 1,281 questionable refund 

schemes reflecting $1.2 billion in 

potentially fraudulent refunds claims and 

also imposed limits on the number of 

refunds that can be deposited in a single 

bank account. As a result, 205,019 refunds 

totaling $863 million were converted to 

paper.

48.9 57.6 55.2 50.2 53.3 57.1 54.2

0

10

20

30

40

50

60

FY

2009

FY

2010

FY

2011

FY

2012

FY

2013

FY

2014

FY

2015

In Billions

 
• Received 28,635 taxpayer applications 

from the Offshore Voluntary Compliance 

Disclosure Program, which permits 

taxpayers to voluntarily disclose that they 

failed to report income in offshore bank 

accounts.

Congress passed FATCA in 2010 to improve 

tax compliance for foreign accounts and 

cross-border transactions. FATCA aims to 

ensure that offshore investment activities are 

properly captured for tax administration 

purposes by instituting reporting requirements 

for foreign financial institutions. In FY 2015, 

the IRS:

• Added additional capabilities to the 

FATCA registration website and released 

second-generation software for FATCA 

registration. 

• Released the International Data Exchange 

Service – which consists of testing with 

foreign partners to enable them to conduct 

FATCA reporting; and

• Initiated and deployed the International 

Compliance Management Model (ICMM), 

a new system that receives processes, 

manages, and stores FATCA data and 

modernizes communications with foreign 

governments that have Intergovernmental 

Agreements (IGAs) and Competent 

Authority Arrangements (CAAs). ICMM 

processes FATCA reports filed 

electronically or on paper. 

The IRS also implemented an initiative to 

improve the Fraud Referral Program and 

examinations of 501(c) tax exempt entities

allowing the IRS to identify 19 entities 

involved in illicit terrorist financing schemes.

During FY 2015, the IRS continued its 

implementation of the ACA and outreach 

activities to ensure that taxpayers were aware 

of the new tax provisions under the ACA. The 

IRS successfully implemented two major 

provisions: the Refundable Premium Tax 

Credit; and individual shared responsibility for 

both individual taxpayer returns and 

information returns from employers and 

insurers. 

During the 2015 filing season, new technology 

allowed taxpayers to report health insurance 

coverage, claim health coverage exemptions, 

report a shared responsibility payment, and 

claim the Premium Tax Credit. 

The IRS also built the ACA Verification 

Service (AVS), to enable at-filing checks of 

tax returns for reporting the Premium Tax 

Credit, leveraging third-party data from the 

Insurance Marketplaces and validating ACArelated tax forms. This system, which 

processed millions of tax returns, helped 

identify fraudulent and erroneous returns at the 

initial processing stage, thereby reducing the 

number of erroneous refunds. 

Business Systems Modernization

IRS modernization efforts continued in 

FY 2015:

• Return Review Program (RRP) Initiated 

the RRP pilot project, which successfully 

loaded and scored over 98 million 

electronic refund returns. Of those returns, 

nearly 800,000 were identified as potential 

ID theft fraud, representing potentially 

more than $4.7 billion in government 

revenues protected. By identifying 

suspicious cases earlier in the process, 

RRP was able to reduce the amount of 

manual analysis work by 20 percent. In its 

inaugural filing season, RRP operated 

without interruption.

• CADE 2 Received Executive Steering 

Committee approval of the Customer 

Account Data Engine (CADE) 2 Transition 

State 2 (TS2) five-year release plan. In 

addition to continued support of the IRS’s 

current tax processing needs, the plan 

includes expansion of CADE 2 

capabilities. The TS2 five-year release 

plan will address the Unpaid Assessment 

Financial Material Weakness, leverage the 
CADE 2 database as the Authoritative 

Source for Financial Statement Audit and 

Reporting, and begin the migration of core 

Individual Master File (IMF) functions 

from Assembly Language Code (ALC) to a 

modern computer language. Notably, an 

update in FY 2015 prevented issuance of 

erroneous notices for limited Failure to Pay 

Penalties and another enabled capturing 

historic financial data expected to be useful 

in audit processes.

Summary of IRS FY 2017 ACA Budget Request

Affordable Care Act (ACA) $000 FTE $000 FTE $000 FTE $000 FTE

FY 2016 Enacted $71,793 935 $19,984 185 $112,840 724 $204,617 1,844

Changes to Base:

Maintaining Current Levels (MCLs): $1,108 $310 $1,719 $3,137

Pay Annualization 233 66 344 643

Pay Raise 865 243 1,273 2,381

Non-Pay 10 2 102 114

Subtotal FY 2017 Changes to Base $1,108 $310 $1,719 $3,137

FY 2017 Current Services (Base) $72,901 935 $20,294 185 $114,559 724 $207,754 1,844

Program Increases:

Budget Request Program Increases:

Implement Changes to Deliver Tax Credits 

and Other Requirements for the ACA 153,240 153,240

Improve Taxpayer Service 32,021 590 9,399 41,420 590

Subtotal FY 2017 Budget Request Program Increa $32,021 590 $162,639 $194,660 590

Total FY 2017 Total Budget Request $104,922 1,525 $20,294 185 $277,198 724 $402,414 2,434

TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT TOTAL