Department of the Treasury

Internal Revenue Service

Congressional Justification

for Appropriations and

Annual Performance

Report and Plan

FY 2018
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Table of Contents

Section I – Budget Request......................................................................................................3

1A – Mission Statement........................................................................................................3

1.1 – Appropriations Detail Table.......................................................................................3

1B – Summary of the Request.............................................................................................4

1.2 – Budget Adjustments Table .........................................................................................8

1C – Budget Increases and Decreases Description............................................................8

1.3 – Operating Levels Table.............................................................................................11

1D – Appropriations Language and Explanation of Changes........................................12

1E – Legislative Proposals .................................................................................................16

Section II – Budget and Performance Plan..........................................................................17

Taxpayer Services...............................................................................................................17

2.1 – Budget Adjustments Table.......................................................................................18

2.2 – Operating Levels Table............................................................................................19

2.3 – Appropriation Detail Table ......................................................................................20

2A – Pre-Filing Taxpayer Assistance and Education .......................................................20

2.1.1 – Budget and Performance Report and Plan ............................................................22

2B – Filing and Account Services.....................................................................................23

2.1.2 – Budget and Performance Report and Plan ............................................................25

Enforcement........................................................................................................................27

2.1 – Budget Adjustments Table.......................................................................................28

2.2 – Operating Levels Table............................................................................................29

2.3 – Appropriation Detail Table ......................................................................................30

2C – Investigations............................................................................................................30

2.1.3 – Budget and Performance Report and Plan ............................................................32

2D – Exam and Collections ..............................................................................................32

2.1.4 – Budget and Performance Report and Plan ............................................................37

2E – Regulatory ................................................................................................................38

2.1.5 – Budget and Performance Report and Plan ............................................................39

Operations Support............................................................................................................41

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

2.2 – Operating Levels Table............................................................................................43

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

2F – Infrastructure.............................................................................................................44

2.1.6 – Budget and Performance Report and Plan ............................................................45

2G – Shared Services and Support....................................................................................45

2.1.7 – Budget and Performance Report and Plan ............................................................48

2H – Information Services................................................................................................48

2.1.8 – Budget and Performance Report and Plan ............................................................51

Business Systems Modernization ......................................................................................52
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2.1 – Budget Adjustments Table.......................................................................................53

2.2 – Operating Levels Table............................................................................................54

2.3 – Appropriation Detail Table ......................................................................................55

2I – Business Systems Modernization ..............................................................................55

2.1.9 – Budget and Performance Report and Plan ............................................................58

Section III................................................................................................................................59

3.1 – Summary of Capital Investments.............................................................................59

3.2 – Return on Investment (ROI) for IRS Major Enforcement Programs..................61

3.3 – IRS Performance Measure Table.............................................................................63

3.4 – Reducing the Tax Gap...............................................................................................67

3.5 – Summary of IRS FY 2018 Budget Request.............................................................68
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Section I – Budget Request

1A – Mission Statement 

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

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

1.1 – Appropriations Detail Table

Dollars in Thousands

1FY 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. FY 2016 Enacted includes the approved inter-appropriation 

transfer of $150 million from Enforcement to Operations Support.

2A full-year 2017 appropriation for this account was not enacted at the time the budget was prepared; therefore, the budget assumes this account 

is operating under the Further Continuing Appropriations Act, 2017 (P.L. 114–254). The amounts included for 2017 reflect the annualized level 

provided by the continuing resolution. FY 2017 Annualized CR includes $289.5 million in Section 113 Administrative Provision funding in the 

following amounts: $208.9 million in Taxpayer Services, and $80.6 million in Operations Support.

3Resources from Transfers In/Out include a FY 2016 transfers between IRS and the Office of National Drug Control Policy (ONDCP) High 

Intensity Drug Trafficking Area (HIDTA) Program (obligations of $7,000).

4Resources from Other Accounts include Other Direct FTE funded by the Federal Highway Administration (2 FTE in FY 2016).

Internal Revenue Service

Appropriated Resources

New Appropriated Resources: FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Taxpayer Services 28,316 $2,333,376 28,455 $2,328,940 24,392 $2,212,311 (4,063) ($116,629) -14.28% -5.01%

Pre-Filing Taxpayer Assistance and 

Education 5,009 620,338 4,978 625,829 4,458 600,717 (520) (25,112) -10.45% -4.01%

Filing and Account Services 23,307 1,713,038 23,477 1,703,111 19,934 1,611,594 (3,543) (91,517) -15.09% -5.37%

Enforcement 37,564 $4,714,936 36,349 $4,855,688 35,049 $4,706,500 (1,300) ($149,188) -3.58% -3.07%

Investigations 3,184 596,417 3,126 624,462 2,893 606,747 (233) (17,715) -7.45% -2.84%

Exam and Collections 33,426 3,981,257 32,251 4,083,908 31,199 3,967,808 (1,052) (116,100) -3.26% -2.84%

Regulatory 954 137,262 972 147,318 957 131,945 (15) (15,373) -1.54% -10.44%

Operations Support 11,078 $3,896,688 11,441 $3,739,565 11,365 $3,946,189 (76) $206,624 -0.66% 5.53%

Infrastructure - 848,191 - 861,229 - 860,643 - (586) N/A -0.07%

Shared Services and Support 4,861 1,110,811 4,981 1,014,139 4,871 1,011,411 (110) (2,728) -2.21% -0.27%

Information Services 6,217 1,937,686 6,460 1,864,197 6,494 2,074,135 34 209,938 0.53% 11.26%

Business Systems Modernization 442 $290,000 593 $289,449 229 $110,000 (364) ($179,449) -61.38% -62.00%

Subtotal New Appropriated 

Resources 77,400 $11,235,000 76,838 $11,213,642 71,035 $10,975,000 (5,803) ($238,642) -7.55% -2.13%

Other Resources:

Reimbursables 640 104,358 684 116,286 711 122,099 27 5,813 3.95% 5.00%

Offsetting Collections - Non 

Reimbursables - 19,212 - 28,134 - 29,541 - 1,407 N/A 5.00%

User Fees 524 343,642 170 503,076 164 525,650 (6) 22,574 -3.53% 4.49%

Recovery from Prior Years - 27,751 - 4,773 - - - (4,773) N/A -100.00%

Unobligated Balances from Prior Years - 451,869 - 374,465 - 268,875 - (105,590) N/A -28.20%

Transfers In/Out3 - 126 - - - - - - N/A N/A

Resources from Other Accounts4 2 - - - - - - - N/A N/A

Subtotal Other Resources 1,166 $946,958 854 $1,026,734 875 $946,165 21 ($80,569) 2.46% -7.85%

Total Budgetary Resources 78,566 $12,181,958 77,692 $12,240,376 71,910 $11,921,165 (5,782) ($319,211) -7.44% -2.61%

% Change

FY 2016

Enacted1

FY 2017

Annualized CR2

FY 2018

Request

FY 2017 to FY 2018 

Request

FY 2017 to FY 

2018 Request

Change
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1B – Summary of the Request 

FY 2018 Budget Request

The IRS FY 2018 President’s Budget request is $10.975 billion, $239.6 million or 2.1 percent

below the FY 2017 Annualized Continuing Resolution level. The IRS will continue to seek 

less costly ways of delivering taxpayer service and maintaining enforcement using 

technology, training, and internal efficiencies. The IRS will:

• Assist taxpayers with tax questions before they file to prevent inadvertent 

noncompliance and reduce burdensome post-filing notices and other correspondence 

from the IRS. 

• Print forms and publications, process tax returns, offer filing and account services, 

ensure the availability of taxpayer assistance, and provide taxpayer advocacy services.

• Review tax returns, both domestic and international. Leverage data and behavioral 

analytics to target the most effective non-compliance work in collection and 

enforcement while delivering a compressed, efficient enforcement cycle with early, 

upfront error detection and resolution. 

• Address the increasing number of cybersecurity threats by modernizing systems to 

protect taxpayer information.

• Refresh aged IT infrastructure to ensure the integrity and continued operation of the 

tax administration system. 

• Recruit top talent and retain our most valuable resource, our people, using tools like 

the requested streamlined critical pay authority (see section 1E – Legislative 

Proposals). 

The Budget includes resources to retain key personnel and align the IRS workforce for the 

future. There is no more critical challenge at the IRS than delivering a smooth filing season. 

This is achieved each year because of the dedication, talent, and experience of IRS 

employees. 

The Budget invests in IT infrastructure modernization. With the growing reliance on IT as an 

integral part of the solution to provide improved taxpayer services and enforcement, the IRS 

must continue to modernize to harness new information delivery models and manage data. 

Infrastructure modernization is necessary to increase agility, efficiency, and service quality, 

ultimately reducing operational cost. 

The IRS will strive to modernize infrastructure using business process reengineering, system 

virtualization, data center consolidation, and adherence to hardware and software standards. 

The long-term dividends of upgrading the infrastructure and systems include: reducing the 

number of computer rooms by replacing old servers with new, energy efficient, more compact 

servers; advancing IT hardware and software development for creating a web-based, digital 
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communications channel that allows taxpayers and the IRS to communicate directly via 

secure messages and secure live capabilities; allowing the IRS to improve the management 

and tracking of records; allowing real time access to records for quicker response times;

improving security and safeguard records from loss; providing reliable disaster recovery 

capabilities through automation; and allowing the IRS to keep pace with new industry 

standards.

Strategic Plan 

The Department of the Treasury is in the process of developing a new strategic plan for fiscal 

years 2018 – 2022 in accordance with the Government Performance and Results Act (GPRA) 

Modernization Act of 2010. The IRS will publish its FY 2018 - FY 2022 Strategic Plan by 

June 2018. The IRS is soliciting input on the plan from its employees as well as from external 

stakeholders. The plan will serve as a roadmap to guide its operations to meet the changing 

needs and expectations of taxpayers and those in the tax community who serve them. 

Return on Investment

The IRS remains one of the most cost-effective investments in the federal government and 

resources invested in the IRS increase revenue collections. This unique and critical role is 

vital to the functioning of the U.S. Government and to keeping the nation and economy 

strong. In FY 2016, the IRS collected more than $3.3 trillion in tax revenue, processed more 

than 244 million tax returns and other forms, and issued more than $426 billion in tax refunds. 

As collections continue to increase, the IRS remains one of the most efficient tax 

administrators in the world. For every $100 collected in taxes, the IRS spends only thirty-five 

cents. The IRS enforcement programs collected more than $54.3 billion in FY 2016, a return

on investment (ROI) of about $5 to $1. The ROI estimate does not include the revenue effect 

of the deterrence value of these investments and other IRS enforcement programs

2016 Filing Season

Through months of planning and collaboration with key stakeholders, the IRS delivered a 

successful 2016 filing season and opened on time on January 19, 2016. The IRS increased its 

staffing for taxpayer telephone service operations to address demand and provide a higher 

level of service (LOS) during the filing season. To prepare for the 2016 filing season, during 

the summer and fall of 2015, the IRS revised 635 tax products, including the tax provisions in

Protecting Americans from Tax Hikes (PATH) Act of 2015, and implemented more than 

400 changes to more than 150 different tax products. 
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Other highlights from the 2016 filing season include: 

• Delivered a filing season telephone LOS of 72.1 percent, a substantial improvement 

over the 37.4 percent delivered during the 2015 filing season.

• Answered more than 13.1 million calls, 5.3 million more calls than in 2015. The 

average speed of answer was 11 minutes, compared to 23 minutes in the 2015.

• Received more than 136.5 million individual returns, 1.7 percent more than last year. 

Electronically filed returns increased by 2.6 percent and accounted for 89.8 percent of

the returns filed.

• Received more than 29.9 million business returns, 3.2 percent more than in 2015.

• Filed more than 17.5 million business returns electronically, an increase of 7.6 percent 

from 2015.

• Issued more than 97 million refunds for a total of $263 billion, with an average refund 

of $2,711, of which 83.7 percent were direct-deposit.

• Worked with our Security Summit partners from state tax agencies and the broader tax 

community to add extra layers of security protection for the filing season.

• Launched Finding Out How Much You Owe on IRS.gov, which provides information 

to taxpayers with straightforward balance inquiries in a secure, easy, and convenient 

way. In the first month after its launch in late 2016, taxpayers checked their account 

balance nearly 54,000 times, and made more than 6,700 tax payments, worth more 

than $21 million, through Direct Pay. 

• Released the 100th IRS eBook for mobile devices in the ePub format.

• Expanded appointment services to all IRS Taxpayer Assistance Centers (TAC). 

Before 2015, TACs served taxpayers face to-face on a first-come, first-served model 

resulting in long lines of taxpayers waiting for service, especially during tax filing 

season. The IRS initiated an appointment-service by expanding appointments to 

376 TAC sites and 28 virtual sites located in external partner offices. This expansion 

resulted in fewer on-site contacts and shorter wait times with more than 91 percent of 

Total Returns Processed 202 million

Total Returns and Other Forms Processed 244.9 million

Total Revenue Collected $3.3 trillion

Enforcement Revenue Collected $54.3 billion

Total Refunds and Outlays $426 billion

Average Individual Refund $2,795

E-File Rate – Individual 86.4%

E-File Rate – Business 50.0%

IRS.gov Page Views 1.9 billion

“Where’s My Refund?” Usage 299.6 million

Number of Downloads from IRS.gov 121.5 million

FY 2016 Tax Stats At-A-Glance
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taxpayers receiving help within 30 minutes. In addition, more than half of the 

taxpayers who called to make an appointment were able to resolve their issue 

immediately, thereby saving a visit to the assistance center. 

• Launched new online tools allowing taxpayers and third parties to communicate and 

transact with the IRS securely and faster.

• Stopped $4 billion in fraudulent refunds claimed by identity thieves on 787,000 tax 

returns through new screening criteria. 

• Registered nearly 190,000 financial institutions in compliance with the Foreign 

Account Tax Compliance Act (FATCA), while more than 5,000 financial institutions 

have enrolled in the International Data Exchange Service to submit FATCA returns to 

the IRS.

2017 Filing Season

The IRS recently completed a successful 2017 filing season on April 22, 2017. During this 

filing season, the IRS received more than 135 million individual tax returns, and issued over 

97 million refunds totaling over $268 billion. Over 90 percent of individual returns received 

were filed electronically. The IRS.gov web site was visited more than 312 million times and 

taxpayers used the Where’s My Refund? tool over 246 million times. Filing season LOS 

reached 79 percent, its highest level since 2007. Assistors answered nearly 10 million calls, 

and another 18 million calls were answered through automated systems. 
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1.2 – Budget Adjustments Table

Dollars in Thousands

Internal Revenue Service FTE Amount

FY 2017 Annualized CR 76,838 $11,213,642 

Changes to Base:

Maintaining Current Levels (MCLs) - $220,035 

Pay Raise - 122,449 

Pay Annualization - 44,877 

Non-Pay Inflation Adjustment - 52,709 

Resource Adjustments - -

Base Realignment for Support Services - -

Adjustments for Administrative Provision Section 113 - -

Subtotal Changes to Base - $220,035 

Total FY 2018 Base 76,838 $11,433,677 

Program Changes:

Program Increase:

Realignment to Support Aging IT Infrastructure 266 179,449 

Program Decreases:

Realignment to Support Aging IT Infrastructure (355) (179,449)

Actions to Achieve Workforce Management Goals (5,714) (458,677)

Subtotal Program Changes (5,803) ($458,677)

Total FY 2018 Request 71,035 $10,975,000 

1C – Budget Increases and Decreases Description

Maintaining Current Levels (MCLs).....................................+$220,035,000 / 0 FTE

Pay Raise +122,449,000 / 0 FTE 

Funds are requested for the proposed January 2018 pay raise. 

Pay Annualization +$44,877,000 / 0 FTE 

Funds are requested for annualization of the January 2017 pay raise.

Non-Pay +$52,709,000 / 0 FTE 

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

equipment.

Resource Adjustment 

Base Realignment for Support Services $0 / 0 FTE

In recent years, the IRS has relied on transfers of resources from the Enforcement

appropriations account to maintain core functions, information technology, and related 
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support services. These transfers have enabled the IRS to provide front-line employees with 

the tools, equipment, analytics, secure facilities, and technology support necessary to serve

taxpayers and to maintain taxpayer customer service. In lieu of a similar transfer in FY 2018, 

the IRS proposes to permanently realign $145 million from Enforcement to Operations 

Support ($55 million) and Taxpayer Services ($90 million). 

Adjustment for Administrative Provisions Section 113 $0 / 0 FTE

Section 113 of the Consolidated Appropriations Act, 2016 at the FY 2017 annualized 

continuing resolution level provides $289.5 million to improve the customer service 

representative LOS rate, improve the identification and prevention of refund fraud and 

identity theft, and enhance cybersecurity to safeguard taxpayer data. This funding is assumed 

in the FY 2018 base and includes $208.9 million in Taxpayer Services (an increase of 

$32.1 million over FY 2016) and $80.6 million in Operations Support (a decrease of 

$27.6 million) for customer service. 

Program Increase.........................................................+$179,449,000 / +266 FTE

Aging IT Infrastructure +$179,449,000 / +266 FTE

The IRS will make progress towards decreasing the backlog of deferred software and 

hardware updates by realigning $179 million and 266 FTE from the BSM appropriation to the 

Operations Support appropriation in FY 2018. 63 percent of IRS IT hardware systems are 

aged and out of warranty and 32 percent of software products are two or more releases behind 

the industry standard, with 15 percent more than four releases behind. Every year, another 

20 percent of hardware moves to a status of aged beyond the manufacturers recommended 

useful life, if not replaced. This aging infrastructure puts the American tax system at risk of 

failure. Such conditions introduce security risks, excessive system downtime, systems and 

hardware no longer supported by the vendor, and incompatibilities across systems and 

programs. Aging IRS infrastructure was elevated by the IRS Enterprise Risk Council has 

elevated aging IRS infrastructure to the highest priority corporate risk. 

Program Decreases...................................................-$638,126,000 / -6,069 FTE

Realignment to Support Aging IT Infrastructure -$179,449,000 / -355 FTE

An estimated $179 million will be realigned to the Operations Support appropriation to 

decrease the backlog of deferred software and hardware updates, which are a critical priority 

and must be prioritized before development and modernization of new systems. With the 

FY 2018 request, the IRS will pause the development of Enterprise Case Selection, Event 

Driven Architecture, and Modernized eFile. The IRS will continue development of Customer 

Account Data Engine 2, Return Review Program and Web Applications, supported by

Architecture Integration and Management, Core Infrastructure. In addition, IRS will continue 

to explore alternative Enterprise Case Management solutions.

Actions to Achieve Workforce Management Goals -$458,677,000 / -5,714 FTE

The IRS will realize reductions in Taxpayer Services, Enforcement, Operations Support, and 

Business Systems Modernization (BSM) by reducing costs and streamlining operations. The 

IRS will mitigate the effect of this reduction by allocating funding from user fees to critical

performance areas. The IRS will reduce staffing, supply, and contractual cost in all four 
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accounts by an estimated $220 million. Additionally, Taxpayer Services seasonal staffing 

costs will be reduced by an estimated by $239 million. The IRS will continue to provide 

service to taxpayers via a range of channels from the internet to telephones to face-to-face 

field assistance. The use and delivery of more online tools and other improved service 

channels, such as virtual tax assistance sites, will help the IRS operate in a cost effective 

manner.
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1.3 – Operating Levels Table

Dollars in Thousands

Internal Revenue Service

Object Classification

FY 2016

Actual

FY 2017

Annualized CR

FY 2018

Request

11.1 Full-Time Permanent Positions 5,818,431 5,825,793 5,721,269

11.3 Other than Full-Time Permanent Positions 75,720 79,141 50,034

11.5 Other Personnel Compensation 210,281 197,772 196,652

11.8 Special Personal Services Payments 26,219 24,603 24,698

11.9 Personnel Compensation (Total) 6,130,651 6,127,309 5,992,653

12.1 Personnel Benefits 2,097,850 2,177,172 2,108,974

13.0 Benefits to Former Personnel 46,199 50,344 51,357

Total Personnel and Compensation Benefits $8,274,700 $8,354,825 $8,152,984

21.0 Travel 75,292 90,506 91,394

22.0 Transportation of Things 19,131 21,735 21,954

23.1 Rental Payments to GSA 592,529 587,370 597,175

23.2 Rent Payments to Others 12,323 12,495 12,679

23.3 Communications, Utilities, & Misc 296,236 350,714 352,957

24.0 Printing & Reproduction 28,353 27,866 28,380

25.1 Advisory & Assistance Services 785,522 913,116 732,898

25.2 Other Services 94,161 102,607 103,440

25.3 Purchase of Goods & Services from Govt. Accounts 172,185 180,423 176,548

25.4 Operation & Maintenance of Facilities 174,913 190,134 188,971

25.6 Medical Care 14,095 14,213 13,310

25.7 Operation & Maintenance of Equipment 70,418 75,298 75,995

26.0 Supplies and Materials 34,827 34,946 35,303

31.0 Equipment 313,749 206,399 347,309

32.0 Land and Structures 6,164 9,840 2,038

41.0 Grants, Subsidies 28,502 33,502 34,001

42.0 Insurance Claims & Indemnities 1,496 1,381 1,392

91.0 Unvouchered 2,484 6,272 6,272

Total Non-Personnel $2,724,380 $2,858,817 $2,822,016

New Appropriated Resources $10,999,080 $11,213,642 $10,975,000

Appropriations:

Taxpayer Services 2,321,956 2,328,940 2,212,311

Enforcement 4,674,272 4,855,688 4,706,500

Operations Support 3,811,907 3,739,565 3,946,189

Business Systems Modernization 190,945 289,449 110,000

New Appropriated Resources $10,999,080 $11,213,642 $10,975,000

FTE 77,400 76,838 71,035

This table includes total annually appropriated funding (actuals for FY 2016 and estimates for FY 2017 Annualized CR and FY 

2018).
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1D – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

TAXPAYER SERVICES

For necessary expenses of the Internal Revenue Service to 

provide taxpayer services, including pre-filing assistance and 

education, filing and account services, taxpayer advocacy 

services, associated support costs, and other services as 

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

determined by the Commissioner, $2,212,311,000, of which 

not less than $6,500,000 shall be for the Tax Counseling for 

the Elderly Program, of which not less than $12,000,000 

shall be available for low-income taxpayer clinic grants, and 

of which not less than $15,000,000, to remain available until 

September 30, 2019, shall be available for a Community 

Volunteer Income Tax Assistance matching grants program 

for tax return preparation assistance, of which not less than 

$206,000,000 shall be available for operating expenses of the 

Taxpayer Advocate Service: Provided, That of the amounts 

made available for the Taxpayer Advocate Service, not less 

than $5,000,000 shall be for identity theft casework.

Note.—A full-year 2017 appropriation for this account was 

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

the budget assumes this account is operating under the 

Further Continuing Appropriations Act, 2017 (P.L. 114–

254). The amounts included for 2017 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 

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

as may be determined by the Commissioner, $4,706,500,000, 

of which not to exceed $50,000,000 shall remain available 

until September 30, 2019, and of which not less than 

The IRS proposes a change in 

the Taxpayer Services 

appropriation language to allow 

some additional support costs to 

be incurred in the Taxpayer 

Services appropriations account 

so that the more accurate cost of 

providing taxpayer services is 

accurately reflected in the 

account. 

To help improve cost accounting 

the IRS proposes a change in the 

Enforcement appropriation 

language to allow some 

additional support costs for 
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$60,257,000 shall be for the Interagency Crime and Drug 

Enforcement program.

Note.—A full-year 2017 appropriation for this account was 

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

the budget assumes this account is operating under the 

Further Continuing Appropriations Act, 2017 (P.L. 114–

254). The amounts included for 2017 reflect the annualized 

level provided by the continuing resolution.

OPERATIONS SUPPORT

For necessary expenses of operating the Internal Revenue 

Service, including rent payments; facilities services; 

printing; postage; physical security; oversight and 

management of IRS-wide activities; research and statistics 

of income; telecommunications; information technology 

development, enhancement, operations, maintenance, and 

security; the hire of passenger motor vehicles (31 U.S.C. 

1343(b)); the operations of the Internal Revenue Service 

Oversight Board; and other services as authorized by 5 

U.S.C. 3109, at such rates as may be determined by the 

Commissioner; $3,946,189,000, of which not to exceed 

$100,000,000 shall remain available until September 30, 

2019; 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, 2020, for research; 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 and the Senate and the Comptroller General 

of the United States detailing the cost and schedule 

performance for its major information technology 

investments, including the purpose and life-cycle stages of 

the investments; the reasons for any cost and schedule 

variances; the risks of such investments and strategies the 

Internal Revenue Service is using to mitigate such risks; and 

the expected developmental milestones to be achieved and 

costs to be incurred in the next quarter: Provided further, 

That the Internal Revenue Service shall include, in its budget 

justification for fiscal year 2019, a summary of cost and 

schedule performance information for its major information 

technology systems.

enforcement to be incurred in the 

Enforcement appropriations 

account so that the more accurate 

cost of providing enforcement 

activities is accurately reflected 

in the account. 

The IRS proposes a change in the 

Operations Support 

appropriation language to allow 

to allow some additional support 

costs to be funded in the 

Taxpayer Services and 

Enforcement accounts.

 

An increase of $50 million to 

$100 million in two-year 

authority is requested to 

correspond with the availability 

of the closely-linked BSM 

appropriation; to provide 

sufficient time for a robust IT 

lifecycle process including 

vision, strategy, solution, design, 

and development, thereby 

improving contracting outcomes; 

and to comply with a recent 

recommendation from the 

Treasury Inspector General for 

Tax Administration, “While 

Improvements Continue in 

Contract Negotiation Methods 

and Management Practices, 

Inconsistencies Need to Be 

Addressed.” 
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Note.—A full-year 2017 appropriation for this account was 

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

the budget assumes this account is operating under the 

Further Continuing Appropriations Act, 2017 (P.L. 114–

254). The amounts included for 2017 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, $110,000,000, to 

remain available until September 30, 2020, for the capital 

asset acquisition of information technology systems, 

including management and related contractual costs of said 

acquisitions, including related Internal Revenue Service 

labor costs, and contractual costs associated with operations 

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

30 days after the end of each quarter, the Internal Revenue 

Service shall submit a report to the Committees on 

Appropriations of the House of Representatives and the 

Senate and the Comptroller General of the United States 

detailing the cost and schedule performance for CADE 2 and 

Modernized e-File information technology investments, 

including the purposes and life-cycle stages of the 

investments; the reasons for any cost and schedule 

variances; the risks of such investments and the strategies the 

Internal Revenue Service is using to mitigate such risks; and 

the expected developmental milestones to be achieved and 

costs to be incurred in the next quarter.

Note.—A full-year 2017 appropriation for this account was 

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

the budget assumes this account is operating under the 

Further Continuing Appropriations Act, 2017 (P.L. 114–

254). The amounts included for 2017 reflect the annualized 

level provided by the continuing resolution.

ADMINISTRATIVE PROVISIONS –

INTERNAL REVENUE SERVICE

(INCLUDING TRANSFER OF FUNDS)

SEC. 101. Not to exceed 5 percent of any appropriation made 

available in this Act to the Internal Revenue Service may be 

transferred to any other Internal Revenue Service 

appropriation upon the advance notification of the 
IRS-15

Committees on Appropriations.

SEC. 102. The Internal Revenue Service shall maintain an 

employee training program, which shall include the 

following topics: taxpayers' rights, dealing courteously with 

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

application of tax law.

SEC. 103. The Internal Revenue Service shall institute and 

enforce policies and procedures that will safeguard the 

confidentiality of taxpayer information and protect taxpayers 

against identity theft. 

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

the Internal Revenue Service shall be available for improved 

facilities and increased staffing to provide sufficient and 

effective 1–800 help line service for taxpayers. The 

Commissioner shall continue to make improvements to the 

Internal Revenue Service 1–800 help line service a priority 

and allocate resources necessary to enhance the response 

time to taxpayer communications, particularly with regard to 

victims of tax-related crimes.

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

of confirmation of any address change relating to an 

employer making employment tax payments, and such notice 

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

and an officer or employee of the Internal Revenue Service 

shall give special consideration to an offer-in-compromise 

from a taxpayer who has been the victim of fraud by a third 

party payroll tax preparer.

SEC. 106. 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. Section 9503(a) of title 5, United States Code, is 

amended by striking the clause "Before September 30, 

2013" and inserting "before September 30, 2021".

SEC. 109. Section 9503(a)(5) of title 5, United States Code, 

is amended by inserting before the semicolon the following:

", but are renewable for an additional two years, based on a 

critical organizational need". 

The IRS requests Streamlined 

Critical Pay authority through 

September 30, 2021 to ensure 

the IRS is able to quickly recruit 

and retain IT professionals who 

can help protect taxpayer data 

from cyberattacks and modernize 

the IRS’s IT infrastructure.
IRS-16

1E – Legislative Proposals

Streamlined Critical Pay Authority

The IRS requests Streamlined Critical Pay (SCP) authority through September 30, 2021. This 

authority allowed the IRS to recruit and retain IT and other senior professionals and limited 

this authority to 40 positions. The authority to make new SCP appointments expired 

September 30, 2013. Currently there are seven senior employees under SCP appointments, 

down from a high of 30. If the SCP is not renewed, the IRS will face additional challenges 

recruiting and retaining top-level talent as the remaining SCP term appointments expire, 

especially IT professionals who can help protect taxpayer data from cyberattacks and who can 

assist with modernizing 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.”
IRS-17

Section II – Budget and Performance Plan

Taxpayer Services 

Appropriation Description

The Taxpayer Services appropriation provides funding for taxpayer service activities and 

programs. This includes printing forms and publications, processing tax returns and related 

documents, offering filing and account services, taxpayer assistance, and providing taxpayer 

advocacy services.

The Taxpayer Services budget request for FY 2018 is $2,212,311,000 in direct appropriations 

and 24,392 FTE. This is a decrease of $116,629,000, or 5 percent, and 4,063 fewer FTE than 

the FY 2017 Annualized Continuing Resolution level of $2,328,940,000 and 28,455 FTE.

The Department of the Treasury is developing a new strategic plan for FYs 2018 – 2022 in 

accordance with the GPRA Modernization Act of 2010. The plan is scheduled for publication 

in 2018. The Annual Performance Plan will be updated in the FY 2019 President’s Budget to 

reflect new departmental strategic goals and objectives. The IRS will publish a component 

plan by summer 2018.
IRS-18

2.1 – Budget Adjustments Table 

Dollars in Thousands

Taxpayer Services FTE Amount

FY 2017 Annualized CR 28,455 $2,328,940 

Changes to Base:

Maintaining Current Levels (MCLs) - $46,342 

Pay Raise - 31,005 

Pay Annualization - 11,363 

Non-Pay Inflation Adjustment - 3,974 

Resource Adjustments - $122,378 

Base Realignment for Support Services - 90,000 

Adjustments for Administrative Provision Section 113 - 32,378 

Subtotal FY 2018 Changes to Base - $168,720 

Total FY 2018 Base 28,455 $2,497,660 

Program Changes:

Program Decrease

Actions to Achieve Workforce Management Goals (4,063) (285,349)

Subtotal Program Changes (4,063) ($285,349)

Total FY 2018 Request 24,392 $2,212,311 
IRS-19

2.2 – Operating Levels Table

Dollars in Thousands

Taxpayer Services

Object Classification

FY 2016

Actual

FY 2017

Annualized CR

FY 2018

Request

11.1 Full-Time Permanent Positions 1,514,435 1,485,932 1,433,368

11.3 Other than Full-Time Permanent Positions 39,271 42,311 12,760

11.5 Other Personnel Compensation 84,246 67,128 68,444

11.8 Special Personal Services Payments 57 - -

11.9 Personnel Compensation (Total) 1,638,009 1,595,371 1,514,572

12.1 Personnel Benefits 529,434 562,795 526,482

13.0 Benefits to Former Personnel 517 344 350

Total Personnel and Compensation Benefits $2,167,960 $2,158,510 $2,041,404

21.0 Travel 8,751 12,464 12,335

22.0 Transportation of Things 713 621 635

23.3 Communications, Utilities, & Misc 1,204 1,246 1,275

24.0 Printing & Reproduction 9,114 8,158 8,285

25.1 Advisory & Assistance Services 32,459 32,802 32,961

25.2 Other Services 6,796 13,676 13,869

25.3 Purchase of Goods & Services from Govt. Accounts 61,262 61,903 61,497

25.4 Operation & Maintenance of Facilities 6 7 7

25.7 Operation & Maintenance of Equipment 75 211 216

26.0 Supplies and Materials 4,726 5,136 5,106

31.0 Equipment 94 428 438

32.0 Land and Structures 1 - -

41.0 Grants, Subsidies 28,502 33,502 34,001

42.0 Insurance Claims & Indemnities 293 276 282

Total Non-Personnel $153,996 $170,430 $170,907

New Appropriated Resources $2,321,956 $2,328,940 $2,212,311

Budget Activities:

Pre-filing Taxpayer Assistance & Education 609,445 625,829 600,717

Filing & Account Services 1,712,511 1,703,111 1,611,594

New Appropriated Resources $2,321,956 $2,328,940 $2,212,311

FTE 28,316 28,455 24,392
IRS-20

2.3 – Appropriation Detail Table

2A – Pre-Filing Taxpayer Assistance and Education ($600,717,000 in direct 

appropriations, and an estimated $15,000 from reimbursable programs). This budget activity 

funds direct labor and 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 researches customer needs; develops and 

manages educational programs; establishes partnerships with stakeholder groups; and 

disseminates tax information to taxpayers and the general public through a variety of 

media, including publications and mailings, websites, broadcasting, and advertising.

• Media and Publications develops and produces notices, forms, and publications for 

printed and electronic tax materials, and provides media production services to 

taxpayers.

• Taxpayer Advocacy provides advocate services to taxpayers by identifying the 

underlying causes of taxpayer problems and participating in the development of 

systematic and/or procedural remedies.

• Account Management and Assistance – Field Assistance provides face-to-face 

assistance, education, and compliance services to taxpayers. It includes return 

preparation, answering tax questions, resolving account and notice inquiries, and 

supplying forms and publications to taxpayers.

Taxpayer Advocate Case Processing provides advocate services to taxpayers to 

resolve taxpayer problems through prompt identification, referral, and settlement.

Dollars in Thousands

Taxpayer Services

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Pre-Filing Taxpayer Assistance and 

Education 5,009 $620,338 4,978 625,829 4,458 600,717 (520) (25,112) -10.45% -4.01%

Filing and Account Services 23,307 1,713,038 23,477 1,703,111 19,934 1,611,594 (3,543) (91,517) -15.09% -5.37%

Subtotal New Appropriated 

Resources 28,316 $2,333,376 28,455 $2,328,940 24,392 $2,212,311 (4,063) ($116,629) -14.28% -5.01%

Other Resources:

Reimbursables 488 34,918 507 36,664 527 38,497 20 1,833 3.94% 5.00%

User Fees 360 69,987 77 43,900 71 67,600 (6) 23,700 -7.79% 53.99%

Recovery from Prior Years - - - 8 - - - (8) N/A -100.00%

Unobligated Balances from Prior 

Years - 13,914 - 8,596 - 15,000 - 6,404 N/A 74.50%

Subtotal Other Resources 848 $118,819 584 $89,168 598 $121,097 14 $31,929 2.40% 35.81%

Total Budgetary Resources 29,164 $2,452,195 29,039 $2,418,108 24,990 $2,333,408 (4,049) ($84,700) -13.94% -3.50%

FY 2016

Enacted

FY 2017

Annualized CR

FY 2018

Request

FY 2017 to FY 2018 

Request

FY 2017 to FY 2018 

Request

Change % Change
IRS-21

• W&I HQ Management and Administration provides staffing, training, and direct 

support for Wage and Investment management activities of strategic planning, 

communications and liaison, finance, human resources, equity, diversity and inclusion, 

business modernization, and embedded training.

Description of Performance

In FY 2016, the IRS delivered 92.5 percent (98 out of 106) of the Critical Individual Filing 

Season Tax Products to the public by the fifth workday of January. After the PATH Act, the 

IRS implemented planned actions to ensure the availability of tax products for the start of 

Filing Season 2016. The immediate focus was aimed at completing the required analysis of 

the legislation and development and finalization of affected forms, instructions and 

publications. In all, more than 400 changes were required for more than 150 different tax 

products. In FY 2017 and FY 2018, the target is set at 89 percent but significant changes in 

tax law late in the year could affect this target. 

In FY 2016, the IRS Timeliness of Critical Tax Exempt and Government Entities (TEGE) and 

Business Filing Season Tax products to the Public was 98 percent (99 of 101). The IRS 

exceeded its FY 2016 target of 87 percent by more than 12 percent due to the exceptional 

planning and employee efforts in anticipation of the PATH Act. For FY 2017 and FY 2018 

the target is set at 91 percent but significant changes in tax law late in the year could affect 

this target as tax products for multiple years are developed concurrently.

The Taxpayer Self-Assistance Rate reached 89 percent in FY 2016, slightly below the 

90 percent target. This may be due in part to the disabling of the Electronic Filing PIN (EFP) 

in mid-June 2016 and a significant decline in the use of the Interactive Tax Assistant. 

Beginning in FY 2017, the IRS changed the Taxpayer Self-Assistance Rate to the Enterprise

Taxpayer Self-Assistance Rate. The revised metric now includes additional applications 

including Get Transcript and payment applications, such as Direct Pay and Online Payment 

Agreement. This demonstrates IRS’s progress toward providing expanded service options and 

taxpayers’ increased adoption of self-assistance options. 
IRS-22

FY 2018 Changes by Budget Activity

Dollars in Thousands

Pre-Filing Taxpayer Assistance & Education FTE Amount

FY 2017 Annualized CR Level 4,978 $625,829 

Changes to Base:

Maintaining Current Levels (MCLs) - $12,553 

Pay Raise - 7,940 

Pay Annualization - 2,910 

Non-Pay - 1,703 

Resource Adjustments

Base Realignment for Support Services - -

Adjustments for Administrative Provision Section 113 - -

Subtotal Changes to Base - $12,553 

Total FY 2018 Base 4,978 $638,382 

Program Changes:

Program Decreases

Actions to Achieve Workforce Management Goals (520) (37,665)

Subtotal Program Changes (520) ($37,665)

Total FY 2018 Request 4,458 $600,717 

Dollar/FTE Change FY 2018 Budget Request over FY 2017 Annualized CR (520) ($25,112)

Percent Change FY 2018 Budget Request over FY 2017 Annualized CR -10.45% -4.01%

2.1.1 – Budget and Performance Report and Plan 

Dollars in Thousands

Pre-Filing Taxpayer 

Assistance & Education FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 $611,653 $586,896 $595,168 $609,196 $609,445 $625,829 $600,717 

Reimbursable Resources2 96 45 51 13 14 15 

User Fees2 22,460 6,400 22,400 4,141 - - -

Budget Activity Total $634,209 $593,296 $617,613 $613,388 $609,458 $625,843 $600,732 1

The FY 2012 - FY 2016 appropriated resources represents the approved operating plan including any inter-BAC transfers and 

inter-appropriation transfers.

2

The FY 2012 - FY 2016 columns represent realized resources for reimbursables and user fees.

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2016 FY 2017 FY 2018 FY 2012 -

Actual Actual Actual Actual Actual Target Target Target FY 2016

Trend

Timeliness of Critical 

Individual Filing Season 

Tax Products to the Public 

(%)

97.2 58.9 99.1 89.0 92.5 87.0 89.0 89.0

Timeliness of Critical 

TE/GE and Business Tax 

Products to the Public (%)

94.5 83.6 98.7 92.6 98.0 87.0 91.0 91.0

Enterprise Taxpayer SelfAssistance Rate 178.5 83.3 84.7 88.7 89.0 90.0 Indicator N/A N/A

1

Starting in FY 2017, the IRS modified the Taxpayer Self Assistance Rate measure to include additional self-service channels. 

As new self-assistance applications are provided to the public, they will be added to the methodology.
IRS-23

2B – Filing and Account Services ($1,611,594,000 in direct appropriations, an estimated 

$38,482,000 from reimbursable programs, and an estimated $67,600,000 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-submitted tax returns, issue refunds, 

and maintain taxpayer accounts. The IRS continues to make progress in decreasing paper 

returns (with more than 90 percent of individual returns being filed electronically during the 

FY 2017 filing season) and increasing the use of electronic filing and payment methods. 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 Return Integrity & Compliance 

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

• Joint Operations Center (JOC) provides service, support, and technology for 

telephone, correspondence, and electronic media inquiries; real time monitoring and 

routing of inbound calls; monitoring of Customer Service Representative accuracy; 

and management of the enterprise telephone database.

Description of Performance

Millions of individual and business taxpayers file their returns electronically. In FY 2016, the 

IRS achieved an 86.4 percent individual e-file rate and a 50 percent business e-file rate. Both 

the individual and business e-file rates exceed the FY 2016 targets. The overall benefits of 

e-file (i.e. faster refunds, greater accuracy, secure and confidential submission, and quick 

confirmation) continue to drive performance. The IRS also is using social media to promote

the benefits of e-filing. The IRS will increase the individual e-filing target to 87 percent for 

FY 2017 and 88 percent for FY 2018. The business e-filing target will increase to 51 percent 

for FY 2017 and 53 percent for FY 2018. 
IRS-24

In FY 2016, Customer Accuracy – Tax Law was 96.4 percent, exceeding the target of 

92 percent. For FY 2017 and FY 2018, the IRS will increase the tax law accuracy targets to 

95 percent, even though responding to legislative changes in tax laws will continue to be a 

challenge.

In FY 2016, the IRS correctly answered 96.1 percent of account questions over the telephone, 

exceeding the target of 94 percent. The IRS expects to maintain high performance on the 

Customer Accuracy – Accounts (Phones) and plans to achieve the FY 2017 and FY 2018 

target of 95 percent through product reviews and by providing training to managers and 

employees to ensure quality service. 

In FY 2016, the IRS Customer Contacts Resolved Per Staff Year measure reached 28,497, 

exceeding the FY 2016 target of 28,000. This measure includes activities such as automated

calls answered, assistor calls answered, and web services completed. The increase is 

attributed to a 24 percent increase in web usage, including an increase in Where’s My 

Refund? Due to modifications made to the Taxpayer Self-Assistance measure for FY 2017, 

several components of the Customer Contacts Resolved Per Staff Year measure changed,

including (1) the way IRS counts transcripts, from “requested” to now counting “delivered”;

(2) the addition of Get Transcript (Online & Mail); and (3) the discontinuation of Electronic 

Interactions. Because of these changes, the IRS will baseline the measure in FY 2017 and use

the results to determine an FY 2018 target. 

In FY 2016, the LOS was 53.4 percent, exceeding the FY 2016 target of 47 percent. The 

2016 filing season LOS was 72.1 percent. In 2016, the IRS received additional funding for 

taxpayer services, which allowed the IRS to focus resources on LOS and reduce paper 

correspondence inventories. This inventory totaled more than 850,000 pieces of 

correspondence with a 48 percent overage at the end of FY 2015, and is currently down to 

approximately 660,000 pieces of correspondence as of May 2017, with a 22 percent overage. 

The IRS has created and continues to create new web-based applications for taxpayers. The 

increase in self-assistance web applications, along with the high level of telephone service 

should reduce paper correspondence receipts. Due to decreased telephone demand, the IRS 

shifted available resources to processing paper, resulting in closing significantly more paper 

correspondence cases compared to FY 2015. The FY 2017 LOS target is 64 percent. This 

target includes funding from direct appropriations including $209 million from the 

administrative provision and $40 million from user fees. The FY 2018 target is 39 percent 

and assumes $58 million from user fees.

Refund timeliness is defined as the percentage of paper refunds issued within 40 days. In 

FY 2016, Refund Timeliness reached 98.7 percent, exceeding the FY 2016 target of 

97 percent as the number of paper refunds continued to decline. There was a 7 percent 

decrease in the number of paper refunds compared to the same period in 2015. For FY 2017 

and FY 2018, the IRS expects to achieve a target of 97 percent. 
IRS-25

FY 2018 Changes by Budget Activity

Dollars in Thousands

Filing and Account Services FTE Amount

FY 2017 Annualized CR 23,477 $1,703,111 

Changes to Base:

Maintaining Current Levels (MCLs) - $33,789 

Pay Raise - 23,065 

Pay Annualization - 8,453 

Non-Pay - 2,271 

Resource Adjustments $122,378 

Base Realignment for Support Services - 90,000 

Adjustments for Administrative Provision Section 113 - 32,378 

Subtotal Changes to Base - $156,167 

Total FY 2018 Base 23,477 $1,859,278 

Program Changes:

Program Decreases

Actions to Achieve Workforce Management Goals (3,543) (247,684)

Subtotal Program Changes (3,543) ($247,684)

Total FY 2018 Request 19,934 $1,611,594 

Dollar/FTE Change FY 2018 Budget Request over FY 2017 Annualized CR (3,543) ($91,517)

Percent Change FY 2018 Budget Request over FY 2017 Annualized CR -15.09% -5.37%

2.1.2 – Budget and Performance Report and Plan 

Dollars in Thousands

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2016 FY 2017 FY 2018 FY 2012 -

Actual Actual Actual Actual Actual Target Target Target FY 2016

Trend

Percent Individual Returns 

Processed Electronically 

(%) 

80.5 82.5 84.1 85.3 86.4 86.0 87.0 88.0

Percent of Business 

Returns Processed 

Electronically 

36.7 40.2 43.1 47.0 50.0 48.0 51.0 53.0

Customer Accuracy - Tax 

Law Phones (%) 

93.2 95.7 95.0 95.0 96.4 92.0 95.0 95.0

Customer Accuracy -

Accounts (Phones) 

95.6 96.0 96.2 95.5 96.1 94.0 95.0 95.0

Customer Contacts 

Resolved Per Staff Year1

16,320 20,767 21,018 26,245 28,497 28,000 Baseline TBD

Customer Service 

Representative (CSR) 

Level of Service (LOS) 

(%)2

67.6 60.5 64.4 38.1 53.4 47.0 64.0 39.0

Filing and Account Services FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 $1,610,904 $1,532,963 $1,550,027 $1,564,488 $1,712,511 $1,703,111 $1,611,594

Reimbursable Resources2 20,759 37,535 28,555 30,147 34,905 36,650 38,482

User Fees2 152,136 184,599 160,342 40,553 69,987 43,900 67,600

Budget Activity Total $1,783,799 $1,755,097 $1,738,924 $1,635,188 $1,817,403 $1,783,661 $1,717,676

1

The FY 2012 - FY 2016 appropriated resources represents the approved operating plan including any inter-BAC transfers and interappropriation transfers.

2

The FY 2012 - FY 2016 columns represent realized resources for reimbursables and user fees.
IRS-26

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2016 FY 2017 FY 2018 FY 2012 -

Actual Actual Actual Actual Actual Target Target Target FY 2016

Trend

Refund Timeliness -

Individual (Paper) 

99.7 99.0 98.7 98.8 98.7 97.0 97.0 97.0

1

Due to modifications made to the Taxpayer Self-Assistance Rate measure for FY 2017, several components of the Customer 

Contacts Resolved Per Staff measure will change. As a result of these changes, the measure will be baselined in FY 2017.

2

Beginning in FY 2013, targets include an increase in base user fees.
IRS-27

Enforcement 

Appropriation Description

The Enforcement appropriation provides funding for the examination of tax returns, both 

domestic and international; administrative and judicial settlement of taxpayer appeals of

examination findings; technical rulings; monitoring of employee pension plans; determination 

of qualifications of organizations seeking tax-exempt status; examination of tax returns of 

exempt organizations; enforcement of statutes relating to detection and investigation of 

criminal violations of the internal revenue laws; identification of underreporting of tax 

obligations; securing of unfiled tax returns; and collection of unpaid accounts.

The Enforcement budget request for FY 2018 is $4,706,500,000 in direct appropriations and 

35,049 FTE. This is a decrease of $149,188,000 (3.1 percent) and 1,300 fewer FTE than the 

FY 2017 Annualized Continuing Resolution level of $4,855,688,000 and 36,349 FTE.

The Department of the Treasury is developing a new strategic plan for FYs 2018 – 2022 in 

accordance with the GPRA Modernization Act of 2010. The plan is scheduled for publication 

in 2018. The Annual Performance Plan will be updated in the FY 2019 President’s Budget to 

reflect new departmental strategic goals and objectives. The IRS will publish a component 

plan by summer 2018.
IRS-28

2.1 – Budget Adjustments Table

Dollars in Thousands

Enforcement FTE Amount

FY 2017 Annualized CR 36,349 $4,855,688 

Changes to Base:

Maintaining Current Levels (MCLs) - $96,845 

Pay Raise - 65,828 

Pay Annualization - 24,126 

Non-Pay Inflation Adjustment - 6,891 

Resource Adjustments - ($149,936)

Base Realignment for Support Services - (145,000)

Adjustments for Administrative Provision Section 113 - (4,936)

Subtotal Changes to Base - ($53,091)

Total FY 2018 Base 36,349 $4,802,597 

Program Changes:

Program Decrease:

Actions to Achieve Workforce Management Goals (1,300) (96,097)

Subtotal FY 2018 Program Changes (1,300) ($96,097)

Total FY 2018 Request 35,049 $4,706,500 
IRS-29

2.2 – Operating Levels Table

Dollars in Thousands

Enforcement

Object Classification

FY 2016

Actual

FY 2017

Annualized CR

FY 2018

Request

11.1 Full-Time Permanent Positions 3,141,237 3,168,939 3,137,409

11.3 Other than Full-Time Permanent Positions 29,922 30,904 31,369

11.5 Other Personnel Compensation 105,714 108,971 106,876

11.8 Special Personal Services Payments 25,486 24,201 24,288

11.9 Personnel Compensation (Total) 3,302,359 3,333,015 3,299,942

12.1 Personnel Benefits 1,136,662 1,159,565 1,128,398

Total Personnel and Compensation Benefits $4,439,021 $4,492,580 $4,428,340

21.0 Travel 55,662 69,941 70,965

22.0 Transportation of Things 7,914 9,909 9,921

23.1 Rental Payments to GSA 3 4 4

23.2 Rent Payments to Others 302 402 405

23.3 Communications, Utilities, & Misc 2,644 2,156 2,158

24.0 Printing & Reproduction 1,875 2,188 2,223

25.1 Advisory & Assistance Services 75,380 168,969 85,217

25.2 Other Services 28,047 35,647 36,461

25.3 Purchase of Goods & Services from Govt. Accounts 34,286 37,163 33,782

25.4 Operation & Maintenance of Facilities 15 2 2

25.5 Research & Development Contracts 2,000

 

-

 

-

25.6 Medical Care 8 47 48

25.7 Operation & Maintenance of Equipment 1,470 1,400 1,404

26.0 Supplies and Materials 15,071 23,190 23,462

31.0 Equipment 7,198 4,917 4,919

32.0 Land and Structures 2 4 4

42.0 Insurance Claims & Indemnities 890 897 913

91.0 Unvouchered 2,484 6,272 6,272

Total Non-Personnel $235,251 $363,108 $278,160

New Appropriated Resources $4,674,272 $4,855,688 $4,706,500

Budget Activities:

Investigations 591,449 624,462 606,747

Exam & Collections 3,945,578 4,083,908 3,967,808

Regulatory 137,245 147,318 131,945

New Appropriated Resources $4,674,272 $4,855,688 $4,706,500

FTE 37,564 36,349 35,049
IRS-30

2.3 – Appropriation Detail Table

2C – Investigations ($606,747,000 in direct appropriations, and an estimated $42,993,000 

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.

• Criminal Investigations supports the enforcement of criminal statutes relating to 

violations of internal revenue laws and other financial crimes. CI investigates cases of 

suspected intent to defraud that involve both legal and illegal sources of income and 

recommends prosecution as warranted. This activity includes the investigation and 

prosecution of tax and money-laundering violations associated with narcotics 

organizations.

• Criminal Tax Legal Support provides legal advice and support from IRS Counsel to 

CI.

• International Investigations supports international investigations involving U.S. 

citizens residing abroad, non-resident aliens, expatriates, and investigations involving 

other international issues, including legal support (e.g., Foreign Tax Credit and 

Foreign Earned Income Exclusion, Corporations, Non-Profits, Pension Plans, etc.).

Dollars in Thousands

Enforcement

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated 

Resources:

Investigations 3,184 $596,417 3,126 624,462 2,893 606,747 (233) (17,715) -7.45% -2.84%

Exam and Collections 33,426 3,981,257 32,251 4,083,908 31,199 3,967,808 (1,052) (116,100) -3.26% -2.84%

Regulatory 954 137,262 972 147,318 957 131,945 (15) (15,373) -1.54% -10.44%

Subtotal New Appropriated 

Resources 37,564 $4,714,936 36,349 $4,855,688 35,049 $4,706,500 (1,300) ($149,188) -3.58% -3.07%

Other Resources:

Reimbursables 54 29,711 75 41,636 78 43,717 3 2,081 4.00% 5.00%

Offsetting Collections - Non 

Reimbursables - 19,212 - 28,134 - 29,541 - 1,407 N/A 5.00%

User Fees 81 9,405 93 13,452 93 16,150 - 2,698 - 20.06%

Recovery from Prior Years - 2,150 - 1,977 - - - (1,977) N/A -100.00%

Years - 20,306 - 52,789 - 18,321 - (34,468) N/A -65.29%

Transfers In/Out 126 - - - - - N/A N/A

Resources from Other Accounts 2 - - - - - - - N/A N/A

Subtotal Other Resources 137 $80,910 168 $137,988 171 $107,729 3 ($30,259) 1.79% -21.93%

Total Budgetary Resources 37,701 $4,795,846 36,517 $4,993,676 35,220 $4,814,229 (1,297) ($179,447) -3.55% -3.59%

FY 2017 to FY 2018 

Request

FY 2017 to FY 2018 

Request

FY 2016

Enacted

FY 2017

Annualized CR

FY 2018

Request

Change % Change
IRS-31

Description of Performance

Criminal Investigations (CI) serves the American public by investigating potential criminal 

violations of the Internal Revenue Code and related financial crimes in a manner that fosters 

confidence in the tax system and compliance with the law. Criminal Investigations is the only 

federal law enforcement organization with jurisdiction over federal tax crimes. The following 

measures are used to evaluate the success of achieving its mission. CI utilized its 

performance projection model to establish its FY 2017 and FY 2018 year-end targets. 

In FY 2016, the number of criminal investigations completed was 3,720, 2.1 percent below 

the year-end target (3,800) and a 17.1 percent decrease compared to FY 2015. Overall 

performance in FY 2016 was affected by a significant decline in the number of Special 

Agents; the decision to focus on more complex tax cases, which take longer to complete; and 

working inventory still in the judicial process. The number of Cases of a Legal, Illegal and 

Narcotics nature completed in FY 2016 decreased (21.8 percent, 4.2 percent and 24.9 percent, 

respectively) compared to FY 2015. Criminal Investigations will continue to utilize proven 

case development strategies, expand case development efforts, and leverage interagency 

partnerships to identify, initiate, and complete criminal investigations in all program areas to 

meet the FY 2017 criminal investigation completed target of 3,100 and the FY 2018 target of 

3,000.

In FY 2016, the numbers of convictions (2,672) were 6.9 percent above the year-end target 

(2,500) but reflected a 7.2 percent decrease compared to FY 2015. The results exceeded the 

year-end target due to a higher- than- expected number of multi-defendant Narcotics related 

investigations. The number of Narcotics related cases convicted in FY 2016 increased 

13.7 percent compared to FY 2015. Overall quality investigations initiated and completed in 

previous years continue to be recommended for prosecution and processed by the Department 

of Justice (DOJ). CI management will continue to ensure appropriate and consistent contact 

with the DOJ Tax Division and U.S. Attorney Offices regarding prosecutorial priorities and 

appropriate movement of pipeline investigations to meet the FY 2017 number of convictions 

target of 2,100 and the FY 2018 target of 2,000. 

In FY 2016, the conviction rate was 92.1 percent, exceeding the FY 2016 target of 92 percent. 

Appropriate case selection and effective field performance continue to increase the number of 

cases that result in convictions. Since CI does not prosecute its own cases, it must depend on 

DOJ to accept its cases for prosecution and move such cases through the courts. CI 

management will continue its current efforts of appropriate and consistent contact with the 

DOJ Tax Division and U.S. Attorney Offices about prosecutorial priorities and appropriate 

movement of pipeline investigations, to ensure a high conviction rate and to meet the 

FY 2017 and FY 2018 targets of 92 percent.

The Conviction Efficiency Rate is determined by dividing the cost of the CI program by the 

number of convictions. The FY 2016 rate ($250,563) improved by 7.9 percent over the 

year-end target ($272,000) and by 4 percent compared to FY 2015, primarily due to an 

increase in the number of convictions. In FY 2017, the Conviction Efficiency Rate measure 

was discontinued for reporting purposes. The IRS will continue to report on Criminal 

Investigations Completed, Number of Convictions, and Conviction Rate.
IRS-32

FY 2018 Changes by Budget Activity

Dollars in Thousands

Investigations FTE Amount

FY 2017 Annualized CR Level 3,126 $624,462 

Changes to Base:

Maintaining Current Levels (MCLs) - $12,439 

Pay Raise - 8,142 

Pay Annualization - 2,984 

Non-Pay - 1,313 

Resource Adjustments - ($18,160)

Adjustments for Administrative Provision Section 113 - (18,160)

Subtotal Changes to Base - ($5,721)

Total FY 2018 Base 3,126 $618,741 

Program Changes:

Program Decrease:

Actions to Achieve Workforce Management Goals (233) (11,994)

Subtotal Program Changes (233) ($11,994)

Total FY 2018 Request 2,893 $606,747 

Dollar/FTE Change FY 2018 Budget Request over FY 2017 Annualized CR Level (233) ($17,715)

Percent Change FY 2018 Budget Request over FY 2017 Annualized CR Level -7.45% -2.84%

2.1.3 – Budget and Performance Report and Plan 

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2016 FY 2017 FY 2018 FY 2012 -

Actual Actual Actual Actual Actual Target Target Target FY 2016

Trend

Criminal Investigations 

Completed

4,937 5,557 4,606 4,486 3,721 3,800 3,100 3,000

Number of Convictions 2,634 3,311 3,110 2,879 2,672 2,500 2,100 2,000

Conviction Rate (%) 93.0 93.1 93.4 93.2 92.1 92.0 92.0 92.0

2D – Exam and Collections ($3,967,808,000) in direct appropriations, and an estimated 

$502,000 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:

• Compliance Services Management supports management associated with exam and 

collection program activities.

Investigations FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 $637,846 $587,932 $601,740 $601,665 $591,449 $624,462 $606,747

Reimbursable Resources2 56,895 28,582 27,133 29,957 29,053 40,946 42,993

User Fees2 6,935 2,979 - - - - -

Budget Activity Total $701,676 $619,493 $628,873 $631,622 $620,502 $665,408 $649,740

Dollars in Thousands

1

The FY 2012 - FY 2016 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation transfers.

2

The FY 2012 - FY 2016 columns represent realized resources for reimbursables and user fees.
IRS-33

• 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 provide investigative leads 

and referrals to federal, state, and local law enforcement agencies.

• Appeals provides an administrative review process that provides a channel for 

impartial case settlement before a case is docketed in a court of law.

• Litigation provides legal support for the IRS in litigation of cases, including 

interpretation of the tax law.

• Specialty Programs – Exams examines federal tax returns of businesses and 

individuals responsible for the filing and payment of employment, excise, estate, and 

gift taxes.

• International Collection supports international field collection efforts associated with 

delinquent taxpayer and business entity liabilities from U.S. Citizens residing abroad, 

non-resident aliens, expatriates, and those involving other international issues 

(e.g., Foreign Tax Credit and Foreign Earned Income Exclusion).

• International Exams supports the international exam program involving U.S. citizens 

residing abroad, non-resident aliens, expatriates, and other examinations involving 

other international issues including legal support (e.g., Foreign Tax Credit and Foreign 

Earned Income Exclusion, Corporations, Non-Profits, Pension Plans, etc.).
IRS-34

• Unit General Management and Administration provides staffing, training, and direct 

support for headquarters management activities of strategic planning, communication 

and liaison, finance, human resources, equity, diversity and inclusion, business system 

planning, and embedded training.

• EITC Management and Administration supports headquarters management associated 

with administering the Earned Income Tax Credit (EITC) program IRS-wide. 

• Integrity & Verification Operations supports civil fraud detection and prevention 

efforts in a pre-refund environment including monitoring program performance and 

developing policy and procedures and guidance for processing civil revenue protection 

program(s).

• ID Theft Victim Assistance has end-to-end responsibility and accountability for IDT 

victim assistance policy and operations, which will include paper inventories from 

tax-related ID theft, the Identity Theft Protection Specialized Unit (IPSU), and Return 

Preparer Misconduct.

• Whistleblower Office provides staffing, training, and direct support to process, assess, 

and analyze tips from individuals who identify potential tax problems.

• Communications and Liaison coordinates local government and liaison relationships; 

manages congressional, state, and national stakeholder relationships and issues; 

coordinates crosscutting issues, including audit management and legislative 

implementation; manages national media contacts and local media relationships; and 

ensures IRS compliance with disclosure and privacy laws.

Description of Performance – Exam

The Examination program helps taxpayers understand and meet their tax responsibilities and 

applies the tax law with integrity and fairness. Enforcement of the tax laws is an integral 

component of the IRS’s effort to enhance voluntary compliance. During FY 2016, the IRS 

maintained its international enforcement presence, continued actions to leverage the tax return 

preparer community, and continued prioritizing the prevention of refund fraud.

The IRS met its FY 2016 Individual Exam Coverage target of 0.7 percent. In FY 2016, the 

IRS audited about 193,000 fewer individuals, a 15.8 percent decrease compared to FY 2015. 

Examination sets its individual exam coverage rate by ensuring resources are appropriately 

planned for, proper inventory levels are maintained, and efficiencies are monitored to achieve 

planned targets. The IRS has reduced the coverage rate target for FY 2017 to 0.6 percent and 

FY 2018 to 0.5 percent, because the new hiring done in FY 2017 and changes in the mix of 

work affect productivity. In order to mitigate this decrease, Examination will increase its 

monitoring of starts and the mix of discretionary inventory in FY 2017. 

In FY 2016, the Field Exam National Quality Review Score (NQRS) was 86.8 percent, 

exceeding the target of 86.7 percent. The IRS expects to achieve a quality score of 

86.7 percent in FY 2017 and FY 2018.

In FY 2016, Office Exam Quality was 88.4 percent, exceeding the target of 88.3 percent. The 

IRS expects to achieve a target of 86.7 percent in FY 2017 and 88.3 percent in FY 2018. 
IRS-35

In FY 2016, Examination Quality – Large Business was 83 percent, 7 percentage points 

below the target of 90 percent. The decline in the quality score is a result of low scores in the 

Planning and Execution technical standards. The measure is calculated through a review of a 

statistically valid random sample of closed Large Business Return cases. Case scores are 

based on the percentage of elements passed within each of the three audit standards (Planning, 

Executing, and Resolving). In FY 2016, Large Business &International (LB&I) reduced the 

number of audit standard categories from four to three. The FY 2017 and FY 2018 targets

were set at 90 percent.

In FY 2016, Examination Coverage – Business (Assets > $10 million) was 3 percent, falling 

short of the target of 3.5 percent. The measure is calculated by taking the total number of 

LB&I returns with assets of more than $10 million (including all partnerships) examined and 

closed by LB&I during the current fiscal year, divided by total filings for the preceding 

calendar year. The FY 2017 and FY 2018 targets were lowered to 2.7 percent, based on fewer 

staff and a projected increase in business returns filed.

The Automated Underreporter (AUR) Efficiency rate was 2,196 through FY 2016, above the 

target of 2,032. The measure is calculated by taking the total number of Wage & Investment 

and SB/SE contact closures divided by the total FTEs, including overtime. SB/SE Campus 

Automated Underreporter realized efficiency gains in FY 2016 from new processes that

allowed work to close more quickly. The inclusion of the Premium Tax Credit (PTC) in 

FY 2016 required manual calculations for a significant number of cases, resulting in fewer

closures compared to FY 2015 (2,196 vs. 2,209). Based on the most recent operational data, 

the IRS set the FY 2017 and FY 2018 Automated Underreporter Efficiency targets at 2,133. 

In FY 2016, AUR Coverage was 2.3 percent, exceeding the target of 2.2 percent. The 

measure is calculated by taking the total number of contact closures divided by total prior 

calendar year individual filings. A 10 percent decrease in FTE and a 1 percent increase in 

filings over the last two years resulted in an AUR Coverage rate of 2.3 percent for FY 2016 

and FY 2015. The IRS expects to achieve an FY 2017 and FY 2018 target of 2.0 percent. 

In 2016, Individual Exam Efficiency - Individual was 143, exceeding the target of 122. 

Individual closures decreased 18 percent compared to FY 2015. The measure is calculated by 

taking the sum of all individual 1040 return examinations and audit reconsideration cases 

divided by the total staff years expended. Examination will continue to monitor the operating 

plan and adjust resources accordingly to ensure the planned target is met. The FY 2017

Individual Exam Efficiency target is set at 118 and the FY 2018 target is set at 126 as the IRS 

expects new staff to require time for training before reaching full efficiency. 

Description of Performance ‒ Collection

The Collection program collects delinquent taxes, secures delinquent tax returns through the 

fair and equitable application of tax laws, and provides education to promote future 

compliance, thereby protecting and instilling public confidence in the American tax system. 

The performance goals that the IRS uses to gauge collection program performance are

discussed below.
IRS-36

In FY 2016, Collection Coverage was 43.4 percent, exceeding the target of 41.8 percent. For 

FY 2016, total net dispositions decreased 8 percent, while FTE were 1 percent lower 

compared to FY 2015. The Collection Coverage measure is calculated by taking the total 

volume of collection work disposed divided by total collection work available. The 

Collection Coverage FY 2017 target is 37.5 percent and the FY 2018 target is 34.2 percent.

In FY 2016, Collection Efficiency was 2,266, exceeding the target of 2,208. The Collection 

Efficiency measure is calculated by dividing total collection case closures by the total number

of FTEs devoted to working the closures. The IRS has improved Collection Efficiency over 

the past five years while FTEs have declined by 25 percent and collection closures declined 

by only 14 percent. The IRS expects to achieve the Collection Efficiency FY 2017 target of 

2,117 and the FY 2018 target of 2,147, as the FY 2016 and 2017 new hires are trained.

In FY 2016, the Field Collection National Quality Review Score (NQRS) was 79.2 percent, 

below the target of 79.7 percent. The Field Collection Quality measure is the percentage of 

quality attributes reviewed by an independent quality reviewer that are determined to be 

correct. The IRS expects to achieve an FY 2017 and FY 2018 Field Collection National 

Quality Review Score target of 79.7 percent.

In FY 2016, Automated Collection System (ACS) Accuracy was 95.4 percent, above the 

target of 95 percent. The ACS Accuracy measure reflects the percentage of correct responses 

from a weighted random sampling of calls selected for quality review by the Centralized

Quality Review System (CQRS). Periodic performance reviews were conducted on the 

campus program and communicated to the sites. IRS has set the FY 2017 and FY 2018

Automated Collection System Accuracy targets at 95 percent. 
IRS-37

FY 2018 Changes by Budget Activity

Dollars in Thousands

Exam and Collections FTE Amount

FY 2017 Annualized CR Level 32,251 $4,083,908 

Changes to Base:

Maintaining Current Levels (MCLs) - $81,466 

Pay Raise - 55,635 

Pay Annualization - 20,390 

Non-Pay - 5,441 

Resource Adjustments - ($116,077)

Base Realignment for Support Services - (111,141)

Adjustments for Administrative Provision Section 113 - (4,936)

Subtotal Changes to Base - ($34,611)

Total FY 2018 Base 32,251 $4,049,297 

Program Changes:

Program Decreases

Actions to Achieve Workforce Management Goals (1,052) (81,489)

Subtotal Program Changes (1,052) ($81,489)

Total FY 2018 Request 31,199 $3,967,808 

Dollar/FTE Change FY 2018 Budget Request over FY 2017 Annualized CR Level (1,052) ($116,100)

Percent Change FY 2018 Budget Request over FY 2017 Annualized CR Level -3.26% -2.84%

2.1.4 – Budget and Performance Report and Plan 

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2016 FY 2017 FY 2018 FY 2012 -

Actual Actual Actual Actual Actual Target Target Target FY 2016

Trend

Examination Coverage -

Individual (1040)

1.0 1.0 0.9 0.8 0.7 0.6 0.6 0.5

Field Examination 

National Quality Review 

Score

87.4 89.2 88.4 86.7 86.8 86.7 86.7 86.7

Office Examination 

National Quality Review 

Score

91.3 90.3 90.6 88.3 88.4 88.3 86.7 88.3

Examination Quality -

LB&I - Large Business1

N/A 92.0 83.0 86.0 83.0 90.0 90.0 90.0

Examination Coverage -

Business Assets >$10 

million (%)

6.2 5.6 4.3 3.9 3.0 3.5 2.7 2.7

Automated Underreporter 

(AUR) Efficiency

2,041 2,025 1,935 2,209 2,196 2,036 2,133 2,133

Exam and Collections FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 $4,482,881 $4,188,328 $4,154,342 $4,018,292 $3,945,578 $4,083,908 $3,967,808

Reimbursable Resources2 6,385 804 640 456 478 502

User Fees2 - - - - 36 -

Budget Activity Total $4,489,266 $4,189,132 $4,154,342 $4,018,932 $3,946,070 $4,084,386 $3,968,310

Dollars in Thousands

1

The FY 2012 - FY 2016 appropriated resources represents the approved operating plan including any inter-BAC transfers and 

inter-appropriation transfers.

2

The FY 2012 - FY 2016 columns represent realized resources for reimbursables and user fees.
IRS-38

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2016 FY 2017 FY 2018 FY 2012 -

Actual Actual Actual Actual Actual Target Target Target FY 2016

Trend

Automated Underreporter 

(AUR) Coverage (%)

3.2 2.8 2.6 2.3 2.3 2.2 2.0 2.0

Examination Efficiency -

Individual (1040)

142 142 138 148 143 122 118 126

Collection Coverage 

(Units)

48.1 47.0 45.9 46.3 43.4 41.8 37.5 34.2

Collection Efficiency 

(Units)

1,997 2,057 2,051 2,448 2,266 2,208 2,117 2,147

Field Collection National 

Quality Review Score

80.4 81.4 81.6 79.2 79.2 79.7 79.7 79.7

Automated Collection 

System (ACS) Accuracy 

(%)

94.7 94.4 95.2 95.3 95.4 95.0 95.0 95.0

1. As a result of program changes that occurred in the Large Business and International (LB&I) organization, starting in FY 

2013, a new Examination Quality - Large Business measure will replace the two previous LB&I quality measures - Examination 

Quality - Industry and Coordinated Industry.

2E – Regulatory ($131,945,000 in direct appropriations, an estimated $222,000 from 

reimbursable programs, and an estimated $16,150,000 from user fees): 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 program activities 

include:

• Tax Law Interpretation and Published Guidance interpret 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.

Description of Performance
IRS-39

Tax Exempt and Government Entities (TEGE) Determination Closures includes both 

applications for tax-exempt status for employee retirement plans (EP) and applications from 

various charitable entities seeking tax-exempt status (EO). The IRS reviews applications to 

determine eligibility and closes them upon approval or disapproval. 

Total determination closures in FY 2016 completed was 99,973 below the target of 103,852. 

While TEGE exceeded the closure goal for applications from organizations seeking 

tax-exempt status by more than 1,200 cases, employee plan determination application closures 

were about 5,100 cases short of the fiscal year goal because fewer applications were received 

than planned, and EO case processing to improve timeliness and maintain consistent case 

treatment. The IRS lowered the FY 2017 Determination Closures target to 95,791 to reflect 

the employee plan determination changes, but will increase the FY 2018 target to 99,840 for 

the anticipated increase in applications. 

FY 2018 Changes by Budget Activity

Dollars in Thousands

Regulatory FTE Amount

FY 2017 Annualized CR 972 $147,318 

Changes to Base:

Maintaining Current Levels (MCLs) - $2,940 

Pay Raise - 2,051 

Pay Annualization - 752 

Non-Pay - 137 

Resource Adjustments - ($15,699)

Adjustments for Administrative Provision Section 113 - (15,699)

Subtotal Changes to Base - ($12,759)

Total FY 2018 Base 972 $134,559 

Program Changes:

Program Decreases:

Actions to Achieve Workforce Management Goals (15) (2,614)

Subtotal Program Changes (15) ($2,614)

Total FY 2018 Request 957 $131,945 

Dollar/FTE Change FY 2018 Budget Request over FY 2017 Annualized CR Level (15) ($15,373)

Percent Change FY 2018 Budget Request over FY 2017 Annualized CR Level -1.54% -10.44%

2.1.5 – Budget and Performance Report and Plan 

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2016 FY 2017 FY 2018 FY 2012 -

Regulatory FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 150,903 147,411 158,415 147,605 137,245 147,318 131,945

Reimbursable Resources2 660 631 792 363 202 212 222

User Fees2 12,482 14,521 13,241 18,485 9,233 13,452 16,150

Budget Activity Total $164,045 $162,563 $172,448 $166,453 $146,680 $160,982 $148,317

Dollars in Thousands

1

The FY 2012 - FY 2016 appropriated resources represents the approved operating plan including any inter-BAC transfers 

and inter-appropriation transfers.

2

The FY 2012 - FY 2016 columns represent realized resources for reimbursables and user fees.
IRS-40

Actual Actual Actual Actual Actual Target Target Target FY 2016

Trend

TE/GE Determination 

Case Closures

87,000 65,877 136,746 111,940 99,973 103,852 95,791 99,840
IRS-41

Operations Support 

Appropriation Description

The Operations Support appropriation provides funding for overall planning, direction, and 

support for the IRS, including shared service support related to facilities services, rent 

payments, printing, postage, and security. This appropriation funds headquarters policy and 

management activities such as corporate support for strategic planning; communications and 

liaison; finance; human resources; equity, diversity and inclusion; research and statistics of 

income; and necessary expenses for information systems and telecommunication support, 

including development, security, and maintenance of the IRS’s information systems.

The Operations Support budget request for FY 2018 is $3,946,189,000 in direct 

appropriations and 11,365 FTE. This is an increase of $206,624,000, or 5.5 percent, and 

76 fewer FTE than the FY 2017 Annualized Continuing Resolution of $3,739,565,000 and 

11,441 FTE.

The Department of the Treasury is developing a new strategic plan for FYs 2018 – 2022 in 

accordance with the GPRA Modernization Act of 2010. The plan is scheduled for publication 

in 2018. The Annual Performance Plan will be updated in the FY 2019 President’s Budget to 

reflect new departmental strategic goals and objectives. The IRS will publish a component 

plan in summer 2018.
IRS-42

2.1 – Budget Adjustments Table

Dollars in Thousands

Operations Support FTE Amount

FY 2017 Annualized CR 11,441 $3,739,565 

Changes to Base:

Maintaining Current Levels (MCLs) - $75,423 

Pay Raise - 24,573 

Pay Annualization - 9,006 

Non-Pay Inflation Adjustment - 41,844 

Resource Adjustments - $27,558 

Base Realignment for Support Services - 55,000 

Adjustments for Administrative Provision Section 113 - (27,442)

Subtotal Changes to Base - $102,981 

Total FY 2018 Base 11,441 $3,842,546 

Program Changes:

Program Increase:

Realignment to Support Aging IT Infrastructure 266 179,449 

Subtotal Program Increase 266 $179,449 

Program Decreases

Actions to Achieve Workforce Management Goals (342) (75,806)

Subtotal Program Changes (76) $103,643 

Total FY 2018 Request 11,365 $3,946,189 
IRS-43

2.2 – Operating Levels Table

Dollars in Thousands

Operations Support

Object Classification

FY 2016

Actual

FY 2017

Annualized CR

FY 2018

Request

11.1 Full-Time Permanent Positions 1,109,315 1,099,853 1,122,911

11.3 Other than Full-Time Permanent Positions 6,102 5,733 5,843

11.5 Other Personnel Compensation 19,754 20,669 21,033

11.8 Special Personal Services Payments 676 402 410

11.9 Personnel Compensation (Total) 1,135,847 1,126,657 1,150,197

12.1 Personnel Benefits 415,262 432,951 445,736

13.0 Benefits to Former Personnel 45,682 50,000 51,007

Total Personnel and Compensation Benefits $1,596,791 $1,609,608 $1,646,940

21.0 Travel 10,709 7,910 7,982

22.0 Transportation of Things 10,504 11,205 11,398

23.1 Rental Payments to GSA 592,526 587,366 597,171

23.2 Rent Payments to Others 12,021 12,093 12,274

23.3 Communications, Utilities, & Misc 292,388 347,312 349,524

24.0 Printing & Reproduction 17,364 17,520 17,872

25.1 Advisory & Assistance Services 567,856 539,118 550,534

25.2 Other Services 59,309 53,125 53,052

25.3 Purchase of Goods & Services from Govt. Accounts 76,637 81,345 81,263

25.4 Operation & Maintenance of Facilities 174,892 190,125 188,962

25.6 Medical Care 14,087 14,166 13,262

25.7 Operation & Maintenance of Equipment 66,241 72,253 73,711

26.0 Supplies and Materials 15,028 6,599 6,726

31.0 Equipment 299,080 179,776 333,287

32.0 Land and Structures 6,161 9,836 2,034

42.0 Insurance Claims & Indemnities 313 208 197

Total Non-Personnel $2,215,116 $2,129,957 $2,299,249

New Appropriated Resources $3,811,907 $3,739,565 $3,946,189

Budget Activities:

Infrastructure 838,048 861,229 860,643

Shared Services & Support 1,090,192 1,014,139 1,011,411

Information Services 1,883,667 1,864,197 2,074,135

New Appropriated Resources $3,811,907 $3,739,565 $3,946,189

FTE 11,078 11,441 11,365
IRS-44

2.3 – Appropriation Detail Table

2F – Infrastructure ($860,643,000 in direct appropriations and an estimated $690,000 from 

reimbursable programs): These 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 building security costs related to contract guard services.

Description of Performance 

The IRS continued efforts to realize operational efficiencies and manage costs effectively by 

improving enterprise-wide resources and streamlining processes. 

Other than payroll, rent is the IRS's largest operating expense. IRS has identified

opportunities to reduce the high cost of rent and improve usage of office space across the 

country. In FY 2016, the IRS completed 61 projects to release more than 558,000 square feet 

of rented space from inventory for an annual rent reduction of about $16 million. In order to

contain costs and improve space usage, the IRS is developing Strategic Facility Plan process

that focuses on closing or consolidating workspace at the time of lease expiration. 

Dollars in Thousands

Operations Support

Appropriated Resources

New Appropriated Resources: FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Infrastructure - $848,191 - 861,229 - 860,643 - (586) N/A -0.07%

Shared Services and Support 4,861 1,110,811 4,981 1,014,139 4,871 1,011,411 (110) (2,728) -2.21% -0.27%

Information Services 6,217 1,937,686 6,460 1,864,197 6,494 2,074,135 34 209,938 0.53% 11.26%

Subtotal New Appropriated Resources 11,078 $3,896,688 11,441 $3,739,565 11,365 $3,946,189 (76) $206,624 -0.66% 5.53%

Other Resources:

Reimbursables 98 39,729 102 37,986 106 39,885 4 1,899 3.92% 5.00%

User Fees 83 264,250 - 409,724 - 441,900 - 32,176 N/A 7.85%

Recovery from Prior Years - 21,318 - 2,022 - - (2,022) N/A -100.00%

Unobligated Balances from Prior Years - 141,205 - 126,898 - 49,970 - (76,928) N/A -60.62%

Subtotal Other Resources 181 $466,502 102 $576,630 106 $531,755 4 ($44,875) 3.92% -7.78%

Total Budgetary Resources 11,259 $4,363,190 11,543 $4,316,195 11,471 $4,477,944 (72) $161,749 -0.62% 3.75%

FY 2017 to FY 

2018 Request

FY 2017 to FY 2018 

Request

FY 2016

Enacted

FY 2017

Annualized CR

FY 2018

Request

Change % Change
IRS-45

FY 2018 Changes by Budget Activity

Dollars in Thousands

Infrastructure FTE Amount

FY 2017 Annualized CR $861,229 

Changes to Base:

Maintaining Current Levels (MCLs) - $17,383 

Non-Pay - 17,383 

Subtotal Changes to Base - $17,383 

Total FY 2018 Base - $878,612 

Program Changes:

Program Decrease:

Actions to Achieve Workforce Management Goals - (17,969)

Subtotal Program Changes - ($17,969)

Total FY 2018 Request - $860,643 

Dollar/FTE Change FY 2018 Budget Request over FY 2017 Annualized CR Level ($586)

Percent Change FY 2018 Budget Request over FY 2017 Annualized CR Level -0.07%

2.1.6 – Budget and Performance Report and Plan 

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2016 FY 2017 FY 2018 FY 2012 -

Actual Actual Actual Actual Actual Target Target Target FY 2016

Trend

Rentable Square Feet Per 

Person (new for FY 2017)

Indicator N/A

2G – Shared Services and Support ($1,011,411,000 in direct appropriations, an estimated 

$17,520,000 from reimbursable programs, and an estimated $11,900,000 from user fees): 

This budget activity funds policy management, IRS-wide support for research, strategic 

planning, communications and liaison, protection of sensitive information and the privacy of 

taxpayers and employees, finance, human resources, and equity, diversity, and inclusion 

programs. It also funds printing and postage, business systems planning, physical security, 

corporate training, legal services, procurement, and employee benefits programs. The

program activities include: 

• 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 

Infrastructure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 894,365 874,627 845,558 833,846 838,048 861,229 860,643

Reimbursable Resources2 1,016 701 16,694 928 626 657 690

User Fees2 57,477 5,414 17,137 - - - -

Budget Activity Total $952,858 $880,742 $879,389 $834,774 $838,674 $861,886 $861,333

Dollars in Thousands

1

The FY 2012 - FY 2016 appropriated resources represents the approved operating plan including any inter-BAC 

transfers and inter-appropriation transfers.

2

The FY 2012 - FY 2016 columns represent realized resources for reimbursables and user fees.
IRS-46

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 customers and employees.

• Procurement supports the procurement function of the IRS and Treasury’s 

Departmental Offices.

• 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 handles congressional, national, and local stakeholder 

relationships and issues; coordinates and addresses crosscutting issues, including 

legislative implementation; works with representatives of the national and local tax 

community; communicates with individual and business taxpayers by developing 

information on IRS.gov and providing other taxpayer-facing content; handles national 

and local media contacts and relationships; and oversees internal employee 

communications.

• Employee Support Services plans and manages financial services, including relocation, 

travel, purchase cards, corporate express, and employee clearances. 

• Treasury Complaint Centers plan and manage the Treasury Complaint Centers.

• Shared Support not provided by Agency-Wide Shared Services provides resources for 

shared cross-functional support, such as 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.

• Security Administration and Management manages and oversees the staffing, training, 

equipment, and direct support for the protection of IRS employees, facilities, and 

assets, and the protection and proper use of identity information. 

• Wage and Investment (W&I) Business Modernization Support provides staffing, 

training, and direct support for W&I’s enterprise-wide business modernization efforts, 

including CADE 2, and Account Management Services (AMS) technology solutions, 

and re-engineered business processes.

• Shared Services provides support services for all IRS employees, including Treasury 

Franchise Fund, Indemnity payments, Mailrooms, Logistics, Shredding and 

Uninterrupted Power Systems. 
IRS-47

Description of Performance

Through support activities that include management and administration of human resources, 

security, and research, Operations Support continues to provide shared services to all IRS 

programs.

Human Capital 

The IRS workforce is our most important resource. By providing improved training and tools 

to all employees and developing future leaders, the IRS helps its workforce better serve 

taxpayer needs and guide the next generation of IRS employees. 

Security

Security of taxpayer data and providing a secure environment for employees are of utmost 

importance to the IRS. In FY 2016, the IRS:

• Continued efforts to protect the integrity of taxpayer data, minimize opportunities for 

fraud, and protect employees and facilities. 

• Engaged in activities with external stakeholders to promote data protection and 

minimize the potential mistreatment of taxpayers. The IRS expanded the Suspicious 

Filer Exchange to include 43 states and 6 municipalities, whereby the states and the 

IRS share information for confirmed identity theft and questionable returns through 

secure data transfers, for use with filter and authentication processes. The IRS also 

established a process to expedite the sharing of significant tax incidents or threats

amongst Security Summit partners.

• Refined and developed new identity theft filters based on analytical models and data 

validation. As a result, the IRS stopped potentially fraudulent returns much earlier in 

processing, allowing it to resolve cases for ID theft victims more quickly. 

Research 

The IRS gains further understanding of compliance through its National Research Program 

(NRP). The NRP analyzes reporting compliance data for various taxpayer populations, 

including Individual Income Tax, Corporate Income Tax, Employment Taxes, and Fuel 

Excise Taxes. Using data from the NRP individual income tax reporting compliance study, 

the IRS updated and implemented IRS Discriminant Function (DIF) models. The updates 

implemented for processing year 2016 were the latest in a series of updates to DIF models 

made possible because of new data available annually from NRP. The IRS expects that these 

improved models will reduce the selection of compliant taxpayers for audit, thereby focusing 

limited examination resources on returns with noncompliance, particularly returns with larger 

expected tax changes. The result will be a reduction in the number of audits for fully 

compliant taxpayers, while ensuring that problematic returns receive the necessary scrutiny. 

The IRS conducts research studies and analytics on behavioral responses to IRS taxpayer 

service operations and enforcement activities and provides measures of taxpayer compliance 

and the tax gap. 
IRS-48

FY 2018 Changes by Budget Activity

Dollars in Thousands

Shared Services and Support FTE Amount

FY 2017 Annualized CR 4,981 $1,014,139 

Changes to Base:

Maintaining Current Levels (MCLs) - $20,629 

Pay Raise - 9,383 

Pay Annualization - 3,439 

Non-Pay - 7,807 

Subtotal Changes to Base - $20,629 

Total FY 2018 Base 4,981 $1,034,768 

Program Changes:

Program Decrease:

Actions to Achieve Workforce Management Goals (110) (23,357)

Subtotal Program Changes (110) ($23,357)

Total FY 2018 Request 4,871 $1,011,411 

Dollar/FTE Change FY 2018 Budget Request over FY 2017 Annualized CR Level (110) ($2,728)

Percent Change FY 2018 Budget Request over FY 2017 Annualized CR Level -2.21% -0.27%

2.1.7 – Budget and Performance Report and Plan 

2H – Information Services ($2,074,135,000 in direct appropriations, $21,675,000 in 

reimbursable resources, and an estimated $430,000,000 from user fees): This budget activity 

funds staffing, equipment, and related costs to manage, maintain, and operate the information 

systems critical to the support of the tax administration programs. This includes the design 

and operation of Information Technology (IT) security controls and disaster recovery 

planning. This budget activity funds the development and maintenance of the millions of 

lines of programming code that support all aspects and phases of tax processing and the 

operation and administration of mainframes, servers, personal computers, networks, and a 

variety of management information systems. IT systems and data are key to all IRS functions. 

IT is responsible for information systems and technology, ranging from cyber security and 

networks to applications development and end user equipment and services. The program 

activities include:

• Application Development performs the analysis, design, development, testing, and 

implementation of about 550 applications supporting critical tax processing, 

management information reporting, and financial management support systems. This 

program supports external trading partner data exchanges with federal government 

agencies, state and local governments, and other third party entities. The program 

Shared Services and Support FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 $1,187,959 $1,097,565 $1,127,931 $1,126,230 $1,090,192 $1,014,139 $1,011,411

Reimbursable Resources2 31,486 17,175 19,886 17,126 19,443 16,686 17,520

User Fees2 14,938 31,644 7,819 1,768 1,000 1,000 11,900

Budget Activity Total $1,234,383 $1,146,384 $1,155,636 $1,145,124 $1,110,635 $1,031,825 $1,040,831

Dollars in Thousands

1

The FY 2012 - FY 2016 appropriated resources represents the approved operating plan including any inter-BAC transfers and inter-appropriation 

transfers.

2

The FY 2012 - FY 2016 columns represent realized resources for reimbursables and user fees.
IRS-49

controls application source code and deploys applications to the production 

environment.

• Cybersecurity delivers IT security services to ensure IRS compliance with federal 

statutory and regulatory requirements governing confidentiality, integrity, and 

availability of IRS electronic systems, services, and data. Cybersecurity tracks 

compliance, continuously monitors risk, and provides remediation to manage the IRS's 

IT Security Program in accordance with the Federal Information Security 

Management Act.

• Enterprise Operations designs, develops, and maintains IT that supports critical tax 

processing, management information reporting, and financial management support 

systems for the IRS. It 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 Program Management Office (EPMO) is responsible for the delivery of 

integrated solutions for several of the IRS’s large-scale programs. It plays a key role 

in establishing change, configuration, and release plans and implementing new 

information system functional capabilities. The EPMO is the primary partner with the 

business for programs under their purview and works with IT delivery partners (AD, 

ES, EOPS and the other ACIO areas) to deliver required capabilities. This structure 

positions each organization to maintain a strong core function to optimize their 

operations. 

• Enterprise Services plans and manages service and delivery methods used across the 

IT organization, including demand analysis, enterprise architecture, configuration 

management, project reporting, enterprise life cycle management, release 

management, systems engineering, dashboard reporting, and internal management.

• IT Executive Oversight supports the continued transformation of the IT organization 

while helping drive the successful implementation of multiple initiatives and is 

responsible for overseeing day-to-day operations of the organization and providing 

strategic and operational oversight for many functions within IT. 

• IT Infrastructure provides a centrally managed investment program for the 

replacement of IRS IT infrastructure that has reached or surpassed its useful life cycle. 

• Strategy and Planning collaborates with IT leadership to provide policy, direction, and 

administration of essential programs, including strategy and capital planning, strategic 

planning and performance measurement, financial management services, vendor and 

contract management, requirements and demand management, and risk management. 

The organization partners with IRS leadership and external stakeholders to ensure 

selection, planning and management of an IT investment portfolio that is driven by the 

strategic priorities of the IRS and demonstrates business value. 

• Treasury Franchise Fund (TFF) is a centralized functional area that pays for services 

provided through the Treasury Franchise Fund. 

• User and Network Services (UNS) provides end-user support in accordance with 

negotiated service level agreements, strategic direction, forecasting, planning and 
IRS-50

oversight of IT business needs, and ensures compliance with government security 

regulations. UNS supplies and maintains all desk-side technology, equips the 

Volunteer Income Tax Assistance Program; establishes and provides oversight of 

hardware and software standards; and manages the architecture, design, and 

engineering of the IRS network infrastructure.

Description of Performance

The IRS taxpayer service and enforcement programs rely heavily on information systems 

funded in this account. These systems process tax and information returns, account for tax 

revenues collected, send bills for taxes owed, issue refunds, assist in the selection of tax 

returns for audit, and provide telecommunication services for all business activities. It also 

funds the disaster recovery activities to ensure continued operations in the event of a major 

interruption of service. 

In FY 2016, the IRS:

• Processed more than 126,000 Forms 1094-B, Transmittal of Health Coverage 

Information Returns and more than 108 million Forms 1095-C, Employer-Provided 

Health Insurance Offer and Coverage Insurance, through the ACA Information 

Returns (AIR) system.

• Continued to deliver new capabilities and enhancements to the Foreign Account Tax 

Compliance Act (FATCA) system. The IRS deployed the FATCA registration system 

releases 3.0, 4.0, and 4.1, and updated the FATCA Compliance Roadmap with 

activities for identifying noncompliance by foreign financial institutions. Nearly 

190,000 financial institutions registered with the IRS, while more than 5,000 financial 

institutions enrolled in the International Data Exchange Service to submit FATCA 

returns to the IRS.

• Worked with Security Summit partners from state tax agencies and the broader tax 

community to add extra layers of security protection for the filing season; processed 

more than 200 million returns and billions of dollars in tax refunds with these security 

protections in place.

• Conducted continuity of operations exercises testing organizational readiness in 

response to emergency events. These exercises allow the IRS to test its ability to 

support and render services to taxpayers by ensuring the three mission essential 

functions, Processing Tax Returns, Processing Remittances, and Processing Refunds, 

remain operational during an emergency event. Exercises centered not only on natural 

disasters (hurricanes, tornadoes, earthquakes, wild fires, etc.) but also on man-made 

disasters (bombs, biohazard situations, riots, etc.) that could affect IRS operations. 

The continuity exercises required extensive coordination with IRS leadership and 

assessed continuity readiness at all levels of the organization. 

• Continued to build robust cybersecurity programs to improve the identification and 

prevention of refund fraud and identity theft and to enhance cybersecurity to safeguard 

taxpayer data. 
IRS-51

• Identified and mitigated 678 cyber incidents and blocked the transmission of 

66,378 unencrypted emails from leaving the IRS network, preventing the possible 

inadvertent disclosure of sensitive data such as social security numbers and passwords. 

The IRS also completed the first release of its Short Messaging Service Platform 

(SMSP), which allowed for the issuance of a one-time password to a taxpayer via text 

messaging services, paving the way for two-factor authentication for taxpayers trying 

to access their tax records.

FY 2018 Changes by Budget Activity

Dollars in Thousands

Information Services FTE Amount

FY 2017 Annualized CR 6,460 $1,864,197 

Changes to Base:

Maintaining Current Levels (MCLs) - $37,411 

Pay Raise - 15,190 

Pay Annualization - 5,567 

Non-Pay - 16,654 

Resource Adjustments - $27,558 

Base Realignment for Support Services - 55,000 

Adjustments for Administrative Provision Section 113 - (27,442)

Subtotal FY 2018 Changes to Base - $64,969 

FY 2018 Current Services 6,460 $1,929,166 

Program Changes:

Program Increase:

Realignment to Support Aging IT Infrastructure 266 179,449 

Program Decrease:

Actions to Achieve Workforce Management Goals (232) (34,480)

Subtotal FY 2018 Program Changes 34 $144,969 

Total FY 2018 Budget Request 6,494 $2,074,135 

Dollar/FTE Change FY 2018 Budget Request over FY 2017 Annualized CR Level 34 $209,938 

Percent Change FY 2018 Budget Request over FY 2017 Annualized CR Level 0.53% 11.26%

2.1.8 – Budget and Performance Report and Plan 

Information Services FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 1,681,195 1,722,172 1,749,110 1,641,360 1,883,667 1,864,197 2,074,135

Reimbursable Resources2 5,154 8,850 4,734 24,262 19,660 20,643 21,675

User Fees2 59,824 145,027 198,206 373,610 263,250 408,724 430,000

Budget Activity Total $1,746,173 $1,876,049 $1,952,050 $2,039,232 $2,166,577 $2,293,564 $2,525,810

Dollars in Thousands

1

The FY 2012 - FY 2016 appropriated resources represents the approved operating plan including any inter-BAC transfers and interappropriation transfers.

2

The FY 2012 - FY 2016 columns represent realized resources for reimbursables and user fees.
IRS-52

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 2018 is $110,000,000 in direct appropriations and 229 FTE. 

This is a decrease of $179,449,000, or 62 percent, and 364 fewer FTE than the FY 2017 

Annualized Continuing Resolution level of $289,449,000 and 593 FTE. 

The IRS is moving $179,449,000 and 266 FTE from BSM to Operations Support to fund 

operations and maintenance for the existing infrastructure, including addressing a backlog of 

infrastructure past its useful life. As of right now, 63 percent of IT hardware systems are aged 

and out of warranty and 32 percent of software products are two or more releases behind the 

industry standard, with 15 percent more than four releases behind. Additionally, the 

increasing number of cybersecurity threats and the need to modernize systems to protect one 

of the world’s most valuable data caches cannot be overstated. These funds and FTE will be 

used to replace about 20 percent of the inventory.

BSM will continue to operate the Return Review Program (RRP), which has significantly 

enhanced fraud detection capabilities; Web Applications, which has provided increased and 

secure Internet-based services to taxpayers; CADE2, which has provided the foundation for a 

more efficient and effective tax administration; Architecture, Integration and Management

(AI&M), which has provided management abilities essential to IRS systems strategy, 

architecture, and engineering capabilities for the major modernization projects across all 

technology platforms; and Core Infrastructure which has provided shared infrastructure that 

leverages reusable engineering design patterns and best practices for standardized, virtual, and 

secure environments.

The Department of the Treasury is developing a new strategic plan for FYs 2018 – 2022 in 

accordance with the GPRA Modernization Act of 2010. The plan is scheduled for publication 

in 2018. The Annual Performance Plan will be updated in the FY 2019 President’s Budget to 

reflect new departmental strategic goals and objectives. The IRS will publish a component 

plan by summer 2018.
IRS-53

2.1 – Budget Adjustments Table 

Dollars in Thousands

Business Systems Modernization FTE Amount

FY 2017 Annualized CR 593 $289,449 

Changes to Base:

Maintaining Current Levels (MCLs) - $1,425 

Pay Raise - 1,043 

Pay Annualization - 382 

Subtotal Changes to Base - $1,425 

Total FY 2018 Base 593 $290,874 

Program Changes:

Program Decreases:

Realignment to Support Aging IT Infrastructure (355) (179,449)

Actions to Achieve Workforce Management Goals (9) (1,425)

Subtotal Program Changes (364) ($180,874)

Total FY 2018 Request 229 $110,000 
IRS-54

2.2 – Operating Levels Table 

Dollars in Thousands

Business Systems Modernization

Object Classification

FY 2016

Actual

FY 2017

Annualized CR

FY 2018

Request

11.1 Full-Time Permanent Positions 53,444 71,069 27,581

11.3 Other than Full-Time Permanent Positions 425 193 62

11.5 Other Personnel Compensation 567 1,004 299

11.9 Personnel Compensation (Total) 54,436 72,266 27,942

12.1 Personnel Benefits 16,492 21,861 8,358

Total Personnel and Compensation Benefits $70,928 $94,127 $36,300

21.0 Travel 170 191 112

25.1 Advisory & Assistance Services 109,827 172,227 64,186

25.2 Other Services 9 159 58

25.3 Purchase of Goods & Services from Govt. Accounts 12 6

25.7 Operation & Maintenance of Equipment 2,632 1,434 664

26.0 Supplies and Materials 2 21 9

31.0 Equipment 7,377 21,278 8,665

Total Non-Personnel $120,017 $195,322 $73,700

New Appropriated Resources $190,945 $289,449 $110,000

Budget Activities:

IT Investments 190,945 289,449 110,000

New Appropriated Resources $190,945 $289,449 $110,000

FTE 442 593 229
IRS-55

2.3 – Appropriation Detail Table 

2I – Business Systems Modernization (BSM) ($110,000,000 in direct appropriations): This 

budget activity funds the planning and capital asset acquisition of information technology (IT) 

to modernize IRS business systems, including labor and related contractual costs.

BSM uses best practices and expertise in business solutions and internal management to 

develop a world-class tax administration system. The following projects are supported by the 

FY 2018 BSM request of $110 million:

Customer Account Data Engine 2 (CADE2) (+$30 million / +102 FTE): These funds will be 

used to re-engineer components of the Individual Master File (IMF) by applying modern 

programming languages and establish CADE 2 as the legal and financial authoritative source 

of individual taxpayer data. 

Return Review Program (RRP) (+$36 million / +41 FTE): The RRP system became the 

system of record in October, 2016 for tax return fraud and anomaly detection. The current 

focus is on individual tax return data. Investment in RRP will continue to improve and 

expand analytical capabilities, that protect increasing levels of revenue from individual and 

business tax return fraud, non-compliance, and other enterprise anomaly detection. IRS will 

implement value-driven enhancements based on Business priorities, enabling additional 

business customers to explore and use RRP for anomaly detection business processes. In 

FY 2018, RRP will make a wider array of data available to other systems, for expanded 

anomaly detection throughout the processing pipeline. RRP will also increase the amount of 

revenue protected by improving existing screening rules and models for individual returns and 

by developing and implementing new rules and models for emerging schemes for business 

returns. RRP will upgrade hardware and analytics software and other infrastructure 

capabilities, to enable superior processing performance and reliability

 

Web Applications (+$24 million / +49 FTE) will simplify the taxpayer’s online experience, 

provide secure digital communications, and add more interactive capabilities to existing web 

self-service products. This will allow taxpayers to resolve more issues online, requiring fewer 

direct interactions with the IRS over the telephone and in person. 

In early FY 2018, Web Applications will substantially complete development of initial Online 

Account capabilities. These initial capabilities will allow a taxpayer to check if they have a 

Dollars in Thousands

Business Systems Modernization

Appropriated Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Business Systems Modernization 442 $290,000 593 289,449 229 110,000 (364) (179,449) -61.38% -62.00%

Subtotal New Appropriated Resources 442 $290,000 593 $289,449 229 $110,000 (364) ($179,449) -61.38% -62.00%

Other Resources:

User Fees - - 36,000 - - - (36,000) N/A -100.00%

Recovery from Prior Years - 4,283 - 766 - - - (766) N/A -100.00%

Unobligated Balances from Prior Years - 276,444 - 186,182 - 185,584 - (598) N/A -0.32%

Subtotal Other Resources - $280,727 - $222,948 - $185,584 - ($37,364) N/A -16.76%

Total Budgetary Resources 442 $570,727 593 $512,397 229 $295,584 (364) ($216,813) -61.38% -42.31%

FY 2017 to FY 2018 

Request

FY 2016

Enacted

FY 2017

Annualized CR

FY 2018

Request

FY 2017 to FY 2018 

Request

Change % Change
IRS-56

balance due, make a payment, and see prior payments and other tax records. Additionally, 

Web Apps will start to plan, develop and deploy new capabilities selected by the Web Apps 

product prioritization process. Anticipated functionalities include: allowing third parties 

(i.e., tax preparers and tax software companies) to interface with IRS systems to directly

provide refund data to their customers; allowing taxpayers to validate their identity for 

questionable tax returns to enhance identity protection and reduce fraud; allowing taxpayers 

access to self-service their public determination applications and return filings; and allowing

taxpayers to initiate and modify installment agreements in the Account application. 

Architecture, Integration and Management (AI&M) (+$10 million / +16 FTE) will provide 

engineering management capabilities essential to delivering a program of BSM’s magnitude 

and complexity. It will also deliver essential IRS systems strategy, architecture, and 

engineering capabilities for the major modernization projects across all technology 

platforms-IT Infrastructure, Business Applications, Data Management, and IT Security. The 

AI&M program translates enterprise and project objectives into targeted, actionable 

investments to provide the necessary framework and direction for a cohesive, successful 

modernization.

Core Infrastructure (+$10 million / +21 FTE) provides mission-critical services for 

designing, engineering, testing, and deploying standardized, consolidated, virtual, and secure 

modernized development and production environments for use by BSM projects. This 

support effort scales with the development projects in the BSM portfolio. 

The IRS is modernizing taxpayer applications to use of web-based technologies that allow 

taxpayers to communicate with the IRS using commercially available technology. The 

modernized infrastructure provides a complete environment (hardware, software, processes, 

and management) for developing, testing, deploying, operating, and monitoring both customer 

and internal applications in support of business practices. This includes continuing to update 

the web portal environment and standardizing services, security, and operations management. 

This approach facilitates the IRS’s ability to develop a shared infrastructure and common 

business service solutions that are usable across multiple BSM projects. 
IRS-57

Description of Performance

The IRS’s modernization efforts focus on building and deploying advanced information 

technology systems, processes, and tools to improve efficiency and productivity. IRS 

performance metrics are described quarterly and in greater detail in the BSM IT 

Modernization report. 

Dollars in thousands

Business Systems Modernization 

FY 2016 

Operating 

Plan

FY 2017 

CR Level

FY 2018 

Budget 

Request

Difference

2017 to 2018

CADE 2 92,231 121,846 30,000 (91,846)

Capital1 62,854 90,000 15,000 (75,000)

Support2 2,372 150 (150)

Labor 27,005 31,696 15,000 (16,696)

FTE 183 202 102 (100)

Enterprise Case Management 38,517 46,324 (46,324)

Capital 28,991 7,100 (7,100)

Support 154 32 (32)

Labor 9,372 14,192 (14,192)

U. Fees 25,000 (25,000)

FTE 32 92 (92)

Enterprise Case Selection 1,492 23,707 (23,707)

Capital 1,492 10,000 (10,000)

Support 25 (25)

Labor 8,682 (8,682)

U. Fees 5,000 (5,000)

FTE 54 (54)

Event Driven Architecture 8,962 4,766 (4,766)

Capital 7,500 2,000 (2,000)

Support 39 5 (5)

Labor 1,423 2,761 (2,761)

FTE 11 17 (17)

Modernized e-File 11,014 3,507 (3,507)

Capital 7,700

Support 39

Labor 3,275 3,507 (3,507)

FTE 12

Return Review Program 40,402 40,215 36,000 (4,215)

Capital 32,000 32,000 29,030 (2,970)

Support 201 55 70 15

Labor 8,201 8,160 6,900 (1,260)

FTE 56 50 41 (9)

Web Applications 22,160 29,253 24,000 (5,253)

Capital 16,272 14,000 15,625 1,625

Support 124 30 75 45

Labor 5,764 9,223 8,300 (923)

U. Fees 6,000 (6,000)

FTE 36 58 49 (9)

Architecture, Integration, and Management 31,560 19,679 10,000 (9,679)

Capital 25,400 15,000 7,380 (7,620)

Support 180 26 20 (6)

Labor 5,980 4,653 2,600 (2,053)

FTE 33 27 16 (11)

Core Infrastructure 26,171 33,450 10,000 (23,450)

Capital 15,000 22,000 6,480 (15,520)

Support 258 60 20 (40)

Labor 10,913 11,390 3,500 (7,890)

FTE 73 70 21 (49)

Management Reserve 17,491 2,702

Total BSM $290,000 $325,449 $110,000 ($212,747)

Total FTE 436 570 229 (341) 1 Capital Investments funding consists of capital and labor costs.

2 Support funding consists of training, travel, supplies, etc.

Ensuring Taxpayer data is secure. CADE2 will re-engineer components of the Individual Master File (IMF) by applying 

modern programming languages and establish CADE 2 as the legal and financial authoritative source of individual 

taxpayer data. 

Working the right cases so taxpayer burden is lessened requires an implementation strategy to consolidate and retire 

legacy systems. Funding ECM will: provide an enterprise-wide strategic approach to case management that will 

implement standard case management functions, an infrastructure platform, and common services that a case 

management application will leverage. The anticipated results are to streamline processes, reduce the number of 

duplicative applications and improve data accessibility and usability.

Funding ECS will: provide the main integration point between the Return Review Program (RRP) and Enterprise Case 

Management (ECM). The ECS program will implement an enterprise solution for performing case selection functions 

using a common infrastructure platform and common services that will be leveraged across the IRS. The ECS program 

will increase operational efficiencies by consolidating separate case selection functions and by identifying the best cases 

allowing the IRS to utilize resources more effectively. 

Enabling online account self-service, including self correction. Funding EDA allows: a framework that processes the tax 

return immediately upon arrival. Just-in-time processing will allow each individual return to flow independently through the 

system at its own pace. This will allow the IRS to move away from batch processing, view returns dynamically, and 

understand the status of a return as it is processed.

Ensuring faster, more efficient tax processing. Providing labor funding to complete MeF Release 10, enables e-filing of 

Form 1040-NR (U.S. Nonresident Alien Income Tax Return) and Form 1040-NR-EZ (U.S. Income Tax Return for Certain 

Nonresident Aliens With No Dependents).

Providing leading-edge technologies to advance the IRS effectiveness in detecting, addressing, and preventing tax refund 

fraud and protecting U.S. Treasury revenue. The RRP fraud framework is critical for IRS’ success in tackling everevolving tax schemes in a sophisticated, scalable and adaptable manner. Funding will: provide leading-edge 

technologies to advance IRS effectiveness in detecting, addressing, and preventing tax refund fraud and protecting US 

Treasury revenue. The RRP system contains multiple data sources combined with sophisticated modeling and business 

rule analytics to support pre-refund revenue protection, compliance and post-refund criminal investigation and prosecution. 

Providing easy access to taxpayer information via digital channels. Funding will: drive the IRS transition to digital 

government and supports the long-term vision of migrating services from expensive traditional channels to the internet. To 

keep pace with the ever changing state of web technology and increasing taxpayer demand for IRS service, the IRS must 

create and enhance online self-service capabilities for taxpayers, tax practitioners, and internal IRS stakeholders. Web 

Applications will continue to enhance the taxpayer’s experience by providing additional self-service options within a 

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.

Provide shared infrastructure that leverages reusable engineering design patterns and best practices for standardized, 

virtual, and secure environments. These environments allow multiple BSM projects to develop, test, deploy, operate, and 

monitor in a common approach. 

Fiscal Year

Percent within +/- 10% 

Cost Variance

Percent within +/- 10% 

Schedule Variance

2016 76.2% 85.7%

Major IT (BSM and Non-BSM) Investments
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IRS IT will continue to monitor program activities closely and address any issues associated 

with cost/schedule on a timely basis to meet the FY 2017 and FY 2018 target of 90 percent. 

FY 2018 Changes by Budget Activity

Dollars in Thousands

Business Systems Modernization FTE Amount

FY 2017 Annualized CR 593 $289,449 

Changes to Base:

Maintaining Current Levels (MCLs) - $1,425 

Pay Raise - 1,043 

Pay Annualization - 382 

Subtotal Changes to Base - $1,425 

Total FY 2018 Base 593 $290,874 

Program Changes:

Program Decreases

Realignment to Support Aging IT Infrastructure (355) (179,449)

Actions to Achieve Workforce Management Goals (9) (1,425)

Subtotal Program Changes (364) ($180,874)

Total FY 2018 Request 229 $110,000 

Dollar/FTE Change FY 2018 Budget Request over FY 2017 Annualized CR Level (364) ($179,449)

Percent Change FY 2018 Budget Request over FY 2017 Annualized CR Level -61.38% -62.00%

2.1.9 – Budget and Performance Report and Plan

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2016 FY 2017 FY 2018 FY 2012 -

Actual Actual Actual Actual Actual Target Target Target FY 2016

Trend

Percent of Major IT 

Investments within +/-10% 

Cost Variance at the 

Investment Level

50.0 .0 66.7 73.7 76.2 90.0 90.0 90.0

Percent of Major IT 

Investments within +/-10% 

Schedule Variance at the 

Investment Level1

90.0 83.3 100.0 89.5 85.7 90.0 90.0 90.0

1. Starting in FY 2015, the measure includes all major investments (BSM and non-BSM).

Business Systems 

Modernization FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Resource Level Actual Actual Actual Actual Actual Annualized 

CR Request

Appropriated Resources1 250,537 198,205 145,235 107,746 190,945 289,449 110,000

Reimbursable Resources2 0 0 0 0 0 0 0

User Fees 0 0 0 0 0 36,000 0

Budget Activity Total $250,537 $198,205 $145,235 $107,746 $190,945 $325,449 $110,000

Dollars in Thousands

1

The FY 2012 - FY 2016 appropriated resources represents the approved operating plan including any inter-BAC 

transfers and inter-appropriation transfers.

2

The FY 2012 - FY 2016 columns represent realized resources for reimbursable resources and user fees.
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Section III

3.1 – Summary of Capital Investments

A summary of capital investment resources, including major information technology and 

non-technology investments, can be viewed/downloaded at:

http://www.treasury.gov/about/budget-performance/pages/summary-of-capitalinvestments.aspx.

This website also contains a digital copy of this document.

3A – Capital Investment Strategy

The Information Technology (IT) office is a key facilitator of efficient and effective tax 

administration. IT continues to provide critical support as the IRS faces increasingly complex 

tax administration, evolving taxpayer expectations, greater media scrutiny, and growing 

challenges in combating refund fraud and identity theft. In FY 2018, the IRS plans to 

strengthen its IT infrastructure. 

The IRS needs new technologies to deliver comprehensive IT solutions that improve electronic 

tax filing returns, enhance services to taxpayers and third party practitioners, and strengthen 

criminal enforcement of tax laws. With increases in electronic data, online interactions, and 

related security risks, the IRS must make significant investments to secure infrastructure, data, 

and applications. To ensure the IRS invests wisely in new technology, it implemented a 

collaborative Capital Investment Strategy with the business units. The collaboration includes

translating business vision and strategy into effective enterprise change by creating, 

communicating, and improving the key requirements, principles, and models that describe the 

IRS's future and enable its evolution. 

The outcome of this collaboration is the Technology Roadmap, which creates a visual depiction 

of the future of IT and promotes dialogue between IT and business leaders on the priorities, 

direction and alignment of investments and resources. The roadmap provides conceptual, 

logical, technical, transitional, and detailed multi-level views of business requirements that 

provide increased granularity with each subsequent level. The transitional view demonstrates 

the current, transition, and next state for major business concepts, including the Intake, Account 

Management, Compliance, Case Management, and Internal Operations processes.

The IRS uses the Technology Roadmap to guide its capital investment strategy. It is a living 

document that is continuously reviewed and updated as appropriate. Below is the conceptual, 

top-level view of the Technology Roadmap, identifying the major services that support each

core business area along with the major architectural principles and structures. 
IRS-60
IRS-61

3.2 – Return on Investment (ROI) for IRS Major Enforcement Programs 

The actual cost and actual revenue collected for FY 2012 through FY 2016 for the three major 

enforcement programs, Examination, Collection, and Automated Underreporter (AUR) are 

provided below. The activities included in these programs include:

Examination Program conducts examinations of tax returns of individual taxpayers, 

businesses, and other types of organizations to verify that the tax reported is correct. This 

includes examinations of individuals, small business, self-employed, large corporate business, 

partnerships, international, estate and gift, excise tax and employment tax, and tax-exempt, 

qualified pension benefit plans, and Government entities. The examination costs include the 

cost of the Field Exam, Correspondence Exam, IRS Chief Counsel, and Appeals functions.

Collection Program collects delinquent taxes and secures delinquent tax returns through the 

appropriate use of enforcement tools, such as lien, levy, seizure of assets, installment 

agreement, offer in compromise, substitute for return, summons, and IRC 6020(b) (which 

allows the IRS to prepare returns if a taxpayer neglects or refuses to file), and provides 

education to taxpayers to enable future compliance. The cost of the Collection program 

includes Automated Collection System (ACS), Field Collection, and Payment 

Compliance/Correspondence Collection.

Automated Underreporter (AUR) Program matches payer information returns (Forms 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, but it is important to note that 

enforcement revenue collected in a fiscal year includes tax, interest, and penalties from multiple 

tax years. Some enforcement activities can take more than a year to close and may generate 

revenue over several years, so it is generally inappropriate to compare revenue collected in a 

given fiscal year to the staffing available for that same year. 

In addition, it is important to note that these data reflect the average return on investment for 

these programs and do not include indirect effects of IRS enforcement activities on voluntary 

compliance. As such, they are not intended to be used to allocate resources or maximize 

revenue. Net revenue is maximized only when resources are allocated according to marginal 

direct and indirect return on investment, but those ratios are much more challenging to estimate 

than the average ROI shown here. As a result, the IRS will continue to allocate enforcement 

resources across a range of enforcement activities to ensure taxpayers pay the taxes they owe. 
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Return on Investment for IRS Major Enforcement Programs

Dollars in millions

Enforcement Program Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI

IRS Total $6,242 $50,187 8.0 $5,883 $53,345 9.1 $5,839 $57,146 9.8 $5,644 $54,203 9.6 $5,592 $54,291 9.7

Examination 4,232 14,476 3.4 3,965 16,662 4.2 3,965 18,983 4.8 3,974 13,320 3.4 3,782 12,023 3.2

Collection 1,742 30,442 17.5 1,660 31,396 18.9 1,618 33,198 20.5 1,419 35,740 25.2 1,576 37,259 23.6

Automated Underreporter (AUR) 267 5,269 19.7 258 5,287 20.5 256 4,965 19.4 251 5,143 20.5 234 5,009 21.4

FY 2015 FY 2016

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 

FY 2012 FY 2013 FY 2014
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3.3 – IRS Performance Measure Table

Changes in Performance Measures

The following are changes in performance measures or indicators from the FY 2017 Annualized 

CR level. 

Performance Measure or Indicator Proposed Change and Justification

1. Conviction Efficiency Rate –

discontinue

The budget component of the measure – which 

makes up the numerator to calculate this rate –

fluctuates year to year and Criminal Investigation has 

limited control over funding. CI will continue to 

report three measures in the budget submission.

2. Enterprise Taxpayer Self-Assistance 

Rate (ETSAR) – modify

Starting in FY 2017, the IRS modified the Taxpayer 

Self Assistance Rate measures to include additional 

self-assistance applications, including Get 

Transcripts and payment applications, such as Direct 

Pay and Online Payment Agreements. As new 

self-assistance applications are provided to the 

public, they will be added to the methodology.

Because of these changes, IRS will use ETSAR as an 

indicator in FY 2017. 

3. Customer Contacts Resolved per Staff 

Year (CCRPSY) – modify

Due to the modifications made to the Taxpayer 

Self-Assistance Rate measure for FY 2017, several 

components of the Customer Contacts Resolved Per 

Staff Year measure changed including: the way IRS 

counts transcripts, from “requested” to now counting 

“delivered”; the addition of Get Transcripts (Online 

& Mail); the discontinuation of Electronic 

Interactions; and, the moving of balance due calls to 

SB/SE.

IRS will baseline CCRPSY in FY 2017.

4. Rentable Square Feet per Person 

(RSFPP) – new measure for FY 2017

A new measure was added to support the Operations 

Support Appropriation. This indicator will help IRS 

better manage rental costs. 

IRS will use RSFPP as an indicator in FY 2017. 
IRS-64

3.3 – IRS Performance Measure Table (Continued)

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2016 FY 2017 FY 2018 FY 2012 -

Actual Actual Actual Actual Actual Target Target Target FY 2016

Trend

Timeliness of Critical 

Individual Filing Season 

Tax Products to the Public 

(%)

97.2 58.9 99.1 89.0 92.5 87.0 89.0 89.0

Timeliness of Critical 

TE/GE and Business Tax 

Products to the Public (%) 

94.5 83.6 98.7 92.6 98.0 87.0 91.0 91.0

Enterprise Taxpayer SelfAssistance Rate 178.5 83.3 84.7 88.7 89.0 90.0 Indicator N/A N/A

Percent Individual Returns 

Processed Electronically 

(%) 

80.5 82.5 84.1 85.3 86.4 86.0 87.0 88.0

Percent of Business 

Returns Processed 

Electronically 

36.7 40.2 43.1 47.0 50.0 48.0 51.0 53.0

Customer Accuracy - Tax 

Law Phones (%) 

93.2 95.7 95.0 95.0 96.4 92.0 95.0 95.0

Customer Accuracy -

Accounts (Phones) 

95.6 96.0 96.2 95.5 96.1 94.0 95.0 95.0

Customer Contacts 

Resolved Per Staff Year2

16,320 20,767 21,018 26,245 28,497 28,000 Baseline TBD

Customer Service 

Representative (CSR) 

Level of Service (LOS) 

(%)3

67.6 60.5 64.4 38.1 53.4 47.0 64.0 39.0

Refund Timeliness -

Individual (Paper) 

99.7 99.0 98.7 98.8 98.7 97.0 97.0 97.0

Criminal Investigations 

Completed

4,937 5,557 4,606 4,486 3,721 3,800 3,100 3,000

Number of Convictions 2,634 3,311 3,110 2,879 2,672 2,500 2,100 2,000

Conviction Rate (%) 93.0 93.1 93.4 93.2 92.1 92.0 92.0 92.0

Examination Coverage -

Individual (1040)

1.0 1.0 0.9 0.8 0.7 0.6 0.6 0.5

Field Examination 

National Quality Review 

Score

87.4 89.2 88.4 86.7 86.8 86.7 86.7 86.7

Office Examination 

National Quality Review 

Score

91.3 90.3 90.6 88.3 88.4 88.3 86.7 88.3

Examination Quality -

LB&I - Large Business

N/A 92.0 83.0 86.0 83.0 90.0 90.0 90.0

Examination Coverage -

Business Assets >$10 

million (%)

6.2 5.6 4.3 3.9 3.0 3.5 2.7 2.7

Automated Underreporter 

(AUR) Efficiency

2,041 2,025 1,935 2,209 2,196 2,036 2,133 2,133
IRS-65

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2016 FY 2017 FY 2018 FY 2012 -

Actual Actual Actual Actual Actual Target Target Target FY 2016

Trend

Automated Underreporter 

(AUR) Coverage (%)

3.2 2.8 2.6 2.3 2.3 2.2 2.0 2.0

Examination Efficiency -

Individual (1040)

142 142 138 148 143 122 118 126

Collection Coverage 

(Units)

48.1 47.0 45.9 46.3 43.4 41.8 37.5 34.2

Collection Efficiency 

(Units)

1,997 2,057 2,051 2,448 2,266 2,208 2,117 2,147

Field Collection National 

Quality Review Score

80.4 81.4 81.6 79.2 79.2 79.7 79.7 79.7

Automated Collection 

System (ACS) Accuracy 

(%)

94.7 94.4 95.2 95.3 95.4 95.0 95.0 95.0

TE/GE Determination 

Case Closures

87,000 65,877 136,746 111,940 99,973 103,852 95,791 99,840

Rentable Square Feet Per 

Person (new for FY 2017)

Indicator N/A

Percent of Major IT 

Investments within +/-10% 

Cost Variance at the 

Investment Level

50.0 .0 66.7 73.7 76.2 90.0 90.0 90.0

Percent of Major IT 

Investments within +/-10% 

Schedule Variance at the 

Investment Level4

90.0 83.3 100.0 89.5 85.7 90.0 90.0 90.0

1. Starting in FY 2017, the IRS modified the Taxpayer Self Assistance Rate measure to include additional self-service channels. 

As new self-assistance applications are provided to the public, they will be added to the methodology.

2. Beginning in FY 2013, targets include an increase in base user fees.

3. As a result of program changes that occurred in the Large Business and International (LB&I) organization, starting in FY 2013, a 

new Examination Quality - Large Business measure will replace the two previous LB&I quality measures - Examination Quality -

Industry and Coordinated Industry.

4. Starting in FY 2015, the measure includes all major investments (BSM and non-BSM).
IRS-66

3.3 – IRS Performance Measure Table (Continued)

Customer Service Representative (CSR) Level of 

Service

The number of toll free callers that either speak to a Customer Service Representative or receive informational 

messages divided by the total number of attempted calls.

Customer Contacts Resolved per Staff Year The number of Customer Contacts resolved in relation to staff years expended. 

Customer Accuracy – Tax Law Phones The percentage of correct answers given by a live assistor on Toll-free tax law inquiries.

Customer Accuracy – Customer Accounts 

(Phones) The percentage of correct answers given by a live assistor on Toll-free account inquiries.

Timeliness of Critical Individual Filing Season Tax 

Products to the Public

The percentage of critical individual filing season tax products (tax forms, schedules, instructions, publications, tax 

packages, and certain notices required by a large number of filers to prepare a complete and accurate tax return) 

available to the public in a timely fashion.

Timeliness of Critical TE/GE & Business Tax 

Products to the Public Percentage of critical other tax products, paper and electronic, available to the public in a timely fashion. 

Percent Individual Returns Processed 

Electronically The percentage of electronically filed individual tax returns divided by the total individual returns filed.

Percent Business Returns Processed 

Electronically The percentage of electronically filed business tax returns divided by the total business returns filed.

Refund Timeliness – Individual (Paper) The percentage of refunds resulting from processing Individual Master File paper returns issued within 40 days or less. 

Enterprise Taxpayer Self Assistance Rate The percentage of taxpayer assistance requests resolved using self-assisted automated services. IRS will use this as 

an indicator for FY 2017.

Examination Coverage – Individual (1040)

The sum of all individual 1040 returns closed by Small Business/Self Employed (SB/SE), Wage & Investment (W&I), 

Tax Exempt and Government Entities (TE/GE), and Large Business and International (LB&I) (Field Exam and 

Correspondence Exam programs) divided by the total individual return filings for the prior calendar year.

Field Exam Nat'l Quality Review Score The score awarded to a reviewed field examination case by a Quality Reviewer using the National Quality Review 

System (NQRS) quality attributes.

Office Exam Nat'l Quality Review Score The score awarded to a reviewed office examination case by a Quality Reviewer using the NQRS quality attributes.

Examination Quality – Large Business Average of the scores of the Large Business Return (LBR) cases reviewed by LB&I Quality Measurement System 

(LQMS). Case scores are based on the percentage of elements passed within each of the four auditing standard.

Examination Coverage – Business Assets >$10 

Million)

The number of LB&I returns (C and S Corporations with assets over $10 million and all partnerships) examined and 

closed by LB&I during the current fiscal year divided by the number of filings for the preceding calendar year.

Examination Efficiency – Individual (1040) The sum of all individual 1040 returns closed by SB/SE, W&I, TE/GE, and LB&I (Field Exam and Correspondence 

Exam programs) divided by the total Full-Time Equivalent (FTE) expended in relation to those individual returns.

Automated Underreporter (AUR) Efficiency The total number of W&I and SB/SE contact closures (a closure resulting from a case where we made contact) divided 

by the total FTE, including overtime.

Automated Underreporter (AUR) Coverage A percentage representing the total number of W&I and SB/SE contact closures (a closure resulting from a case where 

SBSE and W&I made contact) divided by the total return filings for the prior year.

Collection Coverage – Units The volume of collection work disposed compared to the volume of collection work available.

Collection Efficiency – Units The volume of collection work disposed divided by total collection FTE.

Field Collection Nat'l Quality Review Score The score awarded to a reviewed collection cases by a Quality Reviewer using the NQRS quality attributes.

Automated Collection System (ACS) Accuracy The percent of taxpayers who receive the correct answer to their ACS question.

Criminal Investigations Completed

The total number of subject criminal investigations completed during the fiscal year, including those that resulted in 

prosecution recommendations to the Department of Justice as well as those discontinued due to a lack of prosecution 

potential. 

Number of Convictions The number of criminal convictions.

Conviction Rate The percent of adjudicated criminal cases that result in convictions.

TE/GE Determination Case Closures The number of cases closed in the Employee Plans or Exempt Organizations Determination programs, regardless of 

type of case or type of closing.

Rentable Square Feet per Person The amount of Rentable Square Feet the IRS maintains per Personnel requiring space. IRS will use this as an indicator 

for FY 2017.

Percent of Major IT Investments within +/- 10% 

Cost Variance at the Investment Level 

Number of major IT investments within +/-10 percent variance between planned total cost and projected/actual cost 

within a fiscal year divided by the total number of major IT investments in that fiscal year.

Percent of Major IT Investments within +/- 10% 

Schedule Variance at the Investment Level 

Number of major IT investments within +/-10 percent variance between planned days and projected/actual days within a 

fiscal year divided by the total number of major IT investments in that fiscal year.

Budget Level Performance Measure Descriptions
IRS-67

3.4 – Reducing the Tax Gap

The IRS remains committed to increasing compliance and reducing the tax gap, while 

minimizing the burden on the vast majority of taxpayers who pay their taxes accurately and on 

time. The tax gap represents the difference between taxes owed and taxes paid on time. In 

FY 2016, the IRS released updated tax gap estimates for tax years 2008 through 2010 and found

that the annual average gross tax gap was an estimated $458 billion. 

The current estimated voluntary compliance rate is 

81.7 percent. There are three components of the 

$458 billion gross tax gap: Underreporting tax 

liability ($387 billion), which comprises 84 percent 

of the gross tax gap, and nonfiling ($32 billion, 

7 percent) and underpaying ($39 billion, 9 percent). 

Underreporting

84% 

Underpayment

9%

Nonfiling

7%
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3.5 – Summary of IRS FY 2018 Budget Request

Amount FTE Amount FTE Amount FTE Amount FTE Amount FTE

FY 2017 Annualized CR $2,328,940 28,455 $4,855,688 36,349 $3,739,565 11,441 $289,449 593 $11,213,642 76,838

Changes to Base:

Maintaining Current Levels (MCLs) $46,342 - $96,845 - $75,423 - $1,425 - $220,035 -

Pay Raise 31,005 - 65,828 - 24,573 - 1,043 - 122,449 -

Pay Annualization 11,363 - 24,126 - 9,006 - 382 - 44,877 -

Non-Pay Inflation Adjustment 3,974 - 6,891 - 41,844 - - - 52,709 -

Resource Adjustments $122,378 - ($149,936) - $27,558 - - - - -

Base Realignment for Support Services 90,000 - (145,000) - 55,000 - - - - -

Adjustments for Administrative Provision 

Section 113 32,378 - (4,936) - (27,442) - - - - -

Subtotal Changes to Base $168,720 - ($53,091) - $102,981 - $1,425 - $220,035 -

Total FY 2018 Base $2,497,660 28,455 $4,802,597 36,349 $3,842,546 11,441 $290,874 593 $11,433,677 76,838

Program Changes:

Program Increase:

Realignment to Support Aging IT 

Infrastructure - - - - 179,449 266 - - 179,449 266

Program Decreases:

Actions to Achieve Workforce 

Management Goals (285,349) (4,063) (96,097) (1,300) (75,806) (342) (1,425) (9) (458,677) (5,714)

Realignment to Support Aging IT 

Infrastructure - - - - - - (179,449) (355) (179,449) (355)

Subtotal Program Changes ($285,349) (4,063) ($96,097) (1,300) $103,643 (76) ($180,874) (364) ($458,677) (5,803)

Total FY 2018 Request $2,212,311 24,392 $4,706,500 35,049 $3,946,189 11,365 $110,000 229 $10,975,000 71,035

Dollar/FTE Change FY 2018 Request over FY 

2017 Annualized CR ($116,629) (4,063) ($149,188) (1,300) $206,624 (76) ($179,449) (364) ($238,642) (5,803)

Percent Change FY 2018 Request over FY 2017 

Annualized CR -5.01% -14.28% -3.07% -3.58% 5.53% -0.66% -62.00% -61.38% -2.13% -7.55%

Taxpayer Services Enforcement Operations Support Business Systems 

Modernization Total

Internal Revenue Service