Congressional 

Budget 

Justification & 

Annual 

Performance 

Report and Plan

 Fiscal Year 2021

Publication 4450 (Rev. 2-2020) Catalog Number 39720Z

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

Section I – Budget Request........................................................................................................... 1

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

1.1 – Appropriations Detail Table ........................................................................................... 1

Introduction ............................................................................................................................... 2

Vision for the Future................................................................................................................. 3

Reducing the Tax Gap .............................................................................................................. 4

Program Integrity Cap Adjustment........................................................................................ 6

1B – Summary of the Request.................................................................................................. 7

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

1C – Base Adjustment and Program Changes Description................................................. 12

Base Adjustment...................................................................................................................... 12

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

Pay Annualization (3.1%) ..................................................................................................... 13

Pay Raise (1.0%)................................................................................................................... 13

FERS Contribution Increase ................................................................................................. 13

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

Additional Required Labor Costs.......................................................................................... 13

Efficiencies / Savings............................................................................................................... 13

Increase e-File Savings ......................................................................................................... 13

Space Optimization................................................................................................................ 13

Personnel Savings ................................................................................................................. 14

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

IRS Integrated Modernization Business Plan........................................................................ 14

Implementing the Taxpayer First Act.................................................................................... 22

1.3 – Object Classification (Schedule O) Obligations .......................................................... 25

1D – Appropriations Language and Explanation of Changes ............................................ 26

1E – Legislative Proposals...................................................................................................... 35

1F – IRS Use of Evidence and Evaluation............................................................................. 38

Section II – Budget and Performance Plan .............................................................................. 41

Taxpayer Services ................................................................................................................... 42

2.1 – Budget Adjustments Table ............................................................................................ 43

2.2 – Object Classification (Schedule O) Obligations .......................................................... 44

2.3 – Appropriation Detail Table .......................................................................................... 45

2A – Pre-Filing Taxpayer Assistance and Education ........................................................... 45

FY 2021 Changes by Budget Activity .................................................................................... 48

2.1.1 – Budget and Performance Report and Plan ............................................................... 49

2B – Filing and Account Services ......................................................................................... 49

FY 2021 Changes by Budget Activity .................................................................................... 52

2.1.2 – Budget and Performance Report and Plan ............................................................... 53
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Enforcement............................................................................................................................. 54

2.1 – Budget Adjustments Table ............................................................................................ 55

2.2 – Object Classification (Schedule O) Obligations .......................................................... 56

2.3 – Appropriation Detail Table .......................................................................................... 57

2C – Investigations................................................................................................................ 57

FY 2021 Changes by Budget Activity .................................................................................... 60

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

2D – Exam and Collections................................................................................................... 61

FY 2021 Changes by Budget Activity .................................................................................... 67

2.1.4 – Budget and Performance Report and Plan ............................................................... 68

2E – Regulatory..................................................................................................................... 68

FY 2021 Changes by Budget Activity .................................................................................... 71

2.1.5 – Budget and Performance Report and Plan ............................................................... 72

Operations Support................................................................................................................. 73

2.1 – Budget Adjustments Table ............................................................................................ 74

2.2 – Object Classification (Schedule O) Obligations .......................................................... 75

2.3 – Appropriation Detail Table .......................................................................................... 76

2F – Infrastructure ................................................................................................................ 76

FY 2021 Changes by Budget Activity .................................................................................... 79

2.1.6 – Budget and Performance Report and Plan ............................................................... 80

2G – Shared Services and Support........................................................................................ 80

FY 2021 Changes by Budget Activity .................................................................................... 83

2.1.7 – Budget and Performance Report and Plan ............................................................... 84

2H – Information Services..................................................................................................... 84

FY 2021 Changes by Budget Activity .................................................................................... 87

2.1.8 – Budget and Performance Report and Plan ............................................................... 88

Business Systems Modernization ........................................................................................... 89

2.1 – Budget Adjustments Table ............................................................................................ 90

2.2 – Object Classification (Schedule O) Obligations .......................................................... 91

2.3 – Appropriation Detail Table .......................................................................................... 92

2I – Business Systems Modernization.................................................................................... 92

FY 2021 Changes by Budget Activity .................................................................................. 104

2.1.9 – Budget and Performance Report and Plan ............................................................. 105

Section III – Supplemental Information................................................................................. 106

3.1 – Summary of Capital Investments ............................................................................... 106

3.2 – Return on Investment (ROI) for IRS Major Enforcement Programs .................... 112

3.3 – IRS Performance Measures Table.............................................................................. 114

3.4 – Summary of FY 2019 Savings Realized...................................................................... 116

Section IV – Appendix.............................................................................................................. 117

4.1 Appropriations Detail Table with Program Integrity Cap Adjustment.................... 117

Increase Audit Coverage ..................................................................................................... 119

Increase Collection Coverage ............................................................................................. 122
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Expand Coverage in the Tax-Exempt Sector....................................................................... 124

Expand Cyber and Virtual Currency Compliance Efforts .................................................. 125

4.2 – Summary of IRS FY 2021 Request by Business Unit (including the Program 

Integrity Cap Adjustment)................................................................................................... 128

4.3 – Summary of IRS FY 2021 Identity Theft Budget Request....................................... 128

4.4 – Summary of IRS FY 2021 ACA Budget Request...................................................... 129

4.5 – Summary of IRS FY 2021 Cyber Security Budget Request..................................... 130

4.6 – Summary of IRS FY 2021 Budget Request................................................................ 131
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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

Internal Revenue Service Change % Change

Appropriated Resources

FY 2019

Operating Plan1

FY 2020

Enacted2

FY 2021

Enacted3

FY 2020 to FY 2021 

Request

FY 2020 to FY 2021 

Request

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

Taxpayer Services 28,531 $2,556,554 26,760 $2,535,554 25,678 $2,562,554 (1,081) $27,000 -4.04% 1.06%

Pre-Filing Taxpayer Assistance and 

Education 4,335 621,907 4,524 656,829 4,341 667,018 (183) 10,189 -4.05% 1.55%

Filing and Account Services 24,196 1,934,647 22,236 1,878,725 21,337 1,895,536 (898) 16,811 -4.04% 0.89%

Enforcement 33,478 $4,677,600 35,388 $4,909,500 35,026 $5,071,260 (362) $161,760 -1.02% 3.29%

Investigations 2,833 595,686 2,971 654,285 2,933 675,533 (38) 21,248 -1.28% 3.25%

Exam and Collections 29,698 3,907,290 31,467 4,091,953 31,147 4,225,886 (320) 133,933 -1.02% 3.27%

Regulatory 947 174,624 950 163,262 946 169,841 (4) 6,579 -0.42% 4.03%

Operations Support 10,277 $3,918,400 11,970 $3,885,000 12,140 $4,104,689 169 $219,689 1.41% 5.65%

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

Shared Services and Support 4,181 900,287 4,947 1,012,155 5,023 1,063,984 76 51,829 1.54% 5.12%

Information Services 6,096 2,126,973 7,023 1,991,191 7,117 2,145,634 93 154,443 1.32% 7.76%

Business Systems Modernization 445 $150,000 426 $180,000 517 $300,000 91 $120,000 21.36% 66.67%

Subtotal New Appropriated Resources 72,731 $11,302,554 74,544 $11,510,054 73,361 $12,038,503 (1,183) $528,449 -1.59% 4.59%

Other Resources:

Reimbursables 642 124,559 978 170,726 1,027 179,262 49 8,536 5.01% 5.0%

Offsetting Collections - Non 

Reimbursables 9,749 31,781 33,370 1,589 5.0%

User Fees 96 319,023 75 530,230 1,520 549,930 1,445 19,700 1926.67% 3.72%

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

Recoveries Paid 3,681 3,681 

Unobligated Balances from Prior 

Years 727 356,057 15 168,743 15 116,142 (52,601) 0.0% -31.17%

Transfers In/Out 111 

Resources from Other Accounts

Subtotal Other Resources 1,465 $817,014 1,068 $916,547 2,562 $893,724 1,494 ($12,730) 139.89% -1.39%

Total Budgetary Resources 74,196 $12,119,568 75,612 $12,426,601 75,923 $12,932,227 311 $515,719 0.41% 4.15% 1

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

requirements in FY 2019. FY 2019 amount also includes $77 million for the Section 112 Administrative Provision to implement requirements under the Tax Cuts and Jobs 

Act (Public Law 115-97). FY 2019 Other Resources and Full-time Equivalents (FTE) reflect actuals. 

2 FY 2020 Enacted assumes a proposed transfer of $100.5 million from Enforcement to Taxpayer Services ($24 million) and Operations Support ($76.5 million).

3 FY 2021 Request does not include a $400 million Program Integrity Cap Adjustment.
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Introduction

The Internal Revenue Service (IRS) fiscal year (FY) 2021 budget request provides $12 billion (a 5 percent 

increase) to administer the nation’s tax system fairly, collect more than $3.6 trillion ingross taxes to fund 

the government, and strengthen tax compliance. The request includes a $400 million program integrity 

investment in FY 2021 that over 10 years will generate $79 billion in additional revenue and reduce the 

$381 billion net tax gap. The IRS is one of the best investments in the federal government with an overall 

return on investment (ROI) of about $5 for every $1 invested, excluding significant deterrence effects. The 

request provides: 

• $452 million for inflation and labor investments to fund current activities and annualization of the 

3.1 percent pay raise from Congress; 

• $300 million for modernization to transform the taxpayer experience with new digital 

communications, online payment tools and reminders for individuals and tax professionals, and 

stronger data encryption to protect taxpayer information from billions of cyberattacks; and 

• $106 million to implement the Taxpayer First Act of 2019 which will revamp customer service, 

introduce new taxpayer protections, and deliver new online service platforms to facilitate filing and 

payment for individuals and businesses. 

The IRS is executing the largest tax reforms in 30 years with the Tax Cuts and Jobs Act and the Taxpayer 

First Act. We are also implementing an ambitious modernization plan, delivering the annual filing season, 

and conducting important criminal investigations. Even with the lapse in appropriations and 

implementation of tax reform, the IRS started the 2019 filing season as planned and issued nine out of ten 

refunds within 21 days. Systems maintained 100 percent uptime with no unscheduled outages, which 

ensured submission processing, fraud detection, and online payments continued without interruption.

The IRS recently receivedstreamlined critical pay authority for technology positions, multiyear budget 

authority that will allow better execution of contracts, and new electronic filing requirements. These 

changes will improve IRS performance, reduce errors in tax returns that inconvenience taxpayers, and 

lower processing costs. We look forward to building on these efforts with the FY 2021 request, including 

working with Congress to implement important legislative reforms such as expanding error correction 

authority and providing Treasury explicit authority to set standards for paid preparers. 

The IRS interacts with more Americans than any other institution. During the successful 2019 filing 

season, the IRS processed about 255 million federal tax returns andforms and issued more than 109 million 

federal tax refunds totaling over $300 billion. Nine out of 10 of those refunds were issued within 21 days, 

and the average refund per household was about $2,800. On April 15, 2019, the IRS processed the largest 

single-day filing volumes ever recorded (about 15.3 million returns) and observed record-breaking use of 

IRS Online Account and Direct Pay applications.
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The IRS must serve taxpayers in a manner that facilitates voluntary compliance by providing proper levels 

of staffing and support at points of significant taxpayer interaction. The IRS is using advanced analytics 

every day to improve enforcement and encourage voluntary compliance. 

In the year ahead, we have many exciting changes on the horizon. We are embarking on a journey 

about how best to provide our services and how we are currently organized,as we work to implement 

provisions in the Taxpayer First Act and help improve our working relationships with taxpayers and 

others. We will also work to put in place the concepts outlined in the IRS Integrated Business 

Modernization plan. We will continue to put taxpayers first, recognize the critical role our workforce 

plays in fulfilling our mission and make improvements across our operations. We also must work 

hard to enhance every perspective of the taxpayer experience while enhancing both civil and criminal 

enforcement efforts and numerous other priorities. We are making a difference, and we will not stop 

in the successful pursuit of our mission on behalf of the greatest country in the world.1

Chuck P. Rettig

Vision for the Future

The Internal Revenue Service (IRS) FY 2018 – 2022 Strategic Plan articulates the IRS vision and will 

guide the IRS’s strategic decision-making. The plan includes six strategic goals:

• Empower and enable all taxpayers to meet their taxobligations.

• Protect the integrity of the tax system by encouraging compliance through administering and 

enforcing the taxcode.

• Collaborate with external partners proactively to improve taxadministration.

• Cultivate a well-equipped, diverse, flexible and engaged workforce.

 1 Internal Revenue Service Progress Update, Fiscal Year 2019, Putting Taxpayers First. December 2019. 

https://www.irs.gov/pub/irs-pdf/p5382.pdf
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• Advance data access, usability and analytics to inform decision making and improve operational

outcomes.

• Drive increased agility, efficiency, effectiveness and security in IRS operations.

The IRS is supporting multiple strategic initiatives including:

• Customer Experience Cross Agency Priority Goal: The IRS is leading the Office of Management 

and Budget (OMB) customer experience goal on behalf of the Department of the Treasury. As part 

of the goal and in response to the Taxpayer First Act, the IRS is undertaking a significant 

assessment of its approach to customer service, preparing improvement recommendations, and will

develop a comprehensive customer service strategy. 

• Fraud Prevention Agency Priority Goal: The IRS has set a goal to reduce the amount of 

unprotected identity theft tax refunds by an additional 1 percent annually through December 31, 

2021. The IRS exceeded the FY 2018 and FY 2019 goal by reducing the amount of fraud refunds

paid by an estimated 88 percent between processing year 2016 and 2018. The IRS successfully 

protected $6 billion in refunds in 2018. The opt-in Identity Protection Personal Identification 

Number (IP PIN) program will be expanded to 10 more states for the 2020 filing season. An IP 

PIN is a six-digit number assigned to eligible taxpayers that helps prevent the misuse of their 

Social Security number on fraudulent federal income tax returns.

• Electronic Payments Agency Priority Goal: The IRS and the Bureau of the Fiscal Service are 

leading the goal to reduce paper checks printedto 49 million by the end of FY 2021, compared 

with 54 million in FY 2019; and achieve an electronic payment rate of 96.1percent by the end of 

FY 2021, compared with 95.6 percent in FY 2019. Tax checks continue to represent a significant

portion (52 percent) of all federal paper checks delivered to taxpayers each year. 

Reducing the Tax Gap

The IRS is one of the best investments the federal government makes, with an ROI of about $5 for every $1 

invested. The net tax gap, which refers to the amount of taxes owed to the federal government that are not 
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collected, was estimated on average at about $381 billion per year between 2011 and 2013. The FY 2021 

request includes resources to help target the tax gap and provide robust civil and criminal enforcement to 

protect against those who pursue overly aggressive tax positions, while ensuring honest taxpayers have 

access to the services they need, and includes legislative proposals to give the IRS more authority to 

address the tax gap.

Reducing the tax gap requires the IRS to maintain a robust enforcement program. The IRS’s work is still

labor intensive despite technological improvements. Operational efficiencies alone will not offset the 

cumulative effect of lost staff on the level and quality of services. This is most visible in enforcement 

activities. Reductions to enforcement staffing levels between FY 2010 and 2019 likely reducedtotal 

enforcement revenue collected (TERC) by around $70 billion. 

Note: Losses would likely be greater but for recent improvements in automation, notices, and analytics.

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

ambiguity and complexity in tax law, willful evasion is a significant contributing factor. The IRS could 

help remedy this with investments funded by the program integrity cap adjustment, which includes targeted 

investments in enforcement activities that will increase revenue and lower the tax gap. 

The request and legislative proposals provide the IRS with a blueprint to address various facets of the tax 

gap. The modernization plan will provide significant improvements in the taxpayer experience by 

increasing online service options and making it easier for taxpayers tofind answers to their questions. IRS 

research demonstrates making it easier for taxpayers to meet their obligations with self-service tools and 

user-friendly customer service improves compliance. Modernizing operations and expanding data analytics 

throughout the organization – in part by replacing legacy systems – will assist the IRS in determining 

which tax returns need review for compliance questions. This means fewer honest taxpayers will face an 

interaction with the IRS that results in no change to the return and more IRS resources will be available for 

taxpayer assistance and for focusing on deliberate non-compliance. 

57.6 55.2 50.2 53.3 57.1 54.2 54.3 56.9 59.4 57.5

0.0 0.2 2.0 4.4

6.5 7.7 9.7

11.7 14.1 14.4

0

20

40

60

80

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Revenue ($B)

Fiscal Year

Foregone Revenue

TERC (actual) Foregone revenue
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Program Integrity Cap Adjustment

In addition to the base appropriations request of $12 billion request, the budget proposes a $400 million 

discretionary program integrity cap adjustment in FY 2021 to fund investments in expanding and 

improving the effectiveness and efficiency of the IRS’s overall tax enforcement program. The budget 

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

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

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

of $64 billion over 10 years. This return on investment (ROI) is likely understated because it does not 

reflect the effect that enhanced enforcement has on deterring non-compliance. For example, under the 

proposal, the Criminal Investigations Division would expand personnel in seven locations and major cities 

where tax and cybercrimes are prevalent. The IRS will be able to enhance its overall coverage and 

decrease risk to the nation’s voluntary tax compliance system. More information on the cap adjustment is 

available in Section 4.1 of the Appendix and in the Budget Process Chapter of the Analytical Perspective 

volume of the FY 2021 President’s Budget.
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1B – Summary of the Request

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

taxpayers by helping them understand their tax responsibilities and by enforcing the law with integrity and 

fairness. The IRS’s core operations include collection of individual and corporate taxes, examination of 

returns, taxpayer assistance, and oversight of tax-exempt organizations, as well as administering multiple 

refundable tax credits and other specialized programs. 

In FY 2019 the IRS collected $3.6 trillion in taxes (gross receipts before tax refunds) and generated 

95 percent of the funding that supports the Federal Government’s operations. With the U.S. tax base 

becoming more complex, one of the IRS’s key responsibilities is to make it easier for taxpayers to 

understand and meet their tax obligations.

FY 2021 Budget Request and Priorities

The FY 2021 request is $12.039 billion, $528.5 million or 4.6percent more than the FY 2020 enacted level 

of $11.510 billion. The base budget request provides funding to carry out the IRS mission. 

Appropriation Account ($ in Millions)

Taxpayer Services $2,562.5

Enforcement 5,071.3

Operations Support 4,104.7

Business Systems Modernization 300.0

Total Appropriated Resources $12,038.5

This funding level includes a program increase of $220 million for modernization ($114 million) and 

implementation of the Taxpayer First Act ($106 million).

255M $3.6T $2,800 $57.5B

Federal Tax

Returns and Forms

Processed

Collected in 

Gross Taxes

Average 

Individual Refund

Enforcement Revenue 

Collected
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Tax Administration Challenges and Risks

Over the last few years, IRS workload and responsibilities increased. Operational efficiencies alone cannot 

fully compensate for the effect of lost staff on the level and quality of services provided. Substantially 

every taxpayer service and enforcement statistic has declined considerably since 2010. The following chart 

displays the dramatic reduction in FTE over the past 10 years. In FY 2019, the IRS was able to stop this 

decline, revamped its hiring efforts, has begun to see significant progress in hiring, and expects to make

approximately 7,000 external hires between FY 2019 and 2020.

Section 113/112 refers to funding provided by Congress in the IRS administrative provisions for specific purposes in recent appropriations legislation. 

In FY 2016 and 2017, funds were provided for level of service, identity theft, and cybersecurity. In FY 2018 and 2019, funds were provided for 

implementing the Tax Cuts and Jobs Act. Similarly, Congress provided a separate appropriation (approximately $15 million) in FY 2009 – 2011 to 

implement the health insurance tax credit as part of the Trade Act of 2002. 

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

FY 2010

Actuals

FY 2011

Actuals

FY 2012

Actuals

FY 2013

Actuals

FY 2014

Actuals

FY 2015

Actuals

FY 2016

Actuals

FY 2017

Actuals

FY 2018

Actuals

FY 2019

Actuals

FTE

IRS FTE from Newly Appropriated Resources FY 2010 - FY 2019

Section 113/Sec. 112 Health Insurance Tax Credit Administration (HITCA)

Business Systems Modernization (BSM) Operations Support (OS)

Enforcement (ENF) Taypayer Services (TS)
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Excludes Wage & Investment and Taxpayer Advocate in Taxpayer Services to avoid skewing data with seasonal hiring adjustments. Excludes over 900 

additional hires through the IRS Forward (Recent Graduates) Program. Operations Support includes BSM hires. Operations Support hiring has increased 

alongside Enforcement hiring to facilitate onboarding and provide mission critical services including technology. Internal selections are excluded. 

Including internal and external selections, for example, Enforcement hiring in FY 2019 was more than 4,200.

Why Does the IRS Need Operations Support Funding?

The Operations Support account currently funds multiple activities that have a direct tie to basic and critical 

IRS activities and directly ensure that IRS personnel funded in Enforcement and Taxpayer Service accounts 

can execute their mission. For example, while revenue agents are funded in the Enforcement account, the 

facilities (and the resulting rent and physical security) and the computer systems that they use to conduct 

their work are funded in the Operations Support account. Similarly, customer service representatives 

funded in Taxpayer Services use telephone lines, work on computer systems, and work in facilities funded 

through Operations Support. Without commensurate funding in Operations Support, these personnel 

would not be able to conduct their work to provide quality service and ensure taxpayers can meet their tax 

obligations. 

10 

1,578 

892 

63 

3,760 

1,431 

73 

5,338 

2,323 

0 1,000 2,000 3,000 4,000 5,000 6,000

Taxpayer

Services

Enforcement

Operations

Support

IRS External Hiring in FY 2019 and FY 2020

Total Hiring Planned FY 2020 Per External Hiring FY 2019 Perm External Hiring

What Operations Support Funds* Percent

Information Technology 57.4%

Rent and Physical Security 21.3%

Human Capital Office 6.0%

Printing and Postage – Media and Publications 4.7%

Headquarters 4.4%

Facilities Management & Security Services 2.3%

Chief Financial Officer 1.5%

Privacy, Governmental Liaison and Disclosure 1.4%

Communications & Liaison 0.6%

Other 0.4%

Total 100.0%

* Based on FY 2019 Actual Obligations
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As a part of the organizational and strategic work that the IRS is doing to respond to the Taxpayer First 

Act, the IRS is examining how and where these types of activities should be funded to provide a 

transparent and more accurate estimate of the cost of administering Taxpayer Services and Enforcement 

programs. The IRS looked first at rent and physical security costs and estimates that $235 million in 

Taxpayer Service costs and $392 million in Enforcement costs could be realigned from the Operations 

Support appropriations. The exhibit in the Proposed Physical Security-Rent Adjusted Levels provides a 

table of how costs could be realigned and more information.

Why is the Demand for IT Spending Growing?

Spending on information technology at the IRS has steadily increased in response to electronic filing, 

growing demand for online services, technological advances, and security concerns.

IT is an Increasing Share of the IRS Budget

In FY 2019, considering all sources of funding (including user fees), 57.4 percent of Operations Support 

funding was spent on IT, up from 45.6 percent in FY 2010. There are several main reasons IT demand is 

growing: 

• Taxpayers expect more electronic interactions, and the IRS strives to provide them;

• IT efficiencies that benefit the IRS overall sometimes increase costs in Operations Support.

Electronic filing, for example, saves manual effort in Taxpayer Services but is funded in 

Operations Support. The savings occur in Taxpayer Services or Enforcement but costs to achieve 

those savings are expended from Operations Support;

• Modernization programs developed in the Business Systems Modernization account must have 

their IT operations and maintenance funded from Operations Support; 

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

IT % of total OS % Total IT % of OS (Excludes BSM but includes User Fees)
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• As increasingly sophisticatedfraud schemes threaten IRS systems, the IRS must increase IT 

security efforts (for example, the IRS spends around $330 million on cybersecurity and $450 

million on identity theft); and

• New statutory requirements necessitate additional IT investment.

While IT spending at the IRS continues to increase consistent with trends in the private and public sector 

for comparable organizations, a 2018 benchmarking analysis conducted by the MITRE Corporation found 

that “higher IRS IT spend numbers, where present, seem consistent with the IRS size, significant number of 

outdated legacy systems, need to modernize, and new legislative requirements.”2 Basic operations and 

maintenance costs today exceed $2 billion per year, and without modernization, these costs are projected to 

grow at an unsustainable trajectory. Ultimately, modernization will allow the IRS to lower its operations 

and maintenance costs and direct more of its resources to new development, enforcement, and service. 

The National Taxpayer Advocate has identified the need to replace antiquated technology systems as a top 

priority: “IRS performance already is significantly limited by its aging systems, and if those systems aren’t 

replaced, the gap between what the IRS should be able to do and what the IRS is actually able to do will 

continue to increase in ways that don’t garner headlines but increasingly harm taxpayers and impair 

revenue collection.”

 2 “Information Technology Spend Profiles: Federal Agencies, Industry, and IRS IT Comparison.” MITRE Study Team. 

August 9, 2018. 
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1.2 – Budget Adjustments Table

Dollars in thousands

Bureau: Internal Revenue Service 

Summary of Proposed FY 2021 Request FTE Amount

FY 2020 Enacted (Pre-IAT) 74,174 $11,510,054 

Planned Interappropriation Transfer 370 

FY 2020 Enacted 74,544 $11,510,054 

Changes to Base:

Maintaining Current Levels (MCLs) $452,085 

Pay Annualization (3.1% average pay raise) 67,757 

Pay Raise (1.0% average pay raise) 66,080 

FERS Contribution Increase 100,000 

Non-Pay 55,344 

Additional Required Labor Costs 162,904 

Efficiencies/Savings: (1,536) ($143,795)

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

Space Optimization (6,200)

Personnel Savings (1,451) (132,911)

Subtotal FY 2021 Changes to Base (1,536) $308,290 

FY 2021 Current Services 73,008 $11,818,344 

Program Changes:

Program Increases

Integrated Modernization Business Plan 91 113,799 

Implementing the Taxpayer First Act 262 106,360 

Subtotal FY 2021 Program Increases 353 $220,159 

Total FY 2021 Budget Request 73,361 $12,038,503 

See footnotes in 1.1 -- Appropriations Detail Table

1C – Base Adjustment and Program Changes Description

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

The FY 2020 enacted level of $11.510 billion assumes a $100.5 million interappropriation transfer (IAT)

from Enforcement to Taxpayer Services ($24.0 million) and Operations Support ($76.5 million), which is

included in the IRS FY 2020 Operating Plan. A total of 370 FTE will be added to Taxpayer Services to 

support delivery of a 60 percent Level of Service (LOS) and an estimated 65 percent LOS for the filing 

season (January through April) on the Accounts Management phone lines in FY 2020.
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Maintaining Current Levels.......................................................+$452,085,000 / 0 FTE

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

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

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

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

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

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

contribution rates effective FY 2021, for a total employer contribution of 17.3 percent of base salaries. This 

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

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

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

and equipment. This amount is based on an OMB Circular A-11 inflation factor of 2.0 percent. 

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

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

above journey level promotions, manager payband increases, and within-grade increases ($117.9 million). 

These funds will also pay for an increase in employee performance awards spending of 1.0 percentage 

point of non-SES/SL/ST salary spending per OMB Circular A-11.

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

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

The IRS projects a total of 1,300,100 fewer returns filed on paper (623,000 individual and 676,500 business 

returns). As a result, the IRS would need 85 fewer FTE in submission processing, generating a savings of 

$4.7 million. 

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

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

2013, the IRS released 3.7 million square feet, closing 115 buildings and reducing total rent costs by about 

11 percent. For FY 2020, the IRS anticipates the release of 500,000 square feet with an estimated 

$10 million in annualized rent savings. The IRS will continue to consolidate space in FY 2021, projecting 

a release of 243,000 square feet for an estimated $6.2 million in annualized rent savings.
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Personnel Savings -$132,911,000 / -1,451 FTE

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

manage its personnel costs through limited attrition replacement and seasonal workforce adjustments across 

many operational areas. These adjustments are necessary to fund the $452 million in inflationary and labor 

cost increases for existing personnel, including annualization of the FY 2020 pay raise, the proposed 

FY 2021 pay raise, employee promotions, and employee retirement contributions. To achieve these 

savings, the IRS plans to:

• Fill critical vacancies only; 

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

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

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

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

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

Position Type/Other Costs FTE Positions $000

IRS Integrated Modernization 

Business Plan 91 182 $113,799 

IT Specialist 91 182 11,279 

Contractual Services 83,895 

Hardware & Software 18,625 

Total 91 182 $113,799 

The modernization plan provides a roadmap for improving IRS systems and taxpayer services. 

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

enable the IRS to provide consistently superior service to taxpayers and deliver long-term budget 

efficiencies as the IRS modernizes capabilities currently provided via legacy applications. The budget 

requests an increase of $113.8 million for an appropriated budget of $300 million in FY 2021. The IRS is 

working diligently to deliver Section 2101 of the Taxpayer First Act, which requires independent 

verification of Customer Account Data Engine 2 and Enterprise Case Management implementation. The 

IRS will also prepare its annual Key Insights report highlighting 2021 deliverables and funding allocation.

The request funds:

• Web Applications ($25 million): The IRS will expand the capability for taxpayers to use anonline 

account, building on current capabilities to create and submit online installment agreements and make 

payments. The IRS will develop new Tax Pro capabilities for Power of Attorney and Disclosure 

Authorization. Tax Pro capabilities will provide taxpayers and tax professionals a digital service 

channel to establish and manage taxpayer/tax professional authority relationships. 
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• Taxpayer Digital Communications Outbound Notification ($10 million): The IRS will continue

developing digital notices available through a secure online account for taxpayers who prefer that 

channel over mailed correspondence. The IRS has developed a metric to measure its short-term 

progress: the percentage of high-volume IRS notices available to be viewed by taxpayers digitally. 

This investment will increase taxpayer response rates to notices, reduce burden on taxpayers and the 

IRS, and promote more efficient interactions. This effort will reduce IRS costs over time – the IRS will 

spend approximately $185 million on postage costs in FY 2020. 

• Live Assistance ($15 million): The investment funds the Live Assistance program to expand customer 

callback capabilities allowing taxpayers to keep their place in queue without remaining on the phone 

and the Live Chat capability that allows taxpayers to interact with assistors in a web-based chat session. 

The IRS will also deploy machine learning and natural language processing to quickly answer common 

taxpayer inquiries and improve call routing to deliver expert service to customers and empower 

taxpayers with real-time responses.

• Customer Account Data Engine 2 (CADE2) ($100 million): Since the Individual Master File (IMF) 

was built almost 60 years ago, the IRS has made additions to legacybase code to reflect annual tax law 

changes. As a result, the base code of IMF includes embedded business logic written in outdated 

programming languages that only an extremely small number of IRS personnel understand. Funding 

will be used to continue re-engineering the IMF core components of posting, settlement, and analysis 

functions for individual taxpayer accounts by applying modern programming languages to the most 

complex areas of the IMF. This investment will:

o Reduce the burden of ongoing maintenance and routine updates due to tax law changes 

through a common data model; 

o Enable enhanced data accessibility both within the IRS and for taxpayers, and security 

controls; and

o Support business units to deploy advanced analytical capabilities addressing key issues of 

compliance, fraud, and identity theft. 

The IRS has set a goal of reducing the amount of legacy code in the IRS technology environment by 

30 percent by FY 2021 and 75 percent by FY 2024.

• Enterprise Case Management (ECM) ($64 million): The ECM investment will modernize and 

consolidate more than 60 legacy case management applications. The investment will establish a

common cloud infrastructure, automate business functions, and enable seamless case transfers, 
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promoting collaboration that will improve enforcement and facilitate a comprehensive customer 

experience for taxpayers. In FYs 2020-2021, ECM expects to deliver its first release. The IRS is 

currently running ECM pilots and anticipates the Tax Exempt and Government Entities division being 

the first target customer for migration to the new platform. 

• Robotic Process Automation (RPA) ($5 million): RPA is the implementation of smart software 

designed to automaticallyperform high-volume, repeatable tasks that are normally labor intensive. 

These new tools will record the actions an employee takes to complete a computer-based task and then 

rapidly replicate those actions as many times as necessary with increased accuracy – allowing 

employees to focus on high value work. This investment will allow the IRS to scale an enterprise 

solution and onboard new projects that build off implementations completed for IRS procurement, 

monitoring offers-in-compromise, tax exempt referrals, and the internal IRS IT help desk. 

• Application Program Interface (API) ($5 million): The IRS plans to expand the use of APIs. Using 

modern approaches for exchanging data, the IRS will provide expanded integration and data access to 

taxpayers and authorizedthird parties, such as business and government entities using APIs.

• Cloud Execution ($5 million): This investment will provide the IRS with convenient, on-demand 

network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, 

applications, and services) that can be provisioned rapidly and released with minimal management 

effort or service provider interaction.

• NextGen Infrastructure (NGI) ($15 million): This investment will allow the IRS to continue 

modernizing its infrastructure base (hardware, software, network resources, and services) and support 

agile software development and delivery practices.

• Vulnerability and Threat Management ($20 million): This investment will enable the IRS to improve 

security integration in system development and automate security testing; apply use cases to enhance 

security audit analytics and compliance; and enhance data protection through encryption. 

• Identity & Access Management ($12 million): This investment in user identity controls, privileged 

access protections, building access security, and software security configuration will help the IRS 

mitigate the risk of unauthorized access to tax data as the IRS delivers new online tools to taxpayers 

and the number of private sector data breaches increases.
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• Security Operations and Management ($14 million): This investment will deliver a next generation 

secure operations center; improve incident analysis and forensic network investigation; and protect 

High Value Assets by blocking network access for unauthorized users.

As part of the modernization plan, the IRS committed to publishing performance measures evaluating cost, 

schedule, outputs, and outcomes associated with modernization and direct and indirect effects on service 

and enforcement as well as annual deliverables and funding allocations. While several measures are being 

updated for Taxpayer First Act performance measure requirements and revised funding levels for Business 

Systems Modernization ($180 million versus the FY 2020 request of $290 million), the IRS is committed 

to several goals as part of the modernization plan and the FY 2021 request:

Modernization Measures & Milestones 

TAXPAYER EXPERIENCE

Objective Measure FY 2019 Baseline* Interim Progress FY 2024 Target

TRUST & 

CONFIDENCE

Research indicates that 

an improved customer 

experience can lead to 

increased compliance, 

engagement, and trust.

American Customer 

Satisfaction Index score1

74 out of 100 (as of 

FY 2018) Increase Increase

DIGITAL ACCESS

Increase use of digital 

self-help tools.

Percent of interactions by 

taxpayers seeking 

services from the IRS that 

are completed through 

self-assistance

79% (as of FY 2017) 82% in FY 2020 Increase

 * FY 2019 baselines are as of the beginning of FY 2019, unless otherwise indicated.

Note: Integration of activities to implement the Taxpayer First Act and realization of a reduced budget could result 

in resequencing IRS Modernization Portfolio capabilities necessitating adjustments to measures. 1 IRS will continue to identify better ways to measure customer satisfaction, including analyzing the IRS wide 

customer satisfaction surveys.
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DIGITAL ACCESS

Provide taxpayers with 

additional digital options 

for interacting with the 

IRS

Number of taxpayer

interaction types that have a 

digital alternative2 18 In progress 35

DIGITAL ACCESS

Give taxpayers access to 

their IRS notices online

Percent of high-volume IRS 

notices available to be 

viewed by taxpayers 

digitally3 0% 100% by the end of 

CY 2020 In progress

HELPFUL REMINDERS

Give taxpayers access to 

their IRS notices online.

Percent of taxpayers opting 

in to receive the monthly 

installment agreement 

notice digitally 0% 10% by FY 2021 25%

PERSONALIZED SERVICE 

& CONTROL

Offer customer callback 

where there is the 

highest demand for live 

assistance.

Number of live assistance 

applications offering a 

callback option None

1 telephone application

in FY 2019; Additional 

telephone applications 

each fiscal year

61 applications 

(accounting for 

95% of taxpayer 

demand)

 2 Based on prioritized list of taxpayer interactions. This measure may be impacted by future work to improve digital 

services, in accordance with the 21st Century Integrated Digital Experience Act. 3 These notices account for an estimated 35% of notice volume. This measure may be impacted by future work to 

improve digital services, in accordance with the 21st Century Integrated Digital Experience Act.
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CORE TAXPAYER SERVICES & ENFORCEMENT

Objective Measure FY 2019 Baseline* Interim Progress FY 2024 Target

FRAUD PREVENTION

Reduce fraudulent tax 

refunds resulting from 

identity theft.

Amount of unprotected 

identity theft tax refunds 

paid In progress Additional 1% 

reduction

Additional 1% 

annually by 

CY 2024

ANOMALY DETECTION

Enhanced systemic 

identification of 

noncompliance and fraud 

will allow the IRS to 

expand taxpayer 

protection.

Number of data sources 

(return types, schedules and 

datasets) screened for 

anomaly detection through 

Return Review Program 40

Approximately 10 

additional sources by 

FY 2021

60 

EASE & SIMPLICITY

Increase taxpayer usage of 

online identity verification 

services.

Percent of taxpayers using the 

ID Verify tool

14% Increase 5% in CY2020 Increase 50% 

by CY 2024

MODERNIZED IRS OPERATIONS

Objective Measure FY 2019 Baseline* Interim Progress FY 2024 Target

COST CONTAINMENT

According to the 

Government

Accountability Office, 

federal spending on IT 

operations and

maintenance has been 

steadily increasing. Until 

modernization progress is 

achieved, we expect this to 

continue to grow.

Stabilize the cost of operations 

and maintenance4 84% N/A 80% 

 * FY 2019 baselines are as of the beginning of FY 2019, unless otherwise indicated.

Note: Integration of activities to implement the Taxpayer First Act and realization of a reduced budget could result 

in resequencing IRS Modernization Portfolio capabilities necessitating adjustments to measures. * FY 2019 baselines are as of the beginning of FY 2019, unless otherwise indicated.

Note: Integration of activities to implement the Taxpayer First Act and realization of a reduced budget could result 

in resequencing IRS Modernization Portfolio capabilities necessitating adjustments to measures. 4 IRS will continue to identify ways to address cost savings.
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RELIABILITY & 

SECURITY

Upgrading and maintaining 

IRS infrastructure in line 

with industry standards 

provides greater security, 

reliability, and business 

value.

Percent of aged

infrastructure

45.5% (as of FY 

2018) 30% by FY 2021 25%

OPERATIONAL AGILITY

With millions of lines of code 

written in legacy 

programming languages (ALC 

and COBOL),

the IRS must provide 

taxpayers with current data 

and keep pace with changes 

to tax laws, technology and 

business processes.

Reduction of selected legacy 

code (via multiple methods: 

Retire, Re-write, Replace and 

Refactor)

0% 30% by FY 2021 75%

SPEED & EFFICIENCY

Automation tools can 

drastically reduce hours of 

manual labor and provide 

near-instant results. We 

introduced robotic process 

automation in 2019.

Achieve efficiency gains on 

work processes where robotic 

process automation is applied

0% 10% by FY 2020 75%

CYBERSECURITY & DATA PROTECTION

Objective Measure FY 2019 Baseline* Interim Progress FY 2024 Target

HIGH SERVICE 

AVAILABILITY

The IRS is striving to 

ensure systems are 

available when

customers need them.

Service availability of critical 

systems at the appropriate 

level of redundancy 24% 40% 100%

 * FY 2019 baselines are as of the beginning of FY 2019, unless otherwise indicated.

Note: Integration of activities to implement the Taxpayer First Act and realization of a reduced budget could result 

in resequencing IRS Modernization Portfolio capabilities necessitating adjustments to measures.
IRS-21

CYBERSECURITY

Enhancing cybersecurity 

protects taxpayer data and

the nation’s financial 

information from 

persistent and evolving 

threats.

Percent of applications at the 

assessed level of risk or 

mitigated with compensating 

controls5

100% 100% 100%

Key successes for the modernization portfolio in FY 2019 included: 

• Deploying the ID Verify Tool to protect more taxpayers from identity theft by giving them an 

option to confirm their identity with the IRS online; 

• Deploying callback technology on the Toll-Free Balance Due phone line to give taxpayers a 

callback option as an alternative to waiting on the phone; 

• Taking critical steps to award a contract for an Enterprise Case Management system;

• Creating new models and filters within the Return Review Program to more effectively identify 

non-compliance in individual tax returns associated with withholding; 

• Delivering all three planned testing scenarios for the CADE2 Transition State 2 program: Simple 

Single Filing to Testing, Subsequent Payment with Filing for Extension, Internal Balancing & 

Control;

• Completing all nine Modernized IRS Operations milestones including deployment of a critical 

vendor compliance check for a procurement process and development and validation of stack 

components; and

• Completing both Cybersecurity & Data Protection milestones including a strategy to improve the 

number and quality of IRS audit trails through improved security audit analytics and compliance.

 5 The IRS will continue to maintain 100 percent while implementing process improvements as they arise or are

identified.
IRS-22

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

Position Type/Other Costs FTE Positions $000

Establish an Independent Office of Appeals 70 140 $7,679 

Analyst 70 140 7,679 

Comprehensive Service and Training Strategy 78 156 $12,837 

HR Specialist 76 152 11,607 

Program Analyst 2 4 221 

Contractual Services 1,009 

IT Requirements 94 188 $81,400 

IT Specialist 94 188 81,400 

Whistleblower Reforms 10 20 $1,173 

Analyst 6 12 707 

Manager 1 2 118 

Support Staff 3 6 348 

Modernization of IRS Organizational Structure $1,254 

Contractual Services 1,254 

Other Direct Costs 10 20 $2,017 

Attorney 10 20 2,017 

Total 262 524 $106,360 

The Taxpayer First Act will change how the IRS engages with taxpayers, increase digital interactions, and 

require changes in the structure and functioning of the IRS. The FY 2021 request includes funding for:

• Internet Platform for Form 1099 Filings ($30 million): The IRS will create a new website that 

allows taxpayers to prepare, file, and distribute Forms 1099, and create and maintain taxpayer 

records. This platform should improve taxpayer compliance and reduce administrative burden for 

individuals and businesses filing information returns. Taxpayers filed over three billion 1099s in 

calendar year 2019, and 1099s are a critical tool in IRS income verification and document 

matching. 

• Mandatory e-filing by Exempt Organizations ($14.4 million): The Taxpayer First Act mandates 

that all tax-exempt organizations electronically file statements or returns in the Form 990 series or 

Form 8872 (Political Organization Report of Contributions and Expenditures). This platform 

should improve exempt organization compliance and reduce administrative burden for 

organizations and the IRS. 

• Establish Independent Office of Appeals ($7.7 million): Section 1001 requires the IRS to establish 

an independent office of appeals and share non-privileged case files with taxpayers at least 10 days 

prior to conference. Exam and collection case files can be thousands of pages and require sensitive 

reviews. Approximately 70 FTE are neededto make privilege determinations and format case 

files. This estimate includes labor, scanning equipment, and printing. Appeals receives 
IRS-23

approximately 100,000 cases each year and currently has around 1,900 FTE, down 40 percent from 

FY 2010.

• Comprehensive service and training strategy ($12.8 million): Section 1001 requires the IRS submit 

a comprehensive service strategy to Congress by July 2020 to include online services, callback 

technology, training for customer service employees, co-location with other federal service 

providers, self-service options, 10 year and five-year service improvements, and metrics for 

implementation. New training to fulfill the strategy is anticipatedby July of 2021. These costs 

reflect the anticipated technology expenses necessary to fulfill the strategy.

• Uniform Standards for the Useof Electronic Signature for Disclosure Authorizations

($9.2 million): Section 2201 requires the IRS to implement uniform standards for accepting 

electronic signatures, specifically e-Signature for tax professionals to submit Power of Attorney

and other disclosure authorizations required to communicate with the IRS on behalf of clients. 

• Authentication of Users of Electronic Services Accounts ($3.0 million): Section 2304 requires the 

IRS to take additional steps to verify the identity of any individual opening an e-Services account. 

Authentication will need to be done in accordance with current guidance from the National 

Institute of Standards and Technology (NIST).

• Payment of Taxes by Debit and Credit Cards ($3.0 million): Section 2303 requires the IRS to 

charge a fee for those paying taxes by credit or debit card, which requires modifications to 

applications. 

• Whistleblower Reforms ($1.1 million): Section 1405 requires the IRS whistleblower office to 

disclose to whistleblowers that their provided information has been referred for an audit or 

examination, the information provided has resulted in a tax payment, the status and stage of any 

investigation or action related to information provided, and the amount of any whistleblower 

award, including reasons for such determination, within a 60 day mandated window. Historically, 

the IRS generally provides limited notifications of status at preliminary award determination. The 

whistleblower office currently consists of approximately 35 FTE despite an increase in claims and 

awards in recent years. The program made 217 awards in 2018 for $312 million based on tax 

collections of $1.4 billion.

• Technology Operations and Maintenance ($25.2 million): Operations and maintenance costs for 

planned Taxpayer First Act technology and application deployments in FY 2020 based on trends 

observed in recent comparable system builds (approximately 20 percent of development costs). 
IRS-24

Other Direct Costs

Dollars in thousands

IRS Activity Cost FTE Positions Explanation

Chief Counsel $2,017 10.0 20 

Provide support for increases in requests for legal advice, 

litigation assistance, and published guidance on issues raised 

in audits.

Total $2,017 10.0 20 
IRS-25

1.3 – Object Classification (Schedule O) Obligations

Dollars in thousands

Internal Revenue Service

Object Classification

FY 2019

Actuals

FY 2020

Enacted

FY 2021

Request

11.1 Full-Time Permanent Positions 5,682,279 6,057,059 6,202,252

11.3 Other than Full-Time Permanent Positions 86,595 91,508 92,158

11.5 Other Personnel Compensation 271,633 185,801 233,281

11.8 Special Personal Services Payments 29,145 20,494 20,807

11.9 Personnel Compensation (Total) 6,069,652 6,354,862 6,548,498

12.1 Personnel Benefits 2,128,057 2,353,298 2,461,677

13.0 Benefits to Former Personnel 29,240 34,678 35,210

Total Personnel and Compensation Benefits $8,226,949 $8,742,838 $9,045,385

21.0 Travel 91,377 123,226 126,489

22.0 Transportation of Things 19,697 23,204 23,702

23.1 Rental Payments to GSA 581,764 579,517 585,262

23.2 Rent Payments to Others 11,576 11,712 11,947

23.3 Communications, Utilities, & Misc 309,793 327,965 335,164

24.0 Printing & Reproduction 28,851 30,985 31,677

25.1 Advisory & Assistance Services 910,061 740,392 905,518

25.2 Other Services 73,546 101,665 105,817

25.3 Purchase of Goods & Services from Govt. Accounts 166,616 165,198 169,321

25.4 Operation & Maintenance of Facilities 187,915 186,806 190,941

25.5 Research & Development Contracts

25.6 Medical Care 14,301 14,516 14,865

25.7 Operation & Maintenance of Equipment 56,590 60,945 63,443

25.8 Subsistence & Support of Persons

26.0 Supplies and Materials 29,942 47,862 48,949

31.0 Equipment 340,695 248,142 273,514

32.0 Land and Structures 39,367 50,851 52,152

33.0 Investments & Loans

41.0 Grants, Subsidies 39,890 48,000 48,000

42.0 Insurance Claims & Indemnities 1,870 1,730 1,767

91.0 Unvouchered 1,986 4,500 4,590

Total Non-Personnel $2,905,837 $2,767,216 $2,993,118

New Appropriated Resources $11,132,786 $11,510,054 $12, 038,503

Appropriations:

Taxpayer Services 2,553,595 2,535,554 2,562,554

Enforcement 4,592,859 4,909,500 5,071,260

Operations Support 3,861,879 3,885,000 4,104,689

Business Systems Modernization 124,453 180,000 300,000

New Appropriated Resources $11,132,786 $11,510,054 $12,038,503

FTE 72,731 74,544 73,361

See footnotes in 1.1 -- Appropriations Detail Table.

Amounts include obligations of annually appropriated resources, carryover balances, reimbursables, and transfers. Table excludes user fee obligations, 

which can be found in the Treasury chapter of the FY 2021 Budget Appendix.
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1D – Appropriations Language and Explanation of Changes

Appropriations Language Explanation of Changes

TAXPAYER SERVICES

For necessary expenses of the Internal Revenue 

Service to provide taxpayer services, including 

pre-filing assistance and education, filing and 

account services, taxpayer advocacy services, and 

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

such rates as may be determined by the 

Commissioner, [$2,511,554,000] $2,562,554,000

of which not less than $11,000,000 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, of which not 

less than $25,000,000, to remain available until 

September 30, [2021] 2022, shall be available for 

the Community Volunteer Income Tax Assistance 

Matching Grants Program for tax return 

preparation assistance, and of which not less than 

$209,000,000 shall be available for operating 

expenses of the Taxpayer Advocate Service: 

Provided, That of the amounts made available for 

the Taxpayer Advocate Service, not less than 

$5,500,000 shall be for identity theft and refund 

fraud casework. 

ENFORCEMENT

For necessary expenses for tax enforcement 

activities of the Internal Revenue

Service to determine and collect owed taxes, to 

provide legal and litigation support,

to conduct criminal investigations, to enforce 

criminal statutes related to violations

of internal revenue laws and other financial crimes, 

to purchase and hire passenger
IRS-27

motor vehicles (31 U.S.C. 1343(b)), and to provide 

other services as authorized by

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

by the Commissioner,

[$5,010,000,000] $5,071,260,000, of which not to 

exceed $250,000,000 shall remain

available until September 30, [2021] 2022; of 

which not less than $60,257,000

shall be for the Interagency Crime and Drug 

Enforcement program; and of which

not to exceed $15,000,000 shall be for 

investigative technology for the Criminal

Investigation Division: Provided, That the amount 

made available for investigative

technology for the Criminal Investigation Division 

shall be in addition to amounts

made available for the Criminal Investigation 

Division under the "Operations

Support" heading: Provided further, That of the 

funds provided under this paragraph, 

$5,071,260,000 is provided to meet the terms of 

section 251(b)(2) of the

Balanced Budget and Emergency Deficit Control 

Act of 1985, as amended.

In addition, not less than $279,983,000 for tax 

activities under this heading, including tax 

compliance to address the Federal tax gap: 

Provided, That such amount

is additional new budget authority for tax 

activities, including tax compliance to

address the Federal tax gap, as specified for 

purposes of section 251(b)(2) of the

Balanced Budget and Emergency Deficit Control 

Act of 1985, as amended.

OPERATIONS SUPPORT

For necessary expenses of the Internal Revenue 

Service to support taxpayer services and 

Language required for the proposed program 

integrity cap adjustment. More information about 

the cap adjustment can be found in section 4.1 –

Appropriations Detail Table with Program 

Integrity Cap Adjustment of the Appendix and 

Budget Process Chapter of the FY 2021 budget.
IRS-28

enforcement programs, including rent payments; 

facilities services; printing; postage; physical 

security; headquarters and other IRS-wide 

administration activities; research and statistics of 

income; telecommunications; information 

technology development, enhancement, operations, 

maintenance, and security; the hire of passenger 

motor vehicles (31 U.S.C. 1343(b)); 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; [$3,808,500,000] $4,104,689,000, 

of which not to exceed $250,000,000 shall remain 

available until September 30, [2021] 2022; 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, [2022] 

2023, for research; [of which not less than 

$10,000,000, to remain available until expended, 

shall be available for establishment of an 

application through which entities registering and 

renewing registrations in the System for Award 

Management may request an authenticated 

electronic certification stating that the entity does 

or does not have a seriously delinquent tax debt;] 

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

official reception and representation expenses: 

Provided, That not later than 30 days after the end 

of each quarter, the Internal Revenue Service shall 

submit a report to the Committees on 

Appropriations of the House of Representatives 

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 

Please see the exhibit in the Proposed Physical 

Security-Rent Adjusted Levels for a discussion of 

the “rent” and “physical security” language. 
IRS-29

Service is using to mitigate such risks; and the 

expected developmental milestones to be achieved 

and costs to be incurred in the next quarter] major 

information technology investments in the Internal 

Revenue Service Integrated Modernization 

Business Plan portfolio, including detailed, plain 

language summaries on the status of plans, costs, 

and results; prior results and actual expenditures of 

the prior quarter; upcoming deliverables and costs 

for the fiscal year; risks and mitigation strategies

associated with ongoing work; reasons for any cost 

or schedule variances; and total expenditures by 

fiscal year: Provided further, That the Internal 

Revenue Service shall include, in its budget 

justification for fiscal year [2021] 2022, a 

summary of cost and schedule performance 

information for its major information technology 

systems; Provided further, That of the funds 

provided under this paragraph, $4,104,689,000 is 

provided to meet the terms of section 251(b)(2) of 

the Balanced Budget and Emergency Deficit 

Control Act of 1985, as amended. 

In addition, not less than $120,017,000 for tax 

activities under this heading, including tax 

compliance to address the Federal tax gap: 

Provided, That such amount is additional new 

budget authority for tax activities, including tax

compliance to address the Federal tax gap, as 

specified for purposes of section 251(b)(2) of the 

Balanced Budget and Emergency Deficit Control 

Act of 1985, as amended.

BUSINESS SYSTEMS MODERNIZATION

For necessary expenses of the Internal Revenue 

Service's business systems modernization program, 

[$180,000,000] $300,000,000, to remain available 

until September 30, [2022] 2023, for the capital 

This change (and the corresponding change in 

Business Systems Modernization) makes reporting 

requirements across the two appropriations 

consistent and updates the report requirements to 

account for the Integrated Modernization Business 

Plan. 

Language required for the proposed program 

integrity cap adjustment. More information about 

the cap adjustment can be found in section 4.1 –

Appropriations Detail Table with Program 

Integrity Cap Adjustment of the Appendix and 

Budget Process Chapter of the FY 2021 budget.
IRS-30

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 major 

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] major information technology investments 

in the Internal Revenue Service Integrated 

Modernization Business Plan portfolio, including 

detailed, plain language summaries on the status of 

plans, costs, and results; prior results and actual 

expenditures of the prior quarter; upcoming 

deliverables and costs for the fiscal year; risks and 

mitigation strategies associated with ongoing 

work; reasons for any cost or schedule variances; 

and total expenditures by fiscal year.

ADMINISTRATIVE PROVISIONS-INTERNAL 

REVENUE SERVICE (INCLUDING 

TRANSFER OF FUNDS)

SEC. 101. Not to exceed 4 percent of the 

appropriation made available in this Act to the 

Internal Revenue Service under the "Enforcement" 

heading, and not to exceed 5 percent of any other 

appropriation made available in this Act to the 

Internal Revenue Service, may be transferred to 
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any other Internal Revenue Service appropriation 

upon the advance approval of the Committees on 

Appropriations of the House of Representatives 

and the Senate. 

SEC. 102. The Internal Revenue Service shall 

maintain an employee training program, which 

shall include the following topics: taxpayers' 

rights, dealing courteously with taxpayers, crosscultural 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.
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SEC. 106. None of the funds made available under 

this Act may be used by the Internal Revenue 

Service to target citizens of the United States for 

exercising any right guaranteed under the First 

Amendment to the Constitution of the United 

States.

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

Act may be used by the Internal Revenue Service 

to target groups for regulatory scrutiny based on 

their ideological beliefs. 

SEC. 108. None of funds made available by this 

Act to the Internal Revenue Service shall be 

obligated or expended on conferences that do not 

adhere to the procedures, verification processes, 

documentation requirements, and policies issued 

by the Chief Financial Officer, Human Capital 

Office, and Agency-Wide Shared Services as a 

result of the recommendations in the report 

published on May 31, 2013, by the Treasury 

Inspector General for Tax Administration entitled 

"Review of the August 2010 Small Business/SelfEmployed Division's Conference in Anaheim, 

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

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

Act to the Internal Revenue Service may be 

obligated or expended– (1) to make a payment to 

any employee under a bonus, award, or recognition 

program; or (2) under any hiring or personnel 

selection process with respect to re-hiring a former 

employee; unless such program or process takes 

into account the conduct and Federal tax 

compliance of such employee or former employee. 

SEC. 110. None of the funds made available by 

this Act may be used in contravention of section 

6103 of the Internal Revenue Code of 1986 
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(relating to confidentiality and disclosure of 

returns and return information). 

SEC. 111. Unobligated balances of expired 

discretionary funds appropriated from the General 

Fund of the Treasury to the Internal Revenue 

Service by this Act may be transferred (not later 

than the end of the fifth fiscal year after the last 

fiscal year for which such funds are available for 

the purposes for which appropriated) into 

Operations Support heading; Provided that any 

funds so transferred shall remain available for 

obligation for five fiscal years after the fiscal year 

of such transfer, and in addition to such other 

funds as may be available for such purposes, for 

facilities and information technology expenses; 

Provided further, That transfer authority under this 

heading shall be in addition to any other transfer 

authority provided in this Act: Provided further, 

That amounts may be obligated only after the 

Committees on Appropriations of the House of 

Representatives and the Senate are notified at least 

15 days in advance of the planned use of funds. 

SEC. 112. Notwithstanding any Congressional 

notification requirements for a reprogramming of 

funds in this Act, funds provided in this Act for the 

Internal Revenue Service shall be available for 

obligation and expenditure through a 

reprogramming of funds that augments or reduces 

existing programs, projects, or activities by up to 

$10,000,000 without prior Congressional 

notification of such action.

(Department of the Treasury Appropriations Act, 

2020.)

This change would allow the IRS to utilize 

unobligated, expired funds provided in this Act for 

high priority facility and technology investments. 

This is in addition to the Department’s request for 

additional flexibility with the Treasury Capital 

Investments and Modernization Fund.

Providing authority to reprogram up to $10 million 

within appropriations accounts without formal 

notification procedures. This increase will allow 

the IRS to allocate funds to highest priority needs 

at end of fiscal year, including infrastructure, and 

respond to workload and program demand 

changes. 

 
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Proposed Physical Security-Rent Adjusted Levels

FY 21 Request 

(excludes PIC)

Proposed 

Security 

Adjustment*

Proposed Rent 

Adjustment*

Subtotal 

Adjustments

Adjusted 

Levels

Taxpayer Service 2,562,554,000 57,027,414 177,463,822 234,491,237 2,797,045,237 

Pre-filing Taxpayer Assistance & 

Education 667,017,847 9,640,782 33,972,331 43,613,113 710,630,960 

Filing & Account Services 1,895,536,153 47,386,632 143,491,491 190,878,124 2,086,414,277 

Enforcement 5,071,259,990 77,788,076 314,618,563 392,406,639 5,463,666,629 

Investigations 675,533,397 6,513,802 47,031,409 53,545,211 729,078,608 

Exam & Collections 4,225,885,766 69,173,334 256,306,904 325,480,238 4,551,366,004 

Regulatory 169,840,827 2,100,940 11,280,250 13,381,190 183,222,017 

Operations Support 4,104,689,010 (134,815,491) (492,082,385) (626,897,876) 3,477,791,134 

Infrastructure 895,071,621 (162,925,000) (596,918,131) (759,843,131) 135,228,490 

Shared Services & support 1,063,983,643 11,155,413 53,215,527 64,370,940 1,128,354,583 

Information Services 2,145,633,746 16,954,096 51,620,219 68,574,315 2,214,208,061 

Business Systems Modernization 300,000,000 300,000,000 

IT Investments 300,000,000 300,000,000 

Grand Total $12,038,503,000 $0 $0 $0 $12,038,503,000 

*Although they are meant to be representative, if implemented, the IRS would need to perform a more detailed analysis to set these 

levels in the plan. FY 2021 is presented as a 2% inflation of FY 2019 levels, compounded twice.

Dollars for rent and physical security have not been realigned in the 2021 budget submission to give 

Congress an opportunity to evaluate the changes, but the table above shows how these costs would be 

shifted between the appropriations accounts. Executing this change would require moving the references to 

rent and physical security in the Operations Support. This would allow the IRS to execute these costs out 

of the two other accounts, while retaining authority and funding for a portion of these expenses in 

Operations Support for headquarters, technology, procurement, and other personnel. This change would 

increase transparency in the cost of operations and, along with the proposed increase in reprogramming 

authority to $10 million and the new authority for using expired balances, would also improve the IRS’s 

ability to execute these resources efficiently. 

In addition, the Department is proposing to create a Treasury-wide IT modernization fund, the Treasury 

Capital Investments and Modernization Fund, that would include new transfer authority to leverage 

existing funding and introduce further flexibility that would help Treasury to continuously modernize 

information technology infrastructure across the Department. 

Sec. 126 Not to exceed 5 percent of any appropriation made available for the current fiscal year for the 

Department of the Treasury by this Act and unobligated balances of expired discretionary funds 

appropriated from the General Fund to the Department of the Treasury by this Act may be transferred (not 

later than the end of the fifth fiscal year after the last fiscal year for which such funds are available for the 

purposes for which appropriated) to the Treasury Capital Investments and Modernization Fund: Provided,

That any funds so transferred shall remain available for obligation for five fiscal years after the fiscal year 

of such transfers for modernization of Treasury systems to increase cybersecurity and improve efficiency: 
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Provided further, That funds so transferred shall not be available for obligation until the Secretary submits 

to the Committees on Appropriations of the House of Representatives and the Senate a spending plan for 

such funds.

1E – Legislative Proposals

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

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

returns in certain limited instances, such asbasic math errors or the failure to include the appropriate social 

security number or taxpayer identification number. 

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

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

Government databases or Form W-2, or from other third party databases as the Secretary determines by 

regulation; (2) the taxpayer exceeded the lifetime limit for claiming a deduction or credit; or (3) the 

taxpayer failed to include with his or her return certain documentation that is required to be included on or 

attached to the return. This proposal would make it easier for IRS to correct clear taxpayer errors, directly 

improving tax compliance and reducing EITC and other improper payments and freeing IRS resources for 

other enforcement activities. 

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

tax administration because they assist taxpayers in complying with their obligations under the tax laws. 

Incompetent and dishonest tax return preparers increase collection costs, reduce revenues, disadvantage 

taxpayers by potentially subjecting them to penalties and interest because of incorrect returns, and 

undermine confidence in the tax system. To promote high quality services from paid tax return preparers, 

the proposal would explicitly provide that the Secretary of the Treasury has the authority to regulate all 

paid tax return preparers.

Improve clarity in worker classification and information reporting requirements: The budget 

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

an independent contractor and requires withholding of individual income taxes to this independent 

contractor at a rate of five percent on the first $20,000 of payments; and (2) raises the reporting threshold 

for payments to all independent contractors from $600 to $1,000, and reduces the reporting threshold for 

third-party settlement organizations from $20,000 and 200 transactions per payee to $1,000 without regard 

to the number of transactions. In addition, Form 1099-K would be required to be filed with the IRS by 

January 31 of the year following the year for which the information is being reported. The proposal 

increases clarity in the tax code, reduces costly litigation, and improves tax compliance.
IRS-36

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

to retain a portion of the funds collected under the Bureau’s Federal Payment Levy Program (FPLP) which 

processes and collects delinquent tax debts through the Treasury Offset Program (TOP). TOP currently 

recoups its costs from retained amounts from collected amounts for all its programs except for the FPLP 

but under current law, the IRS must pay these costs through annual reimbursement agreements under the 

Economy Act. This proposal would make the FPLP consistent with other TOP programs. Delinquent

taxpayers will not be impacted by the proposal, because they will receive credit for the full amount 

collected. This proposal creates efficiencies, because it allows the Fiscal Service to recover its FPLP costs 

from the IRS in the same manner as other TOP programs.

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

income tax credit (EITC), and credit for other dependents (ODTC): The Administration proposes 

requiring an SSN that is valid for work to claim the EITC, CTC (both the refundable and non-refundable 

portion), and/or the ODTC for the taxable year. For all credits, this requirement would apply to taxpayers 

(including both the primary and secondary filer on a joint return) and all qualifying children or dependents. 

Under current law, taxpayers who do not have an SSN that is valid for work may claim the CTC if the 

qualifying child for whom the credit is claimed has a valid SSN. Furthermore, the ODTC, created by the 

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

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

individuals who are authorized to work in the United States could claim these credits by extending the SSN 

requirement for qualifying children to parents on the tax form for the CTC and instituting an SSN 

requirement for the ODTC. While this SSN requirement is already current law for the EITC, this proposal 

also would close an administrative gap to strengthen enforcement of the provision.
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Program Integrity Cap Adjustment

In addition to the base appropriations request of $12 billion request, the budget proposes a $400 million 

discretionary program integrity cap adjustment in FY 2021 to fund investments in expanding and 

improving the effectiveness and efficiency of the IRS’s overall tax enforcement program. The budget 

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

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

will generate $79 billion in new revenue over 10 years and will cost $15 billion, for net revenue of $64 

billion over 10 years. This return on investment (ROI) is likely understated because it does not reflect the 

effect that enhanced enforcement has ondeterring non-compliance.
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1F – IRS Use of Evidence and Evaluation

The IRS continues to improve program performance by using data and analytics to develop evidence that 

informs innovation and improves program delivery. 

Significant Accomplishments in FY 2019

Compliance Data Warehouse Knowledge Graph Environment (CKGE): CKGE provides over 

2,300 users across the IRS with a powerful tool for exploring and understanding relationships between 

entities in the tax ecosystem including taxpayers, businesses, return preparers, and even personal devices. 

The IRS Research, Analysis, and Statistics division (RAAS) is working to design and develop a corporate 

graph database to assist with comparing changes in corporate structures pre and post-Tax Cuts and Job Act.

Centralized Authorization File (CAF)/Power of Attorney (POA) Analysis: The CAF is a computer 

database containing information on the authority of taxpayer representatives. RAAS has delivered 

15 recommendations to Accounts Management (AM)/CAF to improve processing of Power of Attorney 

requests and mailed 1,500 letters to better understand schemes used by fraudsters.

Conservation Easements: RAAS continues to partner with IRS business units on efforts to address tax 

avoidance schemes through conservation easements. These schemes are estimated to involve billions of 

dollars in lost revenue. RAAS has provided data to the Department of Justice (DOJ) for a pending court 

case involving 96 conservation easement syndicates resulting in over $2 billion of tax deductions from 

overvalued and improperly qualified conservation contributions.

Criminal Investigation Employment Study: RAAS continues to partner with the IRS Criminal 

Investigation (CI) division to develop data-driven approaches to case selection and development. As a 

result of this partnership, CI and RAAS:

• Referred 42 criminal employment tax cases, with an average potential tax loss of $3.3 million per 

case.

• Initiated a project to identify US Citizens living abroad who are not paying income tax on their 

earnings.

• Initiated a project to leverage text analytics for improving the process of reviewing Suspicious 

Activity Reports.

• Coordinated with the Tax-Exempt/Government Entities (TE/GE) business unit to identify potential 

criminal cases.

Exam Planning Scenario Tool: The Exam Planning Scenario Tool (EPST) employs a data-driven 

approach to generate and evaluate optimal, executable tax return examination plans and improve business 

outcomes through incorporation of predictive analytical models. IRS business units used EPST to prepare a 

revised FY 2019 exam plan to assess the effect of the lapse in appropriations on examination starts and 

closures. EPST allowed planners to complete the process in just days, a substantial time saving from a 
IRS-39

manual process that historically took weeks. The tool also allowed leadership to consider multiple 

strategies for optimizing exam plans, where previously the manual process only allowed one strategy.

Identity Theft: During FY 2017, the IRS prevented about 95 percent of known tax refund identity theft 

from being paid out to fraudsters. Known unprotected identity theft is about $300-$600 million annually.

RAAS developed models and filters selected 228,000 returns for potential identity theft, protecting 

$716 million in refunds from being issued until the legitimate filer could authenticate through the Taxpayer 

Protection Program (TPP) that the return was legitimately filed. This effort supports the Treasury Fraud 

Prevention Agency Priority Goal to reduce the amount of unprotected identity theft tax refunds paid by

2 percent by December 31, 2019 (based on data reporting lag), and by an additional 1 percent annually 

through December 31, 2021 under the new FY 2020-2021 goal. The IRS exceeded the FY 2018-2019 goal 

by reducing the amount of unprotected identity theft tax refund paid by an estimated 88 percent between 

processing year 2016 and 2018. The IRS successfully protected between $6.03 billion and $6.08 billion in 

identity theft refunds in 2018. 

Implementing 2019 Legislation and Executive Order: Passage of the Foundations for Evidence-Based 

Policymaking (Evidence Act) and the Executive Order on Improving Free Inquiry, Transparency, and 

Accountability at Colleges and Universities (Executive Order), as well as the recently enacted Taxpayer 

First Act of 2019 increase RAAS’s responsibilities for planning and leading research and statistical 

activities. The Statistics of Income (SOI) Division has been working with the OMB Interagency Council 

on Statistical Policy to implement Title III of the Evidence Act, which focuses on policies and practices to 

improve Federal statistics. 

Large Business & International (LB&I) Line Anomaly Recommender (LAR): LAR is a new and 

innovative approach based on unsupervised learning to find potentially anomalous cases, and specific line 

items for those cases, from LB&I’s filing population. Analysis of the distribution of LB&I filters for LAR 

cases showed that the top 5percent LAR-ranked cases are not often identified by filters, confirming the 

potential opportunity for identifying previously undetected anomalous cases.

Nonfiler: RAAS worked with Collection to construct a training set that replicated Inventory Delivery 

System (IDS) data and improved an expanded suite of predictive models meant to allow downstream 

systems greater flexibility in prioritization and routing. Back-test results indicate that prioritizing inventory 

based on these models can lead to a 30percent increase in enforcement revenue over legacy models. 

Passport Study: The Fixing America’s Surface Transportation (FAST) Act authorizes the IRS to certify 

individual taxpayers with “seriously delinquent tax debt” to the Department of State to use as a factor for 

issuing new or renewed passports. A randomized controlled trial allowed the IRS to show that the Passport 

program has produced an estimated total of $623 million in additional dollars collected and increased the 

number of taxpayers making a payment within 90 days by 13,000. 

RAAS Tax Cuts and Jobs Act of 2018 Response: Passage of the Tax Cuts and Jobs Act significantly 

increased RAAS’s work. RAAS has provided IRS leadership with an improved and updated tax reform 
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statistics placemat and, on the TaxStats pages of IRS.gov, posted detailed SOI filing season statistics that 

reflect the effects of tax reform. 

Collection Notice Redesign and Inventory Case Selection: RAAS has an initiative to redesign certain 

notices sent to taxpayers who owe outstanding tax debts using behavioral insights. RAAS and the 

Collection office developed a model to help Collection identify notice recipients who were more likely to 

fully pay. The model realized a rate of full payment 7.92 percent higher than the control group, while also 

increasing overall collections and decreasing phone calls from notice recipients by 2percent (using 

previously tested re-designed notices).

SB/SE Issue Recommender: The IRS pulls revenue agents from regular audit work to review returns 

flagged for audit, determine what employees to assign to each return, and indicate which lines should be 

worked during an audit. This initiative focuses on using artificial intelligence to automate the classification 

process. SB/SE has approved the use of RAAS’s model, saving weeks of work and classification time. 

The algorithm also can identify training returns. 

Statistics of Income (SOI) Highlights: 

• SOI released more than 500 tables, public-use datasets, and PDF documents on the TaxStats pages 

of IRS.gov. This information is designed to help the public learn more about the tax system.

• For the first time, SOI released data by congressional district. SOI also works with other Federal 

agencies and outside researchers on efforts that benefit the public and improve its understanding of 

tax administration. 

• SOI’s Joint Statistical Research Program uses tax data to evaluate a broad range of research 

questions that can assist in improving tax administration. In 2019, 29 proposals were selected for 

inclusion in the program. 

TE/GE Compliance Initiatives: RAAS is partnering with TE/GE to provide analytic support to enhance 

noncompliance identification and case selection for high priority areas within Exempt Organizations,

Employee Plans, and Government Entities/Indian Tribal Governments workstreams. By partnering with 

RAAS, TE/GE conducts “test and learn” compliance strategies targeted at these high priority areas. 
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Section II – Budget and Performance Plan

Treasury Strategic Objectives and Agency Priority Goals

The budget supports the following Department of the Treasury Strategic Objectives for FY 2018 – FY 2022 

and Agency Priority Goals for FY 2020- FY 2021 for all appropriations: 

• Strategic Goal 1: Boost U.S. Economic Growth, Strategic Objective 1.1: Tax Law 

Implementation: Administer tax law to better enable all taxpayers to meet their obligations, while 

protecting the integrity of the tax system. 

• Strategic Goal 4: Transform Government-wide Financial Stewardship, Strategic Objective 4.1: 

Financial Data Access and Use: Increase the access and use of federal financial data to strengthen 

government-wide decision-making, transparency, and accountability. 

• Strategic Goal 5: Achieve Operational Excellence, Strategic Objectives 5.1 – 5.3: 

o 5.1 Workforce Management: Foster a culture of innovation to hire, engage, develop, and 

optimize a diverse workforce with the competencies necessary to accomplish the mission. 

o 5.2 Treasury Infrastructure: Better enable mission delivery by improving the reliability, 

security, and resiliency of Treasury’s infrastructure. 

o 5.3 Customer Value and Experience: Enhance the experience of interacting with Treasury by 

providing high quality products and services and by delivering excellent customer service. 

• Agency Priority Goal(s): IRS leads the Fraud Prevention Agency Priority Goal and supports the 

Bureau of Fiscal Service’s Reduce Paper Checks Agency Priority Goal for FY 2020 – FY 2021.

o Fraud Prevention (aligned to strategic objective 1.1): Reduce the amount of unprotected 

identity theft tax refunds paid by two percent by December 31, 2019, and by an additional 

one percent annually through December 31, 2021.

o Bureau of Fiscal Service Reduce Paper Checks (aligned to strategic objective 5.3): Create a 

modern, seamless, and cost-effective payment experience for Americans that results in a 

reduction in the number of paper checks issued by Treasury to 49 million and achievement of 

an electronic payment rate of 96.1 percent by the end of FY 2021.

• Cross-Agency Priority Goal on Customer Experience: In FY 2019, OMB designated IRS as one 

of several government-wide High Impact Service Providers. The IRS reports to Treasury and 

OMB on a quarterly and annual basis on its “highest-impact” customer transaction survey data, and 

on efforts to improve the customer experience.
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Taxpayer Services

Appropriation Description

The Taxpayer Services appropriation provides funding for taxpayer service activities and programs. This 

includes printing forms and publications, processing tax returns and related documents, offering filing and 

account services, taxpayer assistance, and providing taxpayer advocacy services. 

The Taxpayer Services budget request for FY 2021 is $2,562,554,000 in direct appropriations and 

25,678 FTE, excluding the proposed program integrity cap adjustment. This amount is an increase of 

$27,000,000, or 1.06 percent, and a decrease of 1,082 FTE from the FY 2020 enacted level (after transfer) 

of $2,535,554,000 and 26,760 FTE. 
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2.1 – Budget Adjustments Table

Dollars in thousands

Taxpayer Services

Summary of Proposed FY 2021 Request FTE Amount

FY 2020 Enacted (Pre-IAT) 26,390 $2,511,554 

Planned Interappropriation Transfer 370 24,000 

FY 2020 Enacted 26,760 $2,535,554 

Changes to Base:

Maintaining Current Levels (MCLs) $107,929 

Pay Annualization (3.1% average pay raise) 18,078 

Pay Raise (1% average pay raise) 17,631 

FERS Contribution Increase 26,523 

Non-Pay 4,058 

Additional Required Labor Costs 41,639 

Efficiencies/Savings: (1,082) ($80,929)

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

Personnel Savings (997) (76,322)

Subtotal FY 2021 Changes to Base (1,082) $27,000 

FY 2021 Current Services 25,678 $2,562,554 

Total FY 2021 Budget Request 25,678 $2,562,554 

See footnotes in 1.1 -- Appropriations Detail Table
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2.2 – Object Classification (Schedule O) Obligations

Dollars in thousands

Taxpayer Services

Object Classification

FY 2019

Actuals

FY 2020

Enacted

FY 2021

Request

11.1 Full-Time Permanent Positions 1,556,489 1,549,224 1,546,081

11.3 Other than Full-Time Permanent Positions 52,468 52,143 51,901

11.5 Other Personnel Compensation 129,622 55,107 67,766

11.8 Special Personal Services Payments 7

11.9 Personnel Compensation (Total) 1,738,586 1,656,474 1,665,748

12.1 Personnel Benefits 612,696 642,458 655,652

13.0 Benefits to Former Personnel 28,605 33,725 34,241

Total Personnel and Compensation Benefits $2,379,887 $2,332,657 $2,355,641

21.0 Travel 11,679 13,832 14,186

22.0 Transportation of Things 672 722 740

23.3 Communications, Utilities, & Misc 1,517 1,350 1,386

24.0 Printing & Reproduction 9,158 9,630 9,865

25.1 Advisory & Assistance Services 34,759 41,196 42,275

25.2 Other Services 12,418 22,563 23,154

25.3 Purchase of Goods & Services from Govt. 

Accounts 59,000 58,409 59,939

25.7 Operation & Maintenance of Equipment 61 249 256

26.0 Supplies and Materials 3,924 6,227 6,374

31.0 Equipment 230 270 277

41.0 Grants, Subsidies 39,890 48,000 48,000

42.0 Insurance Claims & Indemnities 400 449 461

Total Non-Personnel $173,708 $202,897 $206,913

New Appropriated Resources $2,553,595 $2,535,554 $2,562,554

Budget Activities:

Pre-filing Taxpayer Assistance & Education 614,204 656,829 667,018

Filing & Account Services 1,939,391 1,878,725 1,895,536

New Appropriated Resources $2,553,595 $2,535,554 $2,562,554

FTE 28,531 26,760 25,678

See footnotes in 1.1 -- Appropriations Detail Table

FY 2019 amounts include obligations of annually appropriated resources, carryover balances, reimbursables, and transfers. 
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2.3 – Appropriation Detail Table

Dollars in thousands

Taxpayer Services Change % Change

Appropriated Resources

FY 2019

Operating Plan

FY 2020

Enacted

FY 2021

Request

FY 2020 to FY 2021 

Request

FY 2020 to FY 2021 

Request

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

Pre-Filing Taxpayer

 Assistance and Education 4,335 621,907 4,524 656,829 4,341 667,018 (183) 10,189 -4.05% 1.55%

Filing and Account Services 24,196 1,934,647 22,236 1,878,725 21,337 1,895,536 (898) 16,811 -4.04% 0.89%

Subtotal New Appropriated 

Resources 28,531 $2,556,554 26,760 $2,535,554 25,678 $2,562,554 (1,081) $27,000 -4.04% 1.06%

Other Resources:

Reimbursables 507 37,964 862 65,650 905 68,932 43 3,282 4.99% 5.0%

Offsetting Collections - Non

 Reimbursables

User Fees 96 5,870 60 3,900 1,510 99,900 1,450 96,000 2416.67% 2461.54%

Recovery from Prior Years 47 (47) -100.0%

Unobligated Balances from

 Prior Years 234 18,606 1,000 (1,000) -100.0%

Transfers In/Out

Resources from Other 

Accounts

Subtotal Other Resources 837 $62,440 922 $70,597 2,415 $168,832 1,493 $98,235 161.93% 139.15%

Total Budgetary Resources 29,368 $2,618,994 27,682 $2,606,151 28,093 $2,731,386 412 $125,235 1.49% 4.81%

See footnotes in 1.1--Appropriations Detail 

Table

2A – Pre-Filing Taxpayer Assistance and Education ($667,018,000 in direct appropriations, 

and an estimated $213,000 from reimbursable programs). This budget activity funds direct labor and some 

non-labor expenses to assist with tax return preparation, including tax law interpretation, publication, 

production, and advocate services. The program activities include: 

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

Advocate Service and Customer Assistance Relationship and Education (CARE) program 

activities. CARE provides pre-filing taxpayer assistance and education. 

• Taxpayer Communication and Education researches customer needs; develops and manages 

educational programs; establishes partnerships with stakeholder groups; and disseminates tax 

information to taxpayers and the public through a variety of media, including publications and 

mailings, websites, broadcasting, and advertising. 

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

electronic tax materials, and provides media production services to taxpayers.

• Taxpayer Advocacy provides advocate services to taxpayers by identifying the underlying causes 

of taxpayer problems and participating in the development of systematic and/or procedural 

remedies.
IRS-46

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

education, and compliance services to taxpayers. It includes return preparation, answering tax 

questions, resolving account and notice inquiries, and supplying forms and publications to 

taxpayers. 

• Taxpayer Advocate Case Processing provides advocate services to taxpayers to resolve taxpayer 

problems through prompt identification, referral, and settlement.

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

direct support for W&I management activities of strategic planning, communications and liaison, 

finance, human resources, equity, diversity and inclusion, business modernization, and embedded 

training. 

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

taxpayer behavioral studies, data analysis, and uses advanced analytics to deliver results and 

conclusions to inform business decisions to improve IRS products and services. 

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

individual taxpayers, tax practitioners, and IRS tax return preparation partners. 

Description of FY 2019 Performance 

In FY 2019, the Timeliness of Critical Individual Filing Season (CIFS) Tax Products to the Public (i.e. tax 

forms, schedules, instructions, and publications) was 92.6 percent (88 out of 95 products delivered timely), 

exceeding the FY 2019 target of 85 percent by 8.9 percent. These results were achieved due to preparation 

for tax reform changes that started in October 2017. Several working groups were established which 

allowed for the timely identification and approval of changes needed. Prioritization of critical products 

ensured that key forms, instructions, and publications necessary for the completion of income tax returns 

were available to the public by the January 28 start of filing season. The IRS expects to achieve a target of 

89 percent for both FY 2020 and FY 2021.

In FY 2019, the IRS Timeliness of Critical Tax TE/GE and Business Filing Season Tax products to the 

Public was 96.1 percent, exceeding the target of 85 percent. The IRS achieved these results through 

workload planning and prioritization of critical products, which ensured that 73 of the 76 total key forms, 

instructions, and publications necessary for the completion of income tax returns were available to the 

public by the January 28 start of filing season. The IRS will continue to collaborate with stakeholders for 

timely identification of affected tax products, prioritize critical products over eminent products, and create 

and execute effective workload planning and monitoring, including the judicious use of overtime as 

needed. The IRS expects to achieve a target of 89 percent for both FY 2020 and FY 2021.
IRS-47

The FY 2019 Enterprise Self-Assistance Participation Rate (ESAPR) was 85.4 percent. This is due, in part, 

to increases in Get Transcripts Online by 30 percent, “Where's My Refund?” by more than 19 percent, and 

Transcript Delivery Service by almost 31 percent. Compared to FY 2018, total services increased by 

12.4 percent, self-assisted services increased 17.1 percent and assisted services fell 8.5 percent due, in part, 

to the lapse in appropriations as assistors were not available. As the IRS provides new self-assistance 

applications to the public, the IRS will add them to the calculation. The IRS continues to improve taxpayer 

services by developing and improving self-assistance tools and traditional services. In response to taxpayer 

preferences, the IRS also continued expanding secure digital communication options. The IRS measures 

progress toward improvement to taxpayer service by its ESAPR metric. The ESAPR FY 2020 and 

FY 2021 target is set at 82 percent, recognizing the decrease in FY 2019 to assisted services was due to the 

lapse in appropriations and should not repeat in FY 2020.

82.0%

85.4%
IRS-48

FY 2021 Changes by Budget Activity

Dollars in thousands

Pre-Filing Taxpayer Assistance & Education FTE Amount

FY 2020 Enacted (Pre-IAT) 4,524 $656,829

Planned Interappropriation Transfer

FY 2020 Enacted 4,524 $656,829

Changes to Base:

Maintaining Current Levels (MCLs) $27,807 

Pay Annualization (3.1% average pay raise) 4,407 

Pay Raise (1.0% average pay raise) 4,298 

FERS Contribution Increase 5,982 

Non-Pay 1,053 

Additional Required Labor Costs 12,067 

Efficiencies/Savings (183) ($17,618)

Personnel Savings (183) (17,618)

Subtotal FY 2021 Changes to Base (183) $10,189 

FY 2021 Current Services 4,341 $667,018

Program Increases:

Subtotal FY 2021 Program Increases

Total FY 2021 Request (Before Cap) 4,341 $667,018

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted (183) $10,189 

Percent Change FY 2021 Request over FY 2020 Enacted -4.05% 1.55%
IRS-49

2.1.1 – Budget and Performance Report and Plan

Dollars in thousands

Pre-Filing Taxpayer Assistance & Education FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Resource Level Actual Actual Actual Actual Actual Enacted Request

Appropriated Resources1 $609,196 $609,445 $594,962 $640,379 $621,907 $656,829 $667,018 

Reimbursable Resources2 51 13 4 260 118 203 213 

User Fees2 4,141 

Budget Activity Total $613,388 $609,458 $594,966 $640,639 $622,025 $657,032 $667,231 1

The FY 2015 - FY 2019 appropriated resources represent the approved operating plan including any inter-BAC transfers and interappropriation transfers.

2

The FY 2015 - FY 2019 columns represent realized resources for reimbursables and user fees.

Pre-Filing Taxpayer Assistance & Education FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2019 FY 2020 FY 2021

Measure Actual Actual Actual Actual Actual Target Target Target

Timeliness of Critical Filing Season Tax Products to the Public 

(Ot)1 89.0% 92.5% 93.1% 59.6% 92.6% 85.0% 89.0% 89.0%

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

Public (Ot)1 92.6% 98.0% 96.7% 100.0% 96.1% 85.0% 89.0% 89.0%

Enterprise Self Assistance Participation Rate (E) (L)2 88.7% 89.0% 79.0% 82.0% 85.4% 82.0% 82.0% 82.0%

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

1

Modified for FY 2019

2 Starting in FY 2017, the IRS modified the Taxpayer Self Assistance Rate measure (renamed to Enterprise Self Assistance Participation Rate) to include additional 

self-service channels including Get Transcript 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.

2B – Filing and Account Services ($1,895,536,000 in direct appropriations, $68,719,000 from 

reimbursable programs, and $99,900,000 from user fees): This budget activity funds direct labor and 

non-labor expenses that provide filing and account services to taxpayers, process paper and 

electronically-submitted tax returns, issue refunds, and maintain taxpayer accounts. The public continues 

to file more returns electronically (more than 90 percent of individual returns were filed electronically 

during the 2018 filing season). The program activities include:

• Filing and Account Services Management administers filing and account services programs.

• Submission Processing processes paper and electronically-submitted tax returns and supplemental 

documents, accounts for tax revenue, processes information documents, and issues refunds and tax 

notices.

• Account Management and Assistance– Electronic/Correspondence Assistanceprovides education 

and assistance to taxpayers and resolves accounts and notice inquiries through telephone, paper, 

and internet correspondence.
IRS-50

• 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.

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

portion of the Trade Adjustment Assistance Reform Act of 2002. 

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

correspondence, and electronic media inquiries; real time monitoring and routing of inbound calls; 

monitoring of Customer Service Representative (CSR) accuracy; and management of the enterprise 

telephone database.

Description of FY 2019 Performance 

Millions of business taxpayers file their returns electronically. The IRS achieved a 57.8 percent business 

e-file rate in FY 2019, just missing the target of 58 percent. The IRS processed 29 million business returns 

electronically, a five-year high and a 5.8 percent increase from FY 2018. Employment tax returns 

(Form 941, Employer’s Quarterly Federal Tax Return), continue to increase as a share of business returns 

filed from 38 percent in FY 2015 to 41 percent in FY 2019. The IRS will continue to promote the benefits 

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

confirmation). The business e-file target will be increased to 60 percent for FY 2020 and FY 2021.

In FY 2019, Customer Accuracy – Tax Law was 91.6 percent, 0.4 percent below the target of 92 percent. 

The delay in training before the filing season startedaffected the accuracy results. The IRS will continue to 

monitor results through data driven analysis of reports obtained from the Embedded Quality Review 

47.0% 50.0% 52.9% 55.6% 57.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Business E-File Rate
IRS-51

System (EQRS) to ensure achievement of future goals. Ongoing efforts have and will continue to focus on 

production meetings with field sites, promoting coding consistency of product reviews, and providing 

training to managers and employees to ensure quality service to customers. For FY 2020 and FY 2021, the 

IRS set a tax law accuracy target of 92 percent.

For Customer Accuracy – Accounts (Phones), the IRS correctly answered 94.3 percent of account 

questions over the telephone, exceeding the FY 2019 target of 94 percent. The IRS will continue to 

monitor Account Telephone Customer Accuracy results through data driven analysis of reports obtained 

from EQRS to achieve future goals. Ongoing efforts have and will continue to focus on production 

meetings with field sites, promoting coding consistency of product reviews and providing training to 

managers and employees to ensure quality service to customers. For FY 2020 and FY 2021, the IRS 

expects to achieve an accounts (phones) accuracy rate of 94 percent.

The CSR level of service (LOS) measures the relative success rate of taxpayers wanting to speak with a 

CSR. CSR LOS includes telephone lines answered by Accounts Management CSRs only (31 phone lines 

total). These telephone lines service 78 percent of all telephone traffic. In FY 2019, the CSR LOS 

exceeded the target of 63 percent, reaching 65.4 percent. For filing season, LOS was 66.9 percent, an 

increase of 1.9 percentage points over the target of 65 percent. While the target was met, the LOS dropped 

10.5 percentage points from FY 2018 due, in part, to the lapse in appropriations. Overall, the number of 

FY 2019 toll free callers was 15.7 percent lower compared to FY 2018 as more taxpayers use IRS.gov to 

obtain information. The IRS monitors demand in real time and allocates down to the half hour between 

telephones and paper processing to achieve the planned goals and avoid downtime. In FY 2019, the ending 

paper correspondence inventory was 1.1 million. In FY 2020, the IRS will continue to create detailed 

forecasts of expected telephone and correspondence demand and adjust staffing accordingly. The LOS 

target is set at 60 percent for FY 2020, which assumes assistors calls answered of a projected 20 million

and paper correspondence estimated at 1.1 million. The IRS projects that the filing season LOS will be

slightly higher at 65 percent. The FY 2021 LOS target is projected to be 60 percent with a projected 20 

million assistor calls answered with a project paper correspondence inventory estimated at 1.1 million. 

38.1%

53.4%

77.1%

75.9%

65.4%

30% 40% 50% 60% 70% 80%

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

CSR LOS
IRS-52

FY 2021 filing season LOS is projected to be 65 percent. Both targets for FY 2021 assume $96 million in 

user fees to help offset mandatory labor cost increases. 

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

American Customer Satisfaction Index (ACSI) Survey, which is the only uniform, 

cross-industry/government measure of customer satisfaction with the quality of goods and services 

available to U.S. residents. The measure is calculated as a weighted combination of the ACSI Individual 

Electronic Tax Filer and Individual Paper Tax Filer Customer Satisfaction Index scores based on a 

100-point scale. After remaining steady for three years, the measure dropped one point in 2019 to 73, due 

to declines in both electronic and paper filers scores. The government shutdown that ended in early 2019 

likely affected these scores by impacting the timeliness of IRS customer service and the ease of getting 

filing information for certain tax filers.

FY 2021 Changes by Budget Activity

Dollars in thousands

Filing and Account Services FTE Amount

FY 2020 Enacted (Pre-IAT) 21,865 $1,854,725 

Planned Interappropriation Transfer 370 $24,000 

FY 2020 Enacted 22,236 $1,878,725 

Changes to Base:

Maintaining Current Levels (MCLs) $80,122 

Pay Annualization (3.1% average pay raise) 13,671 

Pay Raise (1.0% average pay raise) 13,333 

FERS Contribution Increase 20,541 

Non-Pay 3,005 

Additional Required Labor Costs 29,572 

Efficiencies/Savings (899) ($63,311)

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

Personnel Savings (814) (58,704)

Subtotal FY 2021 Changes to Base (899) $16,811 

FY 2021 Current Services 21,337 $1,895,536 

Program Increases:

Subtotal FY 2021 Program Increases

Total FY 2021 Request (Before Cap) 21,337 $1,895,536 

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted (899) $16,811 

Percent Change FY 2021 Request over FY 2020 Enacted -4.04% 0.89%
IRS-53

2.1.2 – Budget and Performance Report and Plan

Dollars in thousands

Filing and Account Services FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Resource Level Actual Actual Actual Actual Actual Enacted Request

Appropriated Resources1 $1,550,027 $1,564,488 $1,712,511 $1,872,175 $1,934,647 $1,878,725 $1,895,536 

Reimbursable Resources2 28,555 30,147 34,905 62,794 37,846 65,447 68,719 

User Fees2 160,342 40,553 69,987 3,900 5,870 3,900 99,900 

Budget Activity Total $1,738,924 $1,635,188 $1,817,403 $1,938,869 $1,978,363 $1,948,072 $2,064,155 1

The FY 2015 - FY 2019 appropriated resources represent the approved operating plan including any inter-BAC transfers and interappropriation transfers.

2

The FY 2015 - FY 2019 columns represent realized resources for reimbursables and user fees.

Filing and Account Services FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2019 FY 2020 FY 2021

Measures Actual Actual Actual Actual Actual Target Target Target

Percent of Business Returns Processed Electronically (Oe) 47.0% 50.0% 52.9% 55.6% 57.8% 58.0% 60.0% 60.0%

Customer Accuracy - Tax Law (Phones) (Ot) 95.0% 96.4% 96.7% 95.5% 91.6% 92.0% 92.0% 92.0%

Customer Accuracy - Accounts (Phones) (Ot) 95.5% 96.1% 96.0% 96.1% 94.3% 94.0% 94.0% 94.0%

Customer Service Representative Level of Service (Oe)1,2 38.1% 53.4% 77.1% 75.9% 65.4% 63.0% 60.0% 60.0%

Taxpayers Satisfied with the IRS (based on a 100-point 

scale)3, 4 73 74 74 74 73 Indicator Indicator Indicator

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and L - Long Term Goal 1

CSR LOS includes telephone lines answered by Accounts Management Customer Service Representatives only. These telephone phone lines service 78% of all 

telephone traffic.

2

The FY 2019 level of service target was calculated at the FY 2019 Enacted level.

3

New measure added for FY 2019

4

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

Electronic Filer customer satisfaction index scores; available on an annual basis at the end of January and computed on a 100-point scale. 
IRS-54

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 2021 is $5,071,260,000 in direct appropriations and 35,026 FTE, 

excluding the proposed program integrity cap adjustment. This amount is an increase of $161,760,000, or 

3.29 percent, and 362 FTE fewer than the FY 2020 enacted level (after transfer) of $4,909,500,000 and 

35,388 FTE. 
IRS-55

2.1 – Budget Adjustments Table

Dollars in thousands

Enforcement

Summary of Proposed FY 2021 Request FTE Amount

FY 2020 Enacted (Pre-IAT) 35,388 $5,010,000 

Planned Interappropriation Transfer (100,500)

FY 2020 Enacted 35,388 $4,909,500 

Changes to Base:

Maintaining Current Levels (MCLs) $207,089 

Pay Annualization (3.1% average pay raise) 35,236 

Pay Raise (1% average pay raise) 34,364 

FERS Contribution Increase 52,345 

Non-Pay 7,258 

Additional Required Labor Costs 77,886 

Efficiencies/Savings: (454) ($56,589)

Personnel Savings (454) (56,589)

Subtotal FY 2021 Changes to Base (454) $150,500 

FY 2021 Current Services 34,934 $5,060,000 

Program Changes:

Program Increases

Implementing the Taxpayer First Act 92 11,260 

Subtotal FY 2021 Program Increases 92 $11,260 

Total FY 2021 Budget Request 35,026 $5,071,260 

See footnotes in 1.1 -- Appropriations Detail Table
IRS-56

2.2 – Object Classification (Schedule O) Obligations

Dollars in thousands

Enforcement

Object Classification

FY 2019

Actuals

FY 2020

Enacted

FY 2021

Request

11.1 Full-Time Permanent Positions 2,976,718 3,129,874 3,198,737

11.3 Other than Full-Time Permanent Positions 28,520 33,337 33,992

11.5 Other Personnel Compensation 121,867 110,921 135,557

11.8 Special Personal Services Payments 28,969 20,456 20,769

11.9 Personnel Compensation (Total) 3,156,074 3,294,588 3,389,055

12.1 Personnel Benefits 1,136,199 1,251,401 1,309,907

13.0 Benefits to Former Personnel 418 590 600

Total Personnel and Compensation Benefits $4,292,691 $4,546,579 $4,699,562

21.0 Travel 64,375 92,711 94,702

22.0 Transportation of Things 5,799 8,568 8,740

23.2 Rent Payments to Others 311 311 318

23.3 Communications, Utilities, & Misc 2,063 2,176 2,219

24.0 Printing & Reproduction 2,216 2,625 2,685

25.1 Advisory & Assistance Services 128,541 121,691 125,390

25.2 Other Services 31,815 49,188 50,174

25.3 Purchase of Goods & Services from Govt. 

Accounts 34,886 35,434 36,222

25.4 Operation & Maintenance of Facilities 1 5 5

25.6 Medical Care 35 8 8

25.7 Operation & Maintenance of Equipment 1,076 1,545 1,576

26.0 Supplies and Materials 17,517 31,867 32,531

31.0 Equipment 8,389 11,283 11,509

32.0 Land and Structures 3 1 1

42.0 Insurance Claims & Indemnities 1,155 1,008 1,028

91.0 Unvouchered 1,986 4,500 4,590

Total Non-Personnel $300,168 $362,921 $371,698

New Appropriated Resources $4,592,859 $4,909,500 $5,071,260

Budget Activities:

Investigations 587,235 654,285 675,533

Exam & Collections 3,841,166 4,091,953 4,225,886

Regulatory 164,458 163,262 169,841

New Appropriated Resources $4,592,859 $4,909,500 $5,071,260

FTE 34,478 35,388 35,026

See footnotes in 1.1 -- Appropriations Detail Table

Amounts reflect obligations of annually appropriated resources, carryover balances, reimbursables, and transfers. 
IRS-57

2.3 – Appropriation Detail Table

Dollars in thousands

Enforcement Change % Change

Appropriated Resources

FY 2019

Operating Plan

FY 2020

Enacted

FY 2021

Request

FY 2020 to FY 2021 

Request

FY 2020 to FY 2021 

Request

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

Investigations 2,833 595,686 2,971 654,285 2,933 675,533 (38) 21,248 -1.28% 3.25%

Exam and Collections 29,698 3,907,290 31,467 4,091,953 31,147 4,225,886 (320) 133,933 -1.02% 3.27%

Regulatory 947 174,624 950 163,262 946 169,841 (4) 6,579 -0.42% 4.03%

Subtotal New Appropriated Resources 33,478 $4,677,600 35,388 $4,909,500 35,026 $5,071,260 (362) $161,760 -1.02% 3.29%

Other Resources:

Reimbursables 45 28,401 62 40,076 65 42,080 3 2,004 4.84% 5.0%

Offsetting Collections - Non 

 Reimbursable 9,749 31,781 33,370 1,589 5.0%

User Fees 42 30 30 

Recovery from Prior Years 3,110 30 30 

Recoveries Paid 3,408 3,408 

Unobligated Balances from Prior 

 Years 6 12,832 69,043 28,400 (40,643) -58.87%

Transfers In/Out 111 

Resources from Other Accounts

Subtotal Other Resources 51 $54,245 62 $144,368 65 $107,318 3 ($37,050) 4.84% -25.66%

Total Budgetary Resources 33,529 $4,731,845 35,450 $5,053,868 35,091 $5,178,578 (359) $124,710 -1.01% 2.47%

See footnotes in 1.1--Appropriations Detail Table

2C – Investigations ($675,534,000in direct appropriations, an estimated $40,734,000 from 

reimbursable programs, and an estimated $33,370,000 from non-reimbursable programs): This budget 

activity funds the Criminal Investigation (CI) programs that explore potential criminal and civil violations 

of tax laws; enforce criminal statutes relating to violations of tax laws and other financial crimes; and 

recommend prosecution as warranted. The program activities include:

• General Management and Administration supports the headquarters management activities of 

strategic planning, communications, finance, and human resources for CI activities. 

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

inherent risks of Stolen Identity Refund Fraud (SIRF) by focusing on significant tax investigations, 

prosecutions to maximize deterrence, and preventing the IRS from issuing fraudulent refunds. 

• CI supports the enforcement of criminal statutes relating to violations of internal revenue laws and 

other financial crimes. CI investigates cases of suspected intent to defraud involving both legal 

and illegal sources of income and recommends prosecution as warranted. This includes the 

investigation and prosecution of tax and money-laundering violations associated with narcotics 

organizations. 
IRS-58

• 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 (U.S. citizens living abroad who have renounced their 

citizenship), and investigations involving other international issues, including legal support (e.g., 

Foreign Tax Credit and Foreign Earned Income Exclusion, Corporations, Non-Profits, Pension

Plans, etc.).

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

while focusing enforcement and investigative actions on the criminals that pose those threats. This 

activity also supports security program management that protects the safeguarding of all data and 

systems within CI while adhering to all federal regulatory security compliance mandates and local 

security policies. 

Description of FY 2019 Performance

The CI division serves the American public by investigating potential criminal violations of the Internal 

Revenue Code and related financial crimes in a manner that fosters confidence in the tax system and 

compliance with the law. CI uses the following measures to evaluate its success in achieving its mission. 

In FY 2019, CI completed 2,797 criminal investigations, an 8.3 percent decrease compared to FY 2018, 

falling just short of the year-end target of 2,800. Overall performance in FY 2019 continued to be affected 

by a steady decrease in the number of special agents and was affected by the mix of cases, where if CI has 

more traditional tax cases, which tend to have a longer cycle time, the total number of investigations will 

go down. Cases of a Legal, Illegal and Narcotics nature decreased 1.2 percent, 13.2 percent, and 12.6 

percent respectively, compared to FY 2018. Legal source cases include people that earn their income 

legally, but willfully violate the tax laws (i.e. tax evasion). Illegal cases include income from sources such 

4,486 

3,721 

3,089 3,051 2,797 

 2,400

 2,600

 2,800

 3,000

 3,200

 3,400

 -

 1,000

 2,000

 3,000

 4,000

 5,000

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Criminal Investigations Completed and 

Associated FTE

Criminal Investigations Completed

FTE for Criminal Investigations
IRS-59

as embezzlement, mortgage fraud, telemarketing fraud, money laundering, etc. Narcotics cases are like 

illegal, these cases are specific to profit, and financial gains of organized drug groups involved in narcotics 

trafficking and/or narcotics/money laundering. The target is currently projected at 2,700 for FY 2020 and 

FY 2021. It is based on the number of recent hires, estimated attrition levels, and current performance 

trends.

The FY 2019 conviction rate of 91.2 percent was slightly below the year‐end target of 92 percent. The 

average number of acquittals and dismissals remained comparable to previous years while the overall 

number of convictions decreased 7.7 percent from FY 2018, contributing to the slight drop in the 

conviction rate. Appropriate case selection and effective field performance continue to positively affect the 

quality of cases. The FY 2020 and FY 2021 targets will remain at 92 percent, based on historical averages 

while the number of convictions is projected to be 1,600 for both years due to lower than expected 

inventory levels. In addition, projected decreases in the judicial process (pipeline) inventory will influence 

the number of convictions in future years. Additional factors such as unforeseen legislative and 

prosecutorial priorities, as well as resources at the Department of Justice and U.S. Attorney’s offices to 

prosecute CI cases, will also influence future performance.

2879

2672

2300

1879 1735

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

0

500

1000

1500

2000

2500

3000

3500

2015 2016 2017 2018 2019

Convictions vs. Conviction Rate

Convictions Conviction Rate
IRS-60

FY 2021 Changes by Budget Activity

Dollars in thousands

Investigations FTE Amount

FY 2020 Enacted (Pre-IAT) 2,971 $688,733 

Planned Interappropriation Transfer ($34,449)

FY 2020 Enacted 2,971 $654,284 

Changes to Base:

Maintaining Current Levels (MCLs) $27,132

Pay Annualization (3.1% average pay raise) 4,437 

Pay Raise (1.0% average pay raise) 4,327 

FERS Contribution Increase 7,809 

Non-Pay 1,635 

Additional Required Labor Costs 8,925 

Efficiencies/Savings (38) ($7,138)

Personnel Savings (38) (7,138)

Subtotal FY 2021 Changes to Base (38) $19,995 

FY 2021 Current Services 2,933 $674,279 

Program Increases:

Implementing the Taxpayer First Act 1,254 

Subtotal FY 2021 Program Increases $1,254 

Total FY 2021 Request (Before Cap) 2,933 $675,533 

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted (38) $21,249

Percent Change FY 2021 Request over FY 2020 Enacted -1.28% 3.25%
IRS-61

2.1.3 – Budget and Performance Report and Plan

Dollars in thousands

Investigations FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Resource Level Actual Actual Actual Actual Actual Enacted Request

Appropriated Resources1 $601,665 $591,449 $589,295 $581,680 $595,686 $654,285 $675,533 

Reimbursable Resources2 29,957 29,053 33,618 28,295 27,749 38,794 40,734 

User Fees2

Budget Activity Total $631,622 $620,502 $622,913 $609,975 $623,435 $693,079 $716,267 1

The FY 2015 - FY 2019 appropriated resources represent the approved operating plan including any inter-BAC transfers and interappropriation transfers.

2

The FY 2015 - FY 2019 columns represent realized resources for reimbursables and user fees.

Investigations FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2019 FY 2020 FY 2021

Measures Actual Actual Actual Actual Actual Target Target Target

Criminal Investigations Completed (Ot) 4,486 3,721 3,089 3,051 2,797 2,800 2,700 2,700

Conviction Rate (Oe) 93.2% 92.1% 91.5% 91.7% 91.2% 92.0% 92.0% 92.0%

Key: Oe - Outcome Measure, Ot - Output/Workload Measure

2D – Exam and Collections ($4,225,886,000 in direct appropriations, an estimated $495,000 from 

reimbursable programs, and an estimated $30,000 from user fees): 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 compliance 

program activities.

• Payment Compliance – Correspondence Collectionsupports 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.
IRS-62

• Tax Reporting Compliance – Electronic/Correspondence Exam initiates written correspondence 

with taxpayers related to tax issues arising from claims on their tax returns.

• Tax Reporting Compliance – Field Exam compares taxpayer income levels and corresponding tax 

liabilities to ensure the accuracy of taxpayer returns.

• Fraud/Bank Secrecy Act enforces the anti-money laundering provisions of the Bank Secrecy Act of 

1970 (BSA) and the USA Patriot Act of 2001. It examines non-bank financial institutions for 

compliance with these laws, receives and processes more than 15 million financial reports 

annually, and manages a centralized database of that information for the Financial Crimes 

Enforcement Network. The Fraud program follows the money trail to support the criminal 

investigation of tax evasion operations. Fraud technical advisors and revenue agents supply

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

• Appeals supplies an administrative review process that provides a channel for impartial case 

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

• Litigationprovides legal support for the IRS in litigation of cases, including interpretation of the 

tax law.

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

for the filing and payment of employment, excise, estate, and gift taxes.

• International Collection supports international field collection efforts associated with delinquent 

taxpayer and business entity liabilities from U.S. citizens residing abroad, non-resident aliens, 

expatriates (U.S. citizens living abroad who have renounced their citizenship), and those involving 

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

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

abroad, non-resident aliens, expatriates, and other examinations involving other international issues 

including legal support (e.g., Foreign Tax Credit and Foreign Earned Income Exclusion, 

Corporations, Non-Profits, Pension Plans, etc.).

• Enforcement Research provides resources for market-based research to identify compliance issues, 

for conducting tests of treatments to address noncompliance, and for the implementation of 

successful treatments of taxpayer non-compliant behavior.

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

headquarters management activities of strategic planning, communication and liaison, finance, 

human resources, equity, diversity and inclusion, business system planning, and embedded 

training.

• EITC Management and Administrationsupports headquarters management associated with EITC. 
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• Integrity & Verification Operations supports civil fraud detection and prevention efforts in a 

pre-refund environment including monitoring performance and developing policy, procedures, and 

guidance for processing civil revenue protection programs.

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

victim assistance policy and operations, which includes paper inventories from tax-related ID theft, 

the Identity Theft Protection Specialized Unit, and Return Preparer Misconduct.

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

tips from individuals who identify tax problems in the course of their daily business, regardless of 

where encountered (including workplace).

• Communications and Liaison coordinates local government and liaison relationships; manages 

congressional, state, and national stakeholder relationships and issues; coordinates crosscutting 

issues, including audit management and legislative implementation; manages national media 

contacts and local media relationships; and ensures compliance with disclosure and privacy laws.

• Return Integrity, Verification & Program Management provides policy and program oversight of 

revenue protection efforts such as detection, prevention, and treatment of improper refunds 

(identity theft and non-compliance), including managing systemic solutions regarding payment of 

valid refund claims and the development of innovative technology solutions supporting IRS-wide 

revenue protection strategies.

Description of FY 2019 Performance - Exam

The Examination program provides taxpayers top quality service by helping them understand and meet 

their tax responsibilities and by applying the tax law with integrity and fairness.

12,298

10,360 9,157 8,930

6,811

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Individual Exam Closures with Coverage Rates

Exam Closures (hundreds) Exam Coverage Individual
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In FY 2019, Individual Exam Coverage was 0.45 percent, below the target of 0.50 percent. This measure 

tracks the number of individual audits closed in a given fiscal year. While meaningful over time, the 

measure does not reflect in real time ongoing open audit activities or the effectiveness of exams; exam 

selection and effectiveness should continue to increase due to data analytics and system improvements. For 

example, audits of high-income individuals generally take longer and are therefore more likely to remain 

open for a significant period of time. The IRS has continued to increase audits in the category of total 

positive income (TPI), or the sum of all positive amounts shown for various sources of income reported on 

the individual tax return excluding losses, of $10 million and over. At the end of FY 2018, the IRS had 

5,220 audits open in this TPI grouping and has increased the number of open audits in this TPI grouping. 

Many of these exams would not show up in Individual Exam Coverage until closed, which may take 

several years. 

Closures were short of plan because of delays in enforcement hiring due to the lapse in appropriations. 

Significant staffing losses also adversely affected closures. IRS Operating Divisions will monitor 

resources, starts, and work-in-process to ensure FY 2020 targets are met. For FY 2020 the target is 

0.48 percent and the FY 2021 target is being raised to 0.55 percent. The proposed program integrity cap 

adjustment would significantly improve performance for this metric in future years.

The Examination Coverage – Business (Assets > $10 million) 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 prior calendar year. In

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

has exceeded the attrition rate factored into the closure plan for FY 2019. Closures of corporate returns in 

the highest asset classes are well below plan in anticipation of the transition from the traditional 

coordinated industry case program to the new large corporate compliance program. The FY 2020 target is 

1.7 percent and the FY 2021 target is 1.1 percent. The decrease in FY 2021 target is a result of reassigning 

10,804

8,890

7,834 7,189

5,697

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

0

2,000

4,000

6,000

8,000

10,000

12,000

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Business Exam Closures with Coverage Rates

Exam Closures Exam Coverage Business
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more than 100 revenue agents from normal casework to serve as on-the-job-instructors for recent hires and 

limited hiring in FY 2021.

In FY 2019, Exam Efficiency - Individual (the number of closures divided by the total Exam FTE) was 

109, below the target of 122 and down 16.8 percent from FY 2018. Efficiency is below the 12-month 

target due to the five-week lapse in appropriations, resumption activities, and unplanned staffing loses to 

other business units. In addition, the amount of overtime worked, with no additional closures, added to the 

workplan, and reducedexam efficiency. The FY 2020 Exam Efficiency – Individual is 115 and the 

FY 2021 target is 120. 

The AUR Coverage measure is calculated by taking the total number of contact closures divided by total 

prior calendar year individual filings. In FY 2019, AUR Coverage was 1.3 percent, below the target of 

1.6 percent. Manpower was short of plan because of the shutdown and resumption activities, including 

delays in the enforcement hiring timeline. New hires that were originally scheduled for March were not on 

board until August. The IRS will monitor resources, work in process, and planned starts to ensure it meets

future targets. The target in FY 2020 is 1.7 percent for FY 2019 and 1.8 percent for FY 2021.

The Time to Start Compliance Resolution is a new measure currently under development. This measure 

will be used as an indicator in FY 2020. It is the percentage of all individual income tax enforcement cases 

started within six months of the return posting date. It will reflect the effect of expedited issue detection 

and more integrated enforcement approaches. It supports expedited document matching, enhanced 

anomaly detection leading to faster issue identification, and data and analytics to improve issue 

identification and treatment choice. 

The Time to Resolve Compliance Issue After Filing is a new measure currently under development. This 

measure will be used as an indicator in FY 2020. It measures the average time (in days) it takes to close all 

individual income tax enforcement cases. This measure reflects the complete life cycle from return filing 

to resolution. It will reflect the effect of process enhancements, such as new self-correction capabilities, 

including Online Account. It supports expedited document matching and enhanced anomaly detection, 

which will lead to faster issue identification. 

The Repeat Non-Compliance Rate is a new measure under development. The measure will be used as an 

indicator in FY 2020. It measures the percentage of individual taxpayers with repeat non-compliance two 

years after the first tax year for filing, payment, or reporting compliance. This measure supports expedited 

document matching, enhanced anomaly detection leading to faster issue identification, and Enterprise Case 

Management. It also promotes improved customer service through expanded access to new self-correction 

capabilities and improved behavioral analytics. It allows the IRS to better understand and change 

non-compliant taxpayer behavior.

Time to Start, Time to Resolve, and Repeat Non-Compliance are new measures under development.
IRS-66

Description of FY 2019 Performance - Collection

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

equitable application of tax laws, and provides education to customers to promote future compliance. The 

performance goals that the IRS uses to gauge collection program performance are discussed below. 

The Collection Coverage measure is calculated by taking the total volume of collection work disposed (i.e. 

completed) divided by total collection work available. In FY 2019, Collection Coverage was 41.3 percent, 

exceeding the target of 40.1 percent. Collection exceeded its overall disposition target by 3.3 percent, 

while available inventory grew slightly from the FY 2018 level. For FY 2020, Collection coverage is 

expected to meet the planned target basedon the expected case closures calculated on the FY 2020 work 

and staffing plan. The IRS will set a target of 39.7 percent for FY 2020 and 38.8 percent in FY 2021.

The Cost to Collect $100 (in cents) measure is an existing metric that was not been reported in the budget 

prior to FY 2021 and will be used as an indicator in FY 2020. This measure is computed as total operating 

costs divided by gross collections multiplied by 100. The official number isusually released in March after 

the budget release. The FY 2018 Cost to Collect $100 was 34 cents. For FY 2019, IRS total operating 

costs were approximately $11.8 billion while gross collections were approximately $3.56 trillion. The 

FY 2019 Cost to Collect $100 was 33 cents. Operational efficiencies and economic activitycontributed to 

the lower cost to collect.
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FY 2021 Changes by Budget Activity

Dollars in thousands

Exam and Collections FTE Amount

FY 2020 Enacted (Pre-IAT) 31,467 $4,152,837 

Planned Interappropriation Transfer ($60,884)

FY 2020 Enacted 31,467 $4,091,953 

Changes to Base:

Maintaining Current Levels (MCLs) $172,969

Pay Annualization (3.1% average pay raise) 29,693 

Pay Raise (1.0% average pay raise) 28,959

FERS Contribution Increase 43,001 

Non-Pay 5,211 

Additional Required Labor Costs 66,105 

Efficiencies/Savings (404) ($47,652)

Personnel Savings (404) (47,652)

Subtotal FY 2021 Changes to Base (404) $125,316 

FY 2021 Current Services 31,063 $4,217,269 

Program Increases:

Implementing the Taxpayer First Act 83 8,617 

Subtotal FY 2021 Program Increases 83 $8,617

Total FY 2021 Request (Before Cap) 31,147 $4,225,886

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted (321) $133,933

Percent Change FY 2021 Request over FY 2020 Enacted -1.02% 3.27%
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2.1.4 – Budget and Performance Report and Plan

Dollars in thousands

Exam and Collections FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Resource Level Actual Actual Actual Actual Actual Enacted Request

Appropriated Resources1 $4,018,292 $3,945,578 $3,901,041 $3,875,098 $3,907,290 $4,091,953 $4,225,886 

Reimbursable Resources2 640 456 450 3,289 240 471 495 

User Fees2 36 42 30 30 

Budget Activity Total $4,018,932 $3,946,070 $3,901,491 $3,878,387 $3,907,572 $4,092,454 $4,226,411 1

The FY 2015 - FY 2019 appropriated resources represents the approved operating plan 

including any inter-BAC transfers and interappropriation transfers. 2

The FY 2015 - FY 2019 columns represent realized 

resources for reimbursables and user fees.

Exam and Collections FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2019 FY 2020 FY 2021

Measures Actual Actual Actual Actual Actual Target Target Target

Examination Coverage -

Individual (Oe) 0.8% 0.7% 0.6% 0.6% 0.45% 0.5% 0.48% 0.55%

Examination Coverage -

Business (Assets > $10 million) 

(Oe)

3.9% 3.0% 2.5% 2.2% 1.6% 2.2% 1.7% 1.1%

Examination Efficiency -

Individual (E) 148 143 121 131 109 122 115 120

Automated Underreporter (AUR) 

Coverage (E) 2.3% 2.3% 2.2% 2.0% 1.3% 1.6% 1.7% 1.8%

Time to Start Compliance 

Resolution (E, L)1 TBD N/A Indicator Indicator

Time to Resolve Compliance 

Issue After Filing (E)1 TBD N/A Indicator Indicator

Repeat Non-Compliance Rate 

(Ot)1 TBD N/A Indicator Indicator

Collection Coverage - Units (Ot) 46.3% 43.4% 42.2% 41.6% 41.3% 40.1% 39.7% 38.8%

Cost to Collect $100 (E)1 $0.35 $0.35 $0.34 $0.34 $0.33 Indicator Indicator Indicator

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

1

New measure added for FY 2019

2E – Regulatory ($169,841,000 in direct appropriations and an estimated $851,000 from reimbursable 

programs): This budget activity funds the development of published IRS guidance materials; interpretation 

of tax laws; internal advice to IRS on general non-tax legal issues; enforcement of regulatory rules, laws, 

and approved business practices; and support for taxpayers in the areas of pre-filing agreements, 

determination letters, and advance pricing agreements. The activities include:

• Tax Law Interpretation and Published Guidance interprets tax law through published guidance, 

technical advice, and other technical legal services.

• General Legal Servicesprovides 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.
IRS-69

• 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 Responsibilityidentifies, 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 FY 2019 Performance

In FY 2019, IRS published 213 items: 147 Priority Guidance Plan (PGP) projects and 66 ministerial 

rulings. Ministerial projects are publications that only involve ministerial matters (such as applicable 

federal interest rates and monthly bond factor amounts). They are usually published on an annual basis.

Many items published in FY 2019 involved complex and novel issues. For example, six of the published 

items pertain to a deduction created by the Tax Cuts and Jobs Act allowing owners of pass-through 

businesses to deduct up to 20 percent of their qualified business income from their tax returns. Another 

four items addressed the new Opportunity Zone provisions of the Tax Cuts and Jobs Act, which provide 

preferential taxtreatment to investments made in economically-distressed communities. Two items 

addressed the new global intangible low-taxed income provisions that reduced the incentive for 

multinationals to shift profits on intangible assets (patents, copyrights, trademarks, etc.) to low tax 

jurisdictions. The 2019-2020 PGP, published on October 8, 2019 and covering the period, July 2019 

through June 2020, lists 202 projects.

In addition to the significant increase in work due to the Tax Cuts and Jobs Act, the IRS undertook new 

work on return preparers. It established a team to develop a return preparer strategy. This team evaluated 

the current activities around return preparer compliance, identified gaps and associated risks with current 

initiatives, and developed recommendations for a comprehensive and coordinated IRS return preparer 

strategy. The IRS added new language to letters sent to return preparers who are not in tax compliance to 

clarify that the IRS had previously provided details to the recipient about alleged tax noncompliance. Also, 

the IRS worked with Treasury Inspector General for Tax Administration’s (TIGTA) Office of 

Investigations to update the referral criteria for return preparers who misrepresent their professional 

credentials. The IRS currently prepares a quarterly report to track and analyze progress on Compliance 
IRS-70

Initiative projects using the Preparer Risk Identification Scoring Model feature of the Return Preparer 

Database.

Also in FY 2019, the Office of Professional Responsibility (OPR) obtained a new Case Source, 

Compliance Data Warehouse (CDW). The CDW allows the OPR to independently identify potential cases 

of practitioner misconduct that are not being referred to the OPR by other business units. The OPR 

partnered with Criminal Investigation (CI) and the shared cases that met OPR criteria with CI to determine 

whether potential criminal conduct exists, and CI initially elected to keep 291 cases for further 

investigation, leaving the OPR with 900 cases. In May 2019, the OPR began the review process, focusing 

on the remaining cases. The OPR anticipated the cases to be consistently complex and significant, involve 

multiple tax years and violations, and will provide staff with more challenging cases with less routine fact 

patterns. This allows OPR to focus resources on a variety of case types to provide broad deterrent effect. 

The OPR plans to monitor the intake function to refine the queries or case selection as needed and use their

triage function to monitor the selection of these cases to ensure that case selection and investigative results 

are consistent.
IRS-71

FY 2021 Changes by Budget Activity

Dollars in thousands

Regulatory FTE Amount

FY 2020 Enacted (Pre-IAT) 950 $168,430

Planned Interappropriation Transfer (5,167)

FY 2020 Enacted 950 $163,262 

Changes to Base:

Maintaining Current Levels (MCLs) $6,988

Pay Annualization (3.1% average pay raise) 1,106

Pay Raise (1.0% average pay raise) 1,078 

FERS Contribution Increase 1,536 

Non-Pay 412 

Additional Required Labor Costs 2,856 

Efficiencies/Savings (12) ($1,798)

Personnel Savings (12) (1,798)

Subtotal FY 2021 Changes to Base (12) $5,189

FY 2021 Current Services 938 $168,452

Program Increases:

Implementing the Taxpayer First Act 8 1,389 

Subtotal FY 2021 Program Increases 8 $1,389 

Total FY 2021 Request (Before Cap) 946 $169,841

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted (4) $6,578

Percent Change FY 2021 Request over FY 2020 Enacted -0.44% 4.03%
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2.1.5 – Budget and Performance Report and Plan

Dollars in thousands

Regulatory FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Resource Level Actual Actual Actual Actual Actual Enacted Request

Appropriated Resources1 $147,605 $137,245 $131,662 $170,222 $174,624 $163,262 $169,841 

Reimbursable Resources2 363 202 160 593 412 811 851 

User Fees2 18,485 9,233 9,537 

Budget Activity Total $166,453 $146,680 $141,359 $170,815 $175,036 $164,073 $170,692 1

The FY 2015 - FY 2019 appropriated resources represent the approved operating plan including any inter-BAC transfers and interappropriation transfers.

2

The FY 2015 - FY 2019 columns represent realized resources for reimbursables and user fees.
IRS-73

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 2021 is $4,104,689,000 in direct appropriations and 

12,140 FTE, excluding the proposed program integrity cap adjustment. This is an increase of 

$219,689,000, or 5.65 percent, and 170 FTE more than the FY 2020 enacted level of $3,885,000,000 (after 

transfer) and 11,970 FTE. 
IRS-74

2.1 – Budget Adjustments Table

Dollars in thousands

Operations Support

Summary of Proposed FY 2021 Request FTE Amount

FY 2020 Enacted (Pre-IAT) 11,970 $3,808,500 

Planned Interappropriation Transfer 76,500 

FY 2020 Enacted (Pre-IAT) 11,970 $3,885,000 

Changes to Base:

Maintaining Current Levels (MCLs) $130,866 

Pay Annualization (3.1% average pay raise) 13,896 

Pay Raise (1% average pay raise) 13,552 

FERS Contribution Increase 20,143 

Non-Pay 41,840 

Additional Required Labor Costs 41,435 

Efficiencies/Savings: ($6,277)

Increase e-File Savings (77)

Space Optimization (6,200)

Subtotal FY 2021 Changes to Base $124,589 

FY 2021 Current Services 11,970 $4,009,589 

Program Changes:

Program Increases

Implementing the Taxpayer First Act 170 95,100 

Subtotal FY 2021 Program Increases 170 $95,100 

Total FY 2021 Budget Request 12,140 $4,104,689 

See footnotes in 1.1 -- Appropriations Detail Table
IRS-75

2.2 – Object Classification (Schedule O) Obligations

Dollars in thousands

Operations Support

Object Classification

FY 2019

Actuals

FY 2020

Enacted

FY 2021

Request

11.1 Full-Time Permanent Positions 1,091,508 1,324,130 1,393,126

11.3 Other than Full-Time Permanent Positions 5,064 5,976 6,212

11.5 Other Personnel Compensation 19,569 19,306 28,906

11.8 Special Personal Services Payments 169 38 38

11.9 Personnel Compensation (Total) 1,116,310 1,349,450 1,428,282

12.1 Personnel Benefits 361,284 443,204 475,856

13.0 Benefits to Former Personnel 217 363 369

Total Personnel and Compensation Benefits $1,477,811 $1,793,017 $1,904,507

21.0 Travel 15,102 16,230 16,937

22.0 Transportation of Things 13,226 13,914 14,222

23.1 Rental Payments to GSA 581,764 579,517 585,262

23.2 Rent Payments to Others 11,265 11,401 11,629

23.3 Communications, Utilities, & Misc 306,213 324,439 331,559

24.0 Printing & Reproduction 17,477 18,730 19,127

25.1 Advisory & Assistance Services 700,752 485,090 560,937

25.2 Other Services 29,313 29,897 32,409

25.3 Purchase of Goods & Services from Govt. 

Accounts 72,730 71,349 73,151

25.4 Operation & Maintenance of Facilities 187,914 186,801 190,936

25.6 Medical Care 14,266 14,508 14,857

25.7 Operation & Maintenance of Equipment 55,442 57,941 59,205

26.0 Supplies and Materials 8,501 9,751 10,022

31.0 Equipment 330,424 221,292 227,500

32.0 Land and Structures 39,364 50,850 52,151

42.0 Insurance Claims & Indemnities 315 273 278

Total Non-Personnel $2,384,068 $2,091,983 $2,200,182

New Appropriated Resources $3,861,879 $3,885,000 $4,104,689

Budget Activities:

Infrastructure 891,987 881,654 895,071

Shared Services & Support 892,920 1,012,155 1,063,984

Information Services 2,076,972 1,991,191 2,145,634

New Appropriated Resources $3,861,879 $3,885,000 $4,104,689

FTE 10,277 11,970 12,140

See footnotes in 1.1 -- Appropriations Detail Table

Amounts reflect obligations of annually appropriated resources, carryover balances, reimbursables, and transfers. 
IRS-76

2.3 – Appropriation Detail Table

Dollars in thousands

Operations Support Change % Change

Appropriated Resources

FY 2019

Operating Plan

FY 2020

Enacted

FY 2021

Request

FY 2020 to FY 

2021 Request

FY 2020 to FY 2021 

Request

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

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

Shared Services and Support 4,181 900,287 4,947 1,012,155 5,023 1,063,984 76 51,829 1.54% 5.12%

Information Services 6,096 2,126,973 7,023 1,991,191 7,117 2,145,634 93 154,443 1.32% 7.76%

Subtotal New Appropriated 

Resources 10,277 $3,918,400 11,970 $3,885,000 12,140 $4,104,689 169 $219,689 1.41% 5.65%

Other Resources:

Reimbursables 90 58,194 54 65,000 57 68,250 3 3,250 5.56% 5.0%

Offsetting Collections - Non 

Reimbursables

User Fees 223,398 15 423,995 10 450,000 (5) 36,098 -33.33% 8.51%

Recovery from Prior Years 3,338 8,732 8,732 

Recoveries Paid 13 13 

Unobligated Balances from Prior 

Years 472 194,976 70,652 57,500 (13,152) -18.62%

Transfers In/Out

Resources from Other Accounts

Subtotal Other Resources 562 $479,906 69 $568,392 67 $584,495 (2) $26,196 -2.90% 4.61%

Total Budgetary Resources 10,839 $4,398,306 12,039 $4,453,392 12,207 $4,689,184 167 $245,885 1.39% 5.52%

See footnotes in 1.1--Appropriations Detail Table

2F – Infrastructure ($895,071,000 in direct appropriations and an estimated $784,000 from 

reimbursable programs): This budget activity funds administrative services related to space and housing, 

rent and space alterations, building services, maintenance, guard services, and non-IT equipment. The 

program activities include: 

• Building Delegation oversees and manages the IRS GSA-delegated buildings, including cleaning, 

maintenance, utilities, protection, administrative, and recurring and one-time repair costs. 

• Rent provides resources for all IRS rent needs. 

• Space and Housing/Non-IT Equipment provides management of all IRS building services, 

maintenance, space alterations, guard services, custodial overtime, utility service needs, and non-IT 

equipment. 

• Security covers all physical security costs, including guard services, security equipment and 

maintenance, countermeasures, Homeland Security Presidential Directive 12 (HSPD-12) and 

Treasury Enterprise Identity Credential and Access Management (TEICAM). 
IRS-77

Description of FY 2019 Performance 

The Rentable Square Feet per Person indicator is the amount of rentable square feet the IRS maintains per 

person requiring space. The IRS continues to reduce its total office space. Through FY 2019, the Rentable 

Sq. Ft. per Person was 298 compared to 301 in FY 2018. The IRS continued to release excess office space 

through building closures and consolidations; nearly one million rentable square feet has been released 

since FY 2017. In FY 2019, the IRS released 449,500 square feet of space, including closing 

nine buildings, saving $10.6 million. The IRS expanded the number of offices that incorporate hoteling or 

shared workspace for employees and contractors who do not require full-time space. To achieve more 

effective space utilization, the IRS incorporated a more detailed account of employees’ out-of-office status 

in its planning to increase workspace sharing and reduce quantity of leased space required. The IRS is also 

looking to incorporate new hires into existing space, where possible. These and other actions will help 

limit projected rent cost increases. The IRS plans to use this measure as an indicator for FY 2020.

Security 

Security of taxpayer data and providing a secure environment for employees are of utmost importance to 

the IRS. In FY 2019, the IRS: 

• Strengthened internal controls to protect the physical security of IRS facilities against internal and 

external threats and to safeguard taxpayer information. 

• Continued improvements to authentication by deploying phase 2 of the Identity Verify (IDVerify)

tool, which assists taxpayers selected by the Taxpayer Protection Program to provide identity and 

return verification information online rather than by calling a live assistance telephone line or 

visiting a Taxpayer Assistance Center. As of September 30, 2019, 134,200 eligible taxpayers have 

logged in and verified their identity since the application launched for the 2019 filing season.

• Continued to make strides in detecting and preventing fraudulent activity in IRS information 

systems. For example, the IRS adapted its processes to reject fraudulent electronically-filed tax 

returns and prevent the issuance of millions in fraudulent tax refunds and increased the number of 

business return identity theft filters. Also, in FY 2019, the IRS detected and mitigated 

2,534 phishing and malware sites and identified and responded to 147 cyber incidents, 104 of 

which involved common threats such as removable media, email, and web-based activity. The IRS 

also implemented 12,527 content filtering restrictions to mitigate internet content deemed a 

security risk to IRS information systems.
IRS-78

The IRS worked on several initiatives related to the Security Summit, a collaborative effort between the 

IRS, state tax administrators, and private-sector tax partners. In FY 2019, the IRS:

• Held its annual Security Summit meeting in December 2018. The Security Summit continues to 

demonstrate the strength of the public-private partnership to combat identity theft. 

• Conducted the fourth National Tax Security Awareness Week, with events across the country to 

remind taxpayers about the importance of data security and featured a daily series of national news 

releases and 36 press conferences and partner events. 

• Held an annual summer awareness campaign for tax professionals focusing on the 

“Taxes-Security-Together” Checklist, describing how to protect their tax clients’ sensitive tax 

data. The effort included a six-week series of news releases and continuing education sessions for 

tax professionals at the five major IRS Nationwide Tax Forums. 

 
IRS-79

FY 2021 Changes by Budget Activity

Dollars in thousands

Infrastructure FTE Amount

FY 2020 Enacted (Pre-IAT) $881,654 

Planned Interappropriation Transfer

FY 2020 Enacted $881,654 

Changes to Base:

Maintaining Current Levels (MCLs) $17,633 

Pay Annualization (3.1% average pay raise)

Pay Raise (1.0% average pay raise)

Non-Pay 17,633

Efficiencies/Savings ($6,200)

Space Optimization (6,200)

Subtotal FY 2021 Changes to Base $11,433 

FY 2021 Current Services $893,087

Program Increases:

Implementing the Taxpayer First Act 1,984 

Subtotal FY 2021 Program Increases $1,984 

Total FY 2021 Request (Before Cap) $895,071 

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted $13,417

Percent Change FY 2021 Request over FY 2020 Enacted 1.52%
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2.1.6 – Budget and Performance Report and Plan

Dollars in thousands

Infrastructure FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Resource Level Actual Actual Actual Actual Actual Enacted Request

Appropriated Resources1 $833,846 $838,048 $856,655 $870,360 $891,140 $881,654 $895,071

Reimbursable Resources2 928 626 634 662 681 746 784 

User Fees2 999 

Budget Activity Total $834,774 $838,674 $857,289 $871,022 $892,820 $882,400 $895,856 1

The FY 2015 - FY 2019 appropriated resources represent the approved operating plan including any inter-BAC transfers and interappropriation transfers.

2

The FY 2015 - FY 2019 columns represent realized resources for reimbursables and user fees.

Infrastructure FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2019 FY 2020 FY 2021

Measure Actual Actual Actual Actual Actual Target Target Target

Rentable Square Feet per Person (Ot, L) 297 301 298 Indicator Indicator Indicator

Key: Ot - Output/Workload Measure L - Strategic Plan Goal

2G – Shared Services and Support ($1,063,984,000 in direct appropriations, and an estimated 

$45,514,000 from reimbursable programs): This budget activity funds policy management, IRS-wide 

support for research, strategic planning, communications and liaison, finance, human resources, and equity, 

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

legal services, and procurement. The program activities include: 

• National Headquarters Management and Administrationdirects the management activities of 

strategic planning, communications and liaison, finance, human resources, equity, diversity and 

inclusion programs, business systems planning, embedded training, and the Treasury Franchise 

Fund. It sets policies and goals, provides leadership and direction for the IRS, and builds partner 

relationships with key stakeholders (Congress, GAO, and OMB). It provides policy guidance for 

conducting planning and budgeting strategies, conducting analyses of programs and investments to 

support strategic decision-making, and developing and managing human resources. It also 

includes official reception and representation expenses.

• Facilities Management & Security Servicesprovides facilities and security services to deliver a 

safe, secure and optimal work environment to IRS employees.

• Procurement supports the procurement function of the IRS.

• Equity, Diversity and Inclusion Field Services provides staffing, training, and direct support to plan 

and manage the IRS’s Equity, Diversity and Inclusion program.

• Communications and Liaison coordinates local government and liaison relationships; handles 

congressional, state, and national stakeholder relationships and issues; coordinates cross-cutting 
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issues, including managing audits and legislative implementation; handles national media contacts 

and local media relationships; and ensures IRS-wide compliance with disclosure and privacy laws.

• Employee Support Services plans and manages financial services, including relocation, travel, 

purchase cards, corporate express, and employee clearances. 

• Treasury Complaint Centers plan and manage the Treasury Complaint centers.

• Shared Support not provided by Facilities Management & Security Services provides resources for 

shared cross-functional support, such as postage meters, shredders, courier services, and post office 

boxes.

• Printing and Postage – Media and Publicationsprovides operating divisions with printing and 

postage, including shipping of taxpayer and internal-use materials.

• Statistics of Incomeprovides resources for researching annual income, financial, and tax data from 

tax returns filed by individuals, corporations, and tax-exempt organizations.

• Research provides resources for market-based research to identify compliance issues, for 

conducting tests of treatments to address noncompliance, and for the implementation of successful 

strategies to address taxpayer noncompliance behavior.

• Protection of Sensitive Information manages and oversees the staffing, training, equipment, and 

direct support for the protection of IRS employees, facilities, and assets, and the protection and 

proper use of identity information.

• W&I Business Modernization Support provides staffing, training, and support for W&I’s 

enterprise-wide business modernization efforts, including re-engineered business processes.

Description of FY 2019 Performance 

Through support activities that include management and administration of human resources and research,

Operations Support continues to provide shared services to all IRS programs. 

Human Capital 

The future of the IRS depends on a workplace culture that empowers employees to improve the taxpayer 

experience and uphold the tax code fairly. In FY 2019, the IRS: 

• Helped the IRS business units execute more than 2,400 external hiring actions.

• Implemented the Leadership Engagement Action Plan to enhance workplace morale and retention. 

• Fostered a robust IRS knowledge management effort to enhance succession planning and 

knowledge transfer for employees, which received multiple awards and recognitions. 
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• Worked to ensure employees were provided training and developmental opportunities to meet their 

job obligations and career aspirations. 

• Implemented a performance management module for executives in the Treasury-wide Integrated 

Talent Management (ITM) system. The IRS implemented a learning module in early FY 2020 and 

will implement modules in the future for employee performance management, workforce planning,

and succession planning.

Research 

The IRS invests in research projects to help its leaders make data and evidence-driven improvements to 

IRS operations and taxpayer services. In FY 2019, the IRS:

• Updated its Enterprise Research Plan, which describes the IRS’s most critically important 

research initiatives. 

• Expanded and formalized its data and analytics governance structure overseeing the coordination, 

decision-making, and alignment of data and analytics initiatives across the IRS. 

• Created a Learning Agenda Working Group to implement new requirements from the Foundations 

for Evidence-Based Policy Act. These include determining which policy questions and data are 

required to build the “evidence” needed for the IRS to make better decisions and policies that meet 

the changing needs and expectations of taxpayers and members of the tax community who serve 

taxpayers.

• Developed and deployed a graph analytics database environment supporting nearly 3,300 users 

across the IRS, including field revenue agents and officers. The IRS is using this graph 

environment to explore and analyze relationships between taxpayers, businesses, return preparers 

and personal devices to identify taxpayer noncompliance indicators that support IRS enforcement 

and identity theft efforts. 
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FY 2021 Changes by Budget Activity

Dollars in thousands

Shared Services and Support FTE Amount

FY 2020 Enacted (Pre-IAT) 4,947 $1,012,154 

Planned Interappropriation Transfer

FY 2020 Enacted 4,947 $1,012,154 

Changes to Base:

Maintaining Current Levels (MCLs) $40,068 

Pay Annualization (3.1% average pay raise) 5,120 

Pay Raise (1.0% average pay raise) 4,993 

FERS Contribution Increase 7,553 

Non-Pay 7,031 

Additional Required Labor Costs 15,371 

Subtotal FY 2021 Changes to Base $40,068 

FY 2021 Current Services 4,947 $1,052,222

Program Increases:

Implementing the Taxpayer First Act 76 11,762

Subtotal FY 2021 Program Increases 76 $11,762

Total FY 2021 Request (Before Cap) 5,023 $1,063,984

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted 76 $51,830

Percent Change FY 2021 Request over FY 2020 Enacted 1.54% 5.16%
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2.1.7 – Budget and Performance Report and Plan

Dollars in thousands

Shared Services and Support FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Resource Level Actual Actual Actual Actual Actual Enacted Request

Appropriated Resources1 $1,126,230 $1,090,192 $964,702 $920,283 $900,287 $1,012,155 $1,063,984 

Reimbursable Resources2 17,126 19,443 19,194 27,995 30,360 43,347 45,514 

User Fees2 1,768 1,000 1,000 1,000 

Budget Activity Total $1,145,124 $1,110,635 $984,896 $949,278 $930,647 $1,055,502 $1,109,498 1

The FY 2015 - FY 2019 appropriated resources represent the approved operating plan including any inter-BAC transfers and interappropriation transfers.

2

The FY 2015 - FY 2019 columns represent realized resources for reimbursables and user fees.

2H – Information Services ($2,145,634,000 in direct appropriations, $21,952,000 in reimbursable 

resources, and $450,000,000 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 tax administration 

programs. This includes the design and operation of security controls and disaster recovery planning. This 

budget activity funds the development and maintenance of the millions of lines of programming code that 

support all aspects and phases of tax processing and the operation and administration of mainframes, 

servers, personal computers, networks, and a variety of management information systems. The program 

activities include:

• Enterprise Program Management Office (EPMO)provides oversight and project integration into 

daily IT processes for large-scale development, modernization and enhancement projects. It 

enables a coordinated, cross-functional project planning, implementation and performance 

assessment effort aimed at improving IT systems quality, cost and delivery schedule. 

• Security Services ensures effective security policies and programs to safeguard taxpayer records, 

IRS employees, facilities, business processes, systems and other resources. The program is 

responsible for corrective action efforts to establish adequate IRS-wide security, including Security 

Policy Support and Oversight, Mission Assurance, and Modernization Security. 

• IT Executive Oversightprovides support to the immediate Office of the Chief Information Officer, 

and the Stakeholder Management (including program oversight). The program provides executive 

direction for the IT organization, enabling IT to be a customer-focused supplier of IT solutions that 

is responsive to customer business priorities and meets functional and operational needs 

effectively.

• Application Developmentperforms the analysis, design, development, testing, and implementation 

of about 85,000 application programs supporting critical tax processing, management information 

reporting and financial management support systems for the IRS. This program also supports 

external trading partner data exchanges with federal government agencies, state and local 
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governments, and other third-party entities. The program controls application source code and 

deploys applications to the production environment.

• Enterprise Operations provides efficient and reliable computing services for all IRS business 

entities and taxpayers including the deployment and maintenance of infrastructure that supports

critical tax processing, management information reporting, and financial management support 

systems for the IRS. It also includes a comprehensive disaster recovery capability to ensure 

continued operations in the event of a major interruption of service.

• Enterprise Network provides telecommunications service delivery to all customer segments, 

including management of day-to-day operations of the telecommunications environment. This 

includes the operation of equipment and services to meet business user needs and the execution of 

routine changes for scheduled and unscheduled modifications to the telecommunications 

infrastructure and applications. It addresses all phases of engineering, acquisition, implementation, 

and operation of telecommunications systems and services, including voice, video, and data 

communications. 

• Enterprise Services (ES) plans and manages service and delivery methods used across the IT 

organization, including defining the current and target technology architecture and developing the 

transition strategy towards the target environment. ES shares in the responsibility that translates 

enterprise and project objectives into targeted, actionable investments to provide the framework 

and direction for cohesive, successful modernization across the IT enterprise. ES also provides 

systems engineering services that promote standards-based, enterprise technology solutions and 

serves as the enterprise testing authority partnering with customers to improve the quality of IT 

systems, products and services. Also, ES provides 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.

• End User & Network Services maintains the IRS automated business processes at headquarters and 

field sites, effectively allowing the IRS to fulfill its mission. The support includes technical 

systems and applications software support to end users, maintaining legacy operations, local and 

corporate systems administration activities, email and domain user account maintenance. This 

activity monitors IRS network and systems administration by utilizing automated management 

tools. It performs asset management activities, and maintenance of the voice and data 

infrastructure at the territory offices.

• Strategy and Planning provides the management and oversight of investments in IT, demand 

analysis, project reporting, portfolio management, strategic planning, financial management, 

acquisition planning, and other IT operational priorities. It also provides expertise for requirements 

guidance, processes, procedures, and tools that allows for transformation of the IT enterprise. 
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• Information Technology Security Certification and Accreditation provides design and operations of 

security controls and the technical mechanisms used by the IRS systems and applications as part of 

the development of the system security plan, system risk assessment, and IT contingency plan. It 

also supports security testing and evaluation as part of the certification process, including time 

preparing system documentation, interviewing contractors, and responding to information requests. 

• Disaster Recovery supports activities related to Enterprise Disaster Recovery planning, including 

testing, evaluations, plan development, and technical and business assessments. 

• Infrastructure Currency (IC) funds the upgrade or replacement of outdated and aged technology 

solutions related to the IT hardware, software and applications development product portfolio. 

• IT Infrastructure centralizes the resources achieved through efficiencies in various parts of IT to 

ensure that replacement of the aging infrastructure is addressed corporately. 

Description of FY 2019 Performance

The Percent of Aged Hardware measure shows the quantity of IT hardware in operation past its useful life 

as a percentage of total hardware in use. The IRS reducedthe percentage of aged hardware within the IT 

environment from 45.5 percent at the end of FY 2018 to 31 percent at the end of FY 2019. This is a 

reduction of nearly 36,000 aged assets during the fiscal year through efforts such as refreshing employee 

workstations, upgrading aged server operating systems and related aged hardware, and phasing out old 

equipment.

For FY 2020 and FY 2021, the IRS will lower the target to 30 percent, as the IRS continues to dedicate 

funding to reducing the backlog. The IRS will monitor progress against FY 2020 aged hardware 

replacement targets. The industry standard for aged hardware is in the range of 20 – 25 percent. 

0

50000

100000

150000

200000

2016 2017 2018 2019

Percent of Aged Infrastructure

Amount of Aged Infrastructure Total Infrastructure

52.2% 52.3%

45.5%

31.0%
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FY 2021 Changes by Budget Activity

Dollars in thousands

Information Services FTE Amount

FY 2020 Enacted (Pre-IAT) 7,023 $1,914,691 

Planned Interappropriation Transfer 76,500 

FY 2020 Enacted 7,023 $1,991,192

Changes to Base:

Maintaining Current Levels (MCLs) $73,165 

Pay Annualization (3.1% average pay raise) 8,775 

Pay Raise (1.0% average pay raise) 8,558 

FERS Contribution Increase 12,590 

Non-Pay 17,178 

Additional Required Labor Costs 26,064 

Efficiencies/Savings ($77)

Increase e-File Savings (77)

Subtotal FY 2021 Changes to Base $73,088

FY 2021 Current Services 7,023 $2,064,280

Program Increases:

Implementing the Taxpayer First Act 94 81,354 

Subtotal FY 2021 Program Increases 94 $81,354 

Total FY 2021 Request (Before Cap) 7,117 $2,145,634 

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted 94 $154,442

Percent Change FY 2021 Request over FY 2020 Enacted 1.34% 7.76%
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2.1.8 – Budget and Performance Report and Plan

Dollars in thousands

Information Services FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Resource Level Actual Actual Actual Actual Actual Enacted Request

Appropriated Resources1 $1,641,360 $1,883,667 $1,950,191 $2,390,357 $2,126,973 $1,991,191 $2,145,634 

Reimbursable Resources2 24,262 19,660 35,307 40,600 27,153 20,907 21,952 

User Fees2 373,610 263,250 201,584 204,032 222,399 423,995 450,000

Budget Activity Total $2,039,232 $2,166,577 $2,187,082 $2,634,989 $2,376,525 $2,436,093 $2,617,586

1

The FY 2015 - FY 2019 appropriated resources represent the approved operating plan including any inter-BAC transfers and interappropriation transfers.

2

The FY 2015 - FY 2019 columns represent realized resources for reimbursables and user fees.

Information Services FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2019 FY 2020 FY 2021

Measures Actual Actual Actual Actual Actual Target Target Target

Percent of Aged Hardware (Ot, L) 56.5% 52.2% 52.3% 45.5% 31.0% 43.8% 30.0% 30.0%

Key: Ot - Output/Workload Measure L - Strategic Plan Goal

 
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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 2021 is $300,000,000 in direct appropriations and 517 FTE, excluding the 

proposed program integrity cap adjustment. This amount is an increase of $120,000,000, or 66.7 percent, 

and 91 FTE more than the FY 2020 enactedlevel of $180,000,000 and 426 FTE.
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2.1 – Budget Adjustments Table

Dollars in thousands

Business Systems Modernization

Summary of Proposed FY 2021 Request FTE Amount

FY 2020 Enacted (Pre-IAT) 426 $180,000 

Planned Interappropiation Transfer

FY 2020 Enacted 426 $180,000 

Changes to Base:

Maintaining Current Levels (MCLs) $6,201 

Pay Annualization (3.1% average pay raise) 547 

Pay Raise (1% average pay raise) 533 

FERS Contribution Increase 989 

Non-Pay 2,188 

Additional Required Labor Costs 1,944 

Subtotal FY 2021 Changes to Base $6,201 

FY 2021 Current Services 426 $186,201 

Program Changes:

Program Increases

Integrated Modernization Business Plan 91 $113,799 

Subtotal FY 2021 Program Increases 91 $113,799 

Total FY 2021 Budget Request 517 $300,000 

See footnotes in 1.1 -- Appropriations Detail Table
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2.2 – Object Classification (Schedule O) Obligations

Dollars in thousands

Business Systems Modernization

Object Classification

FY 2019

Actuals

FY 2020

Enacted

FY 2021

Request

11.1 Full-Time Permanent Positions 57,564 53,831 64,308

11.3 Other than Full-Time Permanent Positions 543 52 53

11.5 Other Personnel Compensation 575 467 1,052

11.9 Personnel Compensation (Total) 58,682 54,350 65,413

12.1 Personnel Benefits 17,878 16,235 20,262

Total Personnel and Compensation Benefits $76,560 $70,585 $85,675

21.0 Travel 221 453 664

25.1 Advisory & Assistance Services 46,009 92,415 176,916

25.2 Other Services 17 80

25.3 Purchase of Goods & Services from Govt. Accounts 6 9

25.7 Operation & Maintenance of Equipment 11 1,210 2,406

26.0 Supplies and Materials 17 22

31.0 Equipment 1,652 15,297 34,228

Total Non-Personnel $47,893 $109,415 $214,325

New Appropriated Resources $124,453 $180,000 $300,000

Budget Activities:

IT Investments 124,453 180,000 300,000

New Appropriated Resources $124,453 $180,000 $300,000

FTE 445 426 517

See footnotes in 1.1 -- Appropriations Detail Table

Amounts reflect obligations of annually appropriated resources, carryover balances, reimbursables, and transfers. 
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2.3 – Appropriation Detail Table

Dollars in thousands

Business Systems Modernization Change % Change

Appropriated Resources

FY 2019

Operating Plan

FY 2020

Enacted

FY 2021

Request

FY 2020 to FY 2021 

Request

FY 2020 to FY 2021 

Request

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

Business Systems Modernization 445 150,000 426 180,000 517 300,000 91 120,000 21.36% 66.67%

Subtotal New Appropriated Resources 445 $150,000 426 $180,000 517 $300,000 91 $120,000 21.36% 66.67%

Other Resources:

User Fees 89,713 102,305 (102,305) -100.0%

Recovery from Prior Years 1,067 2,577 2,577 

Recoveries Paid 260 260 

Unobligated Balances from Prior 

 Years 15 129,643 15 28,048 15 30,242 2,194 7.82%

Subtotal Other Resources 15 $220,423 15 $133,190 15 $33,079 ($100,111) -75.16%

Total Budgetary Resources 460 $370,423 441 $313,190 532 $333,079 91 $19,889 20.63% 6.35%

See footnotes in 1.1--Appropriations Detail Table

2I – Business Systems Modernization ($300,000,000 in direct appropriations): This budget 

activity funds the planning and capital asset acquisition of information technology to modernize IRS 

business systems and processes, including labor and related contractual costs, in support of the IRS 

mission.

The IRS is implementing its multiyear modernization plan to address the long-term sustainability and 

affordability of its technological environment, eliminating organizational silos and driving efficiencies and 

cost savings throughout the enterprise. The plan defines the scope of capabilities, sets timelines and 

targets, describes milestones, and includes outcome measures for each investment.

Funding for the third year (FY 2021) of the plan is reflected in four pillars (Taxpayer Experience; Core 

Taxpayer Services and Enforcement; Modernized IRS Operations, and Cybersecurity and Data Protection),

and two supporting projects (Architecture Integration and Management and Core Infrastructure).
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Taxpayer Experience: $50 million / 124 FTE

Web Applications (WebApps) ($25 million / 88 FTE) – WebApps delivers a secure, unified online 

experience, accessible through a single online account. It provides taxpayers and business users with 

accurate account information, transparent explanations, and next steps to resolve tax-related issues, along 

with full-service payment options. This allows taxpayers to resolve more issues online with fewer direct 

interactions with the IRS over the telephone and in person. In FY 2021, WebApps will continue to 

develop the capability for taxpayers to create and submit online installment agreements and make 

payments directly from their online account. In addition, in FY 2021, Web Apps will develop new Tax 

Pro capabilities for Power of Attorney and Disclosure Authorization. Tax Pro capabilities will provide 

taxpayers and taxprofessionals a digital service channel to establish and manage taxpayer/tax 

professional authority relationships. 

Expected Benefits:

• Enable taxpayers to view payment plan status and determine eligibility for payment plans within 

online account, which is the first step towards allowing taxpayers to create a payment plan for 

taxes owed; 

• Enable taxpayers to view details for all electronic payments that are pending and scheduled for 

future dates in their online account;

• Establish, in near real-time, a taxpayer/ tax pro authorization record without the need for manual 

review; and,

• Enable multi-faceted views to both parties of the taxpayer/tax pro authorized relationship 

coupled with the ability to revoke/withdraw from the relationship, to allow the parties to 

proactively manage data access and representational rights as well as potentially mitigate 

exposure to fraud.

Taxpayer Digital Communications Outbound Notification ($10 million / 18 FTE) – Taxpayer Digital 

Communications Outbound Notification (TDC-ON) will improve the taxpayer experience with easier, 

more efficient interactions with the IRS through the development of reliable, user-friendly, secure online 

services. Funding will be used to develop digital notices and make them available through the online 

account for taxpayers who prefer that channel over mailed correspondence.

Expected Benefits:

• Increase taxpayer response rate to notices; 

• Lower the burden on taxpayers and the IRS for tax compliance and enforcement; and,

• Provide easier, more efficient interactions with the IRS.
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Live Assistance ($15 million / 18 FTE) – Live Assistance will improve the taxpayer experience in the IRS 

contact center environment by providing enhanced capabilities and adding new channels to interact with 

the IRS. The Live Assistance program will expand Customer Callback capability allowing taxpayers to 

keep their place in queue without remaining on the phone. The Live Chat capability will allow taxpayers 

to interact with assistors in a web-based chat session. Other capabilities may include: machine learning 

and natural language understanding to provide a capability to quickly answer common taxpayer inquiries 

and improve call routing and agent assist to ensure all IRS assistors are able to deliver enhanced expert 

service to customers, empowered with improved relevant information for skilled, real-time responses. 

Funding in FY 2021 will build an enterprise callback solution to support Live Assistance capabilities and 

expand callback capacity to support the new channels in support of toll-free taxpayer demand.

Expected Benefits:

• Reduce taxpayer burden by providing a call back option for services instead of waiting on the 

phone for an assistor to become available; 

• Modernize the IRS contact center infrastructure and expanded Live Assistance capabilities like call 

back, live chat, natural language processing and automated chat, machine learning and natural 

language processing; and

• Enhancing the speed and accuracy of customer experience and allowing faster resolution to 

taxpayer inquiries.

Core Taxpayer Services and Enforcement: $164 million / 303 FTE

Customer Account Data Engine 2 (CADE2) ($100 million) / 203 FTE) – Since the Individual Master File 

(IMF) was built almost 60 years ago, the IRS has made additions to legacy base code to reflect annual tax 

law changes. As a result, the base code of IMF includes embedded business logic written in outdated 

programming languages that only an extremely small number of IRS personnel understand. Funding will 

be used to re-engineer the IMF core components of posting, settlement and analysis functions for 

individual taxpayer accounts by applying modern programming languages to the most complex areas of 

the Individual Master File.

Expected Benefits:

• Simplify the modernized logic by eliminating obsolete functionality;

• Reduce the burden of ongoing maintenance and routine updates due to tax law changes 

through a common data model; 

• Enable enhanced data accessibility both within the IRS and for taxpayers, while implementing 

state of the art financial requirements and security controls; 
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• Support business units to deploy advanced analytical capabilities addressing key issues of 

compliance, fraud, and identity theft; and

• Complete foundational modernization necessary to enable future technology enhancements to 

improve the taxpayer experience by enabling real-time processing and digital services updates 

such as immediate update to balances after payment is made. 

Enterprise Case Management ($64 million / 99 FTE) – Enterprise Case Management (ECM) will 

modernize, upgrade, and consolidate existing case management capabilities. The IRS has more than 

60 legacy case management systems built on aging platforms. These legacy systems have limited 

connectedness to enable the transfer and sharing of case information, resulting in taxpayer and IRS 

employee frustration as they must often work with multiple offices/systems to work and resolve cases. 

The ECM platform will have a common cloud infrastructure, automated business functions and services 

that will allow for transfer of cases across business units. In FYs 2020-2021, ECM expects to deliver its 

first release, centering on delivering the ECM technical foundation and initial case management 

capabilities to support modernized business processes. ECM anticipates moving Tax Exempt & 

Government Entities (TE/GE) as its first business unit. 

Expected Benefits:

• Provide taxpayers with better service as ECM will empower employees to resolve cases more 

rapidly in a simplified technical environment designed to drive efficiency and collaboration.

• Reduce process redundancies to improve transparency and timeliness, and to reduce the risk of 

systems failure impeding revenue collection.

• Increase process and case management efficiencies by creating one solution for all case types, 

treatment streams, and operating divisions.

• Increase integration among existing case management programs, migrate legacy system users 

to a standardized enterprise-wide solution for case management, and reduce fragmentation of 

both business and IT processes across legacy applications.

• Standardize system design for increased taxpayer information security and shortened 

development milestones.

• Modernize data collection and retrieval capabilities and processes for faster authorized access 

to case information.

• Enable retirement of components of legacy case management systems.
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Modernized IRS Operations: $30 million / 29 FTE

Robotic Process Automation ($5 million / 6 FTE) – Robotic Process Automation (RPA) is the 

implementation of smart software designed to perform high-volume, repeatable tasks that are normally 

labor intensive. The software would be capable of navigating across different IT systems, mimicking the 

way staff perform certain work functions. These new tools will record the actions an employee takes to 

complete a computer-based taskand then rapidly replicate those actions as many times as necessary, with 

increased accuracy. This will allow IRS staff to focus on other work. 

Expected Benefits:

• Achieve a 10 percent efficiency gain on work processes where robotic process automation is 

applied;

• Make labor resources available for more complex, value-add activities;

• Increase self-service options for employees; 

• Enhance business processes to ensure better accuracy; and

• Enhance speed and accuracy of business process execution results leading to improved taxpayer 

service.

Application Program Interface (API) ($5 million / 6 FTE)– APIs are a set of protocols, routines, functions 

and/or commands that programmers use to develop software or facilitate interaction between distinct 

systems. In response to growing demands to integrate systems internally and externally, the IRS plans to 

expand the use of APIs. Using modern approaches for exchanging data, the IRS will provide expanded 

integration and data access to taxpayers and third parties, such as business and government entities using 

APIs. API is standard reusable services where interfaces built once can be reused for other future 

development efforts. API will allow the IRS to reduce the complexity within the infrastructure 

environment, improve management and monitoring, improve security of systems to systems interfaces, 

versus the current model of creating, managing, and sending stored data extracts.

Expected Benefits:

• Improve data exchange capabilities with growing external demand for IRS data;

• Enable increased innovation;

• Enhance security posture for internal and external data sharing; and

• Reduce complexity. 

Cloud Execution ($5 million / 3 FTE) – Enterprise Cloud Program (EnCP) refers to the implementation of 

the IRS cloud strategy, leveraging a defined roadmap and process to ensure an effective and accelerated 

transition to the cloud. 
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Expected Benefits:

• Improve time-to-market;

• Increase operational efficiency and resilience;

• Enable increased innovation; and

• Enhance or maintain appropriate security posture.

NextGen Infrastructure (NGI) ($15 million / 14 FTE) – NGI addresses the infrastructure base (i.e. 

hardware, software, network resources and services) at the foundation of IRS critical systems. NGI is 

focused on the identification, evaluation, and selection of new and emerging technologies and services to 

support a resilient, scalable, and secure infrastructure. Infrastructure improvements are necessary to 

effectively operate a large-scale hybrid on-premise/cloud environment, support agile software 

development and delivery practices, and support comprehensive and robust security practices.

Expected Benefits:

• Reduce the infrastructure footprint;

• Increase the speed of provisioning of infrastructure and software;

• Increase system availability and reliability; and 

• Improve time-to-delivery of business capabilities.

Cybersecurity and Data Protection: $46 million / 30 FTE

The IRS defends against more than one million cyberattacks daily and has operated strong network 

perimeter defenses to mitigate threats, detect vulnerabilities, and monitor network security. This 

investment will fund:

Vulnerability and Threat Management ($20 million / 10 FTE) – The effectiveness of vulnerability and 

threat management depends on the organization’s ability to keep up with current security threats and 

trends. Investment in this area allows for expanded capabilities and improved execution for the 

identification and mitigation of vulnerabilities across the disparate, geographically dispersed, IRS 

technology infrastructure.
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Expected Benefits:

• Implement processes to improve the integration of security into the system development lifecycle 

and automate security testing;

• Proactively identify emerging insider threats using real-time intelligence information;

• Apply use cases to enhance security audit analytics and compliance;

• Enhance data protection through the implementation of encryption for data collection, cleansing, 

and events management; and

• Reduce risk of data leaks.

Identity & Access Management ($12 million / 11 FTE) – The risk of unauthorized access to tax accounts 

continues to grow as the IRS focuses its efforts on delivering online tools to taxpayers. The IRS must 

control information about users on computers, including information that authenticates the identity of a 

user and information that describes information and actions they are authorized to access and/or perform.

In addition, the IRS must ensure appropriate access to resources. This covers issues such as how users 

gain an identity, the protection of that identity, and the technologies supporting that protection (e.g., 

network protocols, digital certificates, passwords, etc.).

Expected Benefits:

• Provide user identity control, privileged access protection, and critical data security; 

• Provide security compliance for building access; 

• Develop new Digital Identity Risk Assessment components for transactions that will accept 

Federated Identities; and

• Ensure identification of authorized hardware and software assets to continuously ensure they are 

properly configured with vulnerabilities mitigated. 

Security Operations and Management ($14 million / 9 FTE)– The IRS engages in a collection of 

associated security activities that maintain the ongoing security posture. It consists of the monitoring, 

maintenance and management of the security aspects of the IT environment, its people, and its 

processes.

Expected Benefits:

• Deliver a Next Generation Secure Operations Center (SOC) to increase synergies and enhance 

rapid response activities;
IRS-99

• Improve incident analysis and forensic investigation through increased capabilities for capturing 

network activity; 

• Restrict network access to only approved users and devices; and

• Protect High Value Assets (HVA) by blocking network access for unauthorized users.

Supporting Projects: $10 million / 31 FTE

Architecture Integration and Management (AIM) ($6 million / 19 FTE)– AIM provides engineering 

management capabilities essential to delivering a program of BSM’s magnitude and complexity. It 

also delivers 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 AIM program translates enterprise and project objectives into 

targeted, actionable investments to provide the framework and direction for cohesive, successful 

modernization.

Core Infrastructure (CORE) ($4 million / 12 FTE)– Core Infrastructure provides mission-critical 

services for designing, engineering, testing, and deploying standardized, consolidated, virtual, and 

secure modernized development and production environments for use by projects in the BSM 

portfolio. 

Note: Effective FY 2021, enterprise-wide costs for Architecture, Integration, and Management and Core 

Infrastructure will be paid from the Operations Support appropriation. BSM-specific projects receiving 

services from Core and AIM will continue to be funded from the BSM appropriation.

Description of FY 2019 Performance 

The IRS’s modernization efforts focus on building and deploying advanced information technology 

systems, processes, and tools to improve efficiency and productivity. In FY 2019, IRS delivered 19 

modernization portfolio milestones at approximately $291 million. IRS also made incremental progress on 

27 additional milestones, which will continue to be worked and delivered into FY 2020 and beyond. 

Achievements for FY 2019 include: 

• Completing three scenario-based deliveries for the CADE2 program, which validates the agency’s 

overall approach to modernizing this critical functionality;

• Reduced caller wait times as 77 percent of customers chose the callback option on the IRS Balance 

Due application;

• Provided quick service as tax chat assistors handled 100k text chats;

• Adopted first steps of using standard technology stacks;
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• Implementing the strategy for Next Generation Enterprise Security Audit Trails;

• Delivered a strategy to convert legacy code targeting a scope of 10 million source lines of code;

• Strengthened the agency’s fraud detection capabilities through the Return Review Program by

protecting $2.08B of revenue from attempted fraud between January and September 2019; and

• Deployed the Procurement Vendor Compliance Bot lead to aggregate time savings of up to 17,625 

hours per year.

In FY 2019, the IRS’s key accomplishments included three completed Taxpayer Experience milestones:

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

been selected as a potential identity theft return by the IRS’s Taxpayer Protection Program. With 

the ID Verify Tool, taxpayers can provide additional identity verification information online rather 

than on the phone or in person. From February 1 through August 29, 2019, over 131,000 taxpayers 

successfully logged in and more than 111,000 (85 percent) of unique users were able to resolve 

their account issue online.

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

the IRS Toll-Free Balance Due line a callback option when calling to discuss or pay a balance due 

rather than having to wait on the phone for an IRS CSR. When offered, approximately 77 percent 

of taxpayers chose to receive a call back and over 90 percent of callbacks successfully reconnected 

the taxpayer with an IRS CSR.

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

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

assistance with their workplace technology.
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The 2020 and 2021 targets, which are 90 percent of major IT investments for both BSM and non-BSM 

projects, will be within 10 percent of the cost variance and the schedule variance. 

Major IT (BSM and Non-BSM) Investments

Fiscal Year Percent within +/- 10% Cost 

Variance

Percent within +/- 10% 

Schedule Variance

2019 88.9% 88.9%

Percent of Major IT Investments within +/- 10 percent Cost Variance at the Investment Level: 16 of 

18 major investments (88.89 percent) were within the cost variance threshold at the close of the fourth

quarter. Shown below are the investments falling short of the cost variance target.

• Account Management Services (AMS): The cost underrun was caused by the Account

Management Services project redirecting funds from October 2018 to January 2019 to support tax 

reform and subsequently, required less labor than what was allocated for the July mid-year Release 

project. 

• Foreign Account Tax Compliance Act (FATCA): The cost underrun was because the project 

was ahead of schedule as contractors faced fewer problems than expected.

Percent of Major IT Investments within +/- 10 percent Schedule Variance at the Investment Level: 

16 of 18 major investments (88.89 percent) were within the schedule variance threshold at the close of the 

fourth quarter. Shown below are the investments falling short of the 90 percent schedule variance target.

• FATCA: The schedule variance is showing ahead of schedule due to no priority defects which 

would have required additional time and resources to resolve. Improvements in the quality of 

Enterprise Life Cycle documentation pre-work activities, and the improved MS4b process to 

finalize the Cybersecurity Concurrence Memo also aided in the early completion.

• IRS End User Systems and Services: The ahead of schedule variance is due to the scanners and 

workstations refresh projects combining resources from multiple organizations to achieve a faster 

than projected deployment.

The IRS will continue to closely monitor cost and schedule reporting for investments in FY 2020 and 

FY 2021 to improve current performance levels for this measure.
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FY 2019 - FY 2021 IRS Integrated Modernization Business Plan Pillar

Business Systems Modernization

Dollars in thousands

Funding

Category1

FY 2019

 Actual Spend

FY 2020 

Funding and 

Projected 

Spend

FY 2021 

President's 

Budget 

Request

FY 2019 Appropriation / FY 2020 Appropriation / FY 2021 President's Budget 150,000 180,000 300,000

Carryover balances 133,530 30,000 0

User Fees 99,000 102,300 0

Total Funding $382,530 $312,300 $300,000

Capital 264,584 222,950 213,201

Support 544 742 1,123

Labor 79,745 76,608 85,676

Subtotal Spend 344,873 300,300 300,000

Management Reserve 0 12,000 0

 FTE 459 461 517

Total Spend $344,873 $312,300 $300,000

Web Applications $24,081 $25,000 $25,000

Capital 9,210 9,777 9,732

Support 269 350 395

Labor 14,602 14,873 14,873

FTE 88 88 88

Taxpayer Digital Communications Outbound Notification (TDC-ON) $5,360 $3,000 $10,000

Capital 5,269 2,500 6,617

Support 0 0 150

Labor 91 500 3,233

FTE 1 3 18

Live Assistance $5,000 $200 $15,000

Capital 4,889 0 12,431

Support 0 0 26

Labor 111 200 2,543

FTE 1 1 18

Taxpayer Experience - Subtotal $34,441 $28,200 $50,000

FTE 90 92 124

Customer Account Data Engine (CADE 2) $80,878 $100,000 $100,000

Capital 57,640 66,188 66,188

Support 45 72 72

Labor 23,193 33,740 33,740

FTE 133 203 203

Enterprise Case Management $59,531 $66,200 $64,000

Capital 46,081 50,000 47,160

Support 204 200 300

Labor 13,246 16,000 16,540

FTE 76 96 99

Return Review Program $34,682 $0 $0

Capital 27,353 0 0

Support 5 0 0

Labor 7,324 0 0

FTE 41 0 0

Core Taxpayer Services and Enforcement - Subtotal $175,091 $166,200 $164,000

FTE 250 300 303

Taxpayer Experience

Providing easy access to taxpayer information via digital channels. Funding will drive the IRS transition 

to digital government and support 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. 

Providing digital notices through the secure messaging platform to taxpayers who prefer that channel 

over mailed correspondence.

Implementation of Call Center technologies to improve the taxpayer experience. This includes both 

taxpayer-facing capabilities and infrastructure improvement to support the capabilities. Live Assistance 

capabilities may include callback, live chat, automated chat, natural language processing, etc.

Core Taxpayer Services and Enforcement

Providing modernized individual tax processing. CADE 2 will continue work on completion of Java code 

conversion to modernize Individual Master File core components. The modernization: enables enhanced 

data accessibility across the organization and for online taxpayer services; implements the latest financial 

requirements and security controls; and, supports business units to deploy advanced analytical 

capabilities addressing key issues of compliance, fraud, and identity theft.

Providing a modernized case management platform. Working cases more efficiently so taxpayer burden 

is lessened and employee productivity is increased. ECM is a business-driven transformation program 

that addresses the need to modernize, upgrade, and consolidate case management systems with similar 

functionality in the IRS environment. Continuously deliver incremental capabilities and features that allow 

Business Operating Divisions (BODs) to drive migration of users to the new ECM platform in order to 

improve taxpayer service. In FY 20/21, ECM expects to deliver its first release, centering on delivering the 

ECM technical foundation and initial case management capabilities to support modernized business 

processes. Subsequent releases in FY 2021 and beyond will deliver integration with data sources critical to 

case management and delivery of additional case management capabilities to users in all Business 

Operating Divisions.

Providing leading-edge technologies to advance the IRS effectiveness in detecting, addressing, and 

preventing tax refund fraud in protecting U.S. Treasury revenue. 
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FY 2019 - FY 2021 IRS Integrated Modernization Business Plan (Continued) Pillar

Business Systems Modernization

Dollars in thousands

Funding

Category1

FY 2019

 Actual Spend

FY 2020 

Funding and 

Projected 

Spend

FY 2021 

President's 

Budget 

Request

Robotics Process Automation $5,121 $1,000 $5,000

Capital 4,792 500 3,931

Support 5 0 25

Labor 324 500 1,044

FTE 2 3 6

Application Program Interface (API) $0 $0 $5,000

Capital 0 0 3,904

Support 0 0 9

Labor 0 0 1,087

FTE 0 0 6

Cloud Execution $5,394 $2,500 $5,000

Capital 4,998 2,000 4,451

Support 3 0 5

Labor 393 500 544

FTE 2 3 3

Next Generation Infrastructure $9,821 $300 $15,000

Capital 9,315 0 12,442

Support 3 0 21

Labor 503 300 2,537

FTE 3 2 14

Modernized IRS Operations - Subtotal $20,336 $3,800 $30,000

FTE 6 8 29

Vulnerability and Threat Management $21,389 $34,400 $20,000

Capital 21,389 32,765 18,365

Support 0 50 50

Labor 0 1,585 1,585

FTE 0 10 10

Identity and Access Management $18,994 $16,000 $12,000

Capital 18,994 14,080 10,080

Support 0 20 20

Labor 0 1,900 1,900

FTE 0 11 11

Security Operations and Management $20,970 $14,600 $14,000

Capital 20,970 13,040 12,900

Support 0 50 50

Labor 0 1,510 1,050

FTE 0 9 9

Cybersecurity and Data Protection - Subtotal 61,353 65,000 46,000

FTE 0 30 30

Architecture, Integration, and Management 2 $35,639 $26,500 $6,000

Capital 27,020 23,500 3,000

Support 10 0 0

Labor 8,609 3,000 3,000

FTE 48 19 19

Core Infrastructure 2 $18,013 $10,600 $4,000

Capital 6,664 8,600 2,000

Support 0 0 0

Labor 11,349 2,000 2,000

FTE 65 12 12

Subtotal Supporting Projects $53,652 $37,100 $10,000

FTE 113 31 31

Modernized IRS Operations

Robotic Process Automation (RPA) has emerged as an effective enabling technology to gain efficiencies by 

automating repetitive, rule-based, manual tasks and mitigating human error risks. Combining RPA with 

Artificial Intelligence (AI) has further enhanced opportunities to empower organizations to take on more 

complex processes and gain value through cognitive automation. The goal of the RPA program is to build 

the capability (i.e.; technology, people, and processes) for IRS to take advantage of these emerging 

technologies. Toward this goal, IRS is pursuing a multiyear investment plan that would prove the value 

through execution of strategically selected pilot projects, establish an initial operating capability through 

FY 2021 and, scale services to provide full enterprise-wide operational capability in FY 2022.

APIs are a set of protocols, routines, functions and/or commands that programmers use to develop 

software or facilitate interaction between distinct systems. In response to growing demands to integrate 

systems internally and externally, the IRS plans to expand the use of APIs across its ecosystem. 

Cloud Execution will result in improved “time to market” agility, increased operational efficiency and 

resilience, increased innovation, and enhanced or maintained security posture by migrating workload to 

cloud platforms and services. 

A series of packaged initiatives to support a more efficient, scalable, and flexible architecture 

implemented through advanced IT infrastructure tools and technologies (e.g., Standard Stacks, Enterprise 

Storage Solution). Implementing the Next Generation Infrastructure initiative encompasses 

transformation of compute, network, and storage activities—along with DevOps—to automate software 

delivery and infrastructure changes. IRS will also continue to convert legacy code to modern languages.

1

 Capital Investment funding: capital and contractor labor costs. Support funding: training, travel, supplies costs. Labor funding: IRS employee pay and benefits costs. FTE: FY 2021 

Initiative FTEs are costed at 1/2 year hiring, which equates to 0.5 FTEs per position. Cybersecurity and Data Protection

Enable proactive threat and vulnerability identification using real-time intelligence information and 

analytics, enhance security testing and process automation, protect sensitive data at rest through 

encryption, and enhance both application and infrastructure audit capabilities to detect breaches and 

mitigate internal and external threats effectively.

Prevent compromises to taxpayer and other sensitive data by establishing trusted and streamlined access 

to information through implementing Identity Access Management, Infrastructure Integrity, and Privilege 

Management capabilities. Conduct Digital Identity Risk Assessments and provide identity proofing and 

authentication in compliance with NIST 800-63-3.

Enhance ability to secure taxpayer data and systems through investing in data collection, management, 

and analysis capabilities to achieve a level of situational awareness that enables us to understand both 

our current environment and known threats, while accurately predicting and responding to future 

threats. Block network access for unauthorized users and devices.

 Supporting Projects

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. 

2 Note: Effective FY 2021, enterprise-wide costs for Architecture, Integration, and Management and Core Infrastructure will be paid from the Operations Support appropriation. BSMspecific projects receiving services from Core and AIM will continue to be funded from the BSM appropriation. 
IRS-104

FY 2021 Changes by Budget Activity

Dollars in thousands

Business Systems Modernization FTE Amount

FY 2020 Enacted (Pre-IAT) 426 $180,000 

Planned Interappropriation Transfer

FY 2020 Enacted 426 $180,000 

Changes to Base:

Maintaining Current Levels (MCLs) $6,201 

Pay Annualization (3.1% average pay raise) 547 

Pay Raise (1.0% average pay raise) 533 

FERS Contribution Increase 989 

Non-Pay 2,188 

Additional Required Labor Costs 1,944 

Subtotal FY 2021 Changes to Base $6,201 

FY 2021 Current Services 426 $186,201

Program Increases:

Integrated Modernization Business Plan 91 113,799 

Subtotal FY 2021 Program Increases 91 $113,799 

Total FY 2021 Request (Before Cap) 517 $300,000 

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted 91 $120,000

Percent Change FY 2021 Request over FY 2020 Enacted 21.36% 66.67%
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2.1.9 – Budget and Performance Report and Plan

Dollars in thousands

Business Systems Modernization FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Resource Level Actual Actual Actual Actual Actual Enacted Request

Appropriated Resources1 $107,746 $190,945 $166,263 $110,000 $150,000 $180,000 $300,000 

Reimbursable Resources2

User Fees 25,464 77,418 89,713 102,305 

Budget Activity Total $107,746 $190,945 $191,727 $187,418 $239,713 $282,305 $300,000 1

The FY 2015 - FY 2019 appropriated resources represent the approved operating plan including any inter-BAC transfers and interappropriation transfers.

2

The FY 2015 - FY 2019 columns represent realized resources for reimbursable resources and user fees.

Business Systems Modernization FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2019 FY 2020 FY 2021

Measures Actual Actual Actual Actual Actual Target Target Target

Percent of Major IT Investments within +/- 10% Cost 

Variance at the Investment Level (E)1 73.7% 76.2% 50.0% 72.2% 88.9% 90.0% 90.0% 90.0%

Percent of Major IT Investments within +/- 10% Schedule 

Variance at the Investment Level (E)1 89.5% 85.7% 88.9% 83.3% 88.9% 90.0% 90.0% 90.0%

Key: E - Efficiency Measure

1 Starting in FY 2015, the measure includes all major investments (BSM and non-BSM).
IRS-106

Section III – Supplemental Information

3.1 – Summary of Capital Investments

Introduction

The IRS information technology organization is a key enabler of efficient and effective tax administration. 

IT provides critical support as the IRS faces an increasingly complex tax administration environment. IT 

works to address evolving taxpayer expectations, frequent tax law changes, growing challenges in 

combating refund fraud and identity theft, workforce shortages, while achieving program and cost 

efficiencies. Challenges including aging infrastructure, insertion of emerging technologies, and expanding 

cybersecurity threats, further complicate the IT operating environment.

In July 2019, Congress passed the Taxpayer First Act, a wide-ranging law that touches multiple parts of the 

IRS and includes provisions that are designed to improve taxpayer service and ensure the IRS continues to 

enforce the tax laws in a fair, impartial manner. Section 2101 requires the IRS Chief Information Officer to 

develop and implement a multiyear strategic plan for the IRS’s information technology needs and the IRS 

expects to address the requirements in FY 2020.

In FY 2020, the IRS will publish the IT Strategic Plan, which aligns with the IRS Strategic Plan 

(FY 2018 - FY 2022), and the requirements of the Taxpayer First Act and the IRS Integrated 

Modernization Business Plan. It will articulate a vision to strengthen and modernize the IRS IT 

environment, while supporting business objectives and enhancing taxpayer services. The Capital 

Investment Strategy outlines the technology initiatives and IT investments undertaken to achieve the IRS’s

vision of a modern IT organization. 

IRS Integrated Modernization Business Plan

The IRS Integrated Modernization Business Plan supports the IRS’s mission to help America’s taxpayers 

understand and meet their tax responsibilities, while enforcing tax laws to ensure integrity and fairness for 

all. The modernization plan establishes a multi-year modernization approach to provide effective, reliable, 

IT solutions for taxpayer support to fulfill their tax obligations. The April 2019 plan set out four pillars 

(Taxpayer Experience; Core Taxpayer Services and Enforcement; Modernized IRS Operations, and 

Cybersecurity and Data Protection) and two supporting projects (Architecture Integration and Management 

and Core Infrastructure). It includes specific projects with timeframes and deliverables and serves as a 

guiding document for IRS IT modernization efforts. The IRS will also examine how the Taxpayer First 

Act requirements will affect IT modernization and will update the plan accordingly. 
IRS-107

MODERNIZATION 

PILLAR

KEY OBJECTIVES KEY PROGRAMS 

& INITIATIVES

Taxpayer Experience: 

Deliver a service 

experience comparable 

to private industry

• Help taxpayers resolve issues quickly and

efficiently

• Empower taxpayers with information about 

their account, obligations, and payment options

• Make services available to customers when 

they need them

• Protect taxpayer information and data

• Web Applications (WebApps)

• Taxpayer Digital Communications

• Outbound Notifications (TDC—ON)

• Live Assistance (Callback)

Core Taxpayer Services 

& Enforcement: 

Streamline and 

integrate IT programs 

that enable top- quality 

service

• Integrate tax processing systems to increase 

the cost effectiveness of operations

• Enable real-time processing and increase 

transparency of returns status

• Increase data usability and the use of data 

analytics to combat fraud

• Customer Account Data Engine

(CADE) 2 Transition State 2 (TS2)

• CADE 2 Target State

• Enterprise Case Management (ECM)

• Real-Time Tax Processing (RTTP)

• Information Returns Processing

Modernized IRS 

Operations: Retire and 

decommission legacy 

systems in place of 

more sustainable 

infrastructure

• Reduce complexity of the technical 

environment

• Leverage data to deliver secure, agile, and

efficient applications and services

• Strengthen organizational agility through 

automation and streamlining processes

• Robotics Process Automation (RPA)

• Application Programming Interface

(API) Management

• Cloud Execution

• Next Generation Infrastructure

• Data Digitization

• Universal Data Hub / Analytics 

Tools/Platform
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Cybersecurity & Data 

Protection: Continue to 

protect taxpayer data 

and address emerging 

threats

• Establish trusted and streamlined access to 

information through identity and access 

management technologies

• Proactively identify emerging threats and 

vulnerabilities through the use of real-time 

intelligence information and analytics

• Protect taxpayer data and systems via end-toend visibility and common platforms

• Vulnerability & Threat Management

• Identity & Access Management

(IAM)

• Security Operations & Management

Figure 4 – IRS Modernization Portfolio and Pillars

A. Taxpayer Experience

• Web Applications (Web Apps): These programs and initiatives improve interactions and 

communications across taxpayers, employers, the IRS, and third parties by providing a broad 

range of self-service options, establishing secure information exchange options, and building 

internal capabilities. By enabling authorized third parties and taxpayers to interact digitally 

with the IRS, the investment will provide a better user experience, achieve significant savings 

by moving some service interactions to lower cost channels, and deliver consistent data and 

services through reusable Application Programming Interfaces (APIs). Web Apps will 

transform the way the IRS does business by delivering a digital service that allows taxpayers to 

track and receive information they need when they need it.

• Taxpayer Digital Communications Outbound Notifications (TDC-ON): The program will 

improve the user experience through reliable, user-friendly, secure online services. For 

example, the IRS will develop digital notices through the secure messaging platform that 

provides communications to taxpayers who prefer that channel over mailed correspondence, 

including digital chat.

• Live Assistance – (Callback): Taxpayers will receive customer callback, engage a redesigned 

customer voice portal, and experience improved identity verification. Future live assistance 

enhancements will broaden service channels to include live text chat, virtual assistant 

capabilities, and video chat assistance.

B. Core Taxpayer Services and Enforcement

• CADE 2 Transition State 2 (TS2): The CADE 2 TS 2 environment provides capabilities that 

will help modernize the taxpayer account processing environment and develop an integrated, 

near real-time processing environment to support tax returns, information returns, payments, 

and other transactions, and will allow direct visibility and access to taxpayer account detail on 
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a near real-time basis. A key project supporting CADE 2 TS 2 is the Individual Tax Processing 

Engine (ITPE) project, which will convert about 200,000 lines of legacy assembly language 

code to modern software language. This code conversion is a major milestone towards retiring 

the Individual Master File (IMF). The CADE 2 TS 2 will facilitate voluntary compliance and 

improve traceability of financial data from core accounting systems to IRS financial 

statements.

• Enterprise Case Management (ECM): This solution provides an IRS-wide solution for 

streamlining case and workload management processes. The solution digitizes case 

information, automates work selection, and improves resource alignment. 

• Real-Time Tax Processing (RTTP) (Starts in Phase 2): The program will deliver 

independent and near real-time data processing, allowing the IRS to move away from batch 

processing, view returns dynamically, and understand the status of a return as it is processed. 

Currently, batch processing prevents a taxpayer from easily adjusting their individual return. 

Within certain parameters, RTTP will allow amendments to be processed directly, improving 

the overall taxpayer experience and level of confidence with multi-channel options to enable 

account access. It also improves at-filing compliance and communication with the IRS.

• Information Returns System Processing (Starts in Phase 2): The program consists of a 

modern intake database and applications that allow for improved document matching to 

improve intake consistency.

C. Modernized IRS Operations

• Robotics Process Automation (RPA): Enhancing business process execution, speed, and 

accuracy through smart software designed to perform high-volume, repeatable tasks.

• Application Programming Interface (API) Implementation: The API initiative incorporates 

efforts to drive internal and external API deployment. For example, authorized third parties 

will have easier access and a streamlined data exchange with the IRS on behalf of their clients 

through standard, reusable services and common programming code.

• Cloud Execution: Cloud Execution will result in improved “time-to-market” agility, increased 

operational efficiency and resilience, increased innovation, and an enhanced or maintained 

security posture by migrating workloads to cloud platforms and services.

• Next Generation Infrastructure: Next Generation Infrastructure involves a series of 

packaged initiatives to support a more efficient, scalable, and flexible architecture 

implemented through advanced IT infrastructure tools and technologies (e.g., Standard Stacks, 

Enterprise Storage Solution). Implementing the Next Generation Infrastructure initiative 

encompasses transformation of computer, network, and storage activities—along with 
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DevOps—to automate software delivery and infrastructure changes. IRS will also continue to 

convert legacy code to modern languages.

• Data Digitization (Starts in Phase 2): Electronic files will be enhanced, and the intake of 

paper forms and correspondence will be simplified and streamlined through the integration of 

scanned data and content management systems. This will improve processing of taxpayer 

paper submissions and create efficiencies from not having to manually process, transcribe, and 

store documents.

• Universal Data Hub / Analytics Tools / Platform (Starts in Phase 2): The program will 

support foundational architecture and technology elements that enable business capabilities 

like real-time processing, error correction, expanded online tools and data analytics 

capabilities, improved fraud detection, and other anomaly detection capabilities. The program 

will streamline data availability and will allow for more data-driven business decisions.

D. Cybersecurity and Data Protection

• Vulnerability & Threat Management: Enable IRS cybersecurity professionals to monitor 

servers in order to protect taxpayer data and systems, providing full visibility into endpoints.

• Identity & Access Management: Further prevent malicious or unintended access and 

disclosure of taxpayer and other sensitive data using a common platform for secure 

authorization and authentication services and encrypting sensitive data at rest as well as in 

transit.

• Security Operations & Management: Enhance the ability to secure taxpayer data and 

systems through full visibility of hardware and software on the network and enhance incident 

response and detection of internal threats to data and systems.
IRS-111

FY 2019 Modernization Portfolio Budget

Modernization 

Pillar

Programs Planned Annual 

Budget1

($ in Millions)

Revised Annual 

Budget2

($ in Millions)

End of Year 

Actuals3

($ in Millions)

Taxpayer 

Experience

WebApps4 25.00 24.70 24.10

Taxpayer Digital Communications 

Outbound Notifications 5.00 5.40 5.40

Live Assistance 5.00 5.00 5.00

Core Taxpayer 

Services & 

Enforcement

CADE2 TS2 85.00 85.00 80.90

Enterprise Case Management 

(ECM)5 60.00 70.00 59.50

Return Review Program (RRP) 35.00 35.00 34.70

Modernized IRS 

Operations

Robotics Process Automation (RPA) 5.00 5.00 5.10

API Implementation N/A N/A N/A

Cloud Execution 5.00 5.00 5.40

Next Generation Infrastructure 10.50 10.50 9.80

Cybersecurity & 

Data Protection

Vulnerability & Threat Management 19.50 23.10 21.40

Identity & Access Management 20.00 20.20 19.00

Security Operations & 

Management

25.00 21.20 21.00

Subtotal: $300.00 $310.00 $291.20

Core Infrastructure6 18.30 18.30 18.00

Architecture, Integration, and Management6 36.00 36.00 35.60

Total: $354.30 $364.30 $344.80

 1 Planned Annual Budget reflects figures as identified in the Business Plan published in April 2019.

2 Revised Annual Budget reflects IRS adjustments based on FY 2020 appropriations and prioritization decisions. 3 End of Fiscal Year includes end-of-year adjustments. 4 IRS realigned $350,000 from WebApps to Taxpayer Digital Communications Outbound Notifications on 

September 26, 2019 to support critical development work.

5 IRS increased the budget for Enterprise Case Management from $60 million to $70 million on July 22, 2019. 6 Core Infrastructure (Core) and Architecture, Integration, and Management (AIM) represent enterprise staffing 

and planning costs necessary to deliver the Business Plan. Core Infrastructure provides mission-critical services for 

designing, engineering, testing, and deploying standardized, consolidated, virtual, and secure modernized 

development and production environments. AIM provides engineering management capabilities essential to 

delivering complex IT functions, and supports IRS systems strategy, architecture, and engineering capabilities. 

These costs were not identified in the Business Plan because they are not attributable to specific initiatives, but 

they were reflected in the FY 2020 President’s Budget. For more information on Core and AIM, see page 71 of the 

FY 2020 Congressional Justification (March 18, 2019).
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3.2 – Return on Investment (ROI) for IRS Major Enforcement Programs

The actual cost and actual revenue collected for FY 2013 through FY 2019 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 businesses, self-employed, large corporate businesses, partnerships, international, estate and gift, 

excise tax and employment tax-exempt organizations, qualified pension benefit plans, and government 

entities. The examination costs include the cost of the Field Exam, Correspondence Exam, IRS Chief 

Counsel, and Appeals functions.

Collection Program collects delinquent taxes and secures delinquent tax returns through the appropriate 

use of enforcement tools, such as lien, levy, seizure of assets, installment agreement, offer in compromise, 

substitute for return, summons, and IRC section 6020(b) (which allows the IRS to prepare returns if a 

taxpayer neglects or refuses to file), and provides education to taxpayers to enable future compliance. The 

cost of the Collection program includes Automated Collection System (ACS), Field Collection, and 

Payment Compliance/Correspondence Collection.

Automated Underreporter (AUR) Program matches payer information returns (Forms 1099, W-2, etc.) 

against data reported to the IRS on individual tax returns. The information is verified to identify any 

discrepancies. If a discrepancy is found, the case is given to a tax examiner for research and analysis. If 

the tax examiner is unable to resolve the discrepancy, the IRS issues a proposed notice and generates a 

proposed assessment. 

ROI is calculated by dividing revenue by cost. This information provides an indication of the ROI for the 

three major enforcement programs over time. Enforcement revenue collected in a fiscal year includes tax, 

interest, and penalties from multiple tax years. Some enforcement activities take more than a year to close 

and may generate revenue over several years.

In addition, these data reflect the average return on investment for these programs and do not include the 

indirect effects of IRS enforcement activities on voluntary compliance. Net revenue is maximized only 

when resources are allocated according to marginal direct and indirect return on investment, but those 

ratios are much more challenging to estimate than the average ROI. As a result, the IRS will continue to 

allocate enforcement resources across a range of enforcement activities to ensure taxpayers pay the taxes 

they owe.
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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 $5,644 $54,203 9.6 $5,592 $54,291 9.7 $5,506 $56,914 10.3 $5,559 $59,366 10.7 $5,418 $57,523 10.6

Examination 3,974 13,320 3.4 3,782 12,023 3.2 3,693 15,102 4.1 3,716 15,017 4.0 3,568 10,877 3.0

Collection 1,419 35,740 25.2 1,576 37,259 23.6 1,600 36,498 22.8 1,635 38,985 23.8 1,625 41,793 25.7

Automated Underreporter (AUR) 251 5,143 20.5 234 5,009 21.4 214 5,314 24.9 208 5,364 25.7 225 4,853 21.6

1

The cost of the enforcement programs was calculated using budget data from the IRS Integrated Financial System (IFS) and includes direct dollars and FTE from the Enforcement appropriation, Exam and 

Collections budget activity, and dollars from the Operations Support appropriation prorated using actual FTE realized for each major enforcement program.

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
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3.3 – IRS Performance Measures Table

Performance Measures FY2015 

Actual

FY2016 

Actual 

FY2017 

Actual

FY2018 

Actual 

FY2019 

Actual

FY2020 

Target

FY2021 

Target

Customer Service Representative Level of 

Service (LOS)1 38.1% 53.4% 77.1% 75.9% 65.4% 60.0% 60.0%

Customer Accuracy - Tax Law (Phones) 95.0% 96.4% 96.7% 95.5% 91.6% 92.0% 92.0%

Customer Accuracy - Accounts (Phones) 95.5% 96.1% 96.0% 96.1% 94.3% 94.0% 94.0%

Timeliness of Critical Filing Season Tax Products 

to the Public2 89.0% 92.5% 93.1% 59.6% 92.6% 89.0% 89.0%

Timeliness of Critical TE/GE & Business Tax 

Products to the Public2 92.6% 98.0% 96.7% 100.0% 96.1% 89.0% 89.0%

Percent of Business Returns Processed 

Electronically 47.0% 50.0% 52.9% 55.6% 57.8% 60.0% 60.0%

Enterprise Self-Assistance Participation Rate3 88.7% 89.0% 79.0% 82.0% 85.4% 82.0% 82.0%

Taxpayers Satisfied with the IRS (based on 

100-point scale)4, * 73 74 74 74 73 Indicator Indicator

Examination Coverage - Individual 0.8% 0.7% 0.6% 0.6% 0.45% 0.48% 0.55%

Examination Coverage - Business (Assets > $10 

million) 3.9% 3.0% 2.5% 2.2% 1.6% 1.7% 1.1%

Examination Efficiency - Individual 148 143 121 131 109 115 120

Automated Underreporter Coverage 2.3% 2.3% 2.2% 2.0% 1.3% 1.7% 1.8%

Time to Start Compliance Resolution4 Under 

Development Indicator Indicator

Time to Resolve Compliance Issue After Filing4 Under 

Development Indicator Indicator

Repeat Non-Compliance Rate4 Under 

Development Indicator Indicator

Collection Coverage (Units) 46.3% 43.4% 42.2% 41.6% 41.3% 39.7% 38.8%

Cost to Collect $100 (in cents)4 0.35 0.35 0.34 0.34 0.33 Indicator Indicator

Criminal Investigations Completed 4,486 3,721 3,089 3,051 2,797 2,700 2,700

Conviction Rate 93.2% 92.1% 91.5% 91.7% 91.2% 92.0% 92.0%

Rentable Square Feet per Person 297 301 298 Indicator Indicator

Percent of Aged Hardware5 56.5% 52.2% 52.3% 45.5% 31.0% 30.0% 30.0%

Percent of Major IT Investments within +/- 10% 

Cost Variance at the Investment Level6 73.7% 76.2% 50.0% 72.2% 88.9% 90.0% 90.0%

Percent of Major IT Investments within +/- 10% 

Schedule Variance at the Investment Level6 89.5% 85.7% 88.9% 83.3% 88.9% 90.0% 90.0%

1 CSR LOS includes telephone lines answered by Accounts Management Customer Service Representatives only. These telephone phone lines service 78% of 

all telephone traffic.

2 Modified in FY 2019.

3 Starting in FY 2017, the IRS modified the Taxpayer Self Assistance Rate measure (renamed to Enterprise Self-Assistance Participation Rate) to include 

additional self-service channels including Get Transcript 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.

4 New measure added for FY 2019.

5 This is an existing measure added for budget reporting; the measure definition changed in FY 2018, removing certain asset categories (fax machines, low-end 

printers and scanners) that are no longer being actively refreshed from the calculation to more accurately define the inventory that’s reflective of risk to the IT 

environment.

6 Starting in FY 2015, the measure includes all major investments (BSM and non-BSM).

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

and Electronic Filer customer satisfaction index scores, available on an annual basis at the end of January and computed on a 100-point scale.
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Budget Level Performance Measure Descriptions

Customer Service Representative (CSR) Level of 

Service

The number of toll-free callers that either speak to a Customer Service 

Representative or receive informational messages divided by the total 

number of attempted calls.

Customer Accuracy – Tax Law Phones The percentage of correct answers given by a live assistor on Tollfree tax law inquiries.

Customer Accuracy – Customer Accounts (Phones) The percentage of correct answers given by a live assistor on Tollfree 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, and publications required by many 

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 business tax products (tax forms, schedules, 

instructions, and publications used by a large number of TE/GE and 

Business filers to prepare a complete and accurate return or form) 

available to the public in a timely fashion. 

Percent Business Returns Processed Electronically The percentage of electronically filed business tax returns divided by 

the total business returns filed.

Enterprise Self Assistance Participation Rate The percentage of taxpayer assistance requests resolved using selfassisted automated services.

Taxpayers Satisfied with the IRS

The percentage of taxpayers satisfied with the IRS according to the 

American Customer Satisfaction Index (ACSI) survey. The All 

Individual Tax Filer score is calculated from separate ACSI Individual 

Paper Filer and Electronic Filer Customer Satisfaction Index Scores. 

Based on a 100-point scale.

Examination 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.

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) 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.

Time to Start Compliance Resolution The percentage of all individual income tax enforcement cases started 

within six months of the return posting date.

Time to Resolve Compliance Issue After Filing

The average time it takes to close all individual income tax 

enforcement cases in days. This is an annual measure based on all 

cases closed in a fiscal year.

Repeat Non-Compliance Rate

The percentage of individual taxpayers in a fiscal year with additional 

non-compliance two years after the initial tax year that contains a 

filing, payment, or reporting compliance issue, compared to total 

taxpayers 

Collection Coverage – Units The volume of collection work disposed compared to the volume of 

collection work available.

Cost to Collect $100 (in cents) The cost of collecting $100 is computed as total operating costs 

divided by gross collection divided by 100. 

Criminal Investigations Completed

The total number of subject criminal investigations completed during 

the fiscal year, including those that resulted in prosecution 

recommendations to the Department of Justice as well as those 

discontinued due to a lack of prosecution potential. 
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Conviction Rate The percent of adjudicated criminal cases that result in convictions.

Rentable Square Feet per Person The amount of Rentable Square Feet the IRS maintains per Personnel 

requiring space. IRS will use this as an indicator for FY 2018.

Percent of Aged Hardware This measure shows the quantity of IT hardware in operation past its 

useful life as a percentage of total hardware in use. 

Percent of Major IT Investments within +/- 10% Cost 

Variance at the Investment Level 

Number of major IT investments within +/-10 percent variance 

between planned total cost and projected/actual cost within a fiscal 

year divided by the total number of major IT investments in that fiscal 

year.

Percent of Major IT Investments within +/- 10% 

Schedule Variance at the Investment Level 

Number of major IT investments within +/-10 percent variance 

between planned days and projected/actual days within a fiscal year 

divided by the total number of major IT investments in that fiscal year.

3.4 – Summary of FY 2019 Savings Realized

Increase e-File Savings 

FY 2019 Actual Savings: -$8,900,000 / -167 FTE

FY 2021 Projected Savings: -$4,684,000 / -85 FTE

The IRS realized savings of 167 FTE and $8.90 million in FY 2019 as a result of increases in electronically 

filed returns. The number of paper returns received by the IRS decreased by 2.1 million from FY 2018 to 

FY 2019 while the number of electronically filed returns increased by 4 million over the same period.

Rent 

FY 2019 Actual Savings: $0

FY 2021 Projected Savings: -$6,200,000

Rent is one of the IRS’s largest operating expenses. The IRS plans to release 243,000 square feet for an 

estimated $6.2 million in annualized rent savings. Although savings were projected, there were no savings 

in FY 2019 due torent increases from lease renewal, delays in space release, and expansion of space 

needed to accommodate additional hiring.
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Section IV – Appendix

4.1 Appropriations Detail Table with Program Integrity Cap Adjustment

In addition to the base appropriations request of $12 billion request, the budget proposes a $400 million 

discretionary program integrity cap adjustment in FY 2021 to fund new and continuing investments in 

expanding and improving the effectiveness and efficiency of the IRS’s overall tax enforcement program. 

The budget proposes $280 million for the Enforcement account and $120 million for the Operations 

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

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

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

not reflect the effect that enhanced enforcement has on deterring non-compliance.

IRS Program Integrity Cap Adjustment FY 2021 – FY 2030

Table compares revenue receipts to budget authority. Outlays over ten years are projected to be $15.385 billion compared to budget authority of 

$15.838 billion for net savings of $64.010 billion.

Return on Investment (ROI) for FY 2021 Enforcement Investments

Enforcement efforts generate and protect revenue, as well as encourage voluntary compliance for taxpayers 

who would otherwise seek to avoid meeting their tax obligations under the law. The IRS calculates an ROI

for both revenue generating and revenue protecting investments. Generated revenue is from compliance 

efforts that yield direct, measurable results through enforcement activities such as examination and 

collection returns. Protected revenue is revenue the IRS protects from being refunded erroneously. It is 

associated with activities that occur before issuing a taxpayer’s refund, including the identification of fraud 

and questionable returns. 

FY 2021 Revenue Generating Investments

The cap adjustment includes $351.5 million in investments for traditional enforcement and strategic 

revenue programs, such as examinations and collection activities, which are projected to generate more 

than $4.6 billion in revenue once the investments reach full potential in FY 2023 with an expected total 

ROI of $9.2 to $1. This request also includes $40.5 million to support strategic revenue producing 

investments, including increasing investigations related to cybercrimes, virtual currency, refund fraud, and 

Description 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021-2030

Base $9,059 $9,154 $9,250 $9,348 $9,446 $9,545 $9,646 $9,747 $9,850 $9,953 $94,999

Cap $400 $828 $1,173 $1,524 $1,879 $1,994 $1,995 $2,005 $2,015 $2,025 $15,838

Total $9,459 $9,982 $10,424 $10,872 $11,325 $11,539 $11,641 $11,752 $11,865 $11,979 $110,837

Revenues $264 $542 $3,106 $5,158 $7,356 $9,682 $12,005 $12,974 $13,813 $14,495 $79,395

Net Savings ($136) ($286) $1,933 $3,634 $5,477 $7,688 $10,011 $10,970 $11,798 $12,469 $63,557
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prosecution efforts. While these investments do not have an immediately measurable ROI, they have clear 

long-term positive revenue effects.

FY 2021 Revenue Protecting Investments

The benefits of IRS activities that prevent erroneous refunds are not captured in IRS’s ROI calculations 

above. However, the IRS estimates that investment in these activities should protect $952.7 million in 

revenue that otherwise would need to be recovered from downstream enforcement actions for an estimated 

ROI of $14.7 to $1 by FY 2023. These investments also support IRS’s Agency Priority Goal on Fraud 

Prevention, which is part of the Treasury Strategic Plan FY 2018-2022. 

Return on Investment (ROI) for IRS FY 2021 Enforcement Initiatives 

Dollars in Millions

Cost Revenue ROI Cost Revenue ROI Cost Revenue ROI

FY 2021 Revenue Producing Enforcement Initiatives $351.5 $738.3 2.1 $516.6 $3,557.5 6.9 $504.2 $4,654.6 9.2

Cap Adjustment Enforcement Initiatives $351.5 $738.3 2.1 $516.6 $3,557.5 6.9 $504.2 $4,654.6 9.2

Immediate and Directly Measurable Revenue-Producing Initiatives $311.0 $738.3 2.4 $476.1 $3,557.5 7.5 $463.7 $4,654.6 10.0

Increase Audit Coverage 140.5 356.4 2.5 218.0 1,328.6 6.1 209.1 1,846.1 8.8

Increase Collection Coverage 170.5 381.9 2.2 258.1 2,228.9 8.6 254.6 2,808.5 11.0

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

but clear long-term revenue effects)

$40.5 $0.0 0.0 $40.5 $0.0 0.0 $40.5 $0.0 0.0

Expand Cyber and Virtual Currency Compliance Efforts 40.5 0.0 0.0 40.5 0.0 0.0 40.5 0.0 0.0

First Year (FY 2021) Second Year (FY 2022) Full Performance (FY 2023)

FY 2021 Revenue Protecting Enforcement Initiatives

Dollars in Millions

Cost Revenue ROI Cost Revenue ROI Cost Revenue ROI

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

and results in long-term revenue protection)

$48.5 $31.6 0.7 $64.8 $703.7 10.9 $64.7 $952.7 14.7

Cap Adjustment Revenue Protecting Initiative $48.5 $31.6 0.7 $64.8 $703.7 10.9 $64.7 $952.7 14.7

Increase Audit Coverage (revenue-protecting portion) 32.7 31.6 1.0 49.0 703.7 14.4 48.9 952.7 19.5

Expand Coverage in the Tax-Exempt Sector 15.8 0.0 0.0 15.8 0.0 0.0 15.8 0.0 0.0

First Year (FY 2021) Second Year (FY 2022) Full Performance (FY 2023)
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Increase Audit Coverage +$173,180,000 / +1,333 FTE

Position Type/Other Costs FTE Positions $000

Examination Coverage 437 874 $68,571 

Tax Technician 110 220 14,828 

Revenue Agent 315 630 52,581 

Manager and Support Staff 12 24 1,162 

Specialty Programs 44 88 $8,600 

Tax Examiner 8 16 629 

Revenue Agent 28 56 6,105 

Attorney 8 16 1,866 

Correspondence Examination 451 902 $43,669 

Tax Examiner 426 852 41,281 

Manager and Support Staff 25 50 2,388 

Document Matching 250 500 $24,505 

Tax Examiner 200 400 19,640 

Support Staff 50 100 4,865 

Other Direct Costs 151 302 $27,835 

Appeals Officer 83 166 15,272 

Paralegal 14 28 1,565 

Attorney 30 62 5,983 

Support Staff 24 48 5,015 

Total 1,333 2,666 $173,180 

The cap adjustment includes additional examination employees. The decline in staffing since FY 2010 has 

led to a decrease inthe individual audit coverage rate from 1.1 percent in FY 2010 to 0.45 percent in 

FY 2019, which increases the risk to the integrity of the nation’s voluntary tax compliance system. As 

audit coverage rates continue to decline, individuals and businesses may decide that the chance of the IRS 

auditing them is minimal, and take riskier positions on their tax reporting, especially since the IRS’s audit 

coverage decline has been widely reported and is public. The additional resources will fund a broad range 

of compliance priorities and allow for earlier case assignment and resolution. This investment is expected 

to produce additional enforcement revenue of $1.3 billionannually (an ROI of $6.4 to $1) once the new 

hires reach full potential in FY 2023 and protect revenue of $952.7 million (a protected ROI of $14.7 to 

$1). These resources will help to: 

• Improve the individual audit coverage rate by closing more than 41,000 individual field and 

specialty examination cases and 451,000 pre-refund and post-refund correspondence examination 

cases; and

• Expand the Automated Underreported (AUR) program to process more than 1,013,000 additional 

cases (document matching of individuals decreased by 42 percent from FY 2011 to FY 2019).
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Other Direct Costs 

Dollars in thousands

IRS Activity Cost FTE Positions Explanation

Appeals $15,272 83 166 

Support examination efforts on key compliance areas focused on 

improving voluntary compliance and providing a high level of customer 

service.

Chief Counsel $7,548 44 88 Provide support for increases in requests for legal advice, litigation 

assistance, and published guidance on issues raised in audits.

Human Capital 

Office $170 1 2 Handle the increase in front-line positions and the expectation that new managerial positions will be created. 

SB/SE Operations 

Support $2,184 16 32 Support hiring, training, human capital, technology needs, data analytics, and resource requirements for the business unit.

Privacy, 

Governmental 

Liaison and 

Disclosure

$862 7 14 Address the increase in Freedom of Information Act requests as a result of 

increased compliance activity.

Taxpayer Advocate 

Service $507 Ensure the IRS follows appropriate procedures and does not create unnecessary burdens or compromise taxpayers' rights.

Customer Service 

Representative $1,292 Support examination efforts by ensuring staffing is available to handle downstream impact in accounts management operations.

Total $27,835 151 302
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Increase Collection Coverage +$170,506,000 / +1,342 FTE

Position Type/Other Costs FTE Positions $000

Field Collection Coverage 325 650 $51,500 

Revenue Officer 325 650 51,500 

ACS & ACS Support 555 1110 $56,265 

Customer Service Representative 437 874 44,724 

Tax Examiner 78 156 7,641 

Support Staff 40 80 3,900 

Correspondence Collection (CSCO) 166 332 $16,878 

Tax Examiner 158 316 15,714 

Support Staff 8 16 1,164 

Specialty Collection 78 156 $8,818 

Tax Examiner 68 136 7,423 

Manager and Support Staff 10 20 1,395 

Other Direct Costs 218 436 $37,045 

Attorney 46 92 7,756 

Appeals Officer 148 296 24,819 

Support Staff 24 48 4,470 

Total 1,342 2,684 $170,506 

The IRS is requesting additional resources to improve its capacity to work the collection inventory and 

answer taxpayer phone calls. Increased staffing will address the overall collection coverage rate, which has 

declined 18 percent from FY 2010 to FY 2019 as millions of collection cases available to work were not 

disposed of each year due to lack of staffing. This investment is expected to produce additional annual 

enforcement revenue of $2.8 billion (an ROI of $11 to $1) once the new hires reach full potential in 

FY 2023. These resources will help the IRS to:

• Provide 650 additional field collection staff to address non-filing and underpayment of taxes in 

order to handle more than 29,800 additional collection cases. Currently, there are more than one 

million cases with an aggregate assessed balance of more than $55.4 billion in the queue; 

• Provide 874 additional Automated Collection System (ACS) staff to address an additional 

422,000 ACS cases, including incoming calls generated by the issuance of levies, delinquent 

returns, and/or unpaid tax liabilities. Reduced ACS staffing has contributed to a substantial 

increase in unhandled cases and a 37 percent decline in level of service (LOS) to taxpayers; and

• Expand several Compliance Services Collection Operations (CSCO) programs that address 

non-filing and underpayment of taxes through the notice process by more than 509,000 notice 

dispositions and cases. More than 40,000 Offers in Compromise cases will also be closed, thereby 

enabling taxpayers another option to resolve their tax liability.
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Other Direct Costs 

Dollars in thousands

IRS Activity Cost FTE Positions Explanation

Appeals $24,819 148 296 Support collection efforts and appropriately resolve these cases while 

providing a high level of customer service.

Chief Counsel $7,756 46 92 Provide support for increases in requests for legal advice, litigation 

assistance, and collection due process.

SB/SE Operations 

Support $2,184 16 32 Support hiring, training, human capital, technology needs, data analytics, and 

resource requirements for the business unit.

Accounts 

Management $241 Support Collection efforts to address taxpayer communications in Accounts Management.

Privacy, 

Governmental 

Liaison and 

Disclosure

$616 5 10 Address the increase in Freedom of Information Act requests as a result of 

increased compliance activity.

Human Capital 

Office $969 3 6 Handle the increase in front-line positions and the expectation that new 

managerial positions will be created.

Online Services and 

Equity, Diversity, and 

Inclusion

$460 

Support service design/delivery for payment product improvements and 

taxpayer digital communications support. Provide sign language interpreters, 

special emphasis events, and reasonable accommodation.

Total $37,045 218 436
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Expand Coverage in the Tax-Exempt Sector +$15,766,000 / +109 FTE

Position Type/Other Costs FTE Positions $000

Expand Protection and Coverage of Small Business 

and Tax-Exempt Sponsored Plans 29 58 $4,295

Revenue Agent 25 50 3,893 

Manager 3 6 257

Support Staff 1 2 146 

Address EO Noncompliance with UBI 47 94 $6,907 

Revenue Agent 40 80 6,228 

Support Staff 3 6 291 

Manager 4 8 388 

Enhance Up-front Compliance for Applicant for 

Tax-Exempt Status 15 30 $2,090 

Revenue Agent 13 26 1,850 

Manager 1 2 144 

Support Staff 1 2 96 

Increase Voluntary Compliance 16 32 $2,091 

Revenue Agent 10 20 1,557 

Manager 1 2 97 

Research Analyst 1 2 97 

Support Staff 4 8 340 

Other Direct Costs 2 4 $384 

Attorney 1 2 292 

Appeals Officer 1 2 92 

Total 109 218 $15,766

Funding for this investment will allow the IRS to use a multi-faceted data-driven approach to enhance 

taxpayer education and compliance that will help protect the tax-exempt status of associated assets and 

revenue. 

This investment supports the following efforts, which will increase taxpayer service and education and 

improve overall compliance and protection of funds: 

• Enhance enforcement coverage of employee retirement plans, including but not limited to those 

sponsored by small businesses, exempt organizations, and governments, which make up almost 

half of all retirement plans in the United States;

• Address Exempt Organizations and Tax-Exempt Bond non-compliance to ensure adherence with 

complex and often confusing tax laws; and

• Increase voluntary compliance using low cost correction opportunities, to enhance taxpayer 

education and compliance. 
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Other Direct Costs

Dollars in thousands

IRS Activity Cost FTE Positions Explanation

Appeals $92 0.50 1 Support examination efforts on key compliance areas focused on improving 

voluntary compliance and providing a high level of customer service.

Chief 

Counsel $292 1.50 3 Provide support for increases in requests for legal advice, litigation assistance, and collection due process.

Total $384 2.0 4 

Expand Cyber and Virtual Currency Compliance Efforts +$40,548,000 / +101 FTE

Position Type/Other Costs FTE Positions $000

Expand Cyber and Virtual Currency 

Compliance 87 174 $25,699 

Special Agent 54 108 21,465 

Analyst 29 58 3,700 

IT Specialist 4 8 534 

Operational Technology Environment (OTE) 6 12 $13,349

IT Specialist 6 12 802 

Contractual Services 12,547

Other Direct Costs 8 16 $1,500 

Criminal Tax Legal Specialist 6 12 1,325 

Criminal Tax Admin Specialist 2 4 175 

Total 101 202 $40,548

Since 2016, the IRS Criminal Investigation (CI) division has seen a dramatic rise in the use and value of 

virtual currency, specifically cryptocurrency. With top coins like Bitcoin and Ethereum seeing increases 

well above 1,200 percent in recent years, this remains a large area of noncompliance and risk to the IRS. 

Internal statistics indicate that very few individuals filed tax returns showing gains generated from the sale 

or transfer of cryptocurrency, which indicates a large tax gap in this program area. 

This additional funding would support the hiring of 108 special agents to conduct more criminal 

investigations related to cyber and virtual currency. As a result, about 450 additional criminal 

investigations are projected to be completed from FY 2023 – FY 2025 once the new hires reach full 

potential. Additionally, CI estimates that as a result of the additional special agents, CI will identify 

$197.3 million annually in tax revenues either not reported to the IRS or fraudulently refunded by the IRS.
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Funding for this investment will strengthen CI’s Refund and Cybercrimes efforts by:

• Enhancing several areas, to include supplementing special agent and investigative support 

resources, to combat cyber-criminals and develop a core group of subject matter experts indigital 

assets;

• Allowing further participation in multi-agency cyber taskforces to target large-scale criminal 

organizations and maximize compliance; and

• Expanding criminal investigations through the analysis of available data (open source intelligence 

and investigative data) and fund the build-out of CI’s cybercrime sections. 

Cybercrime continues to exploit stolen taxpayer personally identifiable information (PII) through 

sophisticated data breaches. This new evolution of cyber identity theft has unleashed new schemes, such as 

complex intrusions, business email compromises, synthetic identity theft, account takeovers, 

business/corporate identity theft and a host of dark web exfiltration. This activity undermines the tax 

system and coupled with the ability to use digital assets in their financial concealment only elevates the 

difficulty level for law enforcement. 

Additional funding and resources dedicated to this area would allow CI to hire special agents with the skills 

to combat today’s cybercriminals. Traditionally, CI focused on agents with accounting skills, but with 

cybercrime, agents will need a high technical knowledge of computing as well as the understanding of 

digital assets, such as cryptocurrency. These skills will better assist the agency in identifying, 

investigating, and mitigating known criminal activities and further assist other business units in addressing 

compliance. 

The ever-evolving threats in this area require new approaches to the detection, investigation and prevention 

of these crimes. CI is employing its data strategy to approach these issues differently, seeking to identify 

patterns of non-compliance, focusing on high impact cases and developing predictive methods for new and 

emerging schemes. Past staffing and hiring plans which focused on special agents as the sole 

“investigators” need to be augmented with employees who are skilled in the specialized areas of 

cybercrime, virtual currency and data research/analytics. 

CI is authorized to use a wide array of investigative techniques including, but not limited to, electronic 

surveillance, digital forensics, physical forensics and covert internet surveillance. The operational 

technology associated with these investigative techniques must be deployed outside the IRS enterprise IT 

infrastructure. This has resulted in CI supporting dozens of isolated systems and law enforcement 

applications. In order to increase IT oversight and compliance, CI will centralize these technologies in a 

new program area referred to as Operational Technology Environment (OTE). OTE will be responsible for 

deploying and supporting technology-based law enforcement solutions within a separate and secure 

framework.

If IRS Criminal Investigation successfully expands the Cyber and Digital Assets Compliance Program in 

FY 2021, Criminal Tax (CT) would place an additional attorney in each of its six CT geographic areas and 
IRS-127

one attorney in the National Office, to support the build-out of the CI Cybercrime sections. For added 

client support, CT would strategically place attorneys in each of the major cities where the cyber 

investigations are more voluminous or active, and where Cybercrime Units (CCUs) are present, such as 

Washington, DC, New York, Los Angeles, and Miami. The additional attorneys would assist the case 

agents investigating cybercrimes or cyber-enabled investigations (including crypto currency), and also 

render advice to CCUs, thereby reducing the tax gap in this area. 

Other Direct Costs

Dollars in thousands

IRS Activity Cost FTE Positions Explanation

Chief Counsel $1,500 8 16

Support case agents investigating cybercrimes or cyber-enabled 

investigations (including crypto currency), and render advice to CCUs, thereby 

reducing the tax gap in this area.

Total $1,500 8 16
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4.2 – Summary of IRS FY 2021 Request by Business Unit (including the Program 

Integrity Cap Adjustment)

4.3 – Summary of IRS FY 2021 Identity Theft Budget Request

By Business Unit: Dollars % of TS

Appropriation Dollars % of ENFAppropriation Dollars % of OSAppropriation Dollars % of BSMAppropriation Dollars % ofTotal Budget

Information Technology 2,178,007,836 51.55% 300,000,000 100.0% 2,478,007,836 19.92%

Wage & Investment 2,177,104,640 84.96% 273,490,502 5.11% 241,308,722 5.71% 2,691,903,864 21.64%

Small Business/Self-Employed 2,493,886,566 46.60% 2,493,886,566 20.05%

Facilities Management and Security 

Services

1,098,144,548 25.99% 1,098,144,548 8.83%

Large Business and International 789,597 0.03% 854,253,606 15.96% 916,981 0.02% 855,960,184 6.88%

Criminal Investigation 671,111,327 12.54% 1,570 671,112,897 5.40%

Chief Counsel 20,697,637 0.81% 394,435,280 7.37% 132,172 415,265,089 3.34%

Human Capital Office 336,009,475 7.95% 336,009,475 2.70%

Tax Exempt & Government Entities 8,230,173 0.32% 247,185,007 4.62% 255,415,180 2.05%

Taxpayer Advocate Service 225,238,163 8.79% 205,647 0.00% 225,443,810 1.81%

Corporate Reserve and Payments 54,606,767 2.13% 50,975,137 0.95% 15,096,828 0.36% 120,678,732 0.97%

Appeals 231,367,479 4.32% 231,367,479 1.86%

Research, Applied Analytics, and 

Statistics

2,975,974 0.12% 53,453,759 1.00% 58,391,192 1.38% 114,820,925 0.92%

Chief Financial Officer 22,210,453 0.42% 71,583,623 1.69% 93,794,076 0.75%

Privacy, Governmental Liaison and 

Disclosure

14,944,877 0.58% 2,194,910 0.04% 73,802,239 1.75% 90,942,026 0.73%

Procurement 59,339,230 1.40% 59,339,230 0.48%

Communications & Liaison 17,559,935 0.69% 5,800,577 0.11% 30,368,016 0.72% 53,728,528 0.43%

Online Services 38,920,212 1.52% 38,920,212 0.31%

Return Preparer Office 714,701 0.03% 35,334,393 0.66% 176,926 36,226,020 0.29%

Equity, Diversity & Inclusion 31,270,902 0.74% 31,270,902 0.25%

Front Office2 771,324 0.03% 3,977,513 0.07% 25,449,775 0.60% 30,198,612 0.24%

Whistleblower Office 6,877,559 0.13% 6,877,559 0.06%

Office of the Chief Risk Officer 4,500,178 0.11% 4,500,178 0.04%

Office of Professional Responsibility 4,689,072 0.09% 4,689,072 0.04%

Total 2,562,554,000 5,351,243,140 4,224,705,860 300,000,000 12,438,503,000

Note: These figures reflect full requirements before taking any proposed reductions (Operations Support Hiring Reduction/Delay, FMSS Physical Infrastructure/Security Reduction/Delay, IT Reduction/Delay).

2 Includes Commissioner, Chief of Staff, DCOS, DCSE offices, and Project Management Offices for ACA/FATCA and Services & Enforcement.

Taxpayer Services Enforcement Operations Support BSM Total

Bureau: Internal Revenue Service 

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

FY 2020 Enacted $264,457 118 $237,408 2,401 $8,920 42 $510,786 2,561

Changes to Base:

Maintaining Current Levels (MCLs) $10,786 $9,209 $416 $20,411

Pay Annualization (3.1% average pay raise) 2,049 1,691 65 3,804

Pay Raise (1.0% average pay raise) 1,998 1,649 63 3,710

FERS Contribution Increase 3,160 2,639 99 5,898

Non-Pay 3 385 11 399

Additional Required Labor Costs 3,577 2,845 178 6,599

Efficiencies/Savings ($2,747) (31) ($2,747) (31)

Personnel Savings (2,747) (31) (2,747) (31)

Subtotal FY 2021 Changes to Base $10,786 $6,463 (31) $416 $17,664 (31)

FY 2021 Current Services $275,243 118 $243,871 2,370 $9,336 42 $528,450 2,530

Total FY 2021 Request (Before Cap) $275,243 118 $243,871 2,370 $9,336 42 $528,450 2,530

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted $10,786 $6,463 (31) $416 $17,664 (31)

Percent Change FY 2021 Request over FY 2020 Enacted 4.08% 2.72% -1.28% 4.66% 3.46% -1.20%

TAXPAYER SERVICES ENFORCEMENT OPERATIONS 

SUPPORT BSM TOTAL
IRS-129

4.4 – Summary of IRS FY 2021 ACA Budget Request

Bureau: Internal Revenue Service 

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

FY 2020 Enacted $250,885 14 $41,888 328 $33,320 189 $326,093 531

Changes to Base:

Maintaining Current Levels (MCLs) $10,193 $1,649 $1,501 $13,343

Pay Annualization (3.1% average pay raise) 1,944 323 256 2,523

Pay Raise (1.0% average pay raise) 1,896 315 249 2,460

FERS Contribution Increase 2,972 480 371 3,823

Non-Pay 1 3 6 10

Additional Required Labor Costs 3,380 528 619 4,527

Efficiencies/Savings ($534) (4) ($534) (4)

Personnel Savings (534) (4) (534) (4)

Subtotal FY 2021 Changes to Base $10,193 $1,115 (4) $1,501 $12,809 (4)

FY 2021 Current Services $261,078 14 $43,003 324 $34,821 189 $338,902 527

Total FY 2021 Request (Before Cap) $261,078 14 $43,003 324 $34,821 189 $338,902 527

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted $10,193 $1,115 (4) $1,501 $12,809 (4)

Percent Change FY 2021 Request over FY 2020 Enacted 4.06% 2.66% -1.22% 4.50% 3.93% -0.75%

TAXPAYER SERVICES ENFORCEMENT OPERATIONS 

SUPPORT BSM TOTAL
IRS-130

4.5 – Summary of IRS FY 2021 Cyber Security Budget Request

Bureau: Internal Revenue Service 

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

FY 2020 Enacted $31,024 67 $31,579 162 $243,571 471 $35,000 30 $341,174 729

Changes to Base:

Maintaining Current Levels (MCLs) $1,020 $1,148 $7,094 $9,262

Pay Annualization (3.1% average pay raise) 93 212 689 994

Pay Raise (1.0% average pay raise) 91 207 672 969

FERS Contribution Increase 131 354 1,000 1,485

Non-Pay 499 84 3,094 3,677

Additional Required Labor Costs 206 291 1,640 2,137

Efficiencies/Savings ($351) (1) ($351) (1)

Personnel Savings (351) (1) (351) (1)

Subtotal FY 2021 Changes to Base $1,020 $797 (1) $7,094 $8,911 (1)

FY 2021 Current Services $32,044 67 $32,376 161 $250,665 471 $35,000 30 $350,085 728

Program Increases:

Integrated Modernization Business Plan 11,000 11,000

Implementing the Taxpayer First Act

Subtotal FY 2021 Program Increases $11,000 $11,000

Total FY 2021 Request (Before Cap) $32,044 67 $32,376 161 $250,665 471 $46,000 30 $361,085 728

Dollar/FTE Change FY 2021 Request over FY 2020 Enacted $1,020 $797 (1) $7,094 $11,000 $19,911 (1)

Percent Change FY 2021 Request over FY 2020 Enacted 3.29% 2.52% -0.62% 2.91% 5.84% -0.14%

Cap Adjustment Program Increases

Increase Audit Coverage 278 278

Increase Collection Coverage 273 273

Expand Coverage in the Tax-Exempt Sector 22 22

Expand Cyber and Virtual Currency Compliance Efforts 20 20

Subtotal FY 2021 Cap Adjustment Investments $593 $593

Total FY 2021 Request Including Cap Adjustment $32,044 67 $32,376 161 $251,258 471 $46,000 30 $361,678 728

Dollar/FTE Change FY 2021 Request Including cap over FY 2020 Enacted $1,020 $797 (1) $7,687 $11,000 $20,504 (1)

Percent Change FY 2021 Request Including cap over FY 2020 Enacted 3.29% 2.52% -0.62% 3.16% 6.01% -0.14%

TAXPAYER SERVICES ENFORCEMENT OPERATIONS 

SUPPORT BSM TOTAL
IRS-131

4.6 – Summary of IRS FY 2021 Budget Request

Bureau: Internal Revenue Service 

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

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

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

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

Changes to Base:

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

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

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

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

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

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

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

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

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

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

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

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

Program Increases:

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

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

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

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

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

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

Cap Adjustment Program Increases

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

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

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

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

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

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

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

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

TAXPAYER SERVICES ENFORCEMENT OPERATIONS 

SUPPORT BSM TOTAL