Internal Revenue Service

FY 2016 

President’s Budget

February 2, 2015

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Table of Contents

Section 1 – Purpose..................................................................................................1

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

1.1– Appropriation Detail Table by Appropriation and Budget Activity ............................1

1B - Vision, Priorities, and Context..........................................................................................1

Section 2 – Budget Adjustments and Appropriations Language......................18

2.1 – Budget Adjustments Table.............................................................................................19

2A – Budget Increases and Decreases Description ...............................................................20

Maintaining Current Levels (MCLs).....................................................................................20

Efficiencies and Savings ..........................................................................................................20

Increase e-File Savings.........................................................................................................20

HCTC Program Termination................................................................................................21

Reinvestment............................................................................................................................21

Expand Telecom Infrastructure to Handle Increased Demand ............................................21

Before Cap Adjustment Program Increases........................................................................22

Improve Taxpayer Services...................................................................................................22

Leverage New Technologies to Advance the IRS Mission....................................................29

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other 

Requirements.........................................................................................................................37

Improve Upfront Identification and Resolution of Identity Theft Returns............................40

Implement FATCA ................................................................................................................42

Sustain Critical Information Technology (IT) Infrastructure...............................................45

Address Impact of ACA Statutory Requirements..................................................................48

Enhance Service Options for Taxpayers...............................................................................52

Restore Staffing for Essential Support Programs.................................................................54

Increase Service for Low-Income Taxpayers and Taxpayers in Need of Hardship Relief ...56

Implement Merchant Card and Basis Matching...................................................................58

Cap Adjustment Program Increases....................................................................................61

Prevent Identity Theft and Refund Fraud .............................................................................61

Increase Audit Coverage.......................................................................................................68

Improve Audit Coverage of Large Partnerships...................................................................75

Address International and Offshore Compliance Issues ......................................................78

Enhance Collection Coverage ..............................................................................................83

Leverage Data to Improve Case Selection............................................................................88

Address Compliance Risks in the Tax-Exempt Sector ..........................................................92

Pursue Employment Tax and Abusive Tax Schemes.............................................................96

Enhance Investigations of Transnational Organized Crime (TOC).....................................99

Ensure Ethical Standards of Conduct for Practitioners.....................................................101

Consolidate and Modernize IRS Facilities.........................................................................103

Maintain Integrity of Revenue Financial Systems..............................................................104

Implement Agency Wide Shared Services Priorities...........................................................105

Implement Federal Investigative Standards.......................................................................106

Transfer to TTB for High-Return on Investment (ROI) Tax Enforcement Activities..........107

2.2 – Operating Levels Table ................................................................................................108

2B – Appropriation Language and Explanation of Changes.............................................109

2C – Legislative Proposals ....................................................................................................113

2D – Legislative Tax Proposals.............................................................................................113

2E – Strategic Objective Annual Review (SOAR)..............................................................116
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2F – IRS Use of Evidence and Evaluation...........................................................................117

Section 3 – Budget and Performance Plan ........................................................119

Taxpayer Services..................................................................................................................119

2.1 – Budget Adjustments Table..........................................................................................119

2.2 – Operating Levels Table...............................................................................................120

2.3 – Appropriation Detail Table .........................................................................................121

3A – Pre-Filing Taxpayer Assistance and Education ..........................................................121

3.1.1 – Budget and Performance Report and Plan ...............................................................122

3B – Filing and Account Services .......................................................................................123

3.1.2 – Budget and Performance Report and Plan ...............................................................125

Enforcement ...........................................................................................................................126

2.1 – Budget Adjustments Table..........................................................................................127

2.2 – Operating Levels Table...............................................................................................128

2.3 – Appropriation Detail Table .........................................................................................129

3C – Investigations ..............................................................................................................129

3.1.3 – Budget and Performance Report and Plan ...............................................................131

3D – Exam and Collections .................................................................................................132

3.1.4 – Budget and Performance Report and Plan ...............................................................137

3E – Regulatory ...................................................................................................................138

3.1.5 – Budget and Performance Report and Plan ...............................................................139

Operations Support ...............................................................................................................140

2.1 – Budget Adjustments Table..........................................................................................141

2.2 – Operating Levels Table...............................................................................................142

2.3 – Appropriation Detail Table .........................................................................................143

3F – Infrastructure................................................................................................................143

3.1.6 – Budget and Performance Report and Plan ...............................................................144

3G – Shared Services and Support.......................................................................................144

3.1.7 – Budget and Performance Report and Plan ...............................................................148

3H – Information Services...................................................................................................148

3.1.8 – Budget and Performance Report and Plan ...............................................................151

Business Systems Modernization..........................................................................................152

2.1 – Budget Adjustments Table..........................................................................................152

2.2 – Operating Levels Table...............................................................................................153

2.3 – Appropriation Detail Table .........................................................................................154

3I – Business Systems Modernization .................................................................................154

3.1.9 – Budget and Performance Report and Plan ...............................................................157

Section 4 – Supplemental Information ..............................................................158

4.1 – Summary of Capital Investments................................................................................158

4A – Capital Investment Strategy ........................................................................................160

4B – IRS Aging Legacy Information Technology (IT) Infrastructure (non-BSM) 

Proposed Long-term Multiyear Funding Strategy and Timetable ...................................189

4.2 - Return on Investment (ROI) for IRS Major Enforcement Programs......................191

4.3 – IRS Performance Measure Table................................................................................193

4.4 – Alignment of the FY 2016 Initiatives to the IRS Strategic Goals.............................195

4.5 – Summary of IRS FY 2016 ACA Budget Request.......................................................196

4.6 – Summary of IRS FY 2016 Budget Request ................................................................197

4.7 – Summary of IRS FY 2016 Program Integrity Cap Adjustment ..............................198
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Internal Revenue Service

Section 1 – Purpose

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 – Appropriation Detail Table by Appropriation and Budget Activity Dollars in Thousands

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

Taxpayer Services 28,535 $2,145,195 28,274 $2,156,554 31,285 $2,408,803 3,011 $252,249 10.65% 11.70%

Pre-Filing Taxpayer Assistance and Education 5,219 595,168 5,373 626,510 5,813 682,753 440 56,243 8.19% 8.98%

Filing and Account Services 23,316 1,550,027 22,901 1,530,044 25,472 1,726,050 2,571 196,006 11.23% 12.81%

Enforcement 42,119 $4,914,497 40,564 $4,860,000 44,800 $5,399,832 4,236 $539,832 10.44% 11.11%

Investigations 3,581 601,740 3,425 602,298 3,931 713,282 506 110,984 14.77% 18.43%

Exam and Collections 37,409 4,154,342 36,104 4,104,453 39,692 4,513,376 3,588 408,923 9.94% 9.96%

Regulatory 1,129 158,415 1,035 153,249 1,177 173,174 142 19,925 13.72% 13.00%

Operations Support 11,652 $3,722,599 12,043 $3,638,446 13,863 $4,743,258 1,820 $1,104,812 15.11% 30.36%

Infrastructure 845,558 829,389 973,521 144,132 17.38%

Shared Services and Support 5,097 1,127,931 5,209 1,143,864 5,553 1,274,194 344 130,330 6.60% 11.39%

Information Services 6,555 1,749,110 6,834 1,665,193 8,310 2,495,543 1,476 830,350 21.60% 49.87%

Business Systems Modernization 337 $145,235 398 $290,000 576 $379,178 178 $89,178 44.72% 30.75%

Subtotal New Appropriated Resources 82,643 $10,927,526 81,279 $10,945,000 90,524 $12,931,071 9,245 $1,986,071 11.37% 18.15%

Other Resources:

Reimbursables 619 97,840 730 119,000 768 127,000 38 8,000 5.21% 6.72%

Offsetting Collections - Non Reimbursables 31,073 33,100 33,075 (25) -0.08%

User Fees1 1,151 419,145 191 462,360 191 450,360 (12,000) -2.60%

Recovery from Prior Years 3,297

Unobligated Balances from Prior Years1 339 241,022 408,926 385,763 (23,163) -5.66%

Transfers In/Out2 17 7,561 (5,000) (12,561) -166.13%

Resources from Other Accounts 9 3 3

Subtotal Other Resources 2,118 $792,394 924 $1,030,947 962 $991,198 38 ($39,749) 4.11% -3.86%

Total Budgetary Resources 84,761 $11,719,920 82,203 $11,975,947 91,486 $13,922,269 9,283 $1,946,322 11.29% 16.25%

FY 2016

Request FY 2016 Request

2 Resources from Transfers In/Out include FY 2014 transfers between IRS and the Office of National Drug Control Policy (ONDCP) High Intensity Drug Trafficking Area (HIDTA) Program (net transfer $17K), FY 2015 transfers between IRS and Spectrum (net transfer $7.6M), and an FY 

2016 transfer out to the Alcohol and Tobacco Tax and Trade Bureau (TTB) ($5M).

Internal Revenue Service FY 2015 to

 Resources

FY 2015

% Change

FY 2015 to

Enacted FY 2016 Request

1

FTE funded by User Fees and Unobligated Balances from Prior Years are included in the direct civilian full-time equivalent employment line of the President's Appendix.

Change

FY 2014

Actuals

1B - Vision, Priorities, and Context

The IRS is one of the best investments in the federal government. Resources invested in the 

IRS lead to significant revenue increases for the nation. This unique role is vital to keep the

nation’s economy strong and the federal government functioning. The IRS provides a broad 

range of benefits to the American people. Its dedicated staff supports the nation’s tax 

administration system by providing taxpayer service to help people understand and meet their 

tax responsibilities while ensuring enforcement of the tax laws. 

The IRS is committed to performing its core responsibilities on behalf of the American 

taxpayers and to preserving the essential fairness and integrity of the nation’s tax system. The 

IRS will fund infrastructure and technology improvements, invest in its workforce, and realize 

operational efficiencies through improved and streamlined internal processes. Major policy, 

legislative, economic, socio-demographic and technological challenges impact the way in 

which the IRS operates, but the organization is committed to meeting its responsibilities while 

continuing to embrace these challenges and the opportunities they provide to improve the 

taxpayer experience and effectively enforce the tax law.

There is no more critical challenge at the IRS than that of delivering a smooth filing season 

for the millions of American taxpayers. IRS employees, including temporary and seasonal 
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IRS Vision

We will uphold the integrity of our nation’s tax system and preserve the public 

trust through our talented workforce, innovative technology, and collaborative 

partnerships.

staff, deliver an effective and timely filing season to reduce taxpayer burden and encourage 

voluntary compliance with the tax laws. This tremendous accomplishment is achieved each 

year as a result of the dedication, talent, and experience of IRS employees. While the IRS

continues to respond to new requirements and rapid changes, many of the organization’s

innovative and far-reaching programs face the risk of delay or cancellation without adequate 

funding.

Over the last several years, the IRS has experienced significant budget reductions that are 

creating serious obstacles to the ability to fulfill its mission. Fortunately, the IRS has been 

able to execute a successful filing season, despite these cuts, but this success is often at the 

expense of other important but less visible activities. Any deterioration in taxpayer services 

and enforcement creates long-term risk for the U.S. tax system, which is based on voluntary 

compliance. A one percent drop in the voluntary compliance rate is estimated to cost the 

government $30 billion a year.

The IRS continues to focus on strengthening the public’s confidence with our effective 

administration of the nation’s tax system. The IRS has been engaged in a methodical, 

thorough, and persistent effort to identify, design, and implement management reforms that 

will benefit IRS programs and operations. The IRS mission is complemented by a vision for 

the IRS that describes the longer-term outcomes that it seeks to achieve by fulfilling the IRS

mission. 

The IRS touches virtually every American and generates 93 percent of the funding that 

supports the government’s operations. For more than a century, the IRS has helped fund 

national priorities ranging from education to defense, but never before has tax administration 

required such a wide set of skills and technological capabilities. The IRS must keep pace with 

evolving business models and an expanding global economy, and must stay ahead of schemes 

to defraud the government and the American taxpayers, all while providing new, secure 

digital options that the population of taxpayers expects in order to help them meet their tax 

obligations.

Efforts are underway to provide taxpayers with more interactive tools and online tax 

information on IRS.gov, as well as to provide more resources for those looking for forms, 

publications, and answers to basic questions on the web. Enhanced web applications will 

improve taxpayers’ online experience, provide secure digital communications, and add more 

interactive capabilities to existing web self-service products. These innovations will help the 

IRS better manage its limited resources by moving millions of people from phones onto the 

web, while giving them the ability to confidently take care of their tax obligations quickly and 

securely. Although taxpayer use of online channels is increasing, millions of people still 

prefer to interact with the IRS by phone, mail, or by visiting IRS walk-in sites, so investments 
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IRS Strategic Goals

Deliver high quality and timely service to reduce taxpayer burden and 

encourage voluntary compliance.

Effectively enforce the law to ensure compliance with tax responsibilities 

and combat fraud. 

IRS Strategic Foundation

Invest in our workforce and the foundational capabilities necessary to 

achieve our mission and deliver high performance for taxpayers and 

stakeholders. 

must be made to preserve and bolster these modes of communication. Online services will 

allow for more immediate identification of tax return anomalies so that taxpayers can correct 

them without prolonged follow-up contact or burdensome audits. 

IRS Strategic Plan 2014–2017

The IRS Strategic Plan fiscal year (FY) 2014–2017 guides program and budget decisions and 

supports the Department of the Treasury (Treasury) FY 2014 to 2017 Strategic Plan and the 

Agency Priority Goal of “increasing self-service options for taxpayers”. 

The IRS Strategic Plan FY 2014–2017 recognizes the evolving scope and increasing 

complexity of tax administration, the expanding global tax environment and changing 

business models, the increasing prevalence of refund fraud and identity theft, the need to meet 

taxpayer expectations to digitally interact in a secure manner, the growing use of tax 

preparation assistance, the need to sustain a skilled and talented workforce, and the needs of 

an increasingly diverse U.S. population. 

The IRS strategic goals provide a central direction for the attainment of its mission and vision.

Its strategic foundation for organizational excellence supplements the strategic goals and 

describes the internal initiatives required to support taxpayer-facing actions.

Each strategic goal is outcome-based and supported by several objectives. The strategic 

objectives to deliver high quality and timely service to reduce taxpayer burden and encourage 

voluntary compliance are:

• Design tailored service approaches with a focus on digital customer service to meet 

taxpayer needs, preferences, and compliance behaviors in order to facilitate voluntary 

compliance;

• Deliver clear and focused outreach, communications, and education programs to assist 

taxpayer understanding of tax responsibilities and awareness of emerging tax laws;

• Provide timely assistance through a seamless, multichannel service environment to 

encourage taxpayers to meet their tax obligations and accurately resolve their issues;
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• Strengthen refund fraud prevention and provide prompt assistance to support victims 

of identity theft;

• Reduce taxpayer burden and increase return accuracy at filing through timely and 

efficient tax administration processing;

• Improve service delivery and support effective tax administration by fostering strong 

relationships with our tax community and government partners; and

• Enhance the quality of tax services by strengthening the outreach, education, and tools 

provided to the tax professional community. 

The strategic objectives to effectively enforce the law to ensure compliance with tax 

responsibilities and combat fraud are:

• Enforce domestic and international compliance by strengthening expertise, adopting 

innovative approaches, and streamlining procedures;

• Deter and promptly resolve noncompliance by protecting revenue from refund fraud 

and ensuring appropriate revenue collection;

• Build and maintain public trust by anticipating and addressing the tax-exempt sector’s 

need for a clear understanding of its tax law responsibilities;

• Identify trends, detect high-risk areas of noncompliance, and prioritize enforcement 

approaches by applying research and advanced analytics;

• Address noncompliance by improving data, information, and knowledge sharing with 

tax community and government partners; and

• Improve compliance and reduce the risk of fraud through strong partnerships with the 

tax professional community. 

The IRS strategic foundation consists of the following objectives:

• Be the best place to work in government by building a highly talented, diverse 

workforce and cultivating an inclusive and collaborative environment; 

• Ensure a secure environment that protects the safety of our people and security of our 

facilities;

• Implement and maintain a robust enterprise risk management program that identifies 

emerging risks and mitigates them before they impact performance;

• Realize operational efficiencies and effectively manage costs by improving 

enterprise-wide resource allocation and streamlining processes;

• Invest in innovative, secure technology needed to protect taxpayer data and support 

taxpayer, partner, and IRS business needs; and

• Implement enterprise-wide analytics and research capabilities to make timely, 

informed decisions. 
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Treasury Strategic and Agency Priority Goals

The IRS FY 2016 Budget Request supports the following Department of the Treasury 

Strategic and Agency Priority Goals:

• Treasury Strategic Goal: Fairly and effectively reform and modernize federal 

financial management, accounting, and tax systems.

• Objective: Pursue tax reform, implement the Patient Protection and Affordable Care 

Act (ACA, Public Law 111-148) and Foreign Account Tax Compliance Act (FATCA, 

Public Law 111-147), and improve the execution of the tax code.

• Agency Priority Goal: Increasing Self-Service Options for Taxpayers: Introduce 

self-service and electronic-service taxpayer options to enable taxpayers to securely 

authenticate, view and print tax records online, pay outstanding debts, enter into 

installment agreements, establish a power of attorney, get tax law information, and 

easily access all parts of IRS.gov.

FY 2016 Priorities

The IRS collects the revenue to fund the government and administers the nation’s tax laws. In 

FY 2014, the IRS processed 199 million tax returns and collected $3.1 trillion in taxes (gross 

receipts before tax refunds), 93 percent of federal government receipts. Through both 

taxpayer service and enforcement programs that protect the flow of revenue to the 

government, the IRS remains committed to making the tax law easier to access and 

understand and to improving voluntary compliance and reducing the tax gap, the difference 

between taxes owed and taxes paid on time. Taxpayer service supports taxpayers by helping 

them understand their obligations under the law, correctly file their returns, and pay taxes in a 

timely manner. It also protects the trillions of dollars in revenue that taxpayers pay 

voluntarily each year into the Treasury. Enforcement pursues those who evade or 

misrepresent their tax responsibility; the IRS collected $57.1 billion in enforcement revenue 

in FY 2014. 

Without additional resources in FY 2016, millions of taxpayers will continue to see longer 

wait times on the phone to get basic questions answered and to resolve tax issues. The 

demand for taxpayer services is expected to increase in FY 2016 as the IRS continues to 

implement and administer tax-related provisions of major legislation, including the FATCA 

and the ACA. Without any increase in resources, this increased demand will further erode the 

IRS’s ability to provide the level of services that the public has a right to expect. Without an 

increase, enforcement activities must be reduced. This will result in billions of dollars in 

potential enforcement revenue going uncollected. 

The IRS FY 2016 Budget Request of $12.9 billion will provide the funding to meet the 

increased demand for taxpayer services and strengthen compliance by increasing the number 

of enforcement personnel in key areas, such as refund fraud and international tax compliance. 

The FY 2016 Budget includes a $667 million program integrity cap adjustment for new 

investments in expanding and improving the effectiveness and efficiency of the IRS’s and 

TTB’s overall tax enforcement program. The activities and new initiatives funded out of the 

cap adjustments through FY 2025 will generate $60 billion in additional revenue over 10 
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years and will cost $19 billion for an estimated net savings of $41 billion. The Budget also 

includes investments in high-priority programs affected by the staffing reductions to ensure 

that the IRS continues to deliver its vital mission.

In the Budget, the IRS seeks additional funding for:

• Taxpayer Service to improve telephone level of service (LOS); address increased 

customer service demand for ACA support; deliver enhanced service options to 

taxpayers; and increase service for low-income taxpayers and taxpayers in need of 

hardship relief;

• Enforcement to improve compliance through the implementation of FATCA, ACA, 

and Information Return Document Matching (IRDM) of merchant payment card and 

third party reimbursements and basis reporting; protect revenue by reducing the 

instances of refund fraud, including tax-related identity theft; restore eroding exam 

and collection enforcement programs; expand criminal investigation capabilities; and 

address compliance issues in the tax-exempt sector;

• Infrastructure to sustain critical IT infrastructure; address physical infrastructure 

projects related to health and safety concerns at IRS facilities; and maintain the 

integrity of revenue financial systems; and

• Business Systems Modernization to invest in new IT capabilities for the future, such 

as expanding online self-service applications on IRS.gov which improve the taxpayer 

experience. These include the Get Transcript tool which allows taxpayers 

instantaneous access to their tax records; IRS Direct Pay, which provides a secure, nofee electronic option to make and schedule tax payments; and re-launch of IRS2Go, 

which provides access to Where’s My Refund? and other popular online features from 

mobile devices. BSM will also be used to develop a shared platform for case 

management to improve capabilities across the IRS and for other investments. 

Reducing the Tax Gap

Investments in IRS enforcement programs have yielded significant increases in enforcement 

revenue. Enforcement revenue was $57.1 billion in FY 2014, for a total IRS-wide ROI of 

$5.1 to $1. The ROI estimate does not include the revenue effect of the indirect deterrence 

value of these investments and other IRS enforcement programs, which is conservatively 

estimated to be at least three times the direct revenue impact.

In FY 2012, the IRS released updated estimates of the difference between taxes owed and 

taxes paid on a timely basis—the “tax gap.” The IRS estimated that taxpayers underpaid by 

$385 billion in 2006, net of late payments and IRS enforcement activities (see Tax Gap Map 

for Tax Year 2006). The voluntary compliance rate—the percentage of total tax revenue paid 

on time—for tax year 2006 was 83.1 percent. This rate is statistically unchanged from tax 

year 2001. 
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The three components of the tax gap are:

• Underreporting – Not reporting the full tax liability on a timely-filed return;

• Nonfiling – Not filing required returns on time; and

• Underpayment – Not timely paying the full amount of tax reported on a timely-filed 

return.

Underreporting tax liability ($376 billion) comprises 

84 percent of the gross tax gap ($450 billion). 

The remainder is divided between nonfiling 

($28 billion, 6 percent) and underpayment ($46 billion, 

10 percent). The IRS remains committed to finding 

ways to increase compliance and reduce the tax gap,

while minimizing the burden on the vast majority of 

taxpayers who pay their taxes accurately and on time.

Taxpayer Service and Enforcement Programs 

Complement Each Other

The IRS serves individuals, businesses, and tax-exempt entities. The system of voluntary tax 

compliance is most effective when the IRS is able to provide excellent taxpayer service for 

Tax Gap “Map”

Tax Year 2006 ($ billions)

Actual Amounts 

Updated Estimates

No Estimates Available

Categories of Estimates

Nonfiling

$28

Individual

Income Tax

$25

Corporation

Income Tax

#

Employment

Tax

#

Excise

Tax

#

Estate

Tax

$3

Underpayment

$46

Individual

Income Tax

$36

Corporation

Income Tax

$4

Employment

Tax

$4

Estate

Tax

$2

Excise

Tax

$0.1

FICA

Tax on Wages

$14

Unemployment

Tax

$1 

Individual

Income Tax

$235

Non-Business

Income

$30.6

Business

Income

$65.3 

Corporation

Income Tax

$67

Estate

Tax

$2

Excise

Tax

#

Business

Income

$122

Large 

Corporations 

(assets > $10m)

$48

Self-Employment

Tax

$57

Non-Business

Income

$68

Small 

Corporations

(assets < $10m)

$19

Credits

$28

Adjustments,

Deductions,

Exemptions

$17

Underreporting

$376

Employment

Tax

$72

Tax Paid Voluntarily & Timely: $2,210 Total Tax

Liability

$2,660 Enforced & Other

Late Payments of Tax

$65 

Net Tax Gap: $385

(Tax Never Collected)

(Net Compliance Rate = 85.5%)

Gross Tax Gap: $450

(Voluntary Compliance Rate = 83.1%)

#

Underreporting

 84%

Underpayment

 10%

 Nonfiling

 6%
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those who are trying to meet their obligations under the law and provide a robust and fair 

enforcement program for those who fail to comply with their responsibilities to their fellow 

citizens. Most taxpayers comply with the law by filing returns and paying their taxes on time, 

but some do not comply because they do not understand their obligations under the complex 

tax laws. Noncompliance can stem from a wide range of causes, including lack of knowledge 

and complexity of the tax code.

Taxpayer Service

Providing taxpayers top-quality service and helping them understand and meet their tax 

obligations remain top priorities for the IRS. The IRS strives to deliver high quality and 

timely service to taxpayers and stakeholders. Although the IRS had significant 

accomplishments serving taxpayers in FY 2014, budget constraints forced the IRS to focus on 

its top priorities and reduce funding in many areas. 

The IRS process for programming and testing systems was delayed by a month in October 

2013 due to the lapse in federal appropriations. Despite this delay and significant resource 

constraints, the IRS achieved the following results through September 2014:

• Posted 137.9 million individual returns and issued more than 114.8 million refunds 

totaling $315.6 billion;

• Achieved a 64.4 percent LOS, although average wait times increased to almost 20 

minutes;

• Answered 23.1 million assistor calls;

• Achieved accuracy rates of 95.0 percent for tax law questions and 96.2 percent for

account questions received via the telephone; and

• Direct deposited more than $244.8 billion in refunds. 

The number of individual and business returns filed electronically (e-file) continues to grow. 

Quicker refunds and a more efficient way for taxpayers to file accurate returns, coupled with 

innovative technology, such as home computer filing, contributed to the increase in e-file 

returns. FY 2014 results through September 30, 2014 included:

• Individual returns electronically filed increased to 84.1 percent of filings, an increase 

of 1.9 percent;

• Business returns filed electronically increased to 43.1 percent of filings, an increase of 

7.2 percent;

• Home-computer filing increased to almost 48.0 million tax returns, an increase of 

6.0 percent; and 

• Tax professional use of e-file increased by 1.2 percent, to 77.8 million returns. 

The IRS continued to enhance digital self-service options by increasing the amount of tax 

information and services available to taxpayers through IRS.gov and the mobile app, IRS2Go. 
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The IRS developed and launched new web and mobile tools allowing taxpayers and third 

parties to transact with the IRS, including: 

• Get Transcript provides a current digital display and print of an individual’s tax 

record across five transcript types using enterprise-wide authentication. Since the 

January 2014 launch, more than 18.6 million transcripts have been generated through 

this application, which represents more than 79 percent of all transcript requests 

during that time period.

• IRS2Go provides a “Where’s my Refund” tracker and locator for voluntary tax 

assistance on a re-engineered mobile tool. The IRS2Go mobile application has been 

downloaded more than 5.4 million times since its release. 

• Direct Pay is the first payment application in which an individual taxpayer can make 

a payment fully electronically without paying a fee. Payment scheduling and payment 

lookup features have been added. Direct Pay has collected $2.7 billion since its

November 2013 launch. 

• e-Authentication provides secure access to IRS online tools and applications. Since 

the January 2014 launch, more than 5.8 million knowledge-based authentications have 

occurred. 

• Payment Mix Comparison Tool allows preparers, on behalf of the business taxpayer 

community, to compare the portion of gross receipts from credit/debit card receipts the 

business plans to report to results of similar businesses from prior years. This tool will 

encourage accurate reporting by payment recipients according to Form 1099-K, 

Payment Card and Third Party Network Transactions, and help close the tax gap. 

• Online Payment Agreement (OPA) improvements provide the taxpayer the ability 

to submit an application for an installment agreement fully online. Since

implementation, In-Business Trust Fund taxpayers (i.e. taxpayers that owe trust fund 

taxes and are still doing business) who owe $25,000 or less are now able to use the 

OPA webpage to enter into installment agreements with the IRS. Other enhancements 

included revisions to the design of the OPA webpage, making it easier for the online 

user to navigate the site and establish payment agreements. 

The FY 2014 Service Approach identified in the IRS Strategic Plan allowed the IRS to reserve 

person-to-person service for those who had issues that only the IRS could resolve (e.g. 

assisting taxpayers who have received a notice). Savings from these initiatives were 

reinvested into improving service on the phones and at walk-in sites. It allowed the IRS to 

use the right mix of technology, employees, and IRS partners to best serve customers in the 

face of changing resources. Comprehensive engagement and communication efforts have 

helped employees and taxpayers migrate towards alternative self-service channels.

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

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

Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites 

provided free tax assistance for the elderly, disabled, and limited English proficient 

individuals and families. More than 3.6 million tax returns were filed at VITA and TCE sites, 
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representing a 7.4 percent increase over last year. These returns maintained a 92.2 percent 

accuracy rate.

The Budget includes an additional $342.4 million to improve customer service to meet 

taxpayer demand and continue delivering services to taxpayers. 

Enforcement

Enforcement of the tax law is an integral part of the IRS effort to enhance voluntary 

compliance, especially as tax administration becomes increasingly complex. The IRS has 

maintained a balanced and effective enforcement program despite many challenges, collecting 

more than $50 billion in enforcement revenue in FY 2014, the fifth year in a row. In 

FY 2014, the IRS collected more than $57.1 billion, a 7 percent increase from FY 2013 

through the same period. It is important to note, however, that a variety of factors impact 

enforcement revenue collections, including changes in tax policy and the health of the 

macroeconomy. Thus, this trend should not be interpreted to suggest that budget cuts have 

not reduced IRS’s enforcement capabilities. In fact, the individual examination coverage rate 

has steadily declined from 1.11 percent in FY 2010 to 0.86 percent in FY 2014. If IRS 

enforcement funding had remained at FY 2010 levels, FY 2014 collections would have been 

even higher than what was possible with current resources.

The continued budget constraints in FY 2014 have resulted in the delivery of key enforcement 

programs below FY 2013 levels. Through September 2014, total individual audits fell 

11.5 percent to 1.2 million, while audits of high-income individuals declined 7.3 percent

compared to 2013. Small business return audits dropped 2.6 percent, corporate audits fell 

20.5 percent, while Tax Exempt and Government Entities (TE/GE) compliance contacts fell 

more than 17.4 percent.

The IRS Criminal Investigation (CI) program investigates potential criminal violations of the 

Internal Revenue Code and related financial crimes such as money laundering, currency 

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

administration. Highlights of IRS CI’s Enforcement performance through FY 2014, 

compared to FY 2013 during the same period, include:

• Completing 4,606 criminal investigations, a decrease of 17.1 percent;

• Achieving a conviction rate of 93.4 percent, similar to FY 2013;

56.4

48.9

57.6 55.2 50.2 53.3 57.1

0

20

40

60

FY08 FY09 FY10 FY11 FY12 FY13 FY14

IRS Enforcement Revenue ($ Billions)
IRS-11

• Maintaining a Department of Justice acceptance rate of 93.1 percent with a U.S. 

Attorney acceptance rate of 90.5 percent, which compares favorably with other federal 

law enforcement agencies; and

• Obtaining 3,110 convictions, similar to last year.

The IRS made major changes to the offshore voluntary compliance programs, providing new 

options to help taxpayers residing overseas or in the United States who had unreported foreign 

financial accounts. The changes included:

• Eliminating a requirement that the taxpayer have $1,500 or less of unpaid tax per year.

• Eliminating the required risk questionnaire.

• Requiring the taxpayer to certify that previous failures to comply were due to 

non-willful conduct.

The IRS implemented several improvements to the Offshore Voluntary Disclosure Program 

(OVDP) by:

• Requiring additional information from taxpayers applying to the program.

• Eliminating the existing reduced penalty percentage for certain non-willful taxpayers 

in light of the expansion of the streamlined procedures.

• Requiring taxpayers to submit all account statements and pay the offshore penalty at 

the time of the OVDP application.

• Enabling taxpayers to submit voluminous records electronically rather than on paper.

The IRS streamlined the determination process for tax-exempt status applications. When an 

application cannot be completed on its initial merit, the applicant is directed to provide 

additional information and sign attestations guaranteeing truthfulness. The IRS also:

• Piloted a pre-classification process to improve the content of information request 

letters through the use of standardized questions for particular issues; and

• Created Form 1023-EZ, a simplified two-page version of the 26 page Form 1023, 

Application for Recognition of Exemption Under Section 501(c)(3) of the Internal 

Revenue Code.

As a result of these efforts, at the end of FY 2014, the IRS closed over 117,500 exempt 

organization determination , a 121 percent increase from FY 2013. In addition, the bureau 

reduced the open inventory of applications to 22,759 cases, a 65 percent decrease from the 

previous year.

The IRS made significant process changes to address concerns about applications for 

tax-exempt status (civic leagues, social welfare organizations, or local associations of 

employees) under Section 501(c)(4):

• Established a process documenting reasons why applications are selected for further 

review;
IRS-12

• Developed training and workshops identifying issue advocacy versus political 

campaign intervention and identifying applications for review of political campaign 

intervention activities;

• Established processing guidelines for applications involving potentially significant 

campaign intervention; and

• Created a formal process for IRS determinations personnel to request assistance from 

technical experts.

Implementation of the Foreign Account Tax Compliance Act (FATCA)

FATCA was enacted in March 2010 as part of the Hiring Incentives to Restore Employment 

(HIRE) Act (P.L. 111-147) to improve tax compliance for foreign accounts and cross-border 

transactions. The program represents an effort to reduce tax evasion by creating transparency 

and accountability in offshore financial transactions. The Act provides the IRS with a new 

tool to enforce international tax laws involving individual and business taxpayers, by 

requiring taxpayers and foreign financial institutions to disclose certain information regarding 

U.S. taxpayer accounts to avoid withholding on certain payments.

FATCA aims to ensure that offshore investment activities are properly captured for tax 

administration purposes by instituting reporting requirements for foreign financial institutions. 

Third party reporting will promote greater transparency into U.S. taxpayer accounts and 

enable increased identification of non-compliant taxpayers. 

FY 2014 accomplishments include:

• Deployed the FATCA Foreign Financial Institutions (FFI) Registration System to the 

public;

• Established the concept of Global Intermediary Identification Numbers (GIINs) – a 

new international numbering scheme developed by the IRS to implement a 

standardized worldwide residence-based information reporting; and approved and 

assigned GIINs to over 120,000 financial institutions to date;

• Deployed the IRS FFI List Search and Download Tool;

• Identified requirements and awarded a contract to a third party vendor to develop the 

International Data Exchange Service (IDES);

• Identified requirements and currently working on development of the International 

Compliance Management Model (ICMM) – a system to manage FATCA submissions 

processing, storage, and notification; 

• Identified requirements for new Chapter 3 and Chapter 4 withholding compliance and 

refund fraud detection capabilities;

• Developed a FATCA Compliance Strategy; and

• Developed and shared resources to assist taxpayers, financial institutions, and Host 

Country Tax Administrations with FATCA implementation (e.g., FATCA News and 

Information List, FAQs, user videos, and user guides).
IRS-13

Implementation of the Tax-related Provisions of the ACA

The ACA represents the largest and most complex set of tax law changes in more than 

20 years, with more than 40 provisions amending the tax laws. 

During FY 2014, IRS continued implementation of the ACA and outreach activities to ensure 

that taxpayers were aware of the new tax provisions. The IRS continued its work with the 

group of organizations set up to facilitate the purchase of health insurance in each state on the 

requirements and procedures for safeguarding federal tax information used in the Exchange 

(IRC 6103 (l)(21)), Disclosure of Return Information to Carry Out Eligibility Requirements 

for Health Insurance Affordability Programs). Also, IRS collaborated with the Department of 

Health and Human Services (HHS) on outreach and IT deployment relating to the insurance 

market reforms and health insurance exchange system. In addition, the IRS issued 33 items of 

published guidance on ACA Provisions, including final regulations on the Branded 

Prescription Drug Fee, the Premium Tax Credit (PTC), the Insurance Provider Fee, additional 

Medicare tax, net investment income tax, the employer responsibility provision, information 

reporting regulations for insurers and employers, disclosure of tax data to marketplaces, the 

individual responsibility provision, the Patient-Centered Outcomes Research Trust Fund Fee, 

the medical device excise tax, and various guidance from Treasury, HHS, and Department of 

Labor on plan content and procedures. 

IRS issued proposed regulations on the small business health care tax credit (2014 phase), 

information reporting regulations for marketplaces, additional proposed regulations for net 

investment income tax, and coverage for certain preventive services. The IRS launched the 

Income and Family Size Verification process in time for the marketplace Open Enrollment in 

October 2013 (IRS ACA Release 3.0) and the Insurer Provider Fee in March 2014 (IRS ACA 

Release 4.1).

The development and deployment of these releases involved new and innovative software 

development processes and technology, close cooperation with outside agencies, and highly 

visible, public-facing activities that were crucial for the successful stand-up and operation of 

the Health Insurance Marketplaces. 

Progress Made on Tax-Related Identity (ID) Theft

In calendar year 2014 (through November), the IRS prevented 1.7 million potential ID theft 

cases worth $10.3 billion from being paid out in fraudulent refunds. 

• The IRS sent suspicious refunds for verification, which prevented revenue loss and 

developed and improved ID theft filters based on analytical models, schemes 

identified by Criminal Investigation (CI), and data validation. 

• Enhanced ID theft filters focus on multiple tax returns filed using the same address 

and/or bank account. These filters alone allowed the IRS to stop over 

533,000 fraudulent returns with associated refunds of $3.2 billion in calendar year 

2014. 
IRS-14

The IRS also held an eAuthentication and Identity Protection Summit to develop a strategy 

and implementation roadmap to significantly deter identity theft, reducing fraud and the need 

for victim assistance. 

IRS examiners conducted 250 compliance visits to money services businesses nationwide 

(29 states and Puerto Rico) in relation to the Bank Secrecy Act. The highest percentage of the 

visits occurred in the states of Florida and Georgia, which are known high-risk areas for 

refund fraud and ID theft. These compliance visits help ensure check-cashing facilities are 

not, knowingly or unknowingly, facilitating refund fraud and ID theft. In addition, the IRS 

had more than 900 check-cashing operations under examination across the country and looked 

for indicators of ID theft as part of its examination efforts.

The IRS launched the Identity Protection Personal Identification Number (IP PIN) application 

in January 2014, allowing taxpayers with an IP PIN to retrieve their PIN online. Taxpayers 

previously had to call the IRS to replace a lost or misplaced IP PIN. The new application 

allows taxpayers to quickly file their tax return with manual verification. Since 

implementation of the IP PIN web application, the IRS has generated nearly 119,000 IP PINs. 

Additionally, taxpayers from three high-risk identity theft areas—Florida, Georgia, and 

Washington, D.C.—that used the Electronic Filing Personal Identification Number (EFP) 

voluntarily opted into a pilot to receive an IP PIN.

Fraudulent attempts to obtain taxpayer information through false IRS websites and other 

electronic methods continued to occur. In FY 2014, the IRS Cybersecurity Computer 

Security Incident Response Center (CSIRC) identified, mitigated, and responded to more than 

1,600 cyber incidents, blocked the internet address of more than 3,750 malicious external 

websites, and issued nearly 700 advisories and bulletins to prevent access to malicious or 

compromised sites. The IRS also shut down over 1,200 sites, including approximately 

300 schemes related to “Get Your Refund,” within a median of 0.5 hours for domestic sites 

and 10.4 hours for international sites.

Program Integrity Cap Adjustment 

In addition to the base appropriations request of $12.3 billion, the FY 2016 Budget proposes a 

$667 million cap adjustment to fund new and continuing investments in expanding and 

improving the effectiveness and efficiency of the IRS’s and TTB’s overall tax enforcement 

program. The proposed new FY 2016 enforcement initiatives will yield additional revenue

discussed below. New investments are also proposed beyond FY 2016, with cap adjustments 

through FY 2020 and sustained with additional adjustments through 2025. The activities and 

new initiatives funded out of the cap adjustments through FY 2025 will generate 

approximately $60 billion in additional revenue over 10 years and will cost about $19 billion 

for an estimated net savings of $41 billion. Notably, the ROI is likely understated because it 

only includes amounts received; it does not reflect the effect enhanced enforcement has on 

deterring non-compliance. This deterrent effect helps to ensure the continued payment of 

over $3 trillion in taxes paid each year without direct enforcement measures.
IRS-15

Return on Investment (ROI) for FY 2016 Enforcement Initiatives

Enforcement efforts increase revenue by encouraging voluntary compliance for those 

taxpayers who seek to avoid meeting their tax obligations under the law. Resources for 

traditional revenue-producing compliance programs yield direct, measurable results through 

high ROI enforcement activities such as examination and collection. 

The Budget includes $166.1 million to implement enacted legislation and merchant card and 

basis matching (traditional revenue-producing portion), with an additional $425.6 million for 

IRS enforcement revenue-producing initiatives funded through the program integrity cap 

adjustment discussed above. Of this amount, $5 million will be transferred to TTB, with the 

remaining $420.6 million going towards traditional revenue-producing initiatives. 

$96.9 million is included to protect revenue, $90.5 million of which is also funded through a 

program integrity cap adjustment. The cap adjustment also includes a $36.8 million 

revenue-enhancing initiative, as well as $315.2 million for other compliance-related initiatives 

in the Operations Support account (see Section 4.7, Summary of Program Integrity Cap 

Adjustment).

FY 2016 Revenue-Producing Initiatives

The FY 2016 traditional revenue-producing initiatives not included in the program integrity 

cap adjustment are estimated to produce $658.4 million in additional annual enforcement 

revenue, achieving an FY 2018 ROI of $4.1 to $1.0. 

The $420.6 million requested for the IRS FY 2016 traditional new revenue-producing 

enforcement initiatives funded through the program integrity cap adjustment is estimated to

generate $2,798.9 million in additional annual enforcement revenue, achieving an FY 2018 

ROI of $6.4 to $1.0.

Return on Investment for IRS FY 2016 Revenue-Producing Enforcement Initiatives

Dollars in Millions

Cost Revenue ROI Cost Revenue ROI

FY 2016 Revenue Producing Enforcement Initiatives $586.7 $1,117.9 1.9 $595.0 $3,457.3 5.8

Revenue-Producing Enforcement Initiatives to Implement Enacted Legislation $166.1 $256.5 1.5 $160.4 $658.4 4.1

Implement Foreign Account Tax Compliance Act (FATCA) 71.0 67.7 1.0 66.6 155.1 2.3

Implement Merchant Card and Basis Matching 34.3 124.2 3.6 29.0 321.6 11.1

Address Impact of Affordable Care Act (ACA) Statutory Requirements 60.8 64.6 1.1 64.8 181.7 2.8

Cap Adjustment Enforcement Initiatives $420.6 $861.4 2.0 $434.6 $2,798.9 6.4

Immediate and Directly Measurable Revenue-Producing Initiatives $333.1 $861.4 2.6 $352.8 $2,798.9 7.9

Address International and Offshore Compliance Issues 40.7 49.3 1.2 43.1 159.6 3.7

Increase Audit Coverage 150.7 397.5 2.6 158.5 1,266.7 8.0

Enhance Collection Coverage 122.8 345.9 2.8 131.2 1,179.7 9.0

Improve Audit Coverage of Large Partnerships 16.2 44.5 2.7 16.9 129.1 7.6

Prevent Identity Theft and Refund Fraud 2.7 24.2 9.0 3.1 63.8 20.6

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

but clear long-term revenue effects)

$87.5 $0.0 0.0 $81.8 $0.0 0.0

Address Compliance Risks in the Tax-Exempt Sector 23.5 0.0 0.0 24.6 0.0 0.0

Pursue Fraud Referrals, Employment Tax, and Abusive Tax Schemes 17.2 0.0 0.0 16.2 0.0 0.0

Enhance Investigations of Transnational Organized Crime 42.5 0.0 0.0 35.9 0.0 0.0

Ensure Ethical Standards of Conduct for Practitioners 4.3 0.0 0.0 5.1 0.0 0.0

First Year (FY 2016) Full Performance (FY 2018)
IRS-16

FY 2016 Revenue-Protecting Initiatives

In addition to the traditional revenue-producing initiatives, IRS activities to prevent the 

issuance of fraudulent returns related to identify theft will allow the IRS to identify and 

resolve issues prior to issuing a taxpayer’s refund. While this number is not currently 

included in the IRS’s traditional ROI calculations, investment in these activities is projected 

to protect more than $1 billion in revenue at a lower cost than the downstream enforcement 

actions, and achieve an FY 2018 ROI of $12.5 to $1.0.

FY 2016 Revenue-Protecting Enforcement Initiatives 

FY 2016 Revenue-Enhancing Initiative

Improved technology also increases revenue collection by providing better case selection, 

issue identification, and enforcement case treatment. This technology allows the IRS to adapt 

quickly to changing taxpayer compliance behavior. While this number is not currently 

included in the IRS’s traditional ROI calculations, the FY 2016 revenue-enhancing initiatives 

are expected to increase revenue by $75.4 million from technology investments that will 

analyze compliance data more efficiently and provide better case selection, issue 

identification, and treatment selection, achieving an FY 2018 revenue enhancement ROI of 

$1.8 to $1.0. 

FY 2016 Revenue-Enhancing Initiative

Business Systems Modernization

The IRS modernization efforts continued in FY 2014: 

• Customer Account Data Engine 2 (CADE 2) – The CADE 2 program allows daily 

processing of the tax system. CADE 2 had a smooth filing season launch in January

2014 and continues to demonstrate integration into Filing Season operations and 

standard incident management processes. The project recently met criteria that 

provide a high level of confidence in the readiness and accuracy of the system’s 

performance, operational processes, and data quality. In FY 2014, CADE 2 received 

Dollars in Millions

Cost Revenue ROI Cost Revenue ROI

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

in long-term revenue protection)

$96.9 $446.5 4.6 $98.2 $1,231.9 12.5

Revenue Protecting Initiatives to Implement Enacted Legislation $6.4 $28.4 4.4 $7.3 $88.7 12.2

Address Impact of ACA Statutory Requirements (revenue-protecting portion) 6.4 28.4 4.4 7.3 88.7 12.2

Cap Adjustment Revenue Protecting Initiative $90.5 $418.1 4.6 $90.9 $1,143.2 12.6

Increase Audit Coverage (revenue-protecting portion) 11.1 35.4 3.2 12.7 112.1 8.8

Prevent Identity Theft and Refund Fraud 79.4 382.7 4.8 78.2 1,031.1 13.2

First Year (FY 2016) Full Performance (FY 2018)

Dollars in Millions

Cost Revenue ROI Cost Revenue ROI

Cap Adjustment Revenue-Enhancing Initiative (which leverages technology to improve case 

selection and analysis)

$39.1 $0.0 0.0 $41.4 $75.4 1.8

Leverage Data to Improve Case Selection 39.1 0.0 0.0 41.4 75.4 1.8

First Year (FY 2016) Full Performance (FY 2018)
IRS-17

more than 140.1 million returns and issued over 113.2 million refunds, totaling 

$300.7 billion.

• Modernized e-File (MeF) - MeF receives and processes all tax returns submitted 

electronically. For Filing Season 2014, a new MeF release was deployed on 

January 31 and has performed successfully in production. In FY 2014, taxpayers 

submitted more than 231.4 million individual and business returns (includes both 

federal and state submissions) through MeF.

The Budget includes an increase of $92 million for BSM activities and support in order to 

continue implementing advanced information technology systems, processes, and tools to 

improve productivity. This request provides funding to expand the capabilities of the CADE 

2 relational database and address the financial material weakness; enhance the taxpayer’s 

online experience and provide secure digital communications; complete the design, 

development, testing, and deployment of various estate and gift tax forms for electronic 

acceptance; increase fraud detection, resolution, and prevention through use of the Return 

Review Program; and implement a new enterprise case management solution.
IRS-18

Section 2 – Budget Adjustments and Appropriations Language

The IRS Budget Request for FY 2016 is $12,931,071,000 in direct appropriations and 

90,524 FTE. This is an increase of $1,986,071,000, or 18.15 percent, and 9,245 FTE more 

than the FY 2015 Enacted level of $10,945,000,000 and 81,279 FTE. 
IRS-19

2.1 – Budget Adjustments Table

Dollars in Thousands

Internal Revenue Service FTE Amount

FY 2015 Enacted 81,279 $10,945,000

Changes to Base:

Maintaining Current Levels (MCLs): $200,677

Pay Annualization 21,002

Pay Raise (1.3%) 82,112

Non-Pay 48,710

FERS Contribution Increase 29,553

Federal Employees Health Benefits (FEHB) Program Modification 19,300

Efficiencies/Savings: (61) ($18,431)

Increase e-File Savings (46) (2,406)

HCTC Program Termination (15) (16,025)

Reinvestments: $16,025

Expand Telecom Infrastructure to Handle Increased Demand 16,025

Subtotal FY 2016 Changes to Base (61) $198,271

FY 2016 Current Services (Base) 81,218 $11,143,271

Program Changes:

Before Cap Adjustment Program Increases:

Improve Taxpayer Services 2,970 301,523

Leverage New Technologies to Advance the IRS Mission 178 91,573

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements 818 305,645

Improve Upfront Identification and Resolution of Identity Theft Returns 193 18,884

Implement Foreign Account Tax Compliance Act (FATCA) 461 71,005

Sustain Critical Information Technology (IT) Infrastructure 157 188,514

Address Impact of Affordable Care Act (ACA) Statutory Requirements 483 67,206

Enhance Service Options for Taxpayers 54 16,243

Restore Staffing for Essential Support Programs 152 19,938

Increase Service for Low-Income Taxpayers and Taxpayers in Need of Hardship Relief 27 5,719

Implement Merchant Card and Basis Matching 322 34,253

Subtotal FY 2016 Before Cap Adjustment Program Increases 5,815 $1,120,503

Total FY 2016 Request Before Cap Adjustment 87,033 $12,263,774

Cap Adjustment Program Increases:

Enforcement Initiatives:

Prevent Identity Theft and Refund Fraud 420 82,162

Increase Audit Coverage 1,099 161,809

Improve Audit Coverage of Large Partnerships 107 16,249

Address International and Offshore Compliance Issues 238 40,657

Enhance Collection Coverage 1,034 122,830

Leverage Data to Improve Case Selection 59 39,060

Address Compliance Risks in the Tax-Exempt Sector 159 23,462

Pursue Employment Tax and Abusive Tax Schemes 52 17,186

Enhance Investigations of Transnational Organized Crime (TOC) 194 42,528

Ensure Ethical Standards of Conduct for Practitioners 28 4,280

Subtotal Enforcement Initiatives 3,390 $550,223

Infrastructure Initiatives:

Consolidate and Modernize IRS Facilities 74 85,456

Maintain Integrity of Revenue Financial Systems 7 12,162

Implement Agency Wide Shared Services Priorities 9 10,992

Implement Federal Investigative Standards 11 3,464

Subtotal Infrastructure Initiatives 101 $112,074

Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer:

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

Subtotal Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer Initiative $5,000

Subtotal FY 2016 Cap Adjustment 3,491 $667,297

Subtotal FY 2016 Program Increases 9,306 $1,787,800

Total FY 2016 Budget Request1 90,524 $12,931,071

Dollar/FTE Change FY 2016 Budget Request over FY 2015 Enacted 9,245 $1,986,071

Percent Change FY 2016 Budget Request over FY 2015 Enacted 11.37% 18.15%

1

FTE include those funded with newly appropriated resources only. FTE funded by User Fees and Unobligated Balances from Prior Years are included in the 

direct civilian full-time equivalent employment line of the President's Appendix, but are not shown in the table above.
IRS-20

Initiative Labor Costing Methodology

The IRS uses a variety of methods to calculate the cost of its initiatives. Costs for initiatives 

that require labor funding are calculated by converting the workload to the number and type 

of staff (e.g., Revenue Agents, Revenue Officers, or Special Agents) needed to deliver 

targeted performance goals. Once the number of full-time equivalents (FTE) and type of staff 

are determined, the cost of the FTE is estimated using a Unit Cost Rate (UCR) calculator, a 

tool for projecting FTE salary and non-salary support costs and/or savings. The UCR 

calculator fully costs the salary, benefits, and support costs needed for each FTE. 

The FY 2016 initiative FTE were estimated assuming a January 1 hire date except for 

front-line positions in Submission Processing and Account Management and Assistance –

Electronic/Correspondence Assistance, which were estimated assuming an October 1 hire 

date. The primary function of the Submission Processing and Account Management and 

Assistance taxpayer service programs is to provide service to taxpayers during the filing 

season. These programs manage their workload using staff hours, not FTE. They are not as 

dependent on the traditional hiring and training process that is experienced in other IRS 

programs because they have a large existing seasonal workforce that is available to work 

additional hours as resources become available. To fully fund the FTE requested in the 

FY 2016 Budget Request estimated using a January 1 hire date, the IRS will require an 

additional $164.7 million and 1,651 FTE for annualization in FY 2017.

2A – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs)..................................................+$200,677,000 / 0 FTE 

Pay Annualization +$21,002,000 / 0 FTE

Funds are requested for annualization of the January 2015 pay raise. 

Pay Raise +$82,112,000 / 0 FTE

Funds are requested for the proposed January 2016 pay raise.

Non-Pay +$48,710,000 / 0 FTE

Funds are requested for inflation adjustments in non-labor costs such as travel, contracts, rent, 

supplies, and equipment. 

FERS Contribution Increase +$29,553,000 / 0 FTE

Funds are requested for increases in agency contributions to the Federal Employee Retirement 

System based on updated actuarial estimates.

Federal Employees Health Benefits (FEHB) Program Modification +$19,300,000 / 0 FTE

Funds are requested to meet a new Office of Personnel Management (OPM) guidance to 

modify eligibility for coverage under the FEHB Program to certain temporary, seasonal, 

and/or intermittent employees.

Efficiencies and Savings.....................................................................-$18,431,000 / -61 FTE

Increase e-File Savings -$2,406,000 / -46 FTE

These savings are a result of reduced paper returns. The IRS projects a total of 

1,026,100 fewer returns filed on paper (525,100 individual and 501,000 business returns). 
IRS-21

Position Type/Other Costs FTE Positions $000

Expand Telecom Infrastructure to Handle 

Increased Demand $16,025

Equipment and Infrastructure 15,327

Hardware and Software 698

Total $16,025

HCTC Program Termination -$16,025,000 / -15 FTE

The Health Coverage Tax Credit (HCTC) program was terminated January 1, 2014, in 

accordance with the Trade Adjustment Assistance Extension Act of 2011 

(Public Law 112-40). 

Reinvestment...........................................................................................+$16,025,000 / 0 FTE

Expand Telecom Infrastructure to Handle Increased Demand +$16,025,000 / +0 FTE

This reinvestment expands the 

Customer Service Representative 

(CSR) toll-free call center 

telecommunication infrastructure to 

allow the IRS to answer the additional 

telephone calls expected to result 

from implementation of the ACA. The requested funding covers expanded 

telecommunications infrastructure and equipment, hardware costs for high-speed internet 

connections, and encryption technology.
IRS-22

Total Program Increases........................................................+$1,787,800,000 / +9,306 FTE

Before Cap Adjustment Program Increases........................+$1,120,503,000 / +5,815 FTE

Improve Taxpayer Services +$301,523,000 / +2,970 FTE

Funds requested to Improve Taxpayer Services will allow the IRS to:

• Increase the CSR telephone 

LOS to 80 percent to handle 

an anticipated increase in 

demand due in part to the 

ACA implementation;

• Meet the projected increased 

demand for taxpayer 

face-to-face assistance and 

outreach resulting from ACA 

implementation and improve 

the effectiveness and 

efficiency of service 

responses;

• Expand staffing to assist with 

managing the ACA 

submission processing 

workload and provide 

advanced technology to 

electronically receive 

amended returns; and 

• Increase outreach and 

communications activities,

including the development of 

educational programs and the 

modernization of tax product 

development, publishing, and 

taxpayer letters.

Position Type/Other Costs FTE Positions $000

Increase Taxpayer Level of Service (LOS) 

to 80% 2,115.50 2,130 $185,704

Traditional Demand 1,501.00 1,501 $121,333

Customer Service Representative (CSR) 963.00 963 82,336

CSR - Seasonal 405.00 405 27,215

Manager and Analyst 133.00 133 11,782

Affordable Care Act (ACA) Demand 607.00 619 $48,263

Customer Service Representative (CSR) 295.00 295 25,418

CSR - Seasonal 257.00 257 17,216

Manager and Analyst 17.00 17 1,501

Joint Operations Center 38.00 50 4,128

Authentication Retention (AR) Technology $6,277

IT Equipment for CSR Telework 7.50 10 $4,720

Customer Callback (formerly Virtual Hold) $3,327

Computer Telephone Integration (CTI) 

Technology $1,784

Maintain & Improve the Taxpayer Experience 346.00 474 $32,901

ACA Field Assistance and Outreach 284.50 384 $27,403

Individual Taxpayer Advisory Specialist (ITAS) 146.25 182 13,670

ITAS - Seasonal 96.00 146 8,779

Manager and Analyst 42.25 56 4,954

e-File Authentication 55.50 82 $4,837

Analyst - Seasonal 42.00 64 3,289

Manager and Analyst 13.50 18 1,548

Enhance Quality and Effectiveness of Services 

Provided to Taxpayers 6.00 8 $661

Program Analyst 4.50 6 430

Business Modernization Office (BMO) Analyst 1.50 2 231

Maintain & Improve Return and Notice 

Processing 297.75 301 $24,456

AMS Acceptance of 1040X Amended Returns $4,108

ACA Submission Processing 288.00 288 $16,986

Tax Examiner - Seasonal 143.00 143 8,227

Data Transcriber - Seasonal 120.00 120 7,056

Manager - Seasonal 14.00 14 826

Support Staff 11.00 11 877

Address Quality Initiative (AQI) 9.75 13 $3,362

Improve Communications and Outreach 150.75 201 $49,574

ACA Stakeholder Liaison & Communication 12.00 16 $1,550

Tax Technician 5.25 7 752

Analyst 6.75 9 798

Computer Assisted Publishing System NexGen 95.25 127 $33,180

CRX System Replacement 20.25 27 $11,548

IT Specialists 23.25 31 $3,296

Other Direct Costs 60.00 80 $8,888

ACA Program Management Office $1,700

ACA Taxpayer Advocacy Specialist 46.50 62 $5,557

ACA HR Specialist 2.25 3 $289

Taxpayer Advocacy Specialist 11.25 15 $1,342

Total 2,970.00 3,186 $301,524
IRS-23

Increase Taxpayer Level of Service (LOS) to 80 Percent (+$185.7 million / + 2,115.5 FTE)

The IRS projects that the CSR Telephone LOS will be 38 percent in FY 2015 and will reach 

56 percent in FY 2016 with supplemental funding from projected user fee receipts. This 

initiative will fund additional staff to help increase CSR Telephone LOS to 80 percent in 

FY 2016.

• Traditional Demand (+$121.3 million / +1,501 FTE)

These resources will allow the IRS to answer a greater number of taxpayer telephone 

calls. The IRS plans to continue to maximize self-service options, increase efficiencies 

across existing service delivery channels, and expand the use of more innovative 

technologies to address the increasing demand for services. The FY 2016 projected 

telephone call demand is 43.8 million calls, an increase of 20 percent from FY 2014.

• ACA-related Taxpayer Demand (+$48.3 million / +607 FTE)

The IRS receives more phone calls whenever the tax code becomes more complex. For 

example, the LOS measure dropped from over 82 percent in FY 2007 to 53 percent in FY 

2008 largely due to the increase in calls stemming from the payments provided by the 

Economic Stimulus Act of 2008. Similarly, the IRS expects approximately 5.9 million

more phone calls associated with the ACA in FY 2016, an increase of 13.5 percent. 

Although use of self-service options is increasing, customer demand for CSR-assisted 

phone services will likely continue to remain high based on growth trends. 

The IRS Joint Operations Center (JOC) provides service, support, and technology to 

achieve necessary service levels for all telephone, correspondence, and electronic media 

inquiries. Additional staff is requested to address the expected increase in ACA-related 

demand, including producing announcements, telephone routing, and scripting changes; 

and tracking and reporting the status of ACA-related telephone performance. 

• Authentication Retention (AR) Technology (+$6.3 million / 0 FTE)

This technology will allow taxpayers to provide identifying information to the IRS only 

once per call to authenticate or verify their identity, while still protecting taxpayer privacy. 

Decreasing the number of times a CSR has to authenticate callers will reduce taxpayer 

burden, the risk of identity theft and fraud, and the overall time a taxpayer spends on the 

phone with the IRS. AR technology creates a seamless taxpayer experience during 

interactions with assistors and is estimated to benefit more than 31 million callers 

annually. AR technology will allow the IRS to actively address the Treasury Inspector 

General Tax Administration (TIGTA) finding that telephone authentication practices need 

improvement to prevent unauthorized disclosures.

• IT Equipment for CSR Telework (+$4.7 million / +7.5 FTE)

Funds are requested for IT equipment to allow CSRs to telework. The IRS does not have 

the physical space capacity to reach the 80 percent CSR LOS. This investment will allow 

a 3:1 desk-sharing ratio by enabling telework, which will provide more space for new 

hires. Telework lays the groundwork for reducing leased space and related facility costs 

in the future. 

• Customer Callback (CC) (+$3.3 million / 0 FTE)
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CC technology will allow taxpayers to choose how they interact with IRS toll-free 

services while waiting to speak with a CSR. Currently, taxpayers remain in the queue to 

hear announcements of estimated wait time. Investing in this technology will provide 

taxpayers with the option of remaining on hold or scheduling a callback. This will allow 

the IRS call sites to operate more efficiently, save telephone resources, and greatly 

improve the taxpayer experience with the IRS. 

The CC technology

o Reduces circuitry and port costs, estimated to save $1.5 million to $1.9 million 

annually;

o Improves customer satisfaction by reducing taxpayer burden;

o Increases employee satisfaction; and

o Reduces the number of abandoned calls.

• Computer Telephone Integration (CTI) (+$1.8 million / 0 FTE)

This technology provides online screen displays of taxpayer account-related data. CTI, 

which is dependent upon AR implementation, and performs basic taxpayer-related 

research to provide the CSR with current account information to improve response time 

for taxpayer inquiries. 

Maintain and Improve the Taxpayer Experience (+$32.9 million / +346 FTE)

To maintain and improve the taxpayer experience, the IRS requests additional funds to handle 

the increasing demand for taxpayer services related to implementation of the ACA, provide 

additional support for eAuthentication assistance, and to research taxpayer behaviors in order 

to provide better tools to respond to taxpayer inquiries. 

• ACA Field Assistance and Outreach (+$27.4 million / + 284.5 FTE)

In FY 2015, taxpayers will file the first tax returns that will include the reconciliation of

the PTC, granting individual exemptions from health insurance coverage requirements, 

and the assessment of individual responsibility payments. In addition, beginning in 

FY 2016, new information reporting will be required for certain employers and health 

insurance providers. 

Starting in FY 2016, the IRS will send ACA compliance-related notices to taxpayers, 

which will create growing demand for face-to-face services. This initiative will provide 

permanent staff at up to 120 Taxpayer Assistance Center (TAC) locations that have 

historically had greater than 1,000 annual account notice questions and seasonal staff at up 

to 90 locations that have historically had greater than 500 annual notice questions. 

Resources for face-to-face assistance will mitigate the expected increase in taxpayer wait 

time and reduce repeat visits to TACs. 

• Taxpayer eAuthentication Assistance (+$4.8 million / +55.5 FTE)

The eAuthentication (eAuth) application improves the taxpayer experience by 

providing taxpayers access to online self-service options such as Identity Protection 

Personal Identification Number and Get Transcript. Both applications launched in 
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FY 2014. While these online self-service applications reduce the number of taxpayer 

phone calls, the IRS has found there is still a need to provide taxpayers with assistance in 

creating and managing their eAuth online account. Currently, the IRS provides limited 

services to taxpayers to disable or enable their eAuth account in the case of identity 

theft. In the future, eAuth will provide more capabilities to assist taxpayers that are 

having difficulties with their online accounts. 

While the IRS currently provides support to taxpayers for eAuth, an increase in resources 

is requested to handle the additional 300,000 calls expected from expanded use of online 

services. The IRS estimates eAuth-enabled online applications will generate an additional 

1,000,000 taxpayer inquiries for support by FY 2016. The IRS also plans to provide a 

taxpayer self-service model with Frequently Asked Questions to handle 70 percent of the 

inquiries.

• Enhance Quality and Effectiveness of Services Provided to Taxpayers 

(+$0.7 million / +6 FTE) 

Additional funds in this initiative support enhanced service to taxpayers. The IRS will 

conduct qualitative research to understand taxpayer behaviors related to compliance and 

taxpayer comprehension of new tax laws. The data collected will be used to help 

formulate appropriate service responses. These resources also will support the design of 

enhancements to the Account Management System (AMS) to provide CSRs better tools to 

respond to taxpayer inquiries.

Maintain and Improve Return and Notice Processing (+$24.5 million / +297.75 FTE)

The ACA is expected to generate additional correspondence in FY 2016 which will need to be 

processed. This initiative provides funds to maintain and improve return and notice 

processing by adding 288 submission processing FTE to handle the increased demand from 

the ACA, updating the Account Management System to electronically accept amended 

returns, and improving the delivery of IRS correspondence. Without these resources, the IRS 

will be unable to process the anticipated correspondence demand, generating even more 

taxpayer correspondence and phone calls and leading to significant overage and impacts to 

other paper programs.

• Account Management System (AMS) Acceptance of Individual Amended Returns (+$4.1 

million / 0 FTE)

This initiative provides funds to enhance the AMS to electronically receive Form 1040X 

from Modernized e-File (MeF), resulting in more efficient tax return processing and 

improved taxpayer service. In 2014, the IRS processed 3.6 million paper amended 

returns. The IRS plans to begin accepting electronic amended returns in Tax Year 

2016/Processing Year 2017. 

This enhanced AMS functionality will allow the IRS to receive tax data from MeF so that 

Form 1040X inventories can be routed and worked. This new capability will enhance 

business controls and create a virtual interface to all account and case information. 

Benefits include:
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o Faster and more effective toll-free service because more information will be 

readily available to CSRs;

o Better fraud and identity theft detection for Form 1040X.

o Automated case processing, resulting in fewer manual actions;

o Increased identification of potential issues, resulting in increased revenue 

collection or prevention of revenue loss; 

o Reduced costs by eliminating redundant data stores and applications; and

o Reduced time to route cases by immediately identifying and forwarding cases 

meeting relevant criteria to the appropriate area;

• Submission Processing (+$16.9 million / +288 FTE)

The IRS requires additional staff to handle the submission processing workload related to 

processing ACA-related returns. The increase in return volume is expected because some 

taxpayers who do not currently file a return because they do not meet the filing threshold 

will qualify for the PTC and will be required to file a return. This initiative will provide 

resources to process new and revised forms, including expanded transcription 

requirements and increased error resolution effective in the 2015 filing season. The IRS 

expects that the new forms will require a significant amount of transcription. Because the 

new forms are both unfamiliar and complex, the IRS anticipates that more taxpayers will 

make computational errors or inadvertently omit information. This will result in tax 

examiners spending additional time reviewing some tax returns for accuracy, and in some 

cases, corresponding with the taxpayers for clarification. 

• Address Quality Initiative (AQI) (+$3.4 million / +13 FTE)

The AQI is an effort to improve the delivery of IRS correspondence through process and 

system improvements that enhance the address data the IRS receives and uses. It includes 

evaluation of incoming data for conformity with United States Postal Service (USPS) and 

foreign postal address requirements; use of more USPS non-delivery and address change 

data; and enhanced processing and validation of foreign addresses. 

This project will consist of a series of modules that will modify systems to better 

accommodate addresses, change processing, and their quality indicators. Currently, the 

IRS has a nearly 10 percent undelivered mail rate, which is much higher than commercial 

mailers. The Treasury Inspector General for Tax Administration (TIGTA) estimated that

undelivered mail increases IRS costs by $57.9 million annually in their May 14, 2010, 

report titled “Current Practices Are Preventing a Reduction in the Volume of 

Undeliverable Mail”. 

Currently, most undelivered mail is returned to an IRS campus, where it is destroyed 

without further action. The AQI project will allow the IRS to automate follow-up actions, 

reduce subsequent non-delivery and handling, and cut costs significantly. It also provides 

the IRS with additional means to detect identity theft through non delivery of 

correspondence and quality improvement of addresses.
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Improve Communications and Outreach (+$49.6 million / +150.75 FTE)

This initiative funds increased outreach and communications activities, including the 

development of educational programs and the modernization of tax product development, 

publishing, and taxpayer letters.

• Stakeholder Liaison and Communication (+$1.5 million / +12 FTE)

Stakeholder liaison tax analysts and technicians will support ACA by researching 

customer needs, developing and managing educational programs, establishing 

partnerships with stakeholder groups, and disseminating tax information to taxpayers and 

the general public through a variety of media, including publications and mailings, 

websites, broadcasting, and advertising.

• Implement Computer Assisted Publishing System (CAPS) NexGen Project 

(+$33.2 million / +95.25 FTE)

The IRS operates one of the largest publishing programs in the federal government. It is 

responsible for creating, updating, publishing, and distributing more than 1,200 tax forms, 

instructions, and publications used by taxpayers to fulfill their tax obligations. In 

addition, the IRS publishes and distributes internally the more than 12,000 products used 

to administer the nation’s tax system. To meet these responsibilities, the IRS utilizes 

CAPS to support its content creation, publishing, and distribution processes.

• Replacement of the Correspondex System (CRX) (+$11.5 million / +20.25 FTE)

The CRX system is used by IRS employees to issue letters to taxpayers. The system is 

decades old and creates an antiquated letter that allows for virtually no customization,

such as bolding, italics, or use of IRS letterhead. Revising CRX letters is time-consuming 

and arduous, and makes timely communication difficult in the face of tax law changes. 

The resulting communications do not meet modern standards in design, format, and 

effectiveness and have had their legitimacy questioned by taxpayers due to the 

sub-standard quality of the letters produced.

The new system will create letters that will match the professional appearance already in 

place for computer-generated notices. The system also will provide the following 

features:

o An easy to use, web-based user interface;

o Easy to maintain templates;

o Shared content that allows updates to the text flow through to all letters that use 

the content; and

o A new archiving capability that stores the content and template for each letter 

issued, which will allow users to retrieve a letter by taxpayer identification 

number.

• IT Specialists (+$3.3 million / +23.25 FTE)
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Other Direct Costs (+$8.9 million / +60 FTE)

IRS Activity Cost FTE Positions Explanation

Taxpayer Advocate 

Service (TAS) $1.3 11.25 15

TAS expects to receive about 1,194 additional cases resulting 

from abandoned Affordable Care Act (ACA) calls related to this 

initiative and will need 15 positions (11.25 FTEs) to work the 

additional cases.

Human Capital 

Office $0.3 2.25 3

Handle the increase in front-line positions related to the ACA 

and the expectation that new managerial positions will be 

created. Labor Relations support begins in the first year and 

continues throughout a manager's career, as needed. One 

Labor Relations Specialist supports 49 managers.

ACA Program 

Management Office $1.7 

Funding will allow the Project Management Office (PMO) to 

continue contractual support services and provide oversight of 

ACA implementation activities focusing on individual and 

information returns processing, customer service, outreach, and 

development of guidance. 

Taxpayer Advocate 

Service (TAS) $5.6 46.50 62 Handle additional case receipts.

Total $8.9 60.00 80

Dollars in Millions
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Dollars in Thousands

Business Systems Modernization FY 2014 

Enacted 

FY 2015 

Enacted

FY 2016 

President's 

Budget 

Request 

Change FY 

2015 

to FY 2016 

President's 

Budget 

Request

CADE 2 (Taxpayer Account Database) 

Continue the design and development of applications that will modernize core tax processing application 

architecture, address financial material weakness, and expand capabilities in leveraging the CADE 2 

relational database as the authoritative source of individual taxpayer data. 119,000 100,000 115,000 15,000

Enterprise Case Management

The Enterprise Case Management system will provide an enterprise-wide solution that uses 

Commercial Off-the Shelf (COTS) products, common services and custom code to perform case 

management functions on a standard infrastructure platform. 0 2,000 25,000 23,000

Modernized e-File 

Fund the physical design, development, testing, and deployment of Release 10, Form 1040-NR (U.S. 

Nonresident Alien Income Tax Return) and Form 1040-NR-EZ (U.S. Income Tax Return for Certain 

Nonresident Aliens With No Dependents); the physical design, development, testing and deployment of 

Release 11, Form 706 (U.S. Estate Tax Return), Form 706NA (U.S. Estate (and Generation-Skipping 

Transfer) Tax Return), Form 708 (U.S. Return for Gifts and Bequests Received From Expatriates) and 

Form 709 (U.S.Gift (and Generation - Skipping Transfer) Tax Return; and the initial requirements and 

design phases of Release 12, the implementation of technical improvements and assorted forms to be 

chosen by MeF’s Business partner.

9,148 28,500 27,700 -800

Return Review Program

Provide leading-edge technologies to advance IRS effectiveness in detecting, addressing, and 

preventing tax refund fraud and protecting US Treasury revenue. 43,475 38,475 47,000 8,525

Web Applications (formerly: Enhance Online Services)

Lead the IRS transition to the future digital government and define the long-term vision. Provide an 

enhanced taxpayer experience, a broad range of self-service and innovative options, build internal 

capability, and strengthen the operating model. 10,000 12,500 18,000 5,500

Architecture, Integration, and Management

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.

25,054 28,900 31,000 2,100

Core Infrastructure

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. 24,600 15,465 19,000 3,535

Management Reserve 1,701 4,284 5,000 716

Subtotal Capital Investments $232,978 $230,124 $287,700 57,576

Labor 1 78,774 58,870 87,496 29,240

Support 1,186 1,006 3,982 2,362

Total BSM $312,938 $290,000 $379,178 $89,178

 FY 2016 BSM Project Activities

1 FY 2016 labor includes $1.2M in MCLs and excludes $3.6M in corporate costs which are reflected in the Operations Support appropriation. 

Leverage New Technologies to Advance the IRS Mission +$91,573,000 / +178 FTE 

The IRS is requesting an increase in the Business Systems Modernization appropriation of 

$91.6 million and 178 FTE ($3.6 million is funded in the Operations Support appropriation to 

fund corporate costs related to the new hires) to: 

• Implement an Enterprise Case Management (ECM) solution for performing standard case 

management functions across the IRS; 

• Expand the capabilities of the CADE 2 relational database and address financial material

weakness;

• Enhance the taxpayer’s online experience and provide secure digital communications; 

• Complete the design, development, testing, and deployment of various Estate and Gift tax 

forms for electronic acceptance; and 

• Increase fraud detection, resolution, and prevention through use of the Return Review 

Program. 
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The FY 2016 BSM request of $379.2 million and 576 FTE reflects a zero-based budget and 

the following project activity chart displays the full funding request. It will allow the IRS to 

continue leveraging new technologies to develop critical information technology systems 

needed to support the IRS’s taxpayer service and enforcement programs. 

CADE 2 ($115.0 million) 

In FY 2015, the IRS will continue to focus on the next transition state of the CADE 2 

modernized relational database, building a long-term CADE 2 database annual conversion 

capability and process for use in Filing Season 2016 and beyond. This Transition State 2 

(TS2) capability will allow the IRS to capture and apply all Individual Master File (IMF) 

annual conversion changes to the CADE 2 database in preparation for the new processing 

year while retaining the CADE 2 database historical taxpayer data for more effective 

administration of the tax system. 

Additionally, the IRS will continue to make progress in modernizing its core taxpayer account 

processing systems. Design efforts will be based on the TS2 Release Plan, improving

taxpayer account processing by leveraging the CADE 2 database to build a solid data 

foundation for the future, and achieving long-term viability for the systems by modernizing 

the architectures and programming languages.

In FY 2016, the IRS will: 

• Begin development of an early capability for the CADE 2 database to become the 

authoritative source of individual taxpayer account data for the GAO audit of the custodial 

financial statements, by modifying existing financial reports to take into account the 

increased level of detail and accuracy of data in the CADE 2 database.

o Enhancing accuracy of financial calculations and reporting through Obligation Line 

Items, Penalty & Interest by assessment and credit-to-debit allocations will improve 

availability of current account data. This will increase service accuracy and 

consistency to taxpayers, and will provide improved reporting for better compliance 

and issue resolution.

o Establishing an interface to CADE 2 data to be used for refund generation. This will 

improve the IRS’ ability to collect the correct amount of taxes and reduce erroneous 

refunds.

• Establish the foundation for a modernized tax processing engine by modernizing core 

taxpayer account processing functions that are currently performed by the Individual 

Master File (i.e. posting, financial settlement, and account analysis services), enhancing 

taxpayer account processing, and achieving long-term viability for the systems. 

• Continue the development of a data distribution framework for CADE 2 information. 

Establish technical components to provide CADE 2 data to downstream compliance, 

analytics, and reporting systems via modernized Data Distribution Services (DDS). 

Embedding good information management practices such as reducing duplications in data 

and establishing common data definitions that can be used across all systems, as well as 
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modernizing data access methods to allow CADE 2 files to be shared quickly and 

efficiently with other systems that need CADE 2 data to perform their functions.

o Enhancing CADE 2 to the Integrated Production Model (IPM) interface and data 

model will improve performance in using CADE 2 for data analytics and enable 

additional reporting capabilities (initial DDS).

o Establishing interfaces from CADE 2 to the Integrated Data Retrieval System (IDRS) 

allows the IRS to use CADE 2 expanded data for enhanced customer service activities 

in IDRS and improved case management functions.

Enterprise Case Management (ECM) ($25.0 million) 

The Enterprise Case Management (ECM) solution will address the need to modernize, 

upgrade, and consolidate multiple aging IRS case management systems. The ECM will 

develop an enterprise solution for performing case management functions using a common 

infrastructure platform for multiple projects to share. Implementation of the solution will 

provide the IRS with a consistently efficient approach to case management across all business 

units.

This investment will fund the Project Management Office, the strategy development and 

planning activities required to develop the multi-year roadmap, the upgrade of existing 

applications to the most current software version, and prototypes to demonstrate ability to 

reuse enterprise case management capabilities. It will also fund the infrastructure for the 

development of common services and project migrations, the development of the common 

services, and migration of select projects to the enterprise solution.

Modernized e-File (MeF) ($27.7 million) 

MeF serves as the primary external point of interaction for all electronic tax filings. It 

validates and stores tax return data, allowing authorized IRS users the ability to view tax 

return data securely online. Electronic access to tax return data improves taxpayer service by 

significantly reducing the handling and mailing of paper returns. 

Significant work continues to expand and improve MeF capabilities for taxpayers.

MeF Release 9 was deployed as planned in January 2014 implemented Form 94X, 

Employment/Unemployment Tax and Form 1041, U.S. Income Tax Return for Estates and 

Trusts, onto the MeF platform. It also enabled the passing of information from MeF directly 

to the Return Review Program (RRP) for fraud detection processing. 

In FY 2015 the IRS will complete Milestone 4a (physical design), Milestone 4b 

(development, testing), and Milestone 5 (deployment) of Release 10, which will implement 

Form 1040-NR, U.S. Nonresident Alien Income Tax Return, and Form 1040-NR-EZ, U.S. 

Income Tax Return for Certain Nonresident Aliens With No Dependents. The FY 2015 

request also will fund Milestone 2 (requirements definition) and Milestone 3 (logic design) of 

Release 11, described below will also be completed.
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The FY 2016 request for MeF will fund the Milestone 4a (physical design), Milestone 4b 

(development and testing), and Milestone 5 (deployment) of Release 11, which will 

implement Form 706, U.S. Estate Tax return, Form 706NA, U.S. Estate and GenerationSkipping Transfer Tax Return, Form 708, U.S. Return for Gifts and Bequests Received From 

Expatriates, and Form 709, U.S. Gift and Generation-Skipping Transfer Tax Return. The FY 

2016 request will also fund Milestone 2 (requirements definition) and Milestone 3 (logical 

design) of Release 12, the implementation of Form 1065X, Amended Return Administrative 

Adjustment Request (AAR) of Partnership Income; Form 2848, Power of Attorney and 

Declaration of Representative; Form 8609, Low-Income Housing Credit Allocation and 

Certification, as well as the consolidation of multiple Forms 1120 (Corporate Returns into a 

single form).

Adding Forms 1040-NR, 1040-NR-EZ, 706, 706NA, 708, and 709 to the MeF will provide 

the following: 

• Extensive error checking to improve the accuracy of the tax return; 

• Sophisticated math error validation checking, which increases the likelihood that tax 

returns will be processed successfully; 

• Ability to attach all necessary documents supporting the data onto tax returns; 

• Capability to provide a justification to the taxpayer or trading partner when the IRS 

rejects the tax return; 

• Form receipt acknowledgments provided to transmitters within minutes during nonpeak days (within two hours during peak days), instead of 24-48 hours under the 

legacy system; 

• Expanded availability of electronic filing, beyond the traditional legacy e-file 

shutdown dates; 

• Ability to e-file the current and two prior tax years; and 

• Ability to e-file a balance-due return and, at the same time, authorize an electronic 

funds withdrawal from the taxpayer’s bank account. 

Productivity and IRS efficiency gains include: 

• Improving Customer Service – Once MeF processes 1040-NR, 1040-NR-EZ, 706, 

706NA, 708, and 709 forms, IRS Customer Service Representatives (CSRs) will have 

access to all of the information included on each form. This will allow CSRs to 

provide responses to taxpayers more quickly by viewing the most current 1040-NR, 

1040-NR-EZ, 706, 706NA, 708, and 709 data online, eliminating the need for backend rekeying and data entry. 

• Enhancing Compliance and Enforcement Operations – Online capabilities and 100 

percent data access to 1040-NR, 1040-NR-EZ, 706, 706NA, 708, and 709 forms will 

enhance compliance and enforcement activities by allowing access to taxpayer data in 

a timely and accurate manner. 
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• Enhancing the Production Volumes – Returns submitted through the MeF encounter 

fewer processing errors than do paper returns. 

• Implementing Modernized Data Standards – MeF uses the widely accepted, industrystandard Extensible Markup Language (XML) format for identifying, storing, and 

transmitting data. XML provides improved data accuracy and protection of taxpayer 

information. MeF provides more information to correct taxpayers’ returns, including 

expanded error code explanations that pinpoint the location of errors. 

Return Review Program ($47.0 million) 

The Return Review Program (RRP) delivers an integrated and unified system that enhances 

IRS capabilities to detect, resolve, and prevent criminal and civil tax noncompliance, 

including identity theft. The RRP allows analysis and support of complex case processing 

requirements for compliance and criminal investigation programs during prosecution, revenue 

protection, accounts management, and taxpayer communications processes. The RRP 

implementation occurs in multiple transition states (TS). Additional features include: 

• Enhanced automatic identification of fraudulent and erroneous returns – using 

increasingly sophisticated models through entity-based research; 

• Discernible flexibility and scalability to support changing business needs; 

• Strategic identification of theft trends and detection; 

• In-line processing capabilities – applies rules and scoring in several anomaly areas, 

including identity theft and frivolous filer; 

• Off-line processing capabilities that increase flexibility to implement new models or 

business rules to accommodate changes in process and legislation; and 

• ID Theft Protection (Pilot in FY 2014) – new model leveraging new data fields that 

will feed manual intervention in current legacy environment.

In FY 2015, RRP plans include completion of performance testing, implementation of 

legislative changes, fine tuning systemic verification, improving system performance, 

implementing ID theft expansion, and developing an interface with EFDS in order to transmit 

identity theft data. RRP will provide connectivity to IRS systems to support seamless 

workflow, expand user capabilities, and compare new taxpayer data. The RRP will reengineer and incorporate current business application functionality, such as the inclusion of 

pre-refund capability allowing early detection of issues, new treatment stream determination 

(e.g., a predefined sequence of remedial steps), and identification and management of Return 

Preparer issues. The RRP will deliver full capability for individual taxpayer returns, 

including off-line prevention, in-line detection, systemic verification of third party data, 

integrated data warehouse, Management Information System (MIS), and User Interface using 

the Employee User Portal (EUP). 
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RRP will provide the following benefits: 

• Increased fraud detection (including identity theft), resolution, and prevention; 

• Improved case tracking, analysis, and reporting; 

• Generation of a scorecard for questionable returns, evaluating consistency and 

dependability; 

• Reduction in the percentage of non-fraudulent refund claims frozen by the IRS; 

• Establishment of capabilities to coordinate detection and resolution of criminal and 

civil compliance issues; 

• Prevention of criminal and civil compliance issues; and

• Promotion of increased taxpayer compliance through targeted educational information 

and deterrent activities.

Web Applications (formerly known as Enhance Online Services) ($18.0 million) 

The FY 2016 request will lead the IRS transition to digital government. The Web 

Applications will enhance the taxpayer’s online experience, provide secure digital 

communications, and add more interactive capabilities to existing web self-service products. 

By providing taxpayers with the opportunity to communicate digitally, the IRS estimates that 

it will deliver a greater level of service and achieve significant savings by reducing call center 

volumes, Taxpayer Assistance Center visits, and the number of forms and notices faxed or 

mailed. 

To keep up with the ever-changing state of web and digital technology, the IRS must develop 

and enhance online capabilities and services for taxpayers, tax practitioners, and IRS 

employees. 

The IRS goal is to deliver new digital communication channels and migrate service delivery 

from offline channels to the World Wide Web by implementing Online Account, Taxpayer 

Digital Communications (TDC), and Advanced Mobile projects; upgrading the 

eAuthentication Platform; improving integration with the authorization web service; and 

expanding the Third Party Application Programming Interfaces (API). 

Online Account Phase 3 is a multi-phase effort that will provide single sign-on capability for 

taxpayers to access account-related information with links to multiple products such as Online 

Payment Agreement, IRS Direct Pay, and Where’s My Refund? 

Taxpayer Digital Communications will create a web-based, digital communications channel 

that will allow taxpayers and the IRS to communicate directly via secure messages. This 

solution is expected to require only a web-enabled device and an internet connection. TDC 

will allow the IRS and taxpayer to send both one-way and two-way secure messages and 

digital documents while requiring only minimal integration with IRS systems. 
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The IRS2Go Mobile Application will continue to evolve, allowing taxpayers to increase their 

use of multiple mobile digital devices such as smart phones and tablets as a primary source 

for accessing information and conducting business. By offering new services tailored for 

mobile devices, taxpayers will be able to find tax-related information and meet their filing 

obligations with added convenience and flexibility. Developing a framework for mobile 

applications to utilize IRS data allows the IRS to provide taxpayers with a new generation of 

faster and more feature-rich mobile applications. In FY 2016, new planned functionalities for 

taxpayers will include retrieving balance due, viewing tax history, making payments, and 

setting up Online Payment agreements directly from the IRS2Go Mobile Application.

Upgrade of the eAuthentication framework will provide more advanced tools and techniques 

to confirm the identity of taxpayers, which will assist in the registration of individuals, 

businesses, and tax professionals who wish to use the IRS online digital services. The 

eAuthentication upgrade will support externally-hosted applications, providing the IRS with 

more flexible development options and continued migration of legacy applications to the 

upgraded platform. The enhancements will also include automated reporting and improve 

user interface for mobile browsers and mobile applications.

Third Party Expansion of Application Programming Interface (API) will increase the number 

of tax services available to third parties and broaden the definition of third party to include 

other federal and state government agencies, as well as commercial tax preparers. The IRS 

anticipates that it will implement six to eight new capabilities in FY 2016 as well as a 

continued multi-year effort to provide additional services to taxpayers. Some of the services 

being considered include Pay-Off Amount; Where’s My Refund? (WMR); Transcripts; First 

Time Home-Buyer Credit Lookup; Notices and Explanations Previously Received; Preparer 

Tax Identification Number (PTIN) Lookup; Calculators for Earned Income Tax Credit 

(EITC); and Facilitate taxpayer authorization for prior year tax information.

Architecture, Integration and Management ($31.0 million) 

Provides engineering management capabilities, including systems strategy, architecture, and 

engineering capabilities across IT Infrastructure, Business Applications, Data Management, 

and IT Security. Provides portfolio control and management processes and tools, including 

governance, enterprise lifecycle support, tiered program management, business rules and 

requirements, transition management, cost estimation, configuration/change management, and 

risk management. This program translates enterprise and project objectives into targeted, 

actionable investments to provide the necessary framework and direction for a cohesive, 

successful modernization. 

Core Infrastructure ($19.0 million) 

This request will continue to provide mission-critical services for designing, engineering, 

testing, and deploying standardized, consolidated, virtual, and secure modernized 

development and production environments for use by BSM projects. 

The IRS is modernizing taxpayer applications to take advantage of web-based technologies 

that allow taxpayers to communicate with the IRS through the internet using commercially 
IRS-36

available technology. The modernized infrastructure provides a complete environment 

(hardware, software, processes, and management) for developing, testing, deploying, 

operating, and monitoring both customer and internal applications in support of business 

practices. This includes continuing to update the web portal environment and standardizing 

services, security, and operations management. 

Core Infrastructure allows the IRS to develop a shared infrastructure and common business 

service solutions that are usable across multiple BSM projects. The core infrastructure 

consists of two primary program elements: 

• Infrastructure Shared Services (ISS) to provide capacity planning and performance 

engineering services for BSM projects. This includes additional unit, integration, and 

testing support to increase the reliability of deployed systems; and 

• Development, Integration, and Testing Environment (DITE) to engineer, install, maintain, 

and support the development and test environments needed for each BSM project through 

deployment and acceptance in the production environment. 

Management Reserve ($5.0 million)

This activity maintains funds not otherwise designated for specific projects to allow flexibility 

in responding to unexpected funding increases to projects.

Labor and Support ($91.5 million / 576 FTE)

This request provides the labor and support costs associated with the development of projects 

within the BSM portfolio. 

Other Direct Costs 

There are no other direct costs associated with this initiative.
IRS-37

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other 

Requirements +$305,645,000 / +818 FTE

This investment will allow the IRS to 

continue to implement the new tax 

law provisions contained in the ACA. 

While the Department of Health and 

Human Services is responsible for 

the health care policy and insurance provisions in the legislation, the IRS administers more 

than 45 specific tax provisions and numerous cross-agency sections related to tax 

administration. Included in this investment is one of the largest refundable tax credits the IRS 

administers, the PTC. The investment touches all submission, fraud, and compliance tax 

administration processes to receive, validate, and handle individual and business tax returns. 

Funding this investment will provide enhanced technology infrastructure and applications 

support and allow necessary, major modifications to existing IRS tax administration systems. 

The IRS IT organization uses industry best practices to design, develop, deploy, and manage 

ACA systems. The IRS developed a multi-year release strategy to support multiple, 

concurrent releases. Some of these releases are operational and in production, while others 

are in various stages of development and testing, and are scheduled for implementation over 

the next several years. These releases include new technology implementation as well as 

modifications to the current production environment.

In addition to continuing to operate the IRS systems that support the eligibility and enrollment 

processes with the Insurance Marketplaces, the IRS IT organization: 

• Developed and implemented new systems to support the assessment and collection of the 

Branded Prescription Drug Industry Fee, Insurance Provider Fee, and Hospital Insurance 

Tax; 

• Changed the existing IT production environment to support Advanced PTC reporting; and 

• Implemented updates to ACA Coverage Data Repository and Information Sharing and 

Reporting systems to increase data flows from the Centers for Medicare and Medicaid 

Services Data Hub, which supports the Insurance Marketplaces. 

These activities support increased efficiencies in revenue collection, reporting, and 

information sharing. They also will facilitate prompt and accurate application of the PTC to 

eligible citizens while protecting against erroneous and potentially fraudulent tax credit 

claims. 

A major focus for the IRS going forward is to continue to support the Insurance Marketplaces 

and tax compliance activities, as well as non-Marketplace provisions of the law and annual 

updates to ACA systems. This will include systems to support the assessment and collection 

of individual and Employer Shared Responsibility Payments. It also includes new technology 

and changes to existing systems and infrastructure to receive and process new 

forms/schedules or information reports from federal and state insurance marketplaces, 

insurance providers, and employers. This activity also will enable at-filing checks of tax 

Position Type/Other Costs FTE Positions $000

Implement IT Changes to Deliver Tax Credits 

and Other Requirements 818.00 818 $305,645

IT Specialists 818.00 818 118,579

Contractual Services 187,066

Total 818.00 818 $305,645
IRS-38

returns for reporting a PTC, leveraging third-party data from the insurance marketplaces, and 

validating ACA-related tax forms via the new ACA Verification Service. 

To continue supporting implementation of this critical legislation, the IT organization will 

design, build, test, and implement systems infrastructure, new IT systems, and modified 

current production systems. In addition, the IT organization will implement security 

requirements and alternate production site capabilities, and maintain systems in operations 

and maintenance mode once development activities are complete. 

Funding this IT initiative will allow the IRS to continue to support newly established business 

capabilities as well as develop and implement new capabilities including: 

• Validating PTCs claimed on individual tax returns; 

• Assessing and collecting penalties related to individual and employer responsibility 

provisions; 

• Assessing and collecting the Branded Prescription Drug Industry Fee; 

• Assessing and collecting the Insurance Provider Fee; 

• Assessing and collecting the Hospital Insurance Tax; 

• Establishing reporting requirements for federal and state Insurance marketplaces, certain 

large employers, and insurance issuers; 

• Providing federal tax information to non-IRS entities; 

• Recalculating and adjusting household income and Premium Tax Credit (PTC) for returns 

that are identified as having underreported income and receiving PTC; 

• Recalculating the individual shared responsibility payment in the event of income changes 

in taxpayer returns as a result of compliance activities; and

• Expanding information returns processing and capabilities needed for compliance 

processing.

This initiative will fund significant revisions to existing tax administration systems and 

investment in building, maintaining, and operating the new infrastructure and applications 

technology needed to continue implementation of the ACA tax law provisions. This includes 

business requirements, solution architecture, solution engineering, program and project 

management, security management, and applications development, as well as operations and 

maintenance activities. Vital components of the investment include: 

• Implementing new technology and modifying existing compliance systems to detect 

potential fraud and noncompliance activities associated with refundable credits, such as 

the PTC, and validating ACA-related tax forms.

• Implementing new technology and modifying existing systems to be able to calculate and 

assess Applicable Large Employer Shared Responsibility Payments. The IRS will 

develop a new IT system, ACA Compliance Management (ACM), to support this business 

capability. 
IRS-39

• Maintaining and expanding repositories that store data about household-level income to 

help determine eligibility for and reconciliation of the PTC. Additional data will be 

collected and stored, including periodic data received from the federal and state insurance 

marketplaces that the IRS will use to validate individual claims for PTC and ACA-related 

information returns data. 

• Preparing IT systems to support the annual open enrollment and ongoing exchange 

eligibility processes by providing income and family size information from recent tax 

returns; 

• Modifying and updating tax account systems to assess and collect penalties and fees, such 

as the Individual and Employer Shared Responsibility Payment; 

• Expanding tax account and case management systems to facilitate responses to taxpayer 

inquiries; and 

• Updating IRS Call Center systems and processes. 

Other Direct Costs

There are no other direct costs associated with the initiative.
IRS-40

Improve Upfront Identification and Resolution of Identity Theft Returns

+$18,884,000 / +193 FTE

This initiative strengthens the 

integrity of the tax system by 

improving the IRS’s ability to detect 

and prevent improper refunds.

Expand Identity Protection 

Specialized Unit (IPSU) 

(+$11.6 million / +134 FTE)

The prevention and resolution of identity theft cases is one of the highest priorities for the 

IRS. The rapid growth of tax-related identity theft has resulted in a backlog of cases, which

the IRS has addressed by applying resources from other programs, including customer 

service. In FY 2016, the IRS projects approximately 635,000 identity theft receipts, but with 

current resources will only be able to close 544,000 of them. This funding will allow the IRS 

to close an estimated 91,000 additional identity theft cases in FY 2016 and control the 

backlog without applying resources from other programs. Resources will help taxpayers 

affected by identity theft to get their issues resolved timely and prevent them from being 

burdened with the same issues from year to year. Without the requested resources, the IRS

anticipates growing inventory levels and increasing time to resolve victim cases.

Funds will also expand the capacity of IPSU to handle new case receipts. IPSU employees 

are the only employees authorized and trained to respond to IRS data loss notification 

inquiries. New cases in the IPSU grew from about 188,000 receipts in FY 2010 to 730,000 in 

FY 2014. Receipt levels are expected to remain fairly constant and in FY 2016, the IRS is 

projecting approximately 749,000 new IPSU receipts. New funding will allow the IRS to 

close an estimated 9,000 additional cases more than in FY 2014.

These funds also provide analytical support for the Return Integrity and Compliance Services 

(RICS) program. Additional analysts will identify, evaluate, and prevent the issuance of 

improper refunds; help taxpayers understand the refundable tax credits for which they are 

eligible; and engage taxpayers with notices and letters that are written in plain language that is 

easy to understand.

Expand External and Industry Leads ($+1.0 million / 6 FTE)

The IRS External Leads staff recovers funds related to questionable refunds from external 

sources. Since the External Leads program was developed in 2010, lead sources (e.g., 

financial institutions, state agencies, and tax providers) have grown from 30 to 380. 

Expanding this staff will enable the IRS to increase the number of financial institutions that 

participate in the External Leads program each year and provide support for external leads 

pattern development, industry leads initiatives with the software industry, state leads, return 

preparer leads, and informant referrals. Additional resources also will improve efficiency in 

review and disposition of leads received from external sources, and increase rejected direct 

deposit initiatives. 

Position Type/Other Costs FTE Positions $000

Expand Identity Protection 

Specialized Unit (IPSU) 134.00 134 $11,565

Customer Service Representative 134.00 134 11,565

Expand External and Industry Leads 6.00 8 $952

Analyst 6.00 8 952

Other Direct Costs 53.00 71 $6,367

Taxpayer Advocacy Specialist 53.00 71 6,367

Total 193.00 213 $18,884
IRS-41

The IRS Industry Leads teams research refunds identified as fraud for links and patterns and 

stop additional refunds associated with these patterns. The IRS projects that the External and 

Industry Leads teams will recover more than $951 million in fraudulent refunds during FYs 

2013 and 2014.

This initiative, in addition to the enforcement activities included in the Prevent Refund Fraud 

and Identity Theft initiative, supports the IRS’s efforts to address the growing concerns 

associated with refund fraud and identity theft. Funds to address the increased Taxpayer 

Advocate Service (TAS) workload associated with the enforcement activities in the cap 

adjustment of these efforts are identified in the Other Direct Costs section below.

Other Direct Costs (+$6.4 million / +53 FTE)

IRS Activity Cost FTE Positions Explanation

Taxpayer Advocate 

Service (TAS) $6.4 53.00 71

Provide support by working new cases that arise from the 

Taxpayer Protection Program. TAS estimates that it will receive 

nearly 8,500 new cases due to the program in its Case 

Advocacy function. TAS will also monitor, respond, and work 

new cases received on the Systemic Advocacy Management 

System (SAMS) that identifies and corrects systemic problems 

in its Systemic Advocacy function.

Total $6.4 53.00 71

Dollars in Millions
IRS-42

Position Type/Other Costs FTE Positions $000

Implement Foreign Account Tax 

Compliance Act (FATCA) 321.00 321 $38,432

Revenue Agent 88.00 88 16,211

Tax Examiner 87.00 87 7,970

Analyst 126.00 126 12,015

Support Staff 20.00 20 2,236

Implement IT Changes to Deliver 

FATCA 140.00 140 $32,573

IT Specialist 140.00 140 21,821

Contractual Services 10,752

Total 461.00 461.00 $71,005

Implement FATCA+$71,005,000 / +461 FTE

This initiative will provide funding 

for enforcement staff to implement 

new reporting, disclosure, and 

withholding requirements mandated 

by the FATCA that were enacted in 

the Hiring Incentives to Restore 

Employment (HIRE) Act of 2010 

(Public Law 111-147). This 

initiative is expected to produce 

additional annual enforcement 

revenue of $155.1 million once the new hires reach full potential in FY 2018, an ROI of $2.3

to $1.

Major Activities Revenue

($M)

Individual 

Returns

Speciality 

Returns

Implement Foreign Account Tax Compliance Act 

(FATCA) 155.1 1,000 125 

Total $155.1 1,000 125 

FY 2018 Projected Revenue and Workload

$71.0 $67.7 $66.6 $67.7

$110.8

$155.1

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

$180.0

FY 2016 FY 2017 FY 2018

in millions

Enforcement Revenue ROI 

Cost Enforcement Revenue

$1.0 to $1

$2.3 to $1

$1.6 to $1
IRS-43

Implement FATCA (+$38.4 million / +321 FTE)

This initiative will allow the IRS to address foreign withholding compliance and expand 

coverage of international tax return filings. FATCA seeks to improve offshore compliance by 

imposing new information reporting requirements on foreign financial institutions (FFIs) with 

respect to U.S. accounts and new withholding, documentation, and reporting requirements for 

payments made to certain foreign entities. 

FATCA seeks to improve offshore compliance by imposing a 30 percent withholding tax on 

U.S. source payments to FFIs unless an institution agrees to disclose information on U.S. 

account holders or certifies that it does not have any U.S. customers. All FFIs that report U.S. 

source income must enter into an agreement with Treasury to report to the IRS all accounts of 

U.S. persons or the withholding tax penalty will apply. Since foreign investment information 

is difficult to come by, as investment flows may pass through chains of foreign 

intermediaries, the U.S. Qualified Intermediary program works to enforce compliance with 

U.S. source-based taxation laws. 

Furthermore, the FFIs must comply with requests by the Treasury for additional information 

regarding each U.S. account and must attempt to obtain from each holder of a U.S. account a 

waiver of any bank secrecy law that would otherwise prevent such a report. If a waiver 

cannot be obtained from each holder of a U.S. account, the account will be closed. This 

initiative funds enforcement of these reporting requirements. 

Additional resources also will provide new coverage for discrepancies identified through third 

party data matching and will enhance and centralize coverage for nonfiler taxpayers and for 

those with withholding-related issues. The funding also will allow the IRS to handle the 

calls/communications resulting from notices sent to taxpayers. The IRS will compile data and 

reports that will provide more complete background information during the initial set up of 

related audit case files. 

Further, these resources will help the IRS address potential under withholding of U.S. source 

income flowing to undisclosed jurisdictions and unknown recipients offshore. The initiative

will involve a systematic analysis of the process surrounding Form 1042-S, Foreign Person's 

U.S. Source Income Subject to Withholding, to better target compliance and enforcement 

activities. 

Implement IT Changes to Deliver FATCA (+$32.6 million / +140 FTE)

This initiative will fund investments in building and maintaining the technology necessary to 

deliver FATCA. These automated tools will reduce the response time needed to identify and 

resolve abusive tax-avoidance issues, provide unprecedented visibility into international tax 

compliance risks, and meet the legal and reporting requirements prescribed by the HIRE Act 

of 2010:

• FFI Registration allows FFIs to electronically register and sign agreements with the 

IRS to report on their US-held accounts as specified by FATCA;
IRS-44

• International Data Exchange Service (IDES) receives Form 8966, FATCA Report, and

Form 1042-S/T, Annual Withholding Tax Return for U.S. Source Income of Foreign 

Persons, input from FFIs through Intergovernmental Agreements and transmits forms 

in XML format to the Integrated Compliance Management Model (ICMM);

• Integrated Compliance Management Model (ICMM) receives, processes, stores, and 

manages FATCA data received from various sources and creates reports to conduct 

data analytics for future document matching and compliance activities;

• Refund Processing and Fraud Detection supports the development of processes to 

validate and issue refund payments against withheld taxes, and to identify and prevent 

refund fraud;

• Compliance Solution supports development and implementation of strategies to use 

FATCA data, taxpayer filings, and third party data to identify and treat noncompliance 

on the part of U.S. taxpayers, participating foreign financial institutions (PFFIs)/Host 

Country Tax Authorities (HCTAs), U.S. withholding agents, and taxpayers requesting 

refunds;

• Withholding Payment Processing (WPP) supports the development of processes to 

collect withholding payments and associated reporting from U.S. withholding agents 

and PFFIs as required under FATCA legislative mandates; and

• Taxpayer Reporting captures data to facilitate the usage of FATCA data and taxpayer 

filings (Form 8938, Statement of Specified Foreign Financial Assets, Financial Crime 

Enforcement (FinCen) Report 114 (formerly TD F 90-22.1), Report of Foreign Bank 

and Financial Accounts (FBAR), and others) in compliance workload identification, 

return selection, and execution of examinations by resolving problems encountered 

during filing season and enabling transcription of Form 8938 data.

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-45

Sustain Critical Information Technology (IT) Infrastructure +$188,514,000 / +157 FTE

This initiative requests resources for 

mainframes, servers, laptops, 

network devices, and 

communication equipment to keep 

IRS infrastructure (hardware and 

software) current for existing and 

newly developed systems. The 

IRS’s IT division provides 

technology services and solutions 

that drive effective tax 

administration, improve service, 

modernize systems, and ensure the 

security and resiliency of IRS 

information systems and data. This 

initiative supports the 2014-2017 

IRS Strategic Plan with the 

following strategic objective: Invest 

in Innovative, Secure Technology 

Needed to Protect Taxpayer Data 

and Support Taxpayer, Partner and 

IRS Business Needs. 

For the past few years, the IRS has been faced with increased demand for IT projects and 

services, with significant resources going towards implementing legislative mandates, 

including the FATCA and the ACA, and other mission-critical priorities. This has severely 

restricted the IT program’s capacity in other key operational areas including sustaining 

infrastructure. 

The IRS has a large and increasing amount of aged hardware, some of which is three to four 

times older than industry standards. At the beginning of FY 2015 , the total cost of aged 

hardware inventory that needed updating was estimated at $482 million, representing 59 

percent of the total IRS inventory. Additionally, IRS enterprise system software is on average 

three releases behind industry standards. Specifically, 40 percent of the software products 

utilized in the IRS infrastructure are two or more releases behind the most current release and 

of that 15 percent are greater than four releases.

The farther behind the IRS falls in maintaining the currency of hardware and software, the 

more problematic and expensive it becomes to sustain or upgrade. Such conditions introduce 

security risks, excessive system downtime, and incompatibilities across systems and 

programs. The current state of IRS infrastructure poses significant risk of failure. It is 

unknown when these failures will occur, how severe they will be, or whether they will have 

material impacts on tax administration during the filing season.

Position Type/Other Costs FTE Positions $000

Filing Season Infrastructure Refresh 63.00 84 $77,450

IT Specialist 63.00 84 10,307

Contractual Services 9,583

Hardware and Software 55,749

IT Equipment 1,811

Mobile Workforce Infrastructure 

Refresh 58.75 78 $68,518

IT Specialist 58.75 78 9,569

Contractual Services 5,400

Hardware and Software 51,864

IT Equipment 1,685

Internet Protocol Version 6 (IPv6) 0.75 1 $1,595

IT Specialist 0.75 1 126

Contractual Services 209

Hardware and Software 1,220

IT Equipment 40

Transition to Virtual Environments 27.00 36 $32,335

IT Specialist 27.00 36 4,417

Contractual Services 3,985

Hardware and Software 23,180

IT Equipment 753

IT Operating Platform Refresh 7.50 10 $8,616

IT Specialist 7.50 10 1,258

Contractual Services 1,050

Hardware and Software 6,110

IT Equipment 198

Total 157.00 209 $188,514
IRS-46

This initiative will allow the IRS to:

• Enhance systems security to help anticipate evolving threats;

• Increase reliability of enterprise infrastructures to support the increasing number of tax 

forms submitted electronically;

• Improve risk mitigation capabilities;

• Increase the use of cloud and virtual environments for productivity tools and taxadministration applications; and

• Expand use of next generation of advanced telecommunication technologies (i.e., 

mobile broadband, wireless, collaboration environments).

Filing Season Infrastructure Refresh (+$77.5 million / +63 FTE)

To ensure continued filing season success, the IRS must upgrade aged, critical equipment 

needed to support the receipt and processing of tax returns, including:

• Four mainframes, 1,100 servers, and associated infrastructure for tax processing;

• Thirteen large print systems and 10 inserters for taxpayer notices; and 

• Problem resolution tools to detect and combat non-compliance.

Mobile Workforce Infrastructure Refresh (+$68.5 million / +58.75 FTE)

Geographically dispersed employees and a mobile workforce create unique challenges to 

effective task performance and the development of interpersonal relationships. This funding 

provides hardware and software to replace outdated technology that supports the mobile 

workforce, including: 

• Networking infrastructure, such as mobile devices, security validation for users, VoIP 

(phone service through the computer network), and IRS employee laptops and desktop 

requirements through contracts on an as needed basis; and 

• Enterprise systems software, including Lync 2013 (a unified communications platform 

for the IT enterprise) and SharePoint 2013 (online collaboration and secure document 

sharing). 

Internet Protocol Version 6 (IPv6) Compliance (+$1.6 million / +0.75 FTE) 

This funding continues implementation of an OMB mandate (September 28, 2010) that 

requires all federal agencies to transition to IPv6. This implementation will: 

• Secure communication with other federal agencies and third-party partners;

• Update public facing/external servers and services; and

• Upgrade internal client applications that communicate with public Internet servers and 

support enterprise networks.
IRS-47

Transition to Virtual Environments (+$32.3 million / +27 FTE)

By using outsourced managed infrastructure services with the same level of security and 

privacy controls as existing systems, this project will allow the IRS to replace outdated server 

technology. The long-term dividends of upgrading to a service delivery, cloud environment 

include:

• Providing IT tax processing services through a current hardware and software 

environment;

• The ability to deploy an information technology or telecommunications service by 

using predefined procedures that are carried out electronically without requiring 

human intervention;

• Transitioning from a proprietary software to an open source software for IRS 

mainframes;

• Keeping pace with new industry standards for cloud computing; and

• Increase utilization of hardware capacity.

IT Operating Platform Refresh (+$8.6 million / +7.5 FTE)

This investment will help refresh infrastructure that has exceeded its useful life. The 

following issues demonstrate the need for this refresh:

• Infrastructure is no longer operating reliably or needs an additional capability that is

not available through an upgrade; 

• Existing systems are being retired because of non-support or maintenance issues; 

• The infrastructure is unable to support the latest release of software, growth of the 

current application demand, or meet the latest federal security configuration standards; 

and

• To meet consolidation requirements, servers with higher performance, more memory 

capacity, and increased input/output communication capabilities are required.

The IRS would use these funds strategically to reduce the proportion of its equipment and 

software that is aged and out of warranty. 

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-48

Address Impact of ACA Statutory Requirements +$67,206,000 / +483 FTE

As tax laws change, the IRS must implement programs to ensure that taxpayers understand 

the new laws and address noncompliance. Funding for this initiative will promote 

compliance activities related to new ACA tax provisions and will: 

• Administer new fees on drug 

manufacturers and health 

insurers; 

• Strengthen oversight of 

tax-exempt hospital 

organizations, including 

refining the community 

benefit reviews and 

leveraging this data to 

conduct examinations; 

• Expand coverage of new 

provisions related to the PTC, 

individual responsibility 

requirement, and large 

employer insurance; and

• Address new audit 

requirements related to the

Employer Shared 

Responsibility Payment. 

This initiative is expected to 

annually produce additional 

enforcement revenue of 

$181.7 million, once the new 

hires reach full potential in 

FY 2018, an ROI of $2.8 to $1, 

and protect $88.7 million of 

revenue, a protected ROI of 

$12.2 to $1.

$60.8 $64.6 $65.5 $64.7

$139.4

$181.7

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

$180.0

$200.0

FY 2016 FY 2017 FY 2018

in millions

Enforcement Revenue ROI

Cost Enforcement Revenue

$1.1 to 1

$2.1 to 1

$2.8 to 1

$6.4 $7.3 $7.3

$28.3

$70.9

$88.7

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

$100.0

FY 2016 FY 2017 FY 2018

in millions

Protected Revenue ROI

Cost Enforcement Revenue

$4.4 to 1

$9.7 to 1

$12.2 to 1

Position Type/Other Costs FTE Positions $000

Administer New Fees on Drug 

Manufacturers and Health Insurers 9.00 9 $1,303

Revenue Agent 7.00 7 1,138

Support Staff 2.00 2 165

Strengthen Oversight of Exempt 

Hospitals 55.50 65 $7,601

Revenue Agent 30.75 36 4,618

Tax Law Specialist 5.00 6 901

Tax Technician 12.50 14 1,303

Support Staff 7.25 9 779

Promote Compliance with Other ACA 

Provisions 302.50 377 $32,721

Increase Examination Coverage 96.75 122 14,926

Revenue Agent 70.25 88 11,616

Manager, Analyst and Support Staff 23.00 30 2,759

Communications Specialist 3.50 4 551

Increase Correspondence Examination 172.75 211 14,851

Tax Examiner 141.50 171 11,745

Manager and Support Staff 31.25 40 3,106

Prevent Identity Theft and Refund Fraud 10.50 14 950

Tax Examiner 4.50 6 414

Seasonal 4.50 6 336

Manager and Analyst 1.50 2 200

Expand Collection Program Coverage 22.50 30 1,994

Tax Examiner 22.50 30 1,994

Program Management Office (PMO) 34.00 34 $10,328

Program Analyst 34.00 34 5,957

Contractual Services 4,371

Implement Statutorily Mandated Data 

Protection 12.25 13 $3,329

Program Analyst 12.25 13 2,040

Contractual Services 1,289

Other Direct Costs 69.75 82 $11,924

Appeals Officer 15.75 20 2,769

Attorney 46.00 52 8,279

Support Staff 5.75 7 567

HR Specialist 2.25 3 309

Total 483.00 580.00 $67,206
IRS-49

Administer New Fees on Drug Manufacturers and Health Insurers

(+$1.3 million / +9 FTE)

The IRS must continue to administer a new aggregate annual fee on businesses engaged in 

manufacturing and importing branded prescription drugs sold to specified government 

programs. The fee, set at $3 billion for 2015, represents a significant new source of revenue. 

The IRS will receive and process information from manufacturers/importers and specific 

government programs (Veterans Affairs, Medicare Parts D and B, Medicaid, Department of 

Defense, and TriCare) to determine each manufacturer’s fee assessment. Continuing 

administration includes IRS collection of data, computation of each entity’s fee amount, and 

notification of payment due. In addition, the IRS must administer a new annual fee on health 

insurance policies and self-insured health plans based on the average number of covered lives, 

which is effective for policy years ending after September 30, 2012. That fee is expected to 

raise more than $2.6 billion in the years 2013 to 2019 to fund the new Patient Centered 

Outcomes Research Institute. Further, the IRS must also continue to administer a new 

aggregate annual fees based on net premiums written by health insurance providers, set at 

$11.3 billion for 2016.

Strengthen Oversight of Exempt Hospitals (+$7.6 million / +55.5 FTE)

The ACA establishes new requirements for tax-exempt hospitals, which comprise a majority 

of the hospitals in the United States. IRS submission processing operations will need 

additional staff to process the newly required reports. Additionally, the IRS, in consultation 

with the Department of Health and Human Services, must develop and deliver a new annual 

report to Congress on levels of charity care in the hospital sector. 

Promote Compliance with Other ACA Provisions (+$32.7 million / +302.5 FTE)

This initiative requests resources to promote compliance with previously implemented 

provisions of the ACA, including modifying processes in response to filing and compliance 

trends in the initial processing years. Existing individual and employer compliance processes 

have been modified to support implementation. This initiative provides resources for 

additional revenue agents and tax examiners to detect fraud and identify and examine returns 

with the highest compliance risk, including: 

• New Tax on Net Investment Income and Additional Medicare Tax. Filing Season 2014 

marks the first processing year for a new tax on net investment income for taxpayers with 

Major Activities Enforcement 

Revenue 

($M)

Revenue 

Protected 

($M)

Inquiries 

Worked

PreRefund 

Closures Closures

Additional 

Entity 

Closures

Hospital 

Community 

Benefit 

Reviews

Administer New Fees on Drug Manufacturers and 

Health Insurers 2.5 1,750

Strengthen Oversight of Exempt Hospitals 1,000 5 1,000 

Promoting Compliance with Other ACA Provisions

Examination Coverage 60.2 3,876

Correspondence Examination 67.4 88.7 38,800 26,626

Collection Program 51.7 140,000 

Total $181.7 $88.7 140,000 38,800 33,252 5 1,000 

FY 2018 Projected Revenue and Workload
IRS-50

an adjusted gross income over certain thresholds ($200,000 for individual taxpayers, 

$250,000 for married taxpayers filing jointly) and an additional Medicare Tax on wages 

above the same thresholds was established, for which employers implemented new 

withholding.

• Small Business Health Tax Credit (SBHTC) and the Indoor Tanning Excise Tax. These 

resources will allow the IRS to increase audit coverage on taxpayer returns claiming the 

SBHTC and taxpayers who may be subject to the excise tax on indoor tanning services.

• PTC and Individual Shared Responsibility Payments. These resources will provide 

correspondence examination staff to increase examination coverage and decrease the 

underreporting tax gap. The additional staff will process new notices and respond to 

taxpayer telephone and correspondence inquiries related to provisions in the ACA, which 

added the new PTC in Internal Revenue Code (IRC) §36B, individual responsibility 

payments in IRC §5000A, and related information returns required under IRC §36B and 

§6055. The PTC is a potentially large refundable credit and brings increased compliance 

risk. The IRS requests additional resources to address erroneous claims for the credit 

before refunds are issued.

• Employer Shared Responsibility Payment. Examination Specialty Programs will 

administer the Employer Shared Responsibility Payment provision added by the ACA as 

IRC §4980H. This provision came into effect on December 31, 2014.

Program Management Office (+$10.3 million / +34 FTE)

With these resources, the ACA Program Management Office (PMO) will continue to prepare 

the IRS to process Form 1040, U.S. Individual Income Tax Return, modify existing business 

processes to address pre-refund and post-filing compliance activities, and ensure business 

requirements are built in to regulations, forms, and IT systems. 

Implement Statutorily Mandated Data Protection (+$3.3 million / +12.25 FTE)

Disclosure of certain tax return information is necessary as part of the eligibility 

determination process for enrollment in a Qualified Health Plan (QHP) through an exchange 

(either a state-based or federally-facilitated exchange). These resources will allow the IRS to 

continue to administer IRC §6103, Safeguarding Federal Tax Information, for the new sharing 

of data with non-IRS recipients under the ACA, which will require advance inspections, data 

sharing agreements, and monitoring by the IRS.

This funding also will allow the IRS to provide oversight and outreach to state-based 

marketplaces certified by the Department of Health and Human Services (HHS), the federal 

marketplace administered by HHS/Centers for Medicare & Medicaid Services (CMS), and 

state agencies that administer Medicaid programs. It will ensure that these new state and 

federal agencies receiving federal tax information are appropriately protecting federal tax 

information within their control, as required.
IRS-51

Other Direct Costs (+$11.9 million / +69.75 FTE)

IRS Activity Cost FTE Positions Explanation

Appeals $2.8 15.75 20

Appeals case receipts will increase by new examination 

closures completed by initiative hires that will require 

adjudication in the appeals process.

Chief Counsel $8.8 51.75 59 Counsel will provide legal advice to identify areas of 

noncompliance and equitable resolutions. 

Human Capital Office $0.3 2.25 3 Handle increased workload to hire and support staff. 

Total $11.9 69.75 82

Dollars in Millions
IRS-52

Enhance Service Options for Taxpayers +$16,243,000 / +54 FTE

The IRS is developing a 

customer-centric strategy (Service 

on Demand (SOD)) focused on 

improving the taxpayer experience 

by understanding taxpayers’ wants, 

needs, and service channel preferences. This investment will help to design and implement 

new online service options and will provide project oversight and business support. By 

creating new digital capabilities and reducing the burden on taxpayers, SOD will change the 

IRS’s relationship with taxpayers and allow earlier and more frequent engagement. The 

overall goal is to empower every person with the means to manage their tax information 

securely and conveniently. This initiative will improve the speed and convenience of 

interacting with the IRS.

To create SOD, the IRS has made an effort to identify opportunity areas and develop 

recommendations to transform how the IRS and taxpayers interact throughout the return filing 

lifecycle (pre, at, and post). Identified high-priority opportunities will focus on six project 

areas:

• Online Account features will allow individual taxpayers to view their transcripts, 

balance due, refund status and payment history, and update their personal information;

• Taxpayer Digital Communications will streamline the process for minor return 

changes through the use of secure, digital self-service and increased oral statement 

authority;

• Third Party Services will expand indirect services through government agencies, tax 

preparation software, or tax preparation service providers by establishing authorized 

access to taxpayer information;

• Taxpayer Analytics will leverage insights gained from analyzing taxpayer behavior to 

develop broad, integrated communication campaigns targeted at common errors to 

drive desired behavior;

• Payments will provide new mobile electronic payment options; and

• Forms & Publications will upgrade all IRS forms, publications and accompanying 

instructions to be web-friendly, searchable, and written in plain language.

These cross-channel service changes will improve service delivery by providing new digital 

options to taxpayers and creating capacity for live assistance to focus on the issues where 

taxpayer needs are greatest due to complexity or other challenges. This initiative also will 

provide resources to modernize and expedite the way the IRS delivers customer service, to 

include:

• Improving the user experience on IRS.gov, the toll-free line, and in the Taxpayer 

Assistance Centers;

• Providing messaging and marketing to direct taxpayers to the best service delivery 

channel and products to meet their needs;

Position Type/Other Costs FTE Positions $000

Improve Taxpayer Experience 54.00 72 $16,243

Analyst 54.00 72 9,633

Contractual Services 6,610

Total 54.00 72 $16,243
IRS-53

• Providing easy-to-understand, actionable information via IRS.gov;

• Providing proactive communications for status updates, outreach, and education;

• Partnering with third-party providers to develop new ways to deliver service;

• Improving service analytics to understand changes in demand and address emerging 

taxpayer needs; and

• Developing and implementing new digital products.

These resources will provide staff that will work closely with the IRS business units and the 

Information Technology office to define requirements for new online service options. This 

would include digital service experts that will facilitate the design, implementation, launch, 

and monitoring of new online self-service tools.

Funding for the information technology to implement these recommendations is requested in 

the initiative, Leverage New Technologies to Advance the IRS Mission.

Other Direct Costs

There are no other direct costs associated with this initiative at this time.
IRS-54

Restore Staffing for Essential Support Programs +$19,938,000 / +152 FTE

This initiative will provide 

staffing for IRS support 

organizations to address base 

functional requirements that 

have been challenged by the 

staffing constraints experienced 

since FY 2011. In order to 

continue to provide services at

an optimal level, these functions 

require additional staffing.

Provide Effective Procurement,

Security, and Employee Support 

Services

(+$4.4 million / +34.00 FTE)

Agency Wide Shared Services (AWSS) is responsible for the overall management 

of Shared Services, providing payroll, facilities, physical security, travel, credit 

card, cross-functional administrative, and procurement support for all 

organizational entities within the IRS.

Since FY 2011, AWSS has seen a 26 percent reduction in staffing. Continued attrition will 

impact the provision of necessary support functions. Without further staffing, AWSS will 

be unable to provide its customers with an optimal level of support. 

These resources will restore activities that have been negatively impacted by hiring

constraints and will help to effectively execute requirements.

Develop and Support Human Capital Management Strategies

(+$10.0 million / +78.25 FTE)

The Human Capital Office (HCO) provides strategies and tools for recruiting, hiring, 

developing, and retaining a diverse, highly skilled and valued workforce to support the IRS.

In a 2014 Enterprise Risk Management analysis, staffing and training were listed among the 

top human resources risks. The requested additional hires will allow HCO to continue 

building a highly talented, diverse workforce and cultivating an inclusive and collaborative 

environment.

Support Research to Improve Tax Administration (+$2.6 million / +19.25 FTE)

Research, Analysis & Statistics (RAS) provides research, analytical, statistical, and 

technology services to improve tax administration for many stakeholders, including the

IRS, the Treasury Office of Tax Analysis, the Joint Committee on Taxation, and the Bureau 

of Economic Analysis.

Since FY 2011, RAS has experienced a 15 percent decline in staffing while responsibilities 

have increased because of emerging issues related to FATCA, ACA, and identity theft. 

Position Type/Other Costs FTE Positions $000

Provide Effective Procurement, 

Security and Employee Support 

Services 34.00 43 $4,434

Analyst 34.00 43 4,434

Develop and Support Human Capital 

Management Strategies 78.25 99 $10,040

Analyst 78.25 99 10,040

Support Research to Improve Tax 

Administration 19.25 25 $2,609

Economist/Statistician 9.50 12 1,246

IT Specialist 4.50 6 607

Analyst 4.50 6 649

Clerical 0.75 1 107

Ensure Sound Financial Management 16.75 21 $2,208

Analyst 16.75 21 2,208

Protect Taxpayer Privacy 3.75 5 $647

Analyst 3.75 5 647

Total 152.00 193 $19,938
IRS-55

Realigning resources to handle the additional responsibilities has required diverting staff 

from existing projects. Without additional staffing resources, RAS will be unable to provide

its customers with an optimal level of support in several areas.

Ensure Sound Financial Management (+$2.2 million / +16.75 FTE)

The Chief Financial Officer (CFO) organization ensures the delivery of sound financial 

management by supporting various processes and programs, including the formulation and 

execution of the budget, audit and A-123 oversight, cost accounting and financial reporting,

and quality assurance and strategic plan activities.

Over the last several years, the CFO organization has lost nearly ten percent of its staff due to 

attrition and budget cuts. At current staffing levels, it is becoming increasingly difficult to 

successfully deliver on existing efforts and handle the additional workload related to 

implementing legislative requirements and mandates, including ACA and FATCA.

Protect Taxpayer Privacy (+$0.7 million / +3.75 FTE)

Privacy, Governmental Liaison, and Disclosure (PGLD) preserves and enhances public 

confidence by advocating for the protection and proper use of identity information. Changes 

in directives from Treasury and increased contractor concerns have precipitated the need for 

additional staffing to focus on contractor oversight, civil liberties, and records retention.

Other Direct Costs

There are no other direct costs associated with this initiative.
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Increase Service for Low-Income Taxpayers and Taxpayers in Need of Hardship Relief

+$5,719,000 / +27 FTE

This initiative provides support for 

taxpayers facing financial hardship by

increasing funding for the Low Income 

Taxpayer Clinic (LITC) Grant Program 

from $10 million to $12 million. It also 

increases funding for the Taxpayer 

Advocate Service (TAS) by $3.4 million to address the anticipated additional workload 

resulting from increased IRS enforcement activities requested in the cap adjustment of the FY 

2016 Budget.

Expand Low Income Taxpayer Clinics (+$2.3 million / +0.75 FTE)

The LITC program provides matching grants to community organizations that offer tax 

representation and advice to low-income taxpayers and conduct education and outreach to 

taxpayers for whom English is a second language. In addition to grant increases, this 

investment will also strengthen clinic assistance and oversight to ensure federal grant funds 

are properly spent and accounted for by adding two new analyst positions in the LITC 

Program Office to increase the number of site assistance visits conducted each year. 

By providing low-income and individuals who speak English as a second language taxpayers 

with access to legal services for free or a nominal fee, the IRS ensures that these taxpayers 

receive high quality representation and education about their rights and responsibilities. 

LITCs ensure that low-income taxpayers receive the correct outcome in disputes with the IRS 

and pay the correct amount of tax. LITCs also reduce taxpayer uncertainty and errors by 

clarifying and helping taxpayers understand their rights and responsibilities. LITCs can 

resolve issues early in the process and offer effective information and education through 

outreach efforts. Finally, LITCs are a safety net that provide low-income taxpayers with the 

assistance and support they need while ensuring that their rights are protected and preserved.

Taxpayer Advocate Support to Enforcement Programs (+$3.4 million / +26.25 FTE)

This portion of the initiative funds the increased Taxpayer Advocate workload from increased 

enforcement activities resulting from initiatives in the FY 2016 Budget. This includes 

additional staff for the TAS to ensure the IRS follows appropriate procedures, does not create 

unnecessary taxpayer burdens, and does not compromise taxpayers’ rights. 

A 2007 GAO report found that overall IRS enforcement actions result in downstream 

Taxpayer Advocate activities. TAS expects the additional case closures resulting from the 

new FY 2016 enforcement initiatives to generate an increase of 2,454 TAS cases from 

taxpayers attempting to resolve enforcement issues. 

TAS serves as the “safety net” for U.S. taxpayers – essentially the last resort (short of appeals 

and litigation) that prevents taxpayers from falling through the cracks of tax administration. 

TAS accepts cases when either (i) an IRS enforcement action is creating a financial hardship 

for a taxpayer or (ii) normal IRS processes are not working properly and a taxpayer is 

Position Type/Other Costs FTE Positions $000

Expand Low Income Taxpayer Clinics 0.75 2 $2,285

Program Analyst 0.75 2 285

Grants 2,000

Taxpayer Advocate Support to 

Enforcement Programs 26.25 35 $3,434

Taxpayer Advocacy Specialist 26.25 35 3,434

Total 27.00 37 $5,719
IRS-57

experiencing an unreasonable delay or other challenge in resolving an IRS problem. Issues 

that often require TAS involvement include resolving tax-related identity theft cases, helping 

taxpayers get levies released in appropriate cases, and helping taxpayers obtain refunds when 

overly broad IRS anti-fraud filters have held up their returns. 

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-58

Position Type/Other Costs FTE Positions $000

Document Matching 120.00 120 $10,693

Tax Examiner 104.00 104 9,059

Taxpayer Advocacy Specialist 2.00 2 205

Support Staff 14.00 14 1,429

Compliance Workload 186.00 186 $21,513

Tax Examiner 89.00 89 7,281

Revenue Agent 40.00 40 4,831

Special Agent 36.00 36 7,193

Tax Technician 18.00 18 1,942

Support Staff 3.00 3 266

Other Direct Costs 16.00 16 $2,047

Tax Examiner - Appeals 2.00 2 177

Revenue Agent - Appeals 1.00 1 119

Appeals Officer 3.00 3 420

Attorney 6.00 6 965

Paralegal 2.00 2 194

Support Staff - Counsel 2.00 2 172

Total 322.00 322 $34,253

Implement Merchant Card and Basis Matching +$34,253,000 / +322 FTE

This initiative will provide additional 

enforcement staff that will allow the IRS 

to take advantage of the reporting 

provisions for merchant payment card 

and third party reimbursements enacted in 

the Housing and Economic Recovery Act 

of 2008 (Public Law 110-289); and basis 

reporting on security sales enacted in the 

Emergency Economic Stabilization Act 

of 2008 (Public Law 110-343). These 

efforts will ensure that the IRS will be 

able to:

• Expand new compliance programs 

to ensure business and individual 

taxpayers meet their tax obligations;

• Investigate cases related to payment card and securities basis reporting issues and 

address discrepancies not suitable for resolution through the document matching 

verification process; and

• Address fraud and criminal violations that will be uncovered as the IRS establishes 

broader compliance programs.

This initiative is expected to produce additional annual enforcement revenue of 

$321.6 million, once the new hires reach full potential in FY 2018, an ROI of $11.1 to $1.

$34.3 $29.5 $29.0

$124.2

$243.0

$321.6

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

FY 2016 FY 2017 FY 2018

in millions

Enforcement Revenue ROI 

Cost Enforcement Revenue

$3.6 to $1

$11.1 to $1

$8.2 to $1

Major Activities Revenue

($M) Closures

Investigations 

Completed

Document Analysis 92.4 127,975 

Compliance Worklaod 229.3 104,742 66 

Total $321.6 232,717 66 

FY 2018 Projected Revenue and Workload
IRS-59

Document Matching (+$10.7 million / +120 FTE)

The IRS is modifying existing systems to perform new types of analysis related to merchant 

card payment transactions. Underreporting of gross receipts significantly contributes to the 

tax gap. The merchant payment card and third party reimbursements legislation enacted in 

the Housing and Economic Recovery Act of 2008 (Public Law 110-289) allows the IRS to 

identify businesses with a high likelihood of underreported gross receipts through analysis of 

their payment card receipts and network transactions as reported by payment card processors 

and third party settlement organizations. 

This legislation requiring information reporting on merchant card and third party 

reimbursements will help reduce the tax gap in three ways:

• Provide businesses with an official year-end statement of merchant card payments and 

third party network transactions to avoid underreporting of income they may have 

overlooked; 

• Provide the IRS with information to perform business income validation through 

document analysis; and 

• Provide the IRS with information to identify businesses that evade tax obligations by not 

filing or by understating income. 

Compliance Workload (+$21.5 million / +186 FTE)

Some underreporting discrepancies involving payment cards may require an examination of 

the return. These resources will use the following four mechanisms to help ensure that 

complicated transactions are properly reported for tax purposes and allow the IRS to address 

complex financial transactions with a focus on difficult accounting and tax law issues. 

• Correspondence Examinations

These funds will allow the Correspondence Examinations program to investigate 

complicated cases involving payment card and securities basis reporting issues and 

address discrepancies that cannot be reconciled in a verification process. This mechanism 

will ensure that transactions are reported properly for tax purposes and will help maintain 

adequate examination coverage of individuals and small businesses. 

• Field Examination

The improved data from filings allows the IRS to assess risks in taxpayer returns. The 

improved information will enhance the IRS’s ability to allocate resources and better assess 

the need for audits or other compliance actions. 

• Nonfiler Examination

The new information reporting from payment card processors and third party settlement 

organizations will enhance the IRS’s ability to detect business nonfilers. 

• Criminal Investigation 

Special agents in Criminal Investigation will identify and investigate individuals and 

business entities with indications of fraud as a result of violations that are uncovered as 
IRS-60

the IRS establishes broader compliance programs related to the merchant card and 

securities basis reporting legislation.

Other Direct Costs (+$2.1 million / +16 FTE)

IRS Activity Cost FTE Positions Explanation

Appeals $0.7 6.00 6 Support examination efforts on key compliance areas focused 

on improving voluntary compliance. 

Chief Counsel $1.4 10.00 10

Provide advice to revenue agents, revenue officers and the 

Department of Justice for District Court cases, review 

Notices of Deficiencies and litigate cases in the Tax Court.

Total $2.1 16.00 16

Dollars in Millions
IRS-61

Cap Adjustment Program Increases .......................................+$667,297,000 / +3,491 FTE

Prevent Identity Theft and Refund Fraud +$82,162,000 / +420 FTE

This initiative provides additional 

staffing and advanced technologies to 

handle the increased workload 

associated with identity theft and 

refund fraud. The resources requested 

will help the IRS to:

• Improve upfront identification 

and resolution of identity theft 

returns; 

• Address the backlog of identity 

theft cases associated with 

pre-refund and post-refund 

compliance activities;

• Recover funds related to 

questionable refunds from 

external sources;

• Prevent false tax returns filed 

by prisoners and reduce 

erroneous tax refunds;

• Address identity theft and tax 

refund fraud by focusing on 

bank accounts that receive 

multiple Automated 

Clearinghouse (ACH) or tax 

refund check deposits, 

combating temporary work visa exploitation, and working with the SSA to detect and 

prevent the submission of fictitious wage information; 

• Continue the expansion of the specialized Criminal Investigation (CI) Identity Theft 

Clearinghouse that processes identity theft leads; and

• Invest in information technology projects that will protect taxpayer information, help 

verify potentially fraudulent identity theft tax returns, and reduce erroneous payments.

This initiative is expected to produce additional annual enforcement revenue of $63.8 million, 

once the new hires reach full potential in FY 2018, an ROI of $20.6 to $1, and protect revenue 

of $1,031.1 million, a protected ROI of $13.2 to $1.

Position Type/Other Costs FTE Positions $000

Improving The Prevention of ID Theft 

and Refund Fraud 119.25 165 $13,580

Revenue Agent 6.75 9 866

Tax Examiner 84.00 112 7,225

Analyst 12.00 22 1,585

Manager 7.50 10 951

Support Staff 1.50 2 138

Seasonal 7.50 10 559

Contractual Services 2,256

Correspondence Examination and 

Automated Underreporter Identity 

Theft Teams 60.00 80 $5,399

Tax Examiner 51.00 68 4,461

Manager 4.50 6 487

Support Staff 4.50 6 451

Prevention of False Tax Returns by 

Inmates 7.50 10 $1,221

Analyst 5.25 7 833

Disclosure Specialist 2.25 3 388

Criminal Investigation Support 170.00 211 $38,333

Special Agent 120.50 145 30,403

Analyst 49.50 66 7,080

Contractual Services 850

IT Project 47.25 63 $21,052

Centralized Repository 1.50 2 2,886

Dishonored Check Processing (DCP) 9.75 13 2,792

Electronic Fraud 18.00 24 2,579

Integrated Automated Technology (IAT) Tools 12.75 17 1,990

Web-based AFOIA 5.25 7 3,705

Eliminate SSN from Taxpayer Mailings 7,100

Other Direct Costs 16.00 21 $2,577

Attorney 12.75 17 2,274

Paralegal 0.75 1 77

Support Staff - Counsel 1.50 2 130

HR Specialist 1.00 1 96

Total 420.00 550 $82,162
IRS-62

Improving the Prevention of Identity Theft and Refund Fraud 

(+$13.6 million / +119.25 FTE)

These resources will allow the IRS to expand programs to prevent identity theft related refund 

fraud, protect taxpayer identities, and assist victims of identity theft. The IRS will expand 

efforts to detect fraudulent refund returns and protect revenue by identifying patterns in 

refund return reviews and stopping additional refunds associated with the patterns identified. 

• Establish IRS Campus Fraud Technical Advisors (FTAs)

IRS Campus FTAs and revenue agents will provide investigative leads and referrals to 

federal, state, and local law enforcement agencies to solve identity theft cases.

• Protect data loss and federal tax information 

Recent legislation and data sharing agreements have added multiple state and federal 

agencies and exchanges that are new to receiving federal tax information. These 

agencies must complete the documentation required by Internal Revenue Code §6103 

and protect federal tax information within their control. There is a critical need for 

additional staff to safeguard and effectively manage IRS information, and oversee 

compliance with safeguard agreements. 

IRS operations will be improved to help protect sensitive taxpayer and IRS employee 

information. The IRS will continue to monitor information leaving its networks for

Major Activities Enforcement 

Revenue 

($M)

Revenue 

Protected 

($M)

Assessments 

($000)

Fraudulent 

Refunds 

Recovered 

($000)

False 

Returns 

Prevented

Investigations 

Completed Closures

Improve the Prevention of ID Theft 

and Refund Fraud 972.0 205,770 

Correspondence Examination and 

Automated Underreporter Identity 

Theft Teams 63.8 59.1 70,000 50,800 

Prevention of False Tax Returns 

Filed by Inmates 108,327 

Criminal Investigations Support 280 100,000 

Total $63.8 $1,031.1 $70,000 $205,770 108,327 280 150,800 

FY 2018 Projected Revenue and Workload

$2.7 $3.1 $3.1

$24.2

$48.2

$63.8

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

FY 2016 FY 2017 FY 2018

in millions

Enforcement Revenue ROI

Cost Enforcement Revenue

$9.0 to 1

$15.5 to 1

$20.6 to 1

$79.4 $78.3 $78.2

$382.7

$776.3

$1,031.1

$0.0

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

FY 2016 FY 2017 FY 2018

in millions

Protected Revenue ROI

Cost Enforcement Revenue

$4.8 to 1

$9.9 to 1

$13.2 to 1
IRS-63

vulnerabilities and increase employee awareness of and accountability for protecting 

Personally Identifiable Information (PII). Cybersecurity tools will enhance protection 

of taxpayer information and reduce the risk of identity theft and harm to taxpayers. 

The oversight of unencrypted PII leaving the IRS will allow timely assessment of 

identity theft risk or other potential harm to taxpayers. 

• Implement Revenue Protection Strategy 

The IRS continues to improve its ability to stop fraud and abuse of refundable credits. 

The IRS will develop alternative streamlined processes that will prevent the issuance 

of erroneous refund payments. The new staff will identify trends, coordinate and 

follow leads from banks and other sources, and develop recommendations on how to 

address the findings (i.e., issue taxpayer notices, modify existing systems, etc.). They 

also will conduct case reviews to validate the potential areas of abuse and pilot the 

new recommended procedures. In addition, these resources will allow the IRS to 

expand and expedite access to third party income and withholding information during 

the filing season.

• Business Support to Optimize Use of Return Review Program (RRP) 

This component will ensure that the new RRP system meets the needs of both the 

compliance and criminal investigation programs. The new RRP supports a 

cross-functional approach to coordinating and addressing criminal and civil tax 

noncompliance. It enables analysis and supports case processing needs during

criminal prosecution, revenue protection, accounts management, and taxpayer 

communications.

Correspondence Examination and Automated Underreporter Identity Theft Teams 

(+$5.4 million / +60 FTE)

The IRS will establish identity theft teams for the Correspondence Examination and 

Automated Underreporter (AUR) programs to reduce the impact of identity theft on 

taxpayers. 

The Correspondence Examination and AUR programs address the tax gap by verifying 

individual reporting compliance through limited-scope audits and document matching 

reviews. The additional staff will increase examination coverage, decrease underreporting, 

and expand the identity theft program. Six dedicated Exam and AUR identity theft teams will 

address the case backlog associated with pre- and post- refund compliance activities and 

support resolution of future cases, resulting in nearly 50,800 closures.

Prevention of False Tax Returns Filed by Inmates (+$1.2 million / +7.5 FTE)

The American Taxpayer Relief Act (ATRA) of 2012 (Public Law 112-240), Section 209, 

made 26 U.S.C. Section 6103(k)(10) permanent, authorizing disclosure of false tax returns 

and tax return information filed by inmates to the officers and employees of the federal and 

state prison agencies responsible for their incarceration. This allows the agencies to use the 

IRS information as evidence against the prisoners during administrative hearings, potentially 
IRS-64

resulting in disciplinary actions such as loss of privileges (e.g. access to visitors), loss of 

“good time” credits, or administrative segregation. 

By deterring inmates from filing false or fraudulent tax refunds, the risk of discipline will 

reduce erroneous tax refunds, instances of identity theft, and the amount of illegal funds 

flowing into prison systems (or funds controlled by persons outside the prison but influenced 

by inmates). These illegal funds have been found to promote drug trafficking and use, 

promote other contraband, and incite violence both inside and outside the prison. 

These additional resources will allow the IRS to:

• Develop and renew memoranda of understanding with the Federal Bureau of Prisons 

and state corrections agencies to provide IRS information as evidence against 

prisoners during administrative hearings; 

• Develop the case selection approach, test case leads, and select cases with the Federal 

Bureau of Prisons and the state corrections agencies;

• Educate the Federal Bureau of Prisons and state corrections agencies on prisoners’ tax 

fraud issues;

• Process the flow of the returns and return information requested by the various 

jurisdictions that have entered into memoranda of understanding with the IRS; and

• Facilitate the implementation of IRS safeguards with state corrections agencies, and 

provide ongoing review and evaluation of the implementation of safeguard standards 

by the various participating jurisdictions.

Criminal Investigation (CI) Support (+$38.3 million / +170 FTE)

• Refund Crimes Bank Secrecy Act Review Project 

The IRS will continue to use Bank Secrecy information regarding identity theft and 

tax refund fraud by focusing on bank accounts that receive multiple Automated 

Clearing House or tax refund check deposits. In 2013, 7,223 Suspicious Activity 

Reports (SARs) that referred to “Tax Refund Fraud” were filed. Schemes developed 

during the BSA pilot had an average refund loss rate of 53 percent. The average loss 

rate is the combined average percentage of refunds issued to perpetrator versus the 

total amount of refunds claimed in the refund fraud scheme. The Scheme 

Development Centers (SDC) will review such SARs weekly for possible development 

as well as to enhance and link ongoing schemes and investigations. Significant 

schemes developed by this project will be referred to the field office. 

• Initiative to Combat Temporary Work Visa Exploitation

The IRS has seen an increase in the use of J-1 visas and other exchange visitors’ 

identities for filing false tax returns and serving as money mules to receive and 

facilitate the movement of false refunds. The SSN remains valid after the exchange 

visa holder exits the United States and can be utilized by criminal organizations to 

obtain fraudulent refunds from both within the United States and overseas. The IRS is 

currently collaborating with the SSA, FinCEN, and State Department to gather 
IRS-65

identifying information for visa holders. This project will assist with revenue 

protection, scheme development, and investigative support. 

• Social Security Administration Office of Inspector General (SSA-OIG) Referral 

Program 

The SSA-OIG Referral Project is the result of a working relationship between 

SSA-OIG and IRS. SSA-OIG has been alerted of fictitious submissions of wage 

information to the SSA, which in turn is passed to the IRS and is loaded into IRS 

Information Returns Processing (IRP). The loading of fictitious IRP information 

undermines the IRS’s ability to properly verify the accuracy of returns and can lead to 

refunds based upon these fictitious submissions being released. The SSA Referral 

Project will provide information regarding these submissions to the IRS for further 

investigation and for potential revenue protection. These referrals will assist in 

criminal investigations and assist in the identification of perpetrators of identity theft 

schemes as well as participants in tax fraud schemes.

• Expand Identity Theft Clearinghouse 

These resources will allow the IRS to increase its participation in multi-agency task 

forces dedicated to tax administration and cooperation with state and local law 

enforcement agencies in jurisdictions where prosecutorial actions would have the 

greatest influence. The task forces will obtain information about criminal activity 

involving federal and state tax refunds to expedite prosecution by the Department of 

Justice while the criminal activity is still ongoing. These teams will target larger-scale 

crime rings for maximum compliance results and publicity. In addition, special agents 

will extend outreach efforts to practitioners from filing season only to year-round to 

provide information and address return preparer concerns.

IT Project (+$21.1 million / +47.25 FTE)

• Establish Centralized Repository for Fraud 

This project funds labor and technology that will enhance multiple core tax 

enforcement areas within IRS CI including fraud referrals, corporate fraud, 

employment tax, and abusive tax schemes. 

The centralized repository will:

o Improve information sharing between business operating divisions and expand 

CI’s capabilities to identify significant tax cases that ultimately help recoup 

lost tax revenue in areas that have experienced a decline in initiated 

investigations;

o Increase cost savings and standardize the accountability of the entire fraud 

referral process (there is currently no streamlined process); and

o Enhance overall enforcement efforts, increasing the number of convictions and 

facilitating restitution orders that will lead to additional assessments.
IRS-66

• Dishonored Check Processing (DCP)

These resources will leverage technology to improve protection of taxpayer 

information, enhance efficiency, and reduce erroneous refunds. 

o DCP will improve the IRS’s ability to efficiently process dishonored checks 

and prevent erroneous refunds caused by invalid payments. Currently, banks 

use a manual process to mail checks back to the IRS, taxpayer accounts are 

posted manually by the IRS, and the cases are assigned to tax examiners to 

research. DCP will leverage the Remittance Strategy for Paper Check 

Conversion system to provide a fast, systemic transfer of insufficient fund 

information to the IRS Dishonored Check File with no manual process 

involved.

• Improved Access to Social Security Administration (SSA) Data

This will fund additional IT equipment and programming support to allow the IRS to 

get SSA Form W-2, Wage and Tax Statement, and SSA Form W-3, Transmittal of 

Wage and Tax Statement, data more quickly. Getting the data more quickly will 

accelerate the verification of wages and withholding on potentially fraudulent tax 

returns and shorten the processing time for legitimate refunds. 

• Integrated Automated Technology (IAT) Tools 

IAT tools are desktop productivity-enhancing tools that automate certain taxpayer 

account processing activities. Funding for IAT technical resources support the design, 

development, and deployment of additional software tools to support anti-identity theft 

activities throughout the IRS.

IAT-developed software programs are needed to match wage and withholding 

information, automate additional taxpayer correspondence, and identify potential 

identity theft cases. These additional resources will increase IAT's capacity for 

technology development by approximately three software programs per year.

• Web-based Freedom of Information Act (FOIA)

The IRS processes over 66,000 annual requests for information through the FOIA and 

other channels and is able to complete 83 percent of the FOIA requests within the 

statutory period. A web-based platform will improve system stability and 

performance, reduce network interference, and provide the capability for additional 

enhancements such as a robust search and find feature that will provide additional 

protection against inadvertent disclosure of FTI. Automated Freedom of Information 

Act (AFOIA) is used for all GLDS work, including FOIA request processing, which 

has a 20 day statutory time frame for response. Treasury and Congress closely monitor 

FOIA. AFOIA is mostly compliant with 508 provisions with the exception of the 

document redaction functionality. Moving to a web-based product that is fully 

508 compliant will ensure adherence to 508 requirements. 

Due to the absence of a robust search and find feature, human error is a factor. Errors 

could be reduced or eliminated in some cases with a search engine. Annual TIGTA 

audit findings have addressed the weakness of inadvertent disclosures as well. 
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Additionally, the web platform will establish the foundation for taxpayers to submit, 

monitor, and track their requests for information online. 

The funding need is immediate because degradation of performance in the current 

system is impacting the timely delivery of FOIA requests within statute requirements. 

The current system is comprised of outdated client-server based technology and does 

not provide for additional controls required to improve inadvertent disclosure rate. 

This funding is required to begin development of a web based replacement system.

• Eliminate Social Security Number (SSN) from Taxpayer Mailings 

As part of an effort to eliminate and reduce the display of taxpayer SSNs on IRS 

notices, the IRS will continue to replace the printed SSN on notices with a 

2-dimensional barcode. 

These funds will provide resources for software, infrastructure, and related support to 

further implement the Social Security Number (SSN) Elimination and Reduction 

2-Dimensional (2D) Barcoding project. This phase of the project will reduce the 

display of SSNs on notices requesting a payment from the taxpayer, print barcodes on 

additional outgoing notices, and will create a system that reads 2D barcodes in the 

payment processing systems. This phase will reduce the use of SSNs on 88 notice 

types, eliminating the use of SSNs on notices to 48 million taxpayers. Overall, this 

project will reduce the use of SSNs on 226 notice types, eliminating the use of SSNs 

on notices mailed to 120.7 million taxpayers.

The IRS is required to eliminate unnecessary collection, use, and display of SSNs 

within systems, programs, notices, letters, and forms to comply with the Office of 

Management and Budget (OMB) mandate as described in OMB M-07-16, 

Safeguarding Against and Responding to the Breach of Personally Identifiable 

Information. Safeguarding Personally Identifiable Information (PII) in the possession 

of the government is essential to ensure that the government retains the trust and 

confidence of the American public.

Other Direct Costs (+$2.6 million / +16 FTE)

IRS Activity Cost FTE Positions Explanation

Chief Counsel $2.5 15.00 20

Provide legal guidance throughout the course of the 

investigations and work with Federal and State agencies on 

developing memorandums of Understanding.

Human Capital 

Office $0.1 1.00 1

Handle the increase in front-line positions and the expectation 

that new managerial positions will be created. Labor Relations 

support begins in the first year and continues throughout a 

manager's career, as needed. One Labor Relations Specialist 

supports 49 managers.

Total $2.6 16.00 21

Dollars in Millions
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Position Type/Other Costs FTE Positions $000

Examination Coverage 516.00 688 $65,735

Revenue Agent 318.00 424 43,024

Tax Technician 167.25 223 19,688

Tax Examiner 7.50 10 622

Analyst and Support Staff 23.25 31 2,401

Specialty Programs 33.75 45 $5,217

Revenue Agent 12.75 17 2,254

Attorney 13.50 18 2,000

Analyst and Support Staff 7.50 10 963

Correspondence Examination 258.75 345 $24,599

Tax Examiner 213.75 285 19,376

Revenue Agent 1.50 2 224

Tax Technician 12.00 16 1,544

Manager, Analyst, Support Staff 31.50 42 3,455

Automated Underreporter 138.75 185 $13,264

Tax Examiner 124.50 166 11,398

Analyst and Support Staff 14.25 19 1,866

Address Appeals Workload 22.50 30 $3,463

Revenue Officer 15.00 20 2,371

Appeals Officer 7.50 10 1,092

IT Projects 60.25 80 $39,682

Correspondence Imaging for Compliance 38.75 51 22,028

2D Barcoding 4.50 6 8,603

Implement IT Improvements for Chief Counsel 17.00 23 9,051

Other Direct Costs 69.00 92 $9,849

Appeals Officer 18.75 25 2,742

Revenue Agent - Appeals 5.25 7 657

Tax Examiner - Appeals 3.00 4 282

Attorney 27.00 36 4,659

Paralegal 9.00 12 934

Support Staff - Counsel 5.25 7 479

HR Specialist 0.75 1 96

Total 1,099.00 1,465 $161,809

Increase Audit Coverage +$161,809,000 / +1,099 FTE

This initiative will allow the IRS to increase its examination program coverage over a broad 

range of compliance priorities. Tight budget constraints have eroded the examination staff 

available to conduct audits causing 

the individual audit coverage to 

decline below 0.9 percent. Due to

growth in individual returns filed

and the time required for new hires 

to reach full-working level, this 

initiative will still result in an 

individual coverage rate below 

1.0 percent. Reduced coverage

causes increased risk to the integrity 

of the voluntary tax compliance 

system. This initiative will:

• Provide additional field 

employees to reverse the 

decline in individual audit 

coverage;

• Expand coverage of 

Employment tax returns and 

Estate and Gift tax returns;

• Expand examinations on 

issues related to Individual 

Retirement Arrangements, 

Individual Tax 

Identification Numbers 

(ITINs), General Business Credit, new tax provisions, and the Questionable Refund 

Program;

• Increase individual and business document matching programs to identify and reduce 

income misreporting;

• Provide an imaging solution to support collaboration and improve exam efficiency; 

and

• Improve the effectiveness of the litigation program by expediting both the analysis and 

sharing of electronic data during the lifecycle of Tax Court cases.

This initiative is expected to annually produce additional enforcement revenue of 

$1,266.7 million, once the new hires reach full potential in FY 2018, an ROI of $8.0 to $1, 

and protect revenue of $112.1 million, a protected ROI of $8.8 to $1.
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Examination Coverage (+$65.7 million / +516 FTE)

There has been a recent decline in the staffing levels of examiners conducting field audits as a 

result of a 17 percent decrease in funding since October 2011. This initiative will increase 

field examinations to reduce the individual taxpayer portion of the underreporting compliance 

tax gap. Additional field examination resources will allow the IRS to restore examination 

coverage while achieving balance across taxpayer segments. It is critical that the overall audit 

coverage rate for individual taxpayers does not drop below the current level. These resources 

will ensure that the IRS can maintain broad based coverage of the largest and most complex 

cases in the individual filing population. 

In addition to providing resources for field examination, this initiative requests resources to 

hire quality review specialists to review cases and measure the accuracy of systemic 

computation of interest and the application, calculation, and effectiveness of civil penalties. 

Currently, there is no process to assess the accuracy of systemically calculated interest and 

civil penalties. The Government Accountability Office (GAO) has identified these 

deficiencies as material weaknesses in the IRS's Financial Management Controls and 

recommended corrective action. Additional resources for a quality measurement system will 

allow the IRS to implement a quality review program by hiring specialists to review cases and 

measure the accuracy of systemic computation of interest, as well as the application, 

calculation, and effectiveness of civil penalties. Implementing this quality review program 

will ensure the equitable and accurate administration of more than 170 civil penalties, with 

assessments exceeding $30 billion annually. The results will assist the IRS in identifying 

Major Activities

Enforcement 

Revenue 

($M)

Revenue 

Protected 

($M)

Pre-Refund 

Closures Closures

Examination Coverage 504.9 40,000 

Specialty Programs 50.1 1,066 

Correspondence Examination 350.8 112.1 29,880 87,480 

Automated Underreporter 360.9 199,720 

Address Appeals Workload 4,025 

Total $1,266.7 $112.1 29,880 332,291 

FY 2018 Projected Revenue and Workload

$150.7 $162.7 $158.5

$397.5

$938.8

$1,266.7

$0.0

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

$1,400.0

FY 2016 FY 2017 FY 2018

in millions

Enforcement Revenue ROI 

Cost Enforcement Revenue

$2.6 to $1

$8.0 to $1

$5.8 to $1

$11.1 $12.7 $12.7

$35.4

$89.7

$112.1

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

FY 2016 FY 2017 FY 2018

in millions

Protected Revenue ROI 

Cost Enforcement Revenue

$3.2 to $1

$8.8 to $1

$7.1 to $1
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improvements to systems, policies, and frontline business operations while enhancing the 

accuracy of interest calculations that will support equal and fair tax treatment of taxpayers.

Specialty Programs (+$5.2 million / +33.75 FTE)

This initiative will provide specialty tax staff to examine tax returns that address compliance 

issues in the Employment Tax program and the Estate and Gift Tax program. 

• The Employment Tax program will address egregious underreporting of tips by 

employers in the food and beverage, gaming, travel and cruise, and other service 

industries where tipping is customary. As the service economy in the U.S. has grown 

in size as a percentage of GDP, the level of unreported tips continues to expand. The 

focus of additional workload will be on increasing voluntary tip agreements, assessing 

the employer’s share of the Federal Insurance Contributions Act (FICA) taxes on 

unreported tip income, and performing compliance checks on existing agreements and 

industry groups. In addition, international examiners will investigate wage allocations 

between countries in partnership with the Global High Wealth teams to prevent 

arbitrary allocation and evasion schemes.

• The Estate and Gift Tax program will increase program coverage in response to recent 

changes in the estate and gift tax law and expanding nonfiler work. The number of 

gift tax returns has been impacted by legislative changes to exemption amounts 

resulting in increased filings of 55 percent from calendar year 2012 to 2013. 

Additionally, increased staff to address nonfilers is critical to achieving a higher level 

of voluntary compliance with estate and gift laws.

Correspondence Examination (+$24.6 million / +258.75 FTE)

This initiative will provide correspondence examination staff to increase examination 

coverage, decrease the underreporting tax gap, and expand the following areas:

• Expand Campus Examination Program

The Campus Examination program addresses the tax gap through increased 

enforcement presence in priority segments of individual reporting compliance, 

including itemized deductions and education credits. These resources will deter more 

taxpayers from evading their tax obligations, and thereby support the IRS goal of 

increased voluntary compliance and maintaining examination coverage of individuals. 

The additional staffing will allow the IRS to maintain broad exam coverage by 

meeting the challenges of administering new credits without reducing coverage of 

existing issues. 

• Address Individual Taxpayer Identification Number (ITIN) Compliance

An ITIN is a tax processing number issued by the IRS to foreign nationals and others 

who have federal tax reporting or filing requirements, but do not qualify for social 

security numbers. Additional resources in this area will allow the IRS to: 

o Expand audit coverage on ITIN filers claiming the Advanced Child Tax Credit 

(ACTC) and American Opportunity Tax Credit (AOTC), which are not 

available for ITIN dependents residing outside the U.S.;
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o Test filters in a pre-refund environment to identify ITIN noncompliant claims 

of these credits;

o Address returns with new ITIN applications; and

o Identify and address return preparers who file egregious ITIN noncompliant 

returns. 

• Real Time Preparer Expansion – Return preparers are a critical component of tax 

administration and provide a unique opportunity to improve taxpayer behavior and 

compliance with tax laws. The Real Time Preparer program seeks to improve 

compliance among return preparers by completing pre-refund and post-refund audits, 

conducting on-site visits, and preparing warning letters to preparers. 

• Individual Retirement Account (IRA) Soft Notices – In response to Treasury Inspector 

General for Tax Administration (TIGTA) audit 2010-40-043, A Service-wide Strategy 

is Needed to Address Growing Noncompliance with Individual Retirement Account 

Contribution and Distribution Requirements, the IRS is enhancing IRA compliance 

efforts. The IRS initiated a soft notice pilot in December 2013 to encourage taxpayers 

to voluntarily correct discrepancies and increase voluntary compliance among an 

estimated 15 million potential cases of underreporting related to IRAs that contribute 

to the tax gap each year. The IRA soft notice will remind taxpayers who are over 

70 and a half years of age that they must take required distributions from their IRAs or 

be subject to penalties. 

The IRS also plans to initiate another pilot to conduct audits on individuals who have 

not taken the required distributions or individuals who have made excess 

contributions. The IRS currently does not have sufficient staffing to address the 

required distributions or excess contributions to IRAs. In FY 2016, the additional 

employees will handle the incoming mail and phone calls associated with the 

follow-up audits for individuals who have not complied with IRA distributions or 

contributions tax laws.

Automated Underreporter (AUR) (+$13.3 million / +138.75 FTE)

• Automated Underreporter – The AUR program is highly successful in minimizing 

revenue loss through document matching of individual taxpayer account information. 

About 12 million taxpayers may currently misreport their income based on third-party 

information returns. The AUR program processes approximately 5 million taxpayer 

cases, leaving 7 million taxpayers whose returns may have misreported income

unaddressed. There has also been an increase in complex issues, such as identity theft 

and bankruptcy, requiring the more experienced staff to spend increased time closing 

fewer cases. The expansion of program coverage is expected to increase voluntary 

compliance and reduce the number of taxpayers who underreport income in future tax 

years. AUR coverage decreased from 2.2 million returns in FY 2013 to 1.67 million 

returns in FY 2014. If funding is provided, the IRS estimates that AUR coverage may 

return to 1.9 million returns by FY 2018.

• Business Underreporter (BUR) – As a result of the Housing and Economic Recovery 

Act of 2008 (Public Law 110-289) and the American Taxpayer Relief Act of 2012
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(Public Law 112-240), specific reporting requirements for filers of both Form 1120, 

U.S. Corporation Income Tax Return, and Form 1041, U.S. Income Tax Return for 

Estates and Trusts, were established. To support voluntary compliance with this 

legislation, BUR matches information returns against corporate and estate tax returns. 

The program was created in October 2012 and has proven to be productive in both 

assessing and collecting underreported tax liabilities. These resources will increase 

coverage and bolster voluntary compliance among business filers. Analysts will also 

interface with IT programmers to assist with new programming and troubleshooting to 

effectively and efficiently maintain the underreporter system.

Address Appeals Workload (+$3.5 million / +22.5 FTE)

The Appeals function is a critical outlet for taxpayers to get an independent, second review of 

examination decisions without burdening the court system. Appeals must work all cases 

received from the compliance functions of the IRS. Over the past ten years, this workload has 

increased nearly 15 percent, from approximately 100,000 cases received during FY 2005, to 

118,000 cases received in FY 2014, whereas the Appeals FTEs have declined by 8 percent

over that same period, from 1,850 FTEs realized in FY 2005 to 1,708 FTEs realized in 

FY 2014.

This request for additional staffing will allow Appeals to effectively manage future inventory 

and avoid an increase in backlogged inventory. 

IT Projects (+$39.7 million / +60.25 FTE)

This initiative requests resources for the following IT projects:

• Implement Document Imaging 

Document Imaging (DI) will allow all of the IRS business units to share a common, 

modernized infrastructure for scanning, imaging, and managing documents. DI also 

will allow IRS employees to collaborate and resolve compliance cases more 

efficiently. It will establish a common document and imaging infrastructure that can 

support many projects simultaneously and improve customer support. Projects that 

will benefit from the common document imaging infrastructure include: 

o Content Management & Collaboration (CMC) – A web-based tool used by audit 

teams to facilitate collaboration by integrating document management, forums, 

calendars, and other interpersonal communication and productivity tools; 

o Taxpayer Advocate Service Integrated Systems (TASIS) – A Taxpayer Advocate 

Service case management system that uses document imaging to facilitate 

collaboration within the IRS so that cases can be resolved faster for taxpayers 

experiencing financial hardship or burden; and

o Correspondence Imaging for Compliance (CIC) – An imaging solution that 

provides a central repository for imaged correspondence and stored images used 

by legacy compliance systems. 

Further, this resource will improve the efficacy of search queries across applications, 

indices, and database servers by sharing server content. DI significantly reduces the 
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time, complexity, and costs of current document management and imaging processes, 

and contributes to improved customer service.

• Two Dimensional (2D) Barcode Project 

The 2D Barcode project will allow the IRS to:

o Convert data from paper tax returns into electronic formats more efficiently and 

accurately by adding coded information to computer-generated paper returns;

o Process paper payments electronically; and

o Allow the IRS to accept and store individual amended returns electronically. 

Increased data capture and faster, more accurate processing will improve audit 

effectiveness by ensuring examination programs have the most recent and most 

complete return data available. This additional data will support improved case 

selection approaches, improve the quality of data available to tax examiners and 

revenue agents, and expedite the examination process by reducing reliance on paper 

files.

• Implement Information Technology (IT) Improvements for Chief Counsel

This initiative will increase the effectiveness and efficiency of the Office of Chief 

Counsel, which represents the IRS in all matters in front of the Tax Court, by 

enhancing litigation support and improving external connectivity with third parties. 

This will improve the effectiveness of the litigation program by expediting both the 

analysis and sharing of electronic data during the lifecycle of Tax Court cases.

o Litigation Support Enhancement 

To handle the increasing volumes of digital data, the IRS must either increase

staff or invest in technology that will increase efficiencies. Investing in the 

Litigation Support Enhancement project will add capabilities, including predictive 

coding, de-duplication, email threading, and advanced filtering of data sets, which 

will increase efficiency during the examination and discovery processes. This 

project automates these processes to assist teams with managing the increasingly 

larger volume of data that modern litigation encompasses. 

o External Connectivity 

The External Connectivity project enhances the IRS's ability to communicate with 

external parties such as Congress, the Department of Justice (DOJ), and taxpayer 

representatives by improving virtual collaboration and file sharing across secure 

data connections with the ability to handle gigabytes of data. There is often no 

effective way to explain complex issues other than in a face-to-face format. To 

reduce travel costs and improve efficiency, the External Connectivity project 

enhances virtual collaboration by providing the ability of “screen sharing” with 

parties outside of the IRS. The IRS expects that the demand for this capability 

will continue to increase from external parties.
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Other Direct Costs (+$9.9 million / +69 FTE)

IRS Activity Cost FTE Positions Explanation

Appeals $3.7 27.00 36 Support examination efforts on key compliance areas focused 

on improving voluntary compliance. 

Chief Counsel $6.1 41.25 55

Provide support for increases in requests for legal advice, 

litigation assistance, and published guidance on issues raised in 

audits. 

Human Capital 

Office $0.1 0.75 1 Handle increased workload to hire and support staff. 

Total $9.9 69.00 92 

Dollars in Millions
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Position Type/Other Costs FTE Positions $000

Improve Identification and Coverage of Tiered 

Partnerships 49.25 66 $9,819

Revenue Agent 46.25 62 9,519

Manager 3.00 4 300

Strengthen Enforcement Activities Related to 

TEFRA Workload 39.75 53 $3,642

Revenue Agent 3.50 5 559

Tax Examiner 26.50 35 2,183

Analyst 9.75 13 900

Other Direct Costs 18.00 24 $2,788

Appeals Officer 7.50 10 1,093

Revenue Agent- Appeals 3.00 4 375

Tax Examiner- Appeals 1.50 2 141

Attorney 5.25 7 1,083

Paralegal 0.75 1 96

Total 107.00 143 $16,249

Improve Audit Coverage of Large Partnerships +$16,249,000 / +107 FTE

Partnership businesses continue to 

be the fastest growing segment of all 

tax returns filed. The Government 

Accountability Office says the 

number of large businesses 

organized as partnerships has more 

than tripled since FY 2002; 

however, only 0.8 percent were 

subjected to field exams, in which 

agents completed a thorough review 

of books and records. 

Funding for this initiative will 

improve coverage by: 

• Increasing the number of agents with specialized knowledge in partnership law; and

• Strengthen enforcement activities relating to flow-through entities and improve 

compliance by enhancing Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) 

procedures. 

This initiative is expected to produce additional annual enforcement revenue of $129.1 

million, once the new hires reach full potential in FY 2018, an ROI of $7.6 to $1. 

Major Activities Revenue

($M) Closures

Improve Identification and Coverage of Controlled 

Partnerships 129.1 261 

 Total $129.1 261 

FY 2018 Projected Revenue and Workload

$16.2 $17.8 $16.9

$44.5 

$86.1 

$129.1 

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

FY 2016 FY 2017 FY 2018

in millions

Enforcement Revenue ROI 

Cost Enforcement Revenue

$2.7 to $1

$7.6 to $1

$4.8 to $1
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There is a wide variety of business organizations operating in the United States and abroad 

with different filing requirements. These organizations include businesses, such as sole 

proprietors, corporations, partnerships, and S-corporations, as well as trusts and non-profits. 

Partnership businesses continue to be the fastest growing segment of all tax returns filed. 

In calendar year (CY) 2013, approximately 3.7 million partnership returns were filed, an 

increase of 2.5 percent from CY 2010. This growth is projected to continue at an average rate 

of 2.4 percent per year, reaching 4.1 million returns filed by CY 2017.

The most significant factor affecting the growth in partnerships is the rise of limited liability 

companies (LLCs) filing as partnerships. Over the last 25 years, the number of pass-through 

LLCs rose from virtually zero to more than 600,000 in 2000, and to more than 2.1 million by 

2011. Total assets reported by these LLCs have grown from zero to $7.8 trillion and their 

total income has grown from zero to $2.7 trillion over the same period. This increase

corresponds to an ongoing decline in the business activity of corporations, some of which has 

shifted to partnerships they control.

While the number and complexity of partnership filings have increased significantly since 

2000, audit coverage for this segment has remained flat. The IRS has examined an average of 

0.34 percent of all partnership returns annually since 2000. With few exceptions, the 

percentage of partnership returns examined each year has been lower than other types of tax 

returns. This initiative provides resources to increase audit coverage of partnership returns. 

Improve Identification and Coverage of Tiered Partnerships

(+$9.8 million / +49.25 FTE)

This initiative funds additional revenue agents who will work partnership cases and other 

flow-through returns that are part of this network of returns. This will allow the IRS to 

increase the number of revenue agents with specialized knowledge in partnerships and to 

address the inherent complexity associated with partnership tax law and administrative 

procedures. 

Multiple layers of partnerships have increased the complexity of flow-through examinations. 

Subchapter K of the Internal Revenue Code provides specific rules applicable to the tax 

treatment of partnerships and partners. The increasing prevalence of tiered networks of 

partnership enterprises creates a significant challenge for the IRS in using the rules contained 

in Subchapter K to understand, recognize, and address risk, and treat noncompliance. 

The increased complexity associated with flow-through examinations requires a 

disproportionate amount of time and effort. This complexity also provides an opportunity for 

taxpayers to pursue tax-sheltering activities and has inspired abusive transactions in recent 

history. This initiative will:

• Improve taxpayer compliance in high-risk related return structures comprised of tiered

partnerships through issue-focused examinations by expert partnership examiners. 

• Enhance IRS-wide collaboration; and
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• Develop processes that allow the scoring and risk assessment of partnerships 

controlled by corporations and related individuals.

Strengthen Enforcement Activities Related to TEFRA Workload 

(+$3.6 million / +39.75 FTE)

TEFRA established unified audit rules applicable to all but certain small partnerships that 

meet the Small Partnership Exception. The TEFRA audit rules are complex and extensive. 

Revenue agents handling partnership cases must understand both the TEFRA partnership 

audit rules and the normal audit rules that apply outside the partnership context. Tax shelter 

promoters have been known to take advantage of the complex TEFRA rules through the use 

of a combination of trusts, S corporations, limited liability companies, partnerships, and other 

entities, often arranged in complex networks, for the tax benefit of a single investor or a small 

group of investors. This deliberate addition of complexity can hamper IRS efforts to pursue 

investors in abusive transactions. While the IRS has made progress in training examiners in 

the TEFRA rules, maintaining TEFRA proficiency among non-specialist revenue agents is an 

ongoing challenge. 

This initiative strengthens enforcement activities pertaining to flow-through entities by 

providing assistance to field examiners to identify these interrelated and tiered entities and 

provide notice requirements to investors within established timeframes. 

Other Direct Costs (+$2.8 million / +18 FTE) 

IRS Activity Cost FTE Positions Explanation

Appeals $1.6 12.00 16 Support examination efforts on key compliance areas focused on 

improving voluntary compliance. 

Chief Counsel $1.2 6.00 8

Provide advice to revenue agents, revenue officers and the 

Department of Justice for District Court cases, review Notices of 

Deficiencies, and litigate cases in the Tax Court.

Total $2.8 18.00 24

Dollars in Millions
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Position Type/Other Costs FTE Positions $000

Increase Offshore Compliance 143.75 179 $21,193

Revenue Agent 70.50 94 12,416

Tax Examiner 13.50 18 1,262

Tax Technician 8.25 11 1,063

Manager, Analyst and Support Staff 51.50 56 6,452

Expand Offshore Criminal Investigation 36.50 49 $8,355

Special Agent 12.50 17 4,831

IT Specialist 12.00 16 1,911

Analyst 12.00 16 1,613

Other Direct Costs 57.75 77 $11,109

Appeals Officer 9.75 13 1,716

Revenue Agent - Appeals 0.75 1 94

Tax Examiner - Appeals 0.75 1 71

Attorney 43.50 58 8,937

Paralegal 0.75 1 95

Support Staff - Counsel 2.25 3 196

Total 238.00 305 $40,657

Address International and Offshore Compliance Issues +$40,657,000 / +238 FTE

This initiative will expand 

coverage of entities with 

undisclosed offshore accounts to 

comply with required U.S. tax 

reporting. This initiative will:

• Promote voluntary 

compliance with U.S. laws 

through strategic 

enforcement actions 

directed at identifying 

U.S. taxpayers involved in 

abusive offshore tax 

schemes through banks, 

other financial institutions, 

and third party structures; 

• Allow the IRS to expand information 

gathering and data analysis to identify 

promoters or facilitators of abusive offshore 

schemes; and 

• Expand the pursuit of international tax and 

financial crimes as well as grow the IRS 

attaché presence.

This initiative is expected to produce annual 

enforcement revenue of $159.6 million, once the new 

hires reach full potential in FY 2018, an ROI of $3.7 to $1.

Major Activities Revenue

($M)

Individual 

Closures

Business 

Closures

Investigations

Completed

Increase Offshore Compliance 159.6 4,100 50

Expand Offshore Criminal Investigations 30

 Total $159.6 4,100 50 30

FY 2018 Projected Revenue and Workload

$40.7 $49.3 $44.6 $43.1

$105.5

$159.6

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

$180.0

FY 2016 FY 2017 FY 2018

in millions

Enforcement Revenue ROI 

Cost Enforcement Revenue

$1.2 to $1

$2.4 to $1

$3.7 to $1
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Increase Offshore Compliance (+$21.2 million / +143.75 FTE)

• Increased Coverage of Offshore Individual Compliance Issues

Offshore and cross-border tax issues affect a growing number of taxpayers. The 

additional resources in this initiative will allow the IRS to: 

o Ensure proper application of treaty benefits, foreign tax credits, and foreign earned 

income exclusion; 

o Verify withholding before the release of refund requests;

o Increase pre-refund audit coverage; 

o Establish centralized classification and case building unit; and 

o Increase the use of soft letters to promote voluntary compliance.

• Enhance International Compliance Efforts

This funding will allow the IRS to identify emerging offshore compliance issues and 

handle the increased workload from cases with international issues and offshore 

transactions. The additional workload from the open-ended Offshore Voluntary 

Disclosure Program (OVDP), additional John Doe Summonses, and expanded 

information reporting required by the FATCA is expected to result in increased 

individual and small business audits. 

o Implementation of OVDP

In January 2012, the IRS reopened the previous Offshore Voluntary Disclosure 

Initiative (OVDI) with tightened eligibility requirements in response to strong 

interest from taxpayers and tax practitioners. On July 1, 2014, the IRS expanded 

the OVDI to allow streamlined filing of amended returns for domestic taxpayers to 

self-certify their non-willful actions on their previously undisclosed foreign 

income and pay a 5 percent penalty on the highest aggregate balance of their 

foreign assets. Since the program was established in 2009 through the end of 

FY 2014, the OVDP has resulted in the collection of more than $6.5 billion in back 

taxes, interest, and penalties from more than 45,000 participants.

o Issuance of John Doe Summons 

The purpose of a John Doe summons is to investigate the tax liability of a specific 

unidentified taxpayer (or a group of such taxpayers). The use of John Doe 

summonses has avoided the restrictions imposed by the international bank secrecy 

rules and resulted in over 725 primary treaty cases, equating to over 3,000 returns. 

A John Doe summons can be served only after approval by a federal court. The 

IRS has seen an increase in the number of offshore voluntary disclosure filings 

when Treasury and/or Department of Justice announce legal actions against 

taxpayers after the issuance of John Doe summonses to foreign financial 

institutions (FFIs). 

o Expanded Information Reporting under FATCA

In March 2010 FATCA legislation was enacted as part of the Hiring Incentives to 

Restore Employment (HIRE) Act of 2010 (Public Law 111-147). This legislation 
IRS-80

strengthens offshore compliance efforts by creating new information reporting 

requirements for FFIs with respect to U.S. accounts, establishing new withholding, 

documentation, and reporting requirements for payments made to certain foreign 

entities, and requiring expanded information reporting for offshore assets held by 

U.S. taxpayers. Through both voluntary taxpayer identification of foreign assets 

and third party reporting by FFIs, the IRS expects to see an increase in the number 

of taxpayers with taxable offshore transactions and to identify taxpayers with 

previously undisclosed foreign holdings. 

• Increase Timely Development of Quality Fraud Referrals

The IRS National Fraud Program ensures that areas of tax avoidance and fraud are 

promptly addressed and proactively identified. This program identifies and develops 

potential indicators for acts of fraud. These additional resources will allow technical 

advisors to:

o Provide technical support required as a result of the issuance of John Doe 

summonses;

o Address complex international issues;

o Proactively assist in developing potential fraud cases and streamline referrals to 

IRS Criminal Investigation (CI); and

o Provide assistance in obtaining international data and analyzing Suspicious 

Activity Reports (SAR) data. SARs are submitted to the Treasury by financial 

institutions, brokerage houses, money service businesses, casinos, and others. 

They provide additional information regarding suspicious movements of cash and 

wire transactions that are not included in a Currency Transaction Report (CTR).

Expand Offshore Criminal Investigations (+$8.4 million / +36.5 FTE)

In support of the strategic goal to enforce international compliance by strengthening expertise, 

adopting innovative approaches, and streamlining procedures, the IRS is requesting additional 

resources to support efforts related to FATCA criminal non-compliance, international case 

development with the international law enforcement community, and overseas enforcement 

support. 

• FATCA

Address fraud and criminal violations that will be uncovered as the IRS establishes 

broader withholding, document matching, and compliance programs per FATCA 

legislation. IRS special agents will proactively identify individuals, business entities, 

withholding agents, foreign financial institutions, and professional advisors that 

exhibit substantial and firm indications of fraud. Analysts will focus on trends and 

patterns of substantial criminal and willful intent to evade or avoid the payment of 

federal income tax obligations. The new staff will increase the criminal investigations 

initiated involving false claims for refunds, underreported or non-reported tax, failure 

to pay, conspiracy, and money laundering violations due to the new information 

reporting requirements.
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• International Case Development

The IRS has developed a Case Development Center (CDC) prototype to support field 

operations by identifying and developing tax and financial criminal investigations. 

The CDC will house criminal investigative information regarding the Swiss Bank 

Program, Offshore Voluntary Disclosure Program, Professional 

Advisers/Intermediaries Project, and International Bank Investigations. The CDC will 

allow the IRS to further develop quality leads received from field special agents, 

attaches, FinCEN spontaneous disclosures, domestic and foreign law enforcement 

agencies as well as fraud referrals from IRS business units. 

• Supporting the International Law Enforcement Community 

The numbers of requests for training and development received by the IRS's Office of 

International Operations (IO) has increased. Additionally, IO has seen substantial 

growth in the numbers of international assistance requests from field offices and 

international law enforcement agencies.

The IRS has implemented and received worldwide support for an annual criminal tax 

symposium held in Washington DC. The attendees are representatives from countries 

that have similar tax systems to the United States. The symposium provides a 

platform for open discussion and collaboration on international enforcement strategies. 

As the representative for the United States in the Organization for Economic 

Cooperation and Development (OECD), an organization comprised of 34 member 

countries, the IRS’s Criminal Investigation International Operations Executive 

Director is the head of the Tax Crimes Task Force. The IRS is a leader in the global 

fight against international tax evasion by leading and supporting legislative changes 

and the development of international tax priorities worldwide. Within the OECD, the 

IRS provides assistance to developing countries regarding criminal financial 

investigative techniques.

• Overseas Enforcement Support 

In assessing high-risk geographical areas that pose a threat to the U.S. tax and 

financial systems, the IRS has identified two regions, Dubai and South Africa, that are 

believed to be replete with activity that supports an environment suitable for U.S. 

taxpayers seeking to hide their assets and income offshore. The establishment of an 

IRS presence in both regions would provide the ability to readily identify U.S. 

business entities, citizens, and dual nationals engaged in tax evasion schemes using 

these foreign jurisdictions. Additionally, the establishment of a South African post 

would provide regional coverage to central and South African countries such as 

Republic of Namibia, Republic of Angola, Republic of the Congo, Republic of 

Mauritius, and Seychelles. Dubai has emerged as one of the world’s premier financial 

centers, and has subsequently become a source of money laundering and illicit 

financing activity. Establishing an IRS presence will result in greater case 

development and prosecutions, and provide an increased deterrent effect for taxpayers 

who evade their U.S. tax obligations.
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Other Direct Costs (+$11.1 million / +57.75 FTE)

IRS Activity Cost FTE Positions Explanation

Appeals $1.9 11.25 15 Support examination efforts on key compliance areas focused on 

improving voluntary compliance. 

Chief Counsel $9.2 46.50 62

Provide support to agents working offshore cases that will require 

assistance in case development, especially with respect to 

summonses, interviews of taxpayers, and other witnesses. Also, 

provide support for the Report of Foreign Bank and Financial 

Accounts.

Total $11.1 57.75 77

Dollars in Millions
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Position Type/Other Costs FTE Positions $000

Expand Collection Program Coverage 912.50 1,216 $96,846

Field Collection 391.50 522 $48,870

Revenue Officer 347.25 463 44,766

Tax Examiner 10.50 14 875

Analyst / Support Staff 33.75 45 3,229

Automated Collection Systems Operations 

(ACS) and Support 368.25 491 $30,856

Customer Service Representative 318.75 425 25,962

Tax Examiner 47.25 63 4,613

Manager 2.25 3 281

Compliance Service Collection Operations 

(CSCO) 93.50 124 $11,972

Tax Examiner 86.75 115 11,224

Manager / Support Staff 6.75 9 748

Centralized Offers- in-Compromise (OIC) 59.25 79 $5,148

Tax Examiner 45.00 60 3,749

Program Analyst / Support Staff 14.25 19 1,399

Expansion of Current Collection Treatment 

Streams 46.50 62 $5,465

Tax Examiner 39.00 52 3,396

Manager 3.75 5 429

 Analyst and Support Staff 3.75 5 1,640

IT Projects 48.00 65 $16,068

Predictive Analytics for the Collection Enterprise 

(PACE) 36.75 50 9,640

Compliance Data Warehouse (CDW) 3,085

Business Master File Case Creation Nonfiler ID 

Program (BMF-CCNIP) 11.25 15 3,343

Other Direct Costs 27.00 36 $4,451

Revenue Agent - Appeals 0.75 1 94

Revenue Officer - Appeals 12.00 16 1,897

Attorney 13.50 18 2,364

HR Specialist 0.75 1 96

Total 1,034.00 1,379 $122,830

Enhance Collection Coverage +$122,830,000 / +1,034 FTE

This initiative will ensure that the IRS 

has sufficient resources to work the 

collection inventory and bring 

taxpayers who fail to pay their tax 

debt into compliance. These resources 

will allow the IRS to address growing 

collection case inventories and call 

volumes that have resulted from 

reduced staffing levels in recent years. 

This initiative will: 

• Increase coverage of the 

growing volume of 

employment tax cases among 

business taxpayers;

• Improve service to taxpayers 

calling the Automated 

Collection System (ACS) to 

resolve their account 

delinquencies; 

• Provide resources for Campus 

Collection to reach out to 

taxpayers earlier in the 

collection process, thereby 

increasing collectability; 

• Help taxpayers experiencing economic 

hardship to resolve their liabilities through the 

Offers in Compromise (OIC) program; 

• Increase opportunities to expand new 

collection streams;

• Develop IT solutions to provide better analytic 

models, case routing, and case resolution tools 

and techniques; 

• Expand the data available in the Compliance 

Data Warehouse (CDW); and

• Improve the capability to identify nonfilers of 

business returns.

This initiative is expected to produce additional annual enforcement revenue of 

$1,179.7 million with an ROI of $9.0 to $1, once the new hires reach full potential in 

FY 2018.

$122.8 $132.8 $131.2

$345.9

$880.9

$1,179.7

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

FY 2016 FY 2017 FY 2018

in millions

Enforcement Revenue ROI 

Cost Enforcement Revenue

$2.8 to $1

$9.0 to $1

$6.6 to $1
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Expand Collection Program Coverage (+$96.8 million / +912.5 FTE)

This initiative will reduce the nonfiling and underpayment tax gap.

• Field Collection

Field Collection will hire additional staff to address the increase in the number and value 

of employment tax cases. Individual taxpayers receive credit for the taxes withheld from 

their paychecks, and may receive tax refunds based on those credits, even if their 

employer did not turn over the withheld tax to the government. From FY 2011 to FY 

2013, employment tax cases increased by 8.1 percent, representing a tax obligation 

exceeding $7.4 billion. There are more than one million cases with an assessed balance 

exceeding $52 billion in the queue awaiting assignment, plus another 370,000 cases for 

which returns have not been filed.

• Automated Collection System (ACS)

The ACS call site operation is the most productive IRS program for revenue collection, 

but because of budget constraints, ACS staffing has decreased by approximately 25 

percent since the end of FY 2011. The ACS program addresses incoming calls generated 

by the issuance of levies and the Predictive Dialer (PD) program, an automated system 

that places calls to taxpayers with delinquent return and/or unpaid tax liabilities. 

As of November 2014, there were 5.0 million cases in ACS, with approximately 

1.5 million needing a levy or predictive dialer action. These additional resources will 

allow the IRS to increase collections, close balance due cases, resolve protected inventory 

cases (i.e., cases that are protected from enforcement action pending research or taxpayer 

requests for account and adjustment actions or explanation of complex account issues to 

determine correct balances due), and provide more timely service to the taxpayer.

• Compliance Services Collection Operations (CSCO) 

These funds will allow the IRS to expand CSCO to address nonfiling and underpayment 

of taxes in the notice process. New resources will address the increased balance due work 

and expand the following programs: 

o The CSCO Automated Substitute for Return (ASFR) Program – ASFR is a 

compliance tool used to prepare tax returns based on income information submitted to 

the IRS such as W-2 wage documents, and is used to prompt the taxpayer to file a tax 

return. The reduced staffing levels have resulted in current inventory levels not being 

addressed and more than 150,000 cases becoming too old to be worked by this 

program. 

Major Activities Revenue

($M)

Inquiries 

Worked

Installment 

Agreements

Calls 

Answered

Reconsideration 

Closures Closures

Expand Collection Program Coverage 1,132.6 50,000 250,000 399,100 129,500 620,944 

Expansion of Current Collection Treatment 

Streams 47.1 44,000 

Total $1,179.7 50,000 250,000 399,100 129,500 664,944 

FY 2018 Projected Revenue and Workload
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ο Installment Agreements (IA) – IA requests increased significantly during filing season 

2013 as a result of new balance due tax returns. In order to work the influx of IAs, 

additional overtime resources are requested to meet the cyclical work demand. 

ο Withholding Compliance Program (WHC) – This automated program brings taxpayers 

with serious under-withholding problems into compliance by correcting their federal 

income tax withholding and preventing them from becoming delinquent on the 

payment of future taxes by issuing a letter requiring the employer to withhold a 

specific, appropriate amount from the taxpayer’s pay. From Tax Year 2006 to 2010, 

this program’s success has decreased the number of balance due returns from 

taxpayers in the current WHC program by 64 percent and increased returns with a zero 

balance or refund by 246 percent. These resources will allow the IRS to add an 

additional 90,000 taxpayers to the WHC program. 

• Centralized Offers in Compromise (COIC)

The Offers in Compromise (OIC) program processes taxpayer requests to reduce or 

eliminate their tax liabilities because of extreme circumstances or hardship. COIC 

applications have increased 69 percent since FY 2008, while staffing has declined 

slightly. As a result, the percentage of cases closed within six months has decreased from 

92 percent in December 2008 to 70 percent in September 2014. Further enhancements to 

the OIC program will encourage more unemployed taxpayers to file an OIC request in an 

effort to settle their tax debts. These resources will allow the IRS to help taxpayers 

experiencing hardship resolve their tax liabilities. Program success results in the 

expectation of a fresh start toward compliance with all future filing and payment 

requirements.

Expansion of Current Collection Treatment Streams (+$5.5 million / +46.5 FTE)

Campus Collection is a correspondence and phone operation that addresses nonfiling and 

underpayment of taxes in the collection process. This includes:

• Campus Notice Program

By reaching out earlier in the collection process, Campus Collection more efficiently 

handles taxpayers who have received or are scheduled to receive a notice. Additional 

resources will allow the IRS to handle more balance due work, expand the Refund Hold 

program to secure delinquent returns by delaying issuance of a taxpayer income tax 

refund, and make more outbound calls before preparing an Automated Substitute For 

Return (ASFR) or to prevent installment agreement default. 

• Campus State Payment Levy Program

The IRS requests additional staffing to explore ways to use the Bureau of the Fiscal 

Service (Fiscal Service) State Reciprocal Program to collect state government vendor and 

Medicaid payments in order to pay delinquent federal tax debt through its automated 

Treasury Offset Program and the Federal Payment Levy Program. 

Under current tax law, the IRS can levy federally funded state vendor and Medicaid 

payments but limitations in the law make it inefficient. 
IRS-86

The Fiscal Service and the IRS are working together to assess the effect on state 

legislation and the administrative process of centralizing the collection of state 

government payments to pay federal tax debts. This proposed effort would support the 

recent recommendation from the GAO audit, GAO-12-857, Medicaid: Providers in Three 

States with Unpaid Federal Taxes Received Over $6 Billion in Medicaid Reimbursements, 

dated July 2012. 

• Campus Decedent Taxpayer Unit

The IRS requests additional staffing to establish the Campus Decedent Taxpayer Unit. 

During calendar years 2011 through 2013, there were approximately 272,000 decedent 

accounts with total outstanding balances due at the time of death of more than 

$6.6 billion. There are also approximately 185,000 new cases accrued after death, totaling 

another $1.4 billion in unpaid taxes. The lack of timely action on decedent accounts has 

resulted in a significant loss of revenue. 

In order to protect the government’s interest and increase recovery of taxes owed by 

deceased taxpayers, the IRS needs notification of probate proceedings before estate assets 

are distributed to pay other creditors. The Campus Decedent Taxpayer Unit will establish 

a centralized location to notify the IRS to file probate claims. This unit would be able to 

quickly hand off cases needing a proof of claim to the appropriate office. 

• Manually Monitored Installment Agreements (MMIA) and Federal Tax Deposit (FTD)

The IRS requests additional staffing to improve the MMIA and FTD Alerts programs. 

MMIAs are installment agreements that cannot be established and monitored systemically 

with automatic reminder notices. For MMIAs, extra steps and resources are required to 

mail reminder notice letters. The Predictive Dialer system could be used for a “just in 

time” reminder and potentially reduce MMIA defaults while saving printing and mailing 

costs.

FTD Alert soft notices are issued to business taxpayers who have been identified as not 

having fulfilled a requirement to make federal tax deposits. The additional staff will allow 

the IRS to utilize the Predictive Dialer system to contact taxpayers who have not 

responded to the notice. In addition, revenue from taxpayer payments will be received 

earlier in the collection process and reduce the effect of delayed action on enforcement 

resources.

• Civil Tax Assessment Cases Resulting from Criminal Restitution

The IRS requests additional staffing to coordinate the civil tax assessment cases resulting 

from criminal restitutions. Multiple individuals can be assessed a single liability requiring 

them to make payments, but the total liability can only be collected once. This work 

requires closely monitoring and applying court-generated payments to all parties, and 

cross-referencing them to reach a zero balance over the 10-year collection statute. 

IT Projects (+$16.1 million / +48 FTE)

• Predictive Analytics for the Collection Enterprise (PACE)

PACE is a collection of improvements to existing systems that will increase the 

effectiveness and efficiency of Collection through the design, development, and testing of 
IRS-87

models, communication, case routing, and case resolution tools and techniques. PACE 

will enhance current systems by providing decision support earlier in the collection 

process, build and incorporate new analytic models, and route cases to optimal treatment 

streams at an earlier stage. Through the results of continuous testing and evaluation, the 

IRS will be better able to define, measure, and work the most productive cases. Most 

productive case factors include long-term compliance, voluntary compliance, and revenue 

collected. 

• Compliance Data Warehouse (CDW)

These funds will allow the IRS to purchase hardware and storage capacity to expand the 

data available from the CDW. The purpose of the CDW is to provide high-quality data

and information services to the IRS research community in support of projects, analyses, 

and studies related to tax administration, enforcement, and customer service. This includes 

new data tools and analysis of the collection stream to improve effectiveness, treatment 

selection, and segmentation of the delinquent taxpayer population. The added data will 

facilitate new studies to improve the effectiveness and productivity of IRS service and 

enforcement programs. This investment will improve decision models for case 

management in Collection work streams for nearly 1,500 employees. 

• Business Master File Case Creation Nonfiler Identification Process (BMF CCNIP)

BMF CCNIP will provide the capability to more efficiently target nonfilers of business 

returns, including unknown nonfilers who may be delinquent in filing their required tax 

returns. This program has a current limited capability in its first release configuration that

will extend and enhance the algorithms and datasets in use including available state return 

data. This program will become the system where cases are created, prioritized, selected, 

maintained, and integrated with filing compliance performance and management tools.

Development of this system will reduce non-liable closures by assigning employees to the 

best cases, and is expected to produce a higher number of secured returns and an increase

in the number of taxpayers that meet filing obligations. 

Other Direct Costs (+$4.5 million / +27 FTE)

IRS Activity Cost FTE Positions Explanation

Appeals $2.0 12.75 17

Support collection efforts on key compliance areas, particularly 

the Trust Fund Recovery Penalty and Collection Due Process 

workstreams. 

Chief Counsel $2.4 13.50 18

Provide support for increases in requests for legal advice, 

litigation assistance, and collection due process, particularly 

from Field Collection and the Campus Decedent Taxpayer Unit.

Human Capital 

Office $0.1 0.75 1 Handle increased workload to hire and support staff. 

Total $4.5 27.00 36

Dollars in Millions
IRS-88

Position Type/Other Costs FTE Positions $000

Improve Data Availability 21.75 30 $10,296

IT Specialist 7.50 11 1,392

Contractual Services 1,754

E-file Data Interface for Compliance Data 

Environment 14.25 19 7,150

Design and Pilot New Ways to Identify & Prioritize 

Cases 10.25 13 $9,757

Analyst 8.00 10 1,377

IT Specialist 2.25 3 380

Contractual Services 3,000

IT Equipment 3,250

Hardware & Software 1,750

Optimize Case Selection and Assignment to 

Appropriate Treatment Streams 11.25 15 $16,353

IT Specialist 11.25 15 1,853

Contractual Services 6,000

IT Equipment 2,000

Hardware & Software 6,500

Enhancing Large Corporate Compliance through 

Improved Issue Identification/Return Selection 

and Robust Knowledge Management 13.50 18 $2,198

Program Analyst 5.50 7 886

Analyst 7.25 10 1,190

Economist 0.75 1 122

Other Direct Costs 2.25 3 $456

Attorney 2.25 3 456

Total 59.00 79 $39,060

Leverage Data to Improve Case Selection +$39,060,000 / +59 FTE

This initiative will improve data 

accessibility and usability for better 

case selection, issue identification, 

and treatment assignment. 

Taxpayer behaviors, including those 

of individuals, small businesses,

and large corporate taxpayers, are 

constantly changing. The IRS must

adapt quickly to changing taxpayer 

behavior to prevent fraud and tax 

code misuse.

This initiative will: 

• Increase the digital 

availability of tax return 

information;

• Create an analytical 

computing and data testing 

environment to allow the 

IRS to identify taxpayer behavioral changes more quickly and test compliance 

responses promptly;

• Optimize compliance case identification and treatment assignment to increase 

effectiveness while reducing risk and costs;

• Enhance IRS large corporate taxpayer issue identification/return selection activities, 

improve the data systems and tools needed to perform this work, and more effectively 

use knowledge management and information technology resources to identify 

potential compliance risk; and

• Provide skilled staff in areas such as machine learning, statistical modeling, and data 

mining.

Improved use of analytics is expected to increase revenue 

collection and, while this is not included in the IRS’s 

traditional ROI calculations, it is projected to increase 

revenue by $75.4 million in FY 2018, a revenue 

enhancing ROI of $1.8 to $1. $39.0

$41.4 $41.4

$0.0

$63.0

$75.4

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

FY 2016 FY 2017 FY 2018

in millions

Enhanced Revenue ROI

Cost Enforcement Revenue

$0.0 to 1

$1.5 to 1

$1.8 to 1
IRS-89

Improve Data Availability (+$10.3 million / +21.75 FTE)

This initiative will provide resources to allow the IRS to increase the data available for 

research and analysis by funding the following three projects:

• Enhance Electronic Data Capture on Residual Paper Returns

While the rate of electronic filing continues to increase, the IRS will continue to 

receive some tax returns on paper. These resources provide IT staffing and 

contracting support to allow existing systems to accept additional transcribed data.

• Expand the Compliance Data Environment (CDE) and the Modernized Taxpayer 

Return Database (MTRDB) 

This initiative will expand CDE and MTRDB to include all e-filed data and make it 

accessible for research and identification of emerging trends. Analysis of e-filed data 

will allow the IRS to develop appropriate compliance strategies. The MTRDB is a 

database of all tax returns used for case selection purposes. The MTRDB 

improvements will make all e-file return data available and accessible. Campus and 

field personnel will be able to replicate complete copies of e-filed returns as needed, 

relieving taxpayers who e-file from the burden of providing copies of prior-year 

returns for an examination.

• Allow Electronic Filing of Three Employee Retirement Income Security Act (ERISA) 

Information Returns

Currently, taxpayers must use different means and go to different government 

agencies to file employee plan returns depending on the type of form they are filing, 

placing an undue burden on taxpayers. Unlike other Form 5500 series returns, which 

are filed electronically with the Department of Labor (DOL), Form 5500-EZ, Annual 

Return of One-Participant Retirement Plan, is filed with the IRS either on paper or 

through the IRS Filing Information Returns Electronically (FIRE) system. These 

resources will consolidate electronic filing of Form 5500-EZ and two other retirement 

plan-related forms on DOL’s EFAST2 platform. Allowing retirement plan-related 

forms to be filed in one, electronic location will improve taxpayer service, improve 

case selection, and reduce processing and transcription errors. 

Design and Pilot New Ways to Identify and Prioritize Cases 

(+$9.8 million / +10.25 FTE) 

This initiative provides resources to develop an analytical computing and data testing 

environment that will allow the IRS to rapidly analyze and apply data extracts and third party 

data to evolving compliance programs. Currently, much of the IRS's data analysis takes place 

several years after the returns are filed. To improve this process, the IRS must develop an 

analytical computing environment to test this technology before full implementation and 

deployment. Once completed, this technology will enhance the IRS’s ability to study the most 

difficult tax administration challenges. Experiments conducted in this analytical computing 

environment will assist the IRS in quantifying proposed changes to processes and policies. 
IRS-90

This request also supports additional analysts to design and conduct pilot testing of new case 

selection methods. Pilot tests as part of carefully designed studies will allow the IRS to test 

new hypotheses, processes, and procedures under rigorous methods designed to measure and 

assess the results. 

Optimize Case Selection and Assignment to Appropriate Treatment Streams 

(+$16.4 million / +11.25 FTE) 

This initiative will provide the resources to redirect casework to functions that can handle it 

most effectively or to functions with available capacity. Developing new business rules will 

allow selection and distribution of cases into the most effective enforcement activity. Once 

cases complete their cycle, data visualization will allow for comparison of the effectiveness of 

the treatment streams. 

The ability to adapt to the changing compliance environment and to address a changing 

noncompliant population depends on new business and technology models for case selection, 

issue identification, and case treatment/assignment. The new business and technology models 

will support the organization across individual business units. Currently, IRS compliance 

tools are focused on individual business units with inadequate linkage across the operating 

boundaries of the organization. Moving to these new models requires integration and 

development of common business services. This investment in business tools 

(e.g., rules-based engines, statistical analysis packages, and data visualization) will enhance 

secure data access across the IRS organization and provide a common process to identify 

cases in production.

Enhancing Large Corporate Compliance through Improved Issue Identification/Return 

Selection and Robust Knowledge Management 

(+$2.2 million / +13.5 FTE)

In carrying out its mission, the IRS must decide where and how to apply its limited resources 

for the greatest benefit. This is especially true in large corporate taxation, where over the past 

decade the work has become increasingly globalized, and corporate business models have 

evolved to meet changing demands. In large corporate taxation, the IRS uses issue-driven, 

risk-based modeling approaches, focusing on the nature and complexity of tax issues, to 

inform its workload selection decisions. The overarching goal is to identify those issues 

having the broadest impact on compliance, regardless of entity type or size, and assign 

resources accordingly. 

This initiative seeks to enhance IRS issue identification/return selection activities by 

improving use of data modeling, data filtering, and statistical analysis as well as improving

the data systems and tools needed to perform this work. This initiative will fund staff who 

will possess highly specialized skillsets to conduct statistical analysis and computer 

programming tasks including modeling, data mining, and information architecture. These 

hires will allow the IRS to fully use knowledge management and information technology 

resources to uncover and pinpoint areas of potential compliance risk.
IRS-91

These individuals will:

• Help the IRS prioritize large corporate workload and apply limited field resources 

towards areas of highest compliance risk;

• Select and audit tax issues that will have the broadest overall impact on compliance;

• Support alternative and early issue resolution approaches and guidance; and

• Enhance and better leverage data and analytics to inform business decisions. 

Other Direct Costs (+$0.5 million / +2.25 FTE)

IRS Activity Cost FTE Positions Explanation

Chief Counsel $0.5 2.25 3

Provide support in determining what information needs to be 

programmed into the system in order to help develop the most 

productive issues and cases, identifying the greatest compliance 

risks, and improving audit efficiency overall.

Total $0.5 2.25 3

Dollars in Millions
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Position Type/Other Costs FTE Positions $000

Address Compliance Risks in the Tax-Exempt 

Sector 108.50 145 $13,548

Enhance Streamlined Determinations Process 74.00 99 $8,413

Revenue Agent 33.00 44 4,961

Tax Examiner 37.50 50 3,128

Manager 3.50 5 324

Strengthen Enforcement For Employee Plans 34.50 46 $5,135

Revenue Agent 34.50 46 5,135

Strengthen Voluntary Compliance for Tax-Exempt 

and Government Entities 29.25 39 $4,079

Revenue Agent 11.25 15 1,681

Tax Compliance Officer 11.25 15 1,244

Tax Law Specialist 3.00 4 530

Tax Examiner 1.50 2 136

Manager 2.25 3 488

IT Project 13.75 18 $4,620

Integrate Determination Application Systems 13.75 18 4,620

Other Direct Costs 7.50 10 $1,215

Attorney 6.00 8 1,075

Support Staff - Counsel 0.75 1 69

Tax Examiner - Appeals 0.75 1 71

Total 159.00 212 $23,462

Address Compliance Risks in the Tax-Exempt Sector +$23,462,000 / +159 FTE

This initiative will help the IRS to 

build and maintain public trust by 

anticipating and addressing the 

tax-exempt sector’s needs, 

encourage voluntary compliance, 

and effectively enforce the law to

ensure compliance. 

This initiative will: 

• Enhance the streamlined 

application process for 

exempt organizations 

seeking tax-exempt status; 

• Protect taxpayer donations to 

charities by mitigating the 

downstream risks associated 

with the streamlined application process by conducting post-determination compliance 

activities;

• Protect participants in retirement plans and their assets, which total over $23 trillion, 

through a comprehensive downstream enforcement program as the IRS pursues a 

strategic shift in the application process for qualified employee retirement plans;

• Facilitate voluntary correction opportunities related to employment taxes and 

retirement plans; and

• Improve service by integrating three separate determination application systems into 

one end-to-end system, which supports the IRS’s strategic goal to deploy advanced 

information technology systems to address efficiency and productivity in the 

determination process.

• Through this initiative, the IRS will be able to focus resources on areas with the 

greatest risk and ensure that all resources in the Tax Exempt and Government Entities

arena are developed and deployed appropriately. This will lessen the burden on

taxpayers and employees and will facilitate consistent and timely determinations of 

exempt status and qualifications of employee plans.

Major Activities

Additional 

Determination 

Applications 

Closed

PostDetermination 

Compliance 

Reviews

 Examination 

Closures

Compliance 

Check 

Closures

Voluntary 

Compliance 

Closures

Voluntary 

Correction 

Follow-up 

Exams

Enhance Streamlined Determinations Process 40,000 6,000 780 300

Strengthen Enforcement for Employee Plans 920 2,300 690

Strengthen Voluntary Compliance for Tax-Exempt 

and Government Entities 936 575

 Total 40,000 6,000 1,700 2,600 1,626 575

FY 2018 Projected Workload
IRS-93

Address Compliance Risks in the Tax-Exempt Sector (+$13.5 million / +108.5 FTE)

• Enhance Streamlined Determinations Process

The determination process for organizations seeking tax-exempt status is the IRS’s 

first compliance contact with these entities. The complexity and compliance risk of 

exempt organization applications has increased as more of these organizations operate 

like commercial entities (e.g., credit counseling, down payment assistance, and 

mortgage foreclosure assistance organizations). 

To address these issues and deliver high quality service, the IRS implemented an 

innovative streamlined application process for small organizations that pose a low risk 

of non-compliance. Along with this streamlined process, the IRS introduced the Form 

1023-EZ, a new version of the Form 1023, Application for Recognition of Exemption, 

which further improves customer service and reduces taxpayer burden by simplifying 

the information requested from applicants and minimizing the need for the IRS to 

follow-up with applicants. The IRS expects that approximately 63 percent of new 

organizations seeking tax-exempt status will use this form in lieu of the longer Form 

1023. 

This initiative requests resources that will allow the IRS to promote the compliance of 

exempt organizations through the new streamlined process in the exempt 

organizations determination program and to process the expected increase in receipts 

of the Form 1023-EZ. These resources are expected to allow the IRS to close an 

additional 40,000 applications annually, and will improve the quality and timeliness of 

service provided to all tax-exempt organization applications. 

However, because communication with applicants will be reduced under the new 

streamlined process, organizations that may have previously corrected their operations 

due to conversations with the determination agents, or may have withdrawn their 

applications for failure to establish a basis for exemption, may receive exemption. 

This potentially places charitable donations from taxpayers at risk. To mitigate this 

risk, this initiative also provides resources to support a system of post-determination 

enforcement approach, including compliance reviews, checks, and examinations. At 

full potential, with these resources, the IRS expects to complete 6,000 

post-determination compliance reviews and almost 1,100 examinations or compliance 

checks of organizations identified through the post-determination reviews. The data 

gathered from these post-determination reviews and examinations will additionally be 

used to evaluate the streamlined application process. Without these resources, the 

exempt organization sector, and those who benefit from their services, will be 

adversely affected as the wait time for application closure increases and the IRS risks 

increased noncompliance. 

• Strengthen Enforcement for Employee Plans 

Participants in retirement plans collectively own over $23 trillion in assets. To better 

protect participant assets and help ensure the retirement security of these participants, 

the IRS is pursuing a strategic shift related to determinations of qualified employee 

retirement plans, which will enable greater compliance coverage and enhance 
IRS-94

productivity of enforcement efforts. The upfront qualification program will utilize a 

risk-based review approach to streamline operations and improve customer service. In 

order to support this risk-based approach, the IRS will require additional resources to 

conduct back-end compliance activities. This shift will also result in the expansion of 

overall compliance coverage of the employee plans sector. 

Additional revenue agents will be used to expand the IRS’s multi-faceted compliance 

program, which includes traditional field examinations, focused compliance check 

projects, and enhanced voluntary compliance opportunities. These additional 

compliance activities will enable the IRS to address downstream risks resulting from 

the streamlined approval of retirement plans. Compliance checks will consist of soft 

contacts (i.e., contacting the taxpayer to encourage them to self-correct their 

compliance issues) with approved retirement plans that underwent limited review 

during the qualification process, while areas of greater concern will be addressed by 

field examination. Meanwhile, voluntary compliance enhancements will allow 

sponsors of retirement plans to self-identify compliance issues and to self-correct 

those compliance issues. 

This comprehensive enforcement program is expected to protect over $23 trillion in 

retirement assets that fall within the IRS’s scope and 130 million pension plan 

participants through an additional:

o 920 traditional audits; 

o 2,300 compliance check closures; and

o 690 voluntary compliance closures. 

Without these resources, IRS enforcement activities in the retirement sector, including 

compliance checks and field examinations, will decrease from the FY 2014 

performance level of over 13,100 to 10,800 in FY 2017, a decrease of 18 percent. 

This drop in enforcement activities would place retirement plan participants and their 

retirement assets at a greater risk of noncompliance and abuse than they are today. 

Strengthen Voluntary Compliance for Tax-Exempt and Government Entities 

(+$4.1 million / +29.25 FTE)

Tax-exempt organizations, employee retirement plans, and government entities account for a 

significant share of the U.S. economy, representing approximately $27.6 trillion in assets. 

While not subject to income tax, these entities are responsible for employment and excise 

taxes and must satisfy a complex set of other legal requirements. To efficiently promote 

compliance within this segment, the IRS has created a number of voluntary correction 

programs that provide opportunities for taxpayers to voluntarily self-report and correct 

compliance failures. These programs allow taxpayers to comply with federal tax and reporting 

requirements with fewer burdens than an examination. This request will expand and improve

these existing programs.
IRS-95

This initiative will benefit the 6.1 million employers who pay $1.7 trillion in employment 

taxes annually, and it will provide additional options for plan sponsors to protect the 

retirement benefits of participants in governmental, IRA, and 403(b) retirement plans. 

IT Project (+$4.6 million / +13.75 FTE)

• Integrate Determination Application Systems 

The IRS’s determination application processing is currently dependent on three 

separate information systems. These systems each provide a portion of the 

functionality needed to fully process determination applications. This initiative will 

deploy a single system and create a seamless end-to-end user system for IRS 

determination applications processing. 

These improvements are expected to reduce specialist review times for applications by 

25 minutes per application, nearly an 11 percent reduction from the current average 

processing time. In addition, the single repository will also streamline data analysis 

and reporting. This integration will also enable the IRS to reduce taxpayer burden by 

focusing on high-risk applications through real-time application sampling in order to 

identify compliance issues as they emerge. In addition, the IRS expects to realize 

savings over five years through the:

o Reassignment of dedicated programmers;

o Elimination of maintenance requirements for two separate, aging systems;

o A reduction in the printing and mailing of taxpayer correspondence; and

o A decrease in time applied in manually preparing inventory control reports.

Other Direct Costs (+1.2 million / +7.5 FTE)

IRS Activity Cost FTE Positions Explanation

Appeals $0.07 0.75 1

Promote compliance activities and provide a high level of customer 

service for employee retirement plan and exempt organization 

appeals.

Counsel $1.14 6.75 9

Provide published guidance and legal guidance to the IRS in 

addressing compliance issues in the tax-exempt sector, and to 

navigate potentially undetected issues related to employer 

sponsored retirement plans and tax-exempt organizations.

Total $1.21 7.50 10

Dollars in Millions
IRS-96

Position Type/Other Costs FTE Positions $000

Pursue Employment Tax & Abusive Tax 

Schemes 49.00 65 $9,668

Special Agent 34.50 46 7,681

Manager, Analyst and Support Staff 14.50 19 1,987

Network Analysis $7,158

Contractual Services 7,158

Other Direct Costs 3.00 4 $360

Attorney 3.00 4 360

Total 52.00 69 $17,186

Pursue Employment Tax and Abusive Tax Schemes +$17,186,000 / +52 FTE

This initiative will enhance overall 

enforcement efforts, increase the 

number of convictions and 

assessments, and allow the IRS to 

apply network analysis to the 

investigation of abusive tax schemes. 

Network analysis is a powerful 

software tool being used by many law 

enforcement and other agencies to leverage data and detect illegal or other non-compliant 

behavior. The proposed financial and criminal intelligence database, network analysis 

software will proactively identify potentially noncompliant taxpayers in multiple program 

areas by allowing the IRS to link multiple potentially abusive returns or information items 

together to identify the central figure behind a scheme versus applying resources to work 

individual returns one at a time. This network will improve the sharing of information among 

IRS operating divisions and expand the IRS’s capability to identify significant tax cases. 

Many core tax enforcement program areas, such as employment tax and abusive tax schemes, 

have become underserved in recent years due to the redirection of limited IRS resources to 

other areas, such as identity theft investigations, which increased by 660 percent between 

FY 2010 and FY 2013. This initiative will help stop these problems from becoming an even 

greater source of criminal activity and lost revenue.

FY 2018 Projected 

Workload

Major Activities Investigations Completed

Investigations 60

 Total 60
IRS-97

Pursue Employment Tax and Abusive Tax Schemes (+$9.7 million / +49 FTE)

This investment will expand the IRS’s capabilities in the following core tax enforcement 

areas:

• Employment Tax Program

Employers are required by law to withhold federal income, Social Security, and 

Medicare taxes from their employees. 

This program investigates employers who may be subject to criminal and civil 

sanctions for willfully failing to pay employment taxes. Employees suffer in these 

situations because they may not qualify for Social Security, Medicare, or 

unemployment benefits when employers do not report or pay employment and 

unemployment taxes. The failure of these employers to properly remit withheld 

employment taxes increases the burden on compliant taxpayers whose taxes ultimately 

must cover these promised benefits.

• Abusive Tax Schemes Program

Abusive tax schemes have evolved from simple structuring of domestic and foreign 

trust arrangements into sophisticated strategies that take advantage of the financial 

secrecy laws of some foreign jurisdictions and the availability of credit/debit cards 

issued by offshore financial institutions. This program investigates these fraudulent 

domestic and foreign trust arrangements. One focus of the program is the 

identification and investigation of tax scheme promoters as well as those who facilitate 

abusive tax schemes (e.g., accountants, lawyers). The other, equally important focus 

is the investigation of investors who knowingly participate in abusive tax schemes. 

• Corporate Schemes Program 

This program concentrates on violations of the Internal Revenue Code and related 

statutes committed by large, publicly traded (or private) corporations and/or by their 

senior executives. These schemes are characterized by their scope, complexity, and 

the magnitude of their negative economic consequences for communities, employees,

lenders, investors, and financial markets. Most corporate fraud investigations are joint 

efforts involving many federal agencies through partnership with the Department of 

Justice Financial Fraud Enforcement Task Force. 

Network Analysis (+$7.2 million / 0 FTE)

To further efforts in these areas, the IRS will invest in a network analysis product, which will 

provide investigators with the capability to identify patterns of noncompliance and alleged 

criminal behavior through advanced data matching methods. Successful tests of network 

analysis have demonstrated the versatility of this technology to improve case selection by 

identifying networks as opposed to single cases. The benefit of identifying the network of 

related potentially abusive returns is the ability to identify the central point behind a scheme 

or related group of returns, such as in identity theft, which would enable the IRS to address 

the central figure behind the scheme versus addressing individual returns one at a time. 

Specific features of network analysis include linking data from internal data sources and 

identifying networks, patterns, and characteristics that indicate noncompliant behavior. 
IRS-98

Examples of such data sources include filed returns; information reporting documents such as 

Forms 1099 and K-1; currency transaction reports; and return preparer data. 

Network analysis software provides an opportunity for data-driven assessment of complex 

compliance issues. Investment in a permanent network analysis software tool can enhance 

issue detection, workload selection, and treatment options for some of the IRS’s most 

challenging data problems, including identity theft.

Acquiring a network analysis tool will allow IRS operating divisions to identify compliance 

issues that are difficult and often impossible to detect with existing data matching 

processes. In 2011 and 2012 the IRS tested network analysis and determined that it can help 

the IRS to target issues better, for example, “ghost preparers” (preparers who prepare returns 

for others but do not sign the return as required), employment tax, and education tax credit 

schemes. In addition, the IRS successfully matched identity theft cases to ghost preparer 

networks to test the potential for applying this technology to identity theft work.

Other Direct Costs (+$0.4 million / +3 FTE)

IRS Activity Cost FTE Positions Explanation

Chief Counsel $0.4 3.00 4

Provide legal guidance throughout the course of 

investigations, evaluate successful prosecutions, and work 

with the Department of Justice during criminal trials.

Total $0.4 3.00 4

Dollars in Millions
IRS-99

Position Type/Other Costs FTE Positions $000

Enhance Investigations of Transational 

Organized Crime (TCO) 180.00 240 $40,074

Special Agent 180.00 240 40,074

Other Direct Costs 14.00 19 $2,454

Attorney 11.00 15 2,194

Support Staff 3.00 4 260

Total 194.00 259 $42,528

Enhance Investigations of Transnational Organized Crime (TOC) +$42,528,000 / +194 FTE

This initiative will allow IRS to hire 

Criminal Investigation (CI) staff to 

address the growth in criminal activity 

of a global nature. TOC refers to

associations of individuals who operate 

in multiple countries for the purpose of 

obtaining power, influence, and 

financial gains, wholly or in part by illegal means, while protecting their activities through a 

pattern of corruption that often funds terrorist activities. The threat of transnational organized 

crime has become more severe because criminal networks are using increasingly sophisticated 

tactics that exploit the borderless, interconnected nature of the global economy.

IRS CI is recognized throughout the law enforcement community for its expertise in the 

investigation, disruption, and dismantling of sophisticated narcotics and money laundering 

networks. While other federal agencies have investigative jurisdiction for money laundering 

violations, the IRS is the only agency that can investigate both money laundering violations 

and violations of the Internal Revenue Code simultaneously. 

This initiative will allow the IRS to dedicate resources to this emerging and significant threat 

to the nation’s economic interests, which could cause significant damage to the global 

financial system. 

FY 2018 Projected 

Workload

Major Activities Investigations Completed

Investigations 360

 Total 360
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Enhance Investigations of Transnational Organized Crime (TOC) 

(+$40.1 million / +180 FTE)

IRS CI staff work with the Office of National Drug Control Policy (ONDCP) as well as 

several multi-agency task forces that coordinate activities between the IRS, the Department of 

Justice, the Drug Enforcement Agency, and other agencies. Through these efforts, IRS CI 

supports investigations of illegal drug trafficking and money laundering perpetrated by 

organizations involved in TOC. 

IRS CI’s mission in narcotics law enforcement is to aid in the federal government’s efforts to 

disrupt and dismantle the transnational, national, and regional criminal organizations which 

are responsible for the illegal drug supply in the United States and their related money 

laundering organizations, through the investigation and prosecution of their members and 

associates, and the seizure and forfeiture of their illicit proceeds. IRS CI special agents utilize 

their unique financial investigative expertise to follow the money trail, tracing the proceeds 

from illegal activity back to the criminal organizations responsible. To fulfill its mission, IRS 

CI investigates violations of the Internal Revenue Code, Bank Secrecy Act and federal money 

laundering statutes. 

This initiative will provide resources to hire special agents who will:

• Support the U.S. National Drug Control Strategy, the President’s Strategy to Combat 

Transnational Organized Crime, and the National Money Laundering Strategy;

• Increase investigations of third party money launderers and international banks;

• Work with international partners to identify illicit financial networks that are utilized 

to launder the proceeds of TOC organization; and

• Strengthen the IRS’s partnerships with domestic and international law enforcement 

agencies to more effectively fight transnational narcotics, money laundering, and 

terrorist organizations worldwide.

Other Direct Costs (+$2.5 million / +14 FTE) 

Dollars in Millions

IRS Activity Cost FTE Positions Explanation

Chief Counsel $2.5 14.00 19

The Division Counsel/Associate Chief Counsel (Criminal Tax) will 

provide legal advice, formally review applications for search 

warrant, grand jury requests, tax-related prosecution 

recommendations and highly sensitive undercover operations.

Total $2.5 14.00 19
IRS-101

Position Type/Other Costs FTE Positions $000

Ensure Ethical Standards of Conduct for 

Practitioners 26.50 35 $3,765

Analyst 15.00 20 1,890

Attorney 7.50 10 1,585

Paralegal 4.00 5 290

Tax Debt Resolution 1.50 2 $216

Attorney 0.75 1 158

Paralegal 0.75 1 58

Technology Enhancements $299

Contractual Labor 299

Total 28.00 37 $4,280

Ensure Ethical Standards of Conduct for Practitioners +$4,280,000 / +28 FTE

This initiative will allow the 

IRS’s Office of Professional 

Responsibility (OPR) to conduct 

oversight of return preparers who 

represent taxpayers and are 

subject to Circular 230, 

Regulations Governing Practice 

Before the Internal Revenue 

Service (C230). These resources 

will:

• Provide additional staff to handle the growing number of cases requiring litigation;

• Establish three satellite offices strategically located across the country to handle 

disciplinary case conferences and related negotiations; and

• Invest in technology to provide video conference capability and a systems interface 

that will allow OPR to increase research capability and exchange referrals and other 

pertinent information electronically with the Return Preparer Office (RPO). 

Ensure Ethical Standards of Conduct for Practitioners (+$3.8 million / +26.5 FTE)

The population of those who are subject to the ethical standards contained in C230 will be 

expanding to include uncredentialed tax return preparers, who sign up for the IRS Voluntary 

Record of Completion program and who represent taxpayers in disputes involving returns and 

claims for refunds which they have prepared or signed. A condition precedent to receiving 

the credential is agreement to be covered by all of Subpart B, and Subpart C, Section 10.51, 

Incompetence and disreputable conduct. After December 31, 2015, uncredentialed return 

preparers will be prohibited from representing taxpayers before Treasury for any matter at any 

level. The nature of the cases being handled by OPR has evolved over the past five years from 

being primarily focused on a practitioner’s own tax non-compliance (85 percent of cases in 

2009) to being primarily focused on complex practitioner conduct which violates substantive 

provisions in C230 involving due diligence, false and misleading information given to IRS 

personnel, conflicts of interest, advising conduct in violation of tax laws, and false and 

misleading advertising (71 percent of cases in 2013). 

These complex conduct cases, by their nature, require more extensive development, involve 

more sophisticated settlement negotiations, and are more apt to result in commencement of an 

administrative proceeding before an Administrative Law Judge. After uncredentialed 

practitioners prevailed in Loving v. Commissioner on their claim that Treasury and the IRS do 

not have the authority to regulate tax return preparers (although such preparers may consent to 

be subject to C230), some members of the practitioner community have suggested that other 

parts of C230 may not be valid and that OPR’s jurisdiction may be limited. As a result, OPR 

anticipates an increase in litigation challenging its authority and validity of C230. 

OPR estimates that the number of cases requiring litigation could triple over the next two 

years as a result of the foregoing. The additional staffing will handle these complex conduct 
IRS-102

cases and the associated appeals, conferences, allegations, negotiations, and administrative 

hearing preparation, briefing and, when necessary, appeals of Administrative Law Judge 

decisions.

In addition, the increased staffing will handle:

• Anticipated increases in referrals of practitioner misconduct;

• Due process conferences;

• The new Appellate Authority functions delegated to OPR with respect to appeals from 

Return Preparer Office (RPO) determinations by C230 practitioners regarding 

compliance and suitability in the Preparer Tax Identification Number (PTIN) 

registration process; and

• Alleged violations of C230 standards by tax debt resolution companies that assist 

taxpayers with negotiations to abate penalties, enter into installment agreements, and 

compromise an assessed federal tax liability.

In addition, new field office locations will provide improved access for practitioners who 

desire an in-person conference within their geographical region. Currently, all practitioners 

must travel to Washington, D.C. to be afforded their right to an in-person conference. 

Satellite offices will allow employees to handle disciplinary case conferences and related 

negotiations at three satellite offices strategically located across the country.

Tax Debt Resolution (+$0.2 million / +1.5 FTE)

Additional resources are required to focus on proactively identifying and addressing alleged 

C230 violations by tax debt resolution companies. Tax debt resolution companies are new 

and unique to OPR's expanded scope of responsibility. The business model for these 

companies involves few, if any, “legacy” C230 practitioners (e.g., attorneys, CPAs, and 

enrolled agents and actuaries). The companies’ employees assist taxpayers with negotiations 

to abate penalties, enter into installment payment plans, and compromise an assessed federal 

tax liability. These companies do not necessarily prepare tax returns or represent taxpayers 

during audits. Tax debt resolution companies have largely gone unregulated until now.

Technology Enhancements (+$0.3 million / 0 FTE)

This initiative also includes resources to interface the OPR E-TRAK Case and 

Correspondence Management System (CCMS) with the IRS Return Preparer Office (RPO) 

360 database to allow for better information sharing and video conferencing. 

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-103

Consolidate and Modernize IRS Facilities +$85,456,000 / +74 FTE

This initiative will provide space 

alteration resources needed to 

renovate and reduce office space 

throughout the IRS inventory and 

realize an estimated annual rent 

savings of $23 million. This 

supports Administration mandates to 

efficiently manage real property 

assets, and reduce the federal office space footprint and consolidated data centers. In 

addition, this initiative includes an increase in Procurement and Facilities 

Management and Security Services staff to deliver core business functions that have

experienced a significant decrease since FY 2011. 

The IRS continues to review cost estimates in order to choose the projects that will

provide the greatest savings. Major reductions and consolidations are achievable at IRS

occupied buildings where the following strategies can be implemented:

• Reducing workstation size in accordance with revised National Workplace Standards 

allowing for reductions in workstation size;

• Workspace sharing for frequent teleworkers and employees who work outside of

their assigned post of duty (POD) more than 80 hours per month; and

• Realignment of occupied workspace and consolidation of vacant workspace.

In 2012, the IRS established a standard 48 square foot workstation size for most employees 

and a 3:1 sharing ratio for employees who are out of the office 80 or more hours each 

month. Time out of the office is defined as a combination of offsite (field/mobile) work, 

telework of any type, and regular days off. These two factors provide the IRS with a unique 

opportunity to drastically reduce the amount of office space in inventory. In addition, this 

will provide base funding covering health and safety projects, mandatory moves, and space 

reduction. This includes campus consolidation and modernization (the 4800 building in 

Atlanta, and project development for a replacement facility in Fresno). 

Tight budget constraints, reduced funding levels, and uncertainty of future budgets 

have made it difficult to plan and execute a portfolio of required or advantageous 

projects. Without the requested resources, the IRS will be unable to optimize its use 

of office space and realize significant rent savings. The opportunity to consolidate 

and modernize IRS campuses will continue to be postponed and the overall benefits 

of space reduction and business unit co-location will be lost. The IRS plans to 

reinvest the rent savings from this initiative to fund rent increases for the remaining

buildings and for other new space reduction projects.

Other Direct Costs

There are no other direct costs associated with this initiative.

Position Type/Other Costs FTE Positions $000

Consolidate and Modernize IRS 

Campuses 74.00 99 $85,456

Analyst 74.00 99 9,956

Space Renovation 58,159

Hardware and Software 12,191

Equipment 5,150

Total 74.00 99.00 $85,456
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Position Type/Other Costs FTE Positions $000

Maintain Integrity of Revenue Financial Systems 7.00 10 $12,162

Program Analyst 7.00 10 1,007

Contractual Services 11,155

Total 7.00 10 $12,162

Maintain Integrity of Revenue Financial Systems +$12,162,000 / +7 FTE

This initiative will support and 

improve the IRS’s revenue financial 

accounting systems to ensure timely 

and accurate reporting of tax data.

The revenue financial and 

accounting systems include the 

general ledger, which is required to reconcile and report to Treasury on $3.1 trillion in 

revenue before refunds and $374 billion in individual and business tax refunds in FY 2013; 

produce the annual audited financial statements; and perform other operational and financial 

reporting on unpaid tax assessments currently identified by the Government Accountability 

Office (GAO) as a material weakness. 

The current revenue financial system does not use commercial software and the IRS is reliant 

on internal funding to maintain its legacy system. This initiative will allow the IRS to make 

the necessary system and programming changes required to comply with Office of 

Management and Budget (OMB) mandates, and to stay current with internal changes made to 

the IRS’s tax processing systems for tax administration that also affect financial reporting. 

The investment plan includes funding to:

• Eliminate manual work-around processes;

• Make changes to ensure that the IRS’s revenue financial systems comply with 

accounting and system requirements;

• Merge multiple financial systems into one repository to ensure the integrity of the 

IRS’s financial data. This is needed to improve analyses and reporting which will 

address the long-standing GAO-reported material weakness related to unpaid tax 

assessments; 

• Develop financial system requirements to ensure accurate accounting and reporting for 

both the operational and financial transactions recorded in the tax systems;

• Allow the IRS to implement all required system changes resulting from accounting 

events when changes are made in the tax processing systems (master files) for key 

initiatives, including the ACA, CADE 2, identity theft, Automated Trust Fund

Recovery Penalty, and foreign tax compliance (FATCA)

Other Direct Costs

There are no other direct costs associated with this initiative.
IRS-105

Implement Agency Wide Shared Services Priorities +$10,992,000 / +9 FTE

This initiative will allow the IRS to

implement security measures to

protect IRS employees, facilities, 

operations, and information. This 

initiative consists of

countermeasures to address the 

security risks identified during the

FY 2010 Facility Risk Assessment in 191 IRS buildings, impacting over 70,000 employees.

Improve Security at IRS Facilities (+$11.0 million / +9 FTE)

This initiative requests resources to replace outdated security systems and implement 

solutions to vulnerabilities in IRS facilities. This initiative is in direct support of the IRS’s

Strategic Foundation to ensure a secure environment that protects the safety and security of 

IRS employees and facilities.

• Enterprise Physical Access Control System (ePACs)

This proposal includes $8.5 million and 8.5 FTE in new funding to update the 

ePACs throughout the enterprise. The ePACs is critical to the IRS’s ability to 

monitor and protect resources and support life safety activity for the public, 

employees, and contractors. Many existing PAC systems are characterized as 

Federal Information Security Management Act (FISMA) non-compliant.

• Implement Security Countermeasures

The IRS is requesting $2.5 million to implement security recommendations 

developed in response to the FY 2010 Facility Risk Assessment. This 

investment will help mitigate the risks identified by providing for the 

purchase, implementation, and installation of countermeasures such as:

o Intrusion Detection Systems – detects criminal acts;

o Screening Equipment – enables controlled access to specific areas of the facility;

o Barriers – deters persons from engaging in criminal activities; and

o Alarms – provides security against loss from fire or mechanical failure.

Other Direct Costs

There are no other direct costs associated with this initiative.

Position Type/Other Costs FTE Positions $000

Improve Security at IRS Facilities 9.00 11 $10,992

IT Specialist 9.00 11 1,398

Contractual Services 3,916

Hardware & Software 3,178

Leasehold Improvement 2,500

Total 9.00 11.00 10,992
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Implement Federal Investigative Standards +$3,464,000 / +11 FTE

This initiative will provide resources 

to support the financial responsibility 

determination required by Executive 

Order 13467, Reforming Processes 

Related to Suitability for Government 

Employment, Fitness for Contractor Employees, and Eligibility for Access to Classified 

National Security Information (June 30, 2008). Under the E.O. all federal executive branch 

agencies must implement common employment suitability and security standards, which 

includes tax compliance checks for initial background investigations and periodic 

reinvestigations when hiring federal employees and contractors, or determining whether to 

provide, suspend, or revoke a personnel security clearance. The IRS will receive requests, 

and process and provide results to federal agencies conducting background investigations. 

The resources requested will help the IRS to: 

• Establish a project office to define the process for completing and uploading 

consent-based tax check authorizations in accordance with IRC Section 6103(c) to a 

central repository;

• Establish standards for defining tax compliance;

• Create an automated tax compliance extract; and

• Create a summary report that will be used by various federal agencies to support a 

suitability determination or grant a security clearance and associated federal tax 

compliance activities for employees and contractors if needed. 

OMB’s Performance Accountability Council (PAC) published a government-wide FIS 

implementation plan in April 2014 and is monitoring and supporting agency implementation 

plans. The PAC’s Security and Suitability Processes Review Report to the President (March 

2014) recommends full and accelerated implementation of FIS standards by 2016 to enhance 

protection of federal facilities, suitability for U.S. government employment or fitness as a 

contractor and eligibility to access classified information or hold a sensitive position. 

The Director of National Intelligence (ODNI) reported that more than 4.9 million federal 

government and contractor employees held or were eligible to hold a personnel security 

clearance. GAO is conducting a cross-agency audit (Job Code 192436) concerning 

Department of Defense security clearance holders with unpaid tax debts. Background 

investigations, with a tax compliance check, are required to grant a security clearance 

allowing access to classified information that, through unauthorized disclosure, can cause 

exceptionally grave damage to U.S. national security. 

In December 2012, ODNI and the OPM established a cross-agency Federal Investigative 

Standards Implementation Working Group (FISIWG) that included representatives from 

Treasury and the IRS and is supporting efforts to automate the tax check process and clarify 

legal constraints for disclosing tax records. 

Other Direct Costs: 

There are no other direct costs associated with this initiative.

Position Type/Other Costs FTE Positions $000

Implement Federal Investigative 

Standards 11.00 15 $3,464

Program Analyst 3.00 4 533

Tax Compliance Automation 8.00 11 2,931

Total 11.00 15 $3,464
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Transfer to TTB for High-Return on Investment (ROI) Tax Enforcement Activities

+$5,000,000 / 0 FTE 

IRS will transfer $5 million to the 

Alcohol and Tobacco Tax and Trade 

Bureau (TTB) for those high-ROI 

tax enforcement activities that 

produce additional revenue through 

program activities designated to 

narrow the federal excise tax gap on 

alcohol and tobacco commodities. 

More detailed information can be found in the TTB chapter of this document.

Position Type/Other Costs FTE Positions $000

Alcohol and Tobacco Tax and Trade Bureau 

Program Integrity Transfer $5,000

Special Agent 2,699

Training 220

Training Service Contracts 2,041

Support Supplies 8

Equipment 32

Total $5,000
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2.2 – Operating Levels Table

Dollars in Thousands

Internal Revenue Service

Object Classification

FY 2014

Actual

FY 2015

Enacted

FY 2016

Request

11.1 Full-Time Permanent Positions 5,998,928 6,016,824 6,686,872

11.3 Other than Full-Time Permanent Positions 85,924 79,465 83,305

11.5 Other Personnel Compensation 223,667 181,903 222,025

11.8 Special Personal Services Payments 24,299 15,671 15,884

11.9 Personnel Compensation (Total) 6,332,818 6,293,863 7,008,086

12.0 Personnel Benefits 1,922,424 1,954,019 2,234,039

13.0 Benefits to Former Personnel 43,682 52,266 52,936

Total Personnel and Compensation Benefits $8,298,924 $8,300,148 $9,295,061

21.0 Travel 72,529 115,161 179,837

22.0 Transportation of Things 24,338 23,635 31,700

23.1 Rental Payments to GSA 611,334 614,865 637,320

23.2 Rent Payments to Others 13,194 13,761 14,062

23.3 Communications, Utilities, & Misc 330,949 291,752 344,126

24.0 Printing & Reproduction 32,522 30,644 34,549

25.1 Advisory & Assistance Services 636,571 712,460 973,706

25.2 Other Services 110,291 124,158 271,064

25.3 Purchase of Goods & Services from Govt. Accounts 185,914 181,102 201,042

25.4 Operation & Maintenance of Facilities 169,437 159,116 177,548

25.5 Research & Development Contracts 3,950 2,846 2,899

25.6 Medical Care 13,570 14,160 16,625

25.7 Operation & Maintenance of Equipment 66,353 44,478 57,456

25.8 Subsistence & Support of Persons 2,159 1,702 4,957

26.0 Supplies and Materials 44,156 47,822 58,889

31.0 Equipment 270,394 230,539 515,736

32.0 Land and Structures 15,122 2,833 77,911

41.0 Grants, Subsidies 21,043 29,000 31,000

42.0 Insurance Claims & Indemnities 1,650 1,995 2,034

91.0 Unvouchered 3,126 2,823 3,549

Total Non-Personnel $2,628,602 $2,644,852 $3,636,010

New Appropriated Resources $10,927,526 $10,945,000 $12,931,071

Appropriations:

Taxpayer Services 2,145,195 2,156,554 2,408,803

Enforcement 4,914,497 4,860,000 5,399,832

Operations Support 3,722,599 3,638,446 4,743,258

Business Systems Modernization 145,235 290,000 379,178

New Appropriated Resources $10,927,526 $10,945,000 $12,931,071

FTE 82,643 81,279 90,524
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2B – Appropriation Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

TAXPAYER SERVICES

For necessary expenses of the Internal Revenue Service to 

provide taxpayer services, including pre-filing assistance 

and education, filing and account services, taxpayer 

advocacy services, and other services as authorized by 5 

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

Commissioner, [$2,156,554,000] $2,408,803,000, of which 

not less than [$7,000,000] $5,600,000 shall be for the Tax 

Counseling for the Elderly Program, of which not less than 

[$10,000,000] $12,000,000 shall be available for lowincome taxpayer clinic grants, and of which not less than 

$12,000,000, to remain available until September 30, 

[2016] 2017, shall be available for a Community Volunteer 

Income Tax Assistance matching grants program for tax 

return preparation assistance, of which not less than 

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

the Taxpayer Advocate Service: Provided, That of the 

amounts made available for the Taxpayer Advocate 

Service, not less than $5,000,000 shall be for identity theft 

casework. (Department of the Treasury Appropriations Act, 

2015.)

ENFORCEMENT

For necessary expenses for tax enforcement activities of the 

Internal Revenue Service to determine and collect owed 

taxes, to provide legal and litigation support, to conduct 

criminal investigations, to enforce criminal statutes related 

to violations of internal revenue laws and other financial 

crimes, to purchase and hire passenger motor vehicles (31 

U.S.C. 1343(b)), and to provide other services as 

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

determined by the Commissioner, [$4,860,000,000] 

$5,399,832,000, of which not to exceed $150,000,000 shall 

remain available until September 30, 2017, and of which 

not less than [$60,257,000] $57,493,000 shall be for the 

Interagency Crime and Drug Enforcement program: 

Provided, That, of the amounts provided under this 

heading, not less than $352,100,000, of which $5,000,000 

shall be transferred to the Alcohol and Tobacco Tax and 

The FY 2016 President’s 

Budget requests additional 

resources for the low-income 

taxpayer clinic grants which 

provide support for taxpayers 

facing financial hardship and 

taxpayers whose problems are 

not resolved through normal 

IRS channels.

The IRS requests two-year 

authority in the Enforcement 

appropriation so as to maximize 

flexibility in budget execution 

in the face of a difficult budget 

environment in recent years. 

This will mirror similar 

authority in the Operations 

Support appropriation. 

The Budget Request for the 

Enforcement account is 

$5,399,832,000 including a 

program integrity cap 

adjustment of $352,100,000

which, when combined with the 
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Trade Bureau, shall be for an additional appropriation 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. (Department of the 

Treasury Appropriations Act, 2015.)

OPERATIONS SUPPORT

For necessary expenses of the Internal Revenue Service to

support taxpayer services and enforcement programs, 

including rent payments; facilities services; printing; 

postage; physical security; headquarters and other IRSwide 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)); and other services as authorized by 5 U.S.C. 

3109, at such rates as may be determined by the 

Commissioner; [$3,638,446,000] $4,743,258,000, of which 

not to exceed $315,000,000 shall remain available until 

September 30, [2016] 2017; of which not to exceed 

$65,000,000 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, [2017] 2018, for 

research; of which [not less than]not to exceed $1,850,000 

shall be for the Internal Revenue Service Oversight Board; 

of which not to exceed $25,000 shall be for official 

reception and representation expenses: Provided, That not 

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

Revenue Service shall submit a report to the Committees 

on Appropriations of the House of Representatives and the 

Senate and the Comptroller General of the United States 

detailing the cost and schedule performance for its major 

information technology investments, including the purpose 

and life-cycle stages of the investments; the reasons for any 

cost and schedule variances; the risks of such investments 

and strategies the Internal Revenue Service is using to 

mitigate such risks; and the expected developmental 

milestones to be achieved and costs to be incurred in the 

next quarter: Provided further, That the Internal Revenue 

Service shall include, in its budget justification for fiscal 

year [2016] 2017, a summary of cost and schedule 

performance information for its major information 

technology systems: Provided further, That, of the amounts 

$315,197,000 cap adjustment in 

the Operations Support account, 

totals $667,297,000 in 

additional appropriation for tax 

enforcement and compliance 

activities.

The Budget Request for the 

Operations Support account is 

$4,743,258,000 including a 

program integrity cap 

adjustment of $315,197,000.

Many facilities projects span 

timeframes beyond two fiscal 

years. The requested no-year 

funding authority provides the 

administrative flexibility to 

execute a project without 

having to incrementally fund it 

across multiple years. Full 

funding of a project up front 

eliminates the possibility that 

future funding will not be 

available to complete and 

reduces risk and costs of 

administration. It is also 

consistent with how other 

agencies are funded for 

facilities-related projects.
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provided under this heading, such sums as are necessary 

shall be available to fully support tax enforcement and 

compliance activities, including not less than 

$315,197,000, for an additional appropriation 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. (Department of the Treasury 

Appropriations Act, 2015.) 

BUSINESS SYSTEMS MODERNIZATION

For necessary expenses of the Internal Revenue Service's 

business systems modernization program, [$290,000,000] 

$379,178,000, to remain available until September 30, 

[2017] 2018, for the capital asset acquisition of information 

technology systems, including management and related 

contractual costs of said acquisitions, including related 

Internal Revenue Service labor costs, and contractual costs 

associated with operations authorized by 5 U.S.C. 3109: 

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

quarter, the Internal Revenue Service shall submit a report 

to the Committees on Appropriations of the House of 

Representatives and the Senate and the Comptroller 

General of the United States detailing the cost and schedule 

performance for CADE 2 and Modernized e-File 

information technology investments, including the 

purposes and life-cycle stages of the investments; the 

reasons for any cost and schedule variances; the risks of 

such investments and the strategies the Internal Revenue 

Service is using to mitigate such risks; and the expected 

developmental milestones to be achieved and costs to be 

incurred in the next quarter. (Department of the Treasury 

Appropriations Act, 2015.)

ADMINISTRATIVE PROVISIONS –

INTERNAL REVENUE SERVICE

(INCLUDING TRANSFER OF FUNDS)

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

made available in this Act to the Internal Revenue Service 

may be transferred to any other Internal Revenue Service 

appropriation upon the advance [approval]notification of 

the Committees on Appropriations.

SEC. 102. The Internal Revenue Service shall maintain an 

employee training program, which shall include the 
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following topics: taxpayers' rights, dealing courteously 

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

impartial application of tax law.

SEC. 103. The Internal Revenue Service shall institute and 

enforce policies and procedures that will safeguard the 

confidentiality of taxpayer information and protect 

taxpayers against identity theft.

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

the Internal Revenue Service shall be available for 

improved facilities and increased staffing to provide 

sufficient and effective 1–800 help line service for 

taxpayers. The Commissioner shall continue to make 

improvements to the Internal Revenue Service 1–800 help 

line service a priority and allocate resources necessary to 

enhance the response time to taxpayer communications, 

particularly with regard to victims of tax-related crimes.

[SEC. 105. None of the funds made available to the 

Internal Revenue Service by this Act may be used to make 

a video unless the Service-Wide Video Editorial Board 

determines in advance that making the video is appropriate, 

taking into account the cost, topic, tone, and purpose of the 

video.]

SEC. [106]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-incompromise from a taxpayer who has been the victim of 

fraud by a third party payroll tax preparer.

[SEC. 107. 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. 108. 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. 109. 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 

Section 105 is no longer 

needed. In 2013, the IRS 

established policy and standards 

for video use and the 

Servicewide Video Editorial 

Board to review all video 

projects planned throughout the 

IRS.

Sections 107 and 108 are 

unnecessary since these 

behaviors are prohibited under 

existing, permanent law.

Section 109 is unnecessary 

since obligation and outlay of 

funds on conferences are 

already subject to adequate 

review and departmental 

policies. 

Section 110 is unnecessary 

since these behaviors are 

prohibited under existing, 

permanent law.
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May 31, 2013, by the Treasury Inspector General for Tax 

Administration entitled "Review of the August 2010 Small 

Business/Self-Employed Division's Conference in 

Anaheim, California" (Reference Number 2013–10–037).]

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

may be used in contravention of section 6103 of the 

Internal Revenue Code of 1986 (relating to confidentiality 

and disclosure of returns and return information).]

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

amended by striking the clause "before September 30, 

2013" and inserting "before September 30, 2020".

SEC. 107. Section 9503(a)(5) of title 5, United States Code, 

is amended by inserting before the semicolon the following: 

"renewable for an additional two years, based on a critical 

organizational need". (Department of the Treasury 

Appropriations Act, 2015.)

The IRS requests Streamlined 

Critical Pay (SCP) authority 

through September 30, 2020. 

This SCP authority expired 

September 30, 2013. Currently 

there are approximately 

30 senior employees under SCP 

appointments. If the SCP is not 

renewed, the IRS will not be 

able to recruit and retain 

top-level talent, especially IT 

professionals who can help 

protect taxpayer data from 

cyber-attacks and who are 

working to modernize the IRS's 

IT infrastructure.

2C – Legislative Proposals 

The IRS requests Streamlined Critical Pay (SCP) authority through September 30, 2020. This 

SCP authority expired September 30, 2013. Currently there are approximately 30 senior 

employees under SCP appointments. If the SCP is not renewed, the IRS will not be able to 

recruit and retain top-level talent, especially IT professionals who can help protect taxpayer 

data from cyber-attacks and who are working to modernize the IRS's IT infrastructure. 

According to Treasury Inspector General for Tax Administration report 2015-IE-R001, The 

Internal Revenue Service’s Use of Its Streamlined Critical Pay Authority, “Private sector 

expertise had been crucial to introducing new leadership to supplement in-house expertise, 

and the IRS had taken advantage of the private sector expertise by retaining the critical pay 

appointees whenever feasible.”

2D – Legislative Tax Proposals 

These legislative proposals are intended to reduce the tax gap and improve tax compliance 

with minimal taxpayer burden. The new tax gap proposals that were included in the FY 2016

President’s Budget were estimated by the Treasury Office of Tax Analysis (OTA) to increase 

revenue by $84.3 billion over the next 10 years (estimate includes the revenue generated by 

the FY 2016 program integrity cap adjustment initiatives). These proposals will reduce the 

tax gap by expanding information reporting and sharing, improving compliance by 

businesses, and strengthening tax administration. The IRS estimates the implementation cost 

for these FY 2016 President’s Budget tax gap proposals to be $157.5 million (excluding the 

program integrity cap adjustment’s ten-year cost) over three years, including the initial 

startup, processing, and compliance operational costs (the cost for these legislative proposals 

is provided below). Note that in a few cases estimates are not yet available due to timing. If 

Congress enacts these provisions, the IRS will require additional funds to be included in the 

authorizing legislation in the amounts shown below. 

Expand information reporting – Compliance with the tax laws is highest when payments are 

subject to information reporting to the IRS. Specific information reporting proposals would:
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• Require information reporting for private separate accounts of life insurance 

companies ($0); 

• Require a certified Taxpayer Identification Number (TIN) from contractors and 

allow certain withholding ($11.5 million); 

• Modify reporting of tuition expenses and scholarships on Form 1098-T, Tuition 

Statement ($0.2 million); 

• Provide for reciprocal reporting of information in connection with the 

implementation of the FATCA ($4.2 million); and

Improve compliance by businesses – Improving compliance by businesses of all sizes is 

important. Specific proposals to improve compliance by businesses would:

• Require greater electronic filing of returns ($0.6 million); 

• Increase certainty with respect to worker classification ($1.9 million); and

• Increase information sharing to administer excise taxes ($0).

• Provide authority to readily share beneficial ownership information of U.S. 

companies with law enforcement ($4.3 million).

Strengthen tax administration – The IRS has taken a number of steps under existing law to 

improve compliance. These efforts would be enhanced by specific tax administration 

proposals that would:

• Impose liability on shareholders to collect unpaid income taxes of applicable 

corporations ($0.1 million);

• Increase levy authority for payments to Medicare providers with delinquent tax 

debt ($0.1 million);

• Implement a program integrity statutory cap adjustment for tax administration 

($18.7 billion);

• Streamline audit and adjustment procedures for large partnerships ($2.5 million);

• Revise offer-in-compromise application rules ($17.8 million);

• Expand the IRS access to information in the National Directory of New Hires for 

tax administration purposes ($12 million);

• Make repeated willful failure to file a tax return a felony ($0);

• Facilitate tax compliance with local jurisdictions ($1.2 million);

• Extend statute of limitations where state adjustment affects federal tax liability 

($0); 

• Improve investigative disclosure statute ($0);

• Require taxpayers who prepare their returns electronically but file their returns on 

paper to print their returns with a scannable code ($14.6 million); 
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• Allow IRS to absorb credit and debit card processing fees for certain tax payments 

($9.6 million); 

• Provide the IRS with greater flexibility to address correctable errors ($1.4 million);

• Make e-filing mandatory for exempt organizations ($18.2 million); 

• Authorize the Department of Treasury to require additional information to be 

included in electronically filed Form 5500 annual reports and electronic filing of 

certain other employee benefit plan reports ($11.2 million); 

• Impose a penalty on failure to comply with electronic filing requirements

($2.5 million);

• Improve the whistleblower program ($0);

• Index all penalties for inflation ($0.8 million);

• Extend paid preparer Earned Income Tax Credit (EITC) due diligence 

requirements to the child tax credit ($20.2 million);

• Extend IRS authority to require a truncated Social Security Number (SSN) on 

Form W-2, Wage and Tax Statement ($0.2 million); 

• Combat tax-related identity theft ($2.7 million);

• Allow states to send notices of intent to offset federal tax refunds to collect state 

tax obligations by regular first-class mail instead of certified mail ($0);

• Explicitly provide that the Department of Treasury and IRS have authority to 

regulate all paid return preparers (Undetermined);

• Rationalize tax return filing due dates so they are staggered ($1.0 million);

• Increase the penalty applicable to paid tax preparers who engage in willful or 

reckless conduct ($0);

• Enhance administrability of the appraiser penalty ($0); 

• Increase levy authority for payments to Medicare providers with delinquent tax 

debt ($0 million); and

• Implement standards clarifying when employee leasing companies can be held 

liable for their clients’ federal employment taxes (new in 2016).
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2E – Strategic Objective Annual Review (SOAR) 

The GPRA Modernization Act of 2010 requires each federal agency to conduct a review of 

performance goals and objectives on an annual basis. This strategic review serves as an 

annual assessment of progress being made to improve program outcomes and looks at 

opportunities for productivity gains using a variety of analytical, research, and evaluation 

methods to support the assessment.

Based on the SOAR review, the IRS identified three areas of focus: (1) expand online 

services; (2) build stronger relationships with the tax community and government partners; 

and (3) build upon current compliance analytics.

In FY 2014, the IRS: 

• Expanded and enhanced digital self-help services available to taxpayers through 

IRS.gov, increased use of social media and mobile tools such as YouTube and 

IRS2Go and promoted the use of Facilitated Self Assistance kiosks available at some 

Taxpayer Assistance Centers;

• Continued to foster stronger relationships with its tax community and government 

partners through Tax Forums, workshops and training at various locations across the 

country, and providing a weekly e-News for Tax Professionals newsletter;

• Improved compliance analytics through increased collaboration with the states and 

foreign governments, the development of enhanced workload selection models, and 

the deployment of the Return Review Program, an automated system designed to 

maximize fraud detection at the time the tax returns are filed to eliminate the issuance

of questionable refunds.

A summary of IRS accomplishments can be found in Section 1B, Vision, Priorities, and 

Context. More detailed information on the IRS FY 2014 accomplishments can be found in 

the Management’s, Discussion & Analysis Report that was released as part of GAO’s review 

of the IRS financial statements in November 2014. The IRS has requested additional 

resources to support these areas of focus. 
IRS-117

2F – IRS Use of Evidence and Evaluation

The IRS continues to improve program performance by applying existing evidence about 

what works and by using research and innovation to improve program delivery. 

Significant Accomplishments 

Reducing Taxpayer Burden and Improving Compliance

• Post-Filing Model: The IRS has developed a model of the post-filing interactions 

between taxpayers and the IRS, accounting for various post-filing treatment streams, 

with a focus on taxpayer burden, IRS costs, cycle time, and compliance 

outcomes. The taxpayer burden aspect of the model was presented at the 2013 Winter 

Simulation Conference, the 2014 HM Revenue and Collections International Tax 

Analysis Conference, the 2014 IRS Research Conference, and the 2014 Joint 

Statistical Meetings.

• Use of National Research Program (NRP) Data to Evaluate EITC Compliance: The 

IRS is using data from the NRP individual taxpayer study to evaluate compliance of 

taxpayers who claim the EITC. The study is using the NRP results to estimate the 

total cost of EITC errors, evaluate types of errors made and the relative costs of those

errors, as well as identify common characteristics of tax returns on which errors are 

reported.

• Evaluation of the Compliance Assurance Process (CAP): The IRS CAP research 

project found that CAP revenue results are substantially similar to the traditional 

examination program, and are achieved sooner with greater certainty. The research is 

helpful in demonstrating the effects of the CAP program and complements program 

measures based on directly observable outcomes.

Highest Priorities

Improving the Effectiveness of the IRS

• Fraud Detection: Research, Analysis, and Statistics (RAS) supports IRS efforts in 

early detection of fraud and erroneous refund claims through research to identify 

fabricated entities potentially filing false income and withholding information 

documents in an attempt to bypass existing detection filters. 

• Evaluation of Statistics of Income (SOI) Major Programs: The IRS SOI office 

conducted initial evaluations with key customer groups to evaluate the utility of its 

individual and corporation income tax products, determine projected future needs, and 

identify areas of potential cost savings. The evaluation showed that customers were 

satisfied with the products, but suggested new directions for the individual income 

files and changes over the next 5-years in the production and delivery of business tax 

data to better represent increased globalization. SOI plans phased implementation of 

proposed changes beginning in FY 2015.

• Encouraging Electronic Refunds: The IRS is partnering with the Bureau of the Fiscal 

Service (BFS) to increase the electronic deposit take-up rate for tax refunds. This 

effort includes analysis of the taxpayer segments receiving paper refunds and a pilot 

outreach program. The pilot program targets taxpayers who received a paper check in 

Tax Year 2012, but who also received electronic benefits from the federal 
IRS-118

government. Two types of letters, and a follow-up postcard were tested on two 

taxpayer samples containing 35,000 taxpayers each. After processing the 2013 tax 

returns for over 90 percent of the taxpayers in the outreach campaign, IRS found that 

25 percent of them requested an electronic refund. The take-up rate was 7 percent 

higher compared to similar taxpayers who did not receive an outreach letter. Letters 

emphasizing the safety of electronic refunds versus paper checks showed a higherresponse rate compared to letters emphasizing the speed of electronic refunds. Further 

analysis of the response to the outreach campaign will be conducted over the summer. 

This project supports the Administration’s electronic government initiative. 

Implementation Updates for OMB Memo M-14-06.

• Incarceration Data: SOI provided Treasury with a copy of an IRS administrative data 

file containing information for U.S. citizens who have been incarcerated. Treasury 

will use the file for studies of how individuals who have served time in prison use 

various tax expenditures to both help their families during periods of imprisonment 

and improve their economic circumstances once they have been released. This file 

may also be used to study the long-term economic effects of imprisonment on various 

U.S. demographic groups.

• Providing Information on the Tax System to the Public: During FY 2014, SOI released the 

2011 Corporation Source Book online. This publication includes nearly 

450 electronic tables that present corporate tax data by industrial sector as well as by 

major and minor industries within sector. SOI also released tables for the 

2011 Corporation Income Tax Returns Complete Report on the IRS webpage, Tax 

Stats. These tables consist of extensive corporate tax data classified primarily by size 

of total assets and size of total tax receipts. 

In addition, SOI released nearly 400 tables containing detailed information on a wide 

range of topics. Significantly, SOI released the 2010-2011 state and county level 

migration data, which are based on year-to-year address changes reported on 

individual income tax returns. State-level files track inflows and outflows and include 

both origins and destinations by county. SOI’s other releases included updates to 

tables on controlled foreign corporations and time-series individual income tax data by 

state. 

SOI also completed a review of its very popular individual income tax public-use file 

and produced a revised release strategy that strengthens privacy protection of 

individual tax data while increasing the utility of the data to key customers of this 

product.
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Section 3 – Budget and Performance Plan

Taxpayer Services 

Appropriation Description

The Taxpayer Services appropriation provides funding for taxpayer service activities and 

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

documents, offering filing and account services, ensuring the availability of taxpayer 

assistance, and providing taxpayer advocacy services.

The Taxpayer Services budget request for FY 2016 is $2,408,803,000 in direct appropriations 

and 31,285 FTE. This is an increase of $252,249,000, or 11.70 percent, and 3,011 FTE more 

than the FY 2015 Enacted level of $2,156,554,000 and 28,274 FTE.

The performance measures reflected in Taxpayer Services appropriation support and align to 

Goal 3: Fairly and effectively reform and modernize federal financial management, 

accounting, and tax systems, Objective 3.3: Pursue tax reform, implement the ACA and 

FATCA, and improve the execution of the tax code of Treasury’s Strategic Plan 

(FY 2014-2017).

2.1 – Budget Adjustments Table 

Dollars in Thousands

Taxpayer Services FTE Amount

FY 2015 Enacted 28,274 $2,156,554

Changes to Base:

Maintaining Current Levels (MCLs): $52,822

Pay Annualization 4,837

Pay Raise (1.3%) 18,910

Non-Pay 3,571

FERS Contribution Increase 7,362

Federal Employees Health Benefits (FEHB) Program Modification 18,142

Efficiencies/Savings: (61) ($18,399)

Increase e-File Savings (46) (2,374)

HCTC Program Termination (15) (16,025)

Subtotal FY 2016 Changes to Base (61) $34,423

FY 2016 Current Services (Base) 28,213 $2,190,977

Program Changes:

Before Cap Adjustment Program Increases:

Improve Taxpayer Services 2,806 183,142

Improve Upfront Identification and Resolution of Identity Theft Returns 193 15,562

Address Impact of Affordable Care Act (ACA) Statutory Requirements 1 108

Enhance Service Options for Taxpayers 45 13,891

Increase Service for Low-Income Taxpayers and Taxpayers in Need of Hardship Relief 27 5,123

Subtotal FY 2016 Program Increases 3,072 $217,826

Total FY 2016 Budget Request1 31,285 $2,408,803

Dollar/FTE Change FY 2016 Budget Request over FY 2015 Enacted 3,011 $252,249

Percent Change FY 2016 Budget Request over FY 2015 Enacted 10.65% 11.70%

1

FTE include those funded with newly appropriated resources only. FTE funded by User Fees and Unobligated Balances from Prior Years are included in the 

direct civilian full-time equivalent employment line of the President's Appendix, but are not shown in the table above.
IRS-120

2.2 – Operating Levels Table 

Dollars in Thousands

Taxpayer Services

Object Classification

FY 2014

Actual

FY 2015

Enacted

FY 2016

Request

11.1 Full-Time Permanent Positions 1,478,423 1,513,412 1,665,695

11.3 Other than Full-Time Permanent Positions 44,113 36,629 39,928

11.5 Other Personnel Compensation 71,555 42,404 54,366

11.8 Special Personal Services Payments 885 11

11.9 Personnel Compensation (Total) 1,594,976 1,592,445 1,760,000

12.0 Personnel Benefits 395,692 389,099 469,889

13.0 Benefits to Former Personnel 3

Total Personnel and Compensation Benefits $1,990,671 $1,981,544 $2,229,889

21.0 Travel 10,962 19,312 24,164

22.0 Transportation of Things 1,047 671 687

23.2 Rent Payments to Others 1

23.3 Communications, Utilities, & Misc 1,206 1,707 1,751

24.0 Printing & Reproduction 8,590 8,381 8,532

25.1 Advisory & Assistance Services 22,829 22,336 22,895

25.2 Other Services 21,306 26,735 20,861

25.3 Purchase of Goods & Services from Govt. Accounts 61,253 59,726 61,056

25.4 Operation & Maintenance of Facilities 3 2 2

25.7 Operation & Maintenance of Equipment 2

25.8 Subsistence & Support of Persons 143 147 191

26.0 Supplies and Materials 5,888 5,884 6,642

31.0 Equipment 80 328 337

41.0 Grants, Subsidies 21,043 29,000 31,000

42.0 Insurance Claims & Indemnities 171 781 796

Total Non-Personnel $154,524 $175,010 $178,914

New Appropriated Resources $2,145,195 $2,156,554 $2,408,803

Budget Activities:

Pre-filing Taxpayer Assistance & Education 595,168 626,510 682,753

Filing & Account Services 1,550,027 1,530,044 1,726,050

New Appropriated Resources $2,145,195 $2,156,554 $2,408,803

FTE 28,535 28,274 31,285
IRS-121

2.3 – Appropriation Detail Table Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Pre-Filing Taxpayer Assistance and Education 5,219 $595,168 5,373 $626,510 5,813 $682,753 440 $56,243 8.19% 8.98%

Filing and Account Services 23,316 1,550,027 22,901 1,530,044 25,472 $1,726,050 2,571 196,006 11.23% 12.81%

Subtotal New Appropriated Resources 28,535 $2,145,195 28,274 $2,156,554 31,285 $2,408,803 3,011 $252,249 10.65% 11.70%

Other Resources:

Reimbursables 444 28,600 511 32,900 538 34,600 27 1,700 5.28% 5.17%

Offsetting Collections - Non Reimbursables

User Fees1 886 182,742 58 55,195 58 55,595 400 0.72%

Recovery from Prior Years

Unobligated Balances from Prior Years 17,292 9,553 14,100 4,547 47.60%

Transfers In/Out

Resources from Other Accounts

Subtotal Other Resources 1,330 $228,634 569 $97,648 596 $104,295 27 $6,647 4.75% 6.81%

Total Budgetary Resources 29,865 $2,373,829 28,843 $2,254,202 31,881 $2,513,098 3,038 $258,896 10.53% 11.49%

FY 2015 to

Actuals Enacted

Taxpayer Services

 Resources

FY 2016

Request FY 2016 Request

1

FTE funded by User Fees are included in the direct civilian full-time equivalent employment line of the President's Appendix.

FY 2016 Request

Change % Change

FY 2014 FY 2015 FY 2015 to

3A – Pre-Filing Taxpayer Assistance and Education ($682,753,000 in direct 

appropriations, $100,000 from reimbursable programs, and an estimated $9,000,000 from 

user fees): This budget activity funds services to assist with tax return preparation, including 

tax law interpretation, publication, production, and advocate services. The program activities

include the following:

• Pre-Filing Services Management supports headquarters management associated with 

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

taxpayer assistance and education.

• Taxpayer Communication and Education researches customer needs; develops and 

manages educational programs; establishes partnerships with stakeholder groups; and 

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

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

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

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

taxpayers.

• Taxpayer Advocacy provides advocate services to taxpayers by identifying the 

underlying causes of taxpayer problems and participating in the development of 

systematic and/or procedural remedies.

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

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

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

supplying forms and publications to taxpayers.

• Taxpayer Advocate Case Processing provides advocate services to taxpayers to 

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

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

support for Wage and Investment management activities of strategic planning, 

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

business modernization, and embedded training. 
IRS-122

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

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

Description of Performance

The IRS timely delivered 99.1 percent of the Critical Individual Filing Season Tax Products to 

the public in 2014, exceeding the FY 2013 results by 40.2 percent. The IRS released its 

products that are unaffected by legislation early to devote more time to analyze, develop, and 

post or print the tax products affected by late changes to legislation. The IRS expects to meet 

the target of 95.0 percent for Critical Individual Filing Season Tax Products to the Public in 

FY 2015 and FY 2016 by continuing to employ this strategy.

The IRS Timeliness of Critical TE/GE and Business Filing Season Tax products to the Public 

reached 98.7 percent in FY 2014, exceeding the established target by 3.7 percent. The IRS 

will continue to plan, monitor, and coordinate all products development and delivery 

activities. To ensure future targets are met, the IRS also will continue to evaluate the 

processes so that mitigation strategies can be implemented quickly. The IRS expects to meet 

the target of 95.0 percent for the Critical TE/GE and Business Tax Products to the Public 

measure in FY 2015 and FY 2016.

The Taxpayer Self-Assistance Rate reached 84.7 percent for FY 2014, falling short of the 

FY 2014 target of 85.0 percent. The shortfall is attributed to a large decrease in Web Services 

Completed. The decrease in Web Services is primarily due to a decrease in Where's My 

Refund? usage, which was 31.9 million (14 percent) below the planned volume. The smaller 

number of taxpayer accesses of “Where’s My Refund?” is attributed to a concerted effort to 

inform taxpayers that the application should only be checked once a day. In previous years, 

the IRS realized about a 10 percent annual increase in usage as taxpayers became acquainted 

with this service, though some were using it several times per day. The IRS will continue to 

promote the use of self-service applications and expects to meet the FY 2015 target of 

85.0 percent and the FY 2016 of 86.0 percent.

3.1.1 – Budget and Performance Report and Plan 

Dollars in Thousands

Pre-Filing Taxpayer Assistance & Education

Resource Level 1, 2 FY 2009

Enacted

FY 2010

Enacted

FY 2011

Enacted

FY 2012

Enacted

FY 2013

Enacted

FY 2014

Enacted

FY 2015

Enacted

FY 2016

Request

Appropriated Resources $661,000 $679,924 $678,204 $625,189 $605,761 $610,496 $626,510 $682,753

Reimbursable Resources 796 862 1,135 96 45 100 100

User Fees 18,700 5,514 22,460 6,400 22,400 9,000 9,000

Budget Activity Total $680,496 $686,300 $679,339 $647,745 $612,161 $632,941 $635,610 $691,853

Pre-Filing Taxpayer Assistance & Education

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Measure Actual Actual Actual Actual Actual Actual Target

Timeliness of Critical Filing Season Tax Products to the Public (Ot) 96.8% 95.3% 96.3% 97.2% 58.9% 99.1% 95.0% 95.0%

Timeliness of Critical TE/GE & Business Tax Products to the Public (Ot) 95.2% 97.7% 96.4% 94.5% 83.6% 98.7% 95.0% 95.0%

Taxpayer Self-Assistance Rate (E) (L) 69.3% 64.4% 70.1% 78.5% 83.3% 84.7% 85.0% 86.0%

FY 2016

Request

Target

2

The FY 2009 - FY 2014 columns represent realized resources for reimbursable and user fees.

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

1

The FY 2009 - FY 2014 Appropriated Resources represents the approved Operating Plan including any interappropriation transfers. 
IRS-123

3B – Filing and Account Services ($1,726,050,000 in direct appropriations, an estimated 

$34,500,000 from reimbursable programs, and an estimated $46,595,000 from user fees): 

This budget activity funds programs that provide filing and account services to taxpayers, 

process paper and electronically-submitted tax returns, issue refunds, and maintain taxpayer 

accounts. The IRS continues to make progress in decreasing paper returns and increasing the 

use of electronic filing and payment methods. The program activities include the following:

• Filing and Account Services Management administers filing and account services 

programs.

• Submission Processing processes paper and electronically submitted tax returns and 

supplemental documents, accounts for tax revenue, processes information documents, 

and issues refunds and tax notices.

• Account Management and Assistance – Electronic/Correspondence Assistance

provides education and assistance to taxpayers and resolves accounts and notice 

inquiries through telephone, paper, and internet correspondence.

• Electronic Products and Services Support provides centralized operations and support 

capabilities for the IRS suite of electronic products, including e-help desk, technology 

support, and operations support.

• Electronic Tax Administration (ETA) markets and administers electronic tax 

administration products and services.

• Business Performance Lab initiatives, recommends and manages systemic solutions 

for the detection and treatment of improper refunds while ensuring effective treatment 

for payment of valid refund claims, leads the development of innovative business

processes and technology solutions and represents Return Integrity & Compliance 

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

• Pre-Refund provides coordination support for the pre-refund activities to ensure timely 

issuance of refunds and credits that are legally due to taxpayers.

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

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

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

and management of the enterprise telephone database.

• Files Most Efficient Organization (MEO) provides staffing, training, and direct 

support for the management associated with the MEO for files in Submission 

Processing. This organization stores the administrative files and the most recent tax 

returns in process, which are the returns most often requested for research by various 

IRS organizations before being forwarded to federal records centers.

Description of Performance

Millions of individual and business taxpayers file their returns electronically. The overall 

benefits of e-file are faster refunds, greater accuracy, secure and confidential submission, 

quick confirmation, and the ability to file amended superseded and prior year returns. For 

FY 2014 the IRS met its 84.1 percent individual e-file target rate. The business e-file rate was 

43.1 percent, missing the 2014 target of 44.7 percent. 
IRS-124

The IRS uses projections to set the targets for business returns processed. These projected 

numbers are then used to determine the target for the subset of business returns that are 

electronically filed. The primary reason for the business e-file shortfall was that returns in the 

Form 94X (Employment Tax) series did not materialize in the volumes originally projected. 

A team has been formed to develop a Servicewide strategy for increasing the volume of 

electronic returns filed by business taxpayers and a communications outreach plan is being 

developed to promote e-filing for business returns during the 2015 Filing Season. The IRS 

will increase the individual e-filing target to 84.6 percent for FY 2015 and 85.0 percent for 

FY 2016. The business e filing target will increase to 46.5 percent for FY 2015 and 

47.0 percent for FY 2016. Increases for both e-file rates will be achieved by continuing to 

promote the benefits of e-filing.

In FY 2014, Customer Accuracy – Tax Law was at 95.0 percent, exceeding the target of 

93.0 percent. The mandatory use of the Interactive Tax Law Assistant (ITLA) and the 

continual monitoring of results through data-driven analysis of reports obtained from the 

Embedded Quality Review System (EQRS) ensured targets were met. Ongoing efforts 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. 

Although responding to legislative changes in tax laws will continue to be a major challenge 

moving forward, the IRS will set the tax law accuracy targets at 92.0 percent for FY 2015 and 

FY 2016. 

In FY 2014, the IRS correctly answered 96.2 percent of account questions via the telephone, 

exceeding the target of 95.0 percent. The high performance on Customer Accuracy –

Accounts (Phones) was achieved through data-driven analysis of reports obtained from the 

Embedded Quality Review System (EQRS). Ongoing efforts 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 2015 and FY 2016, 

the target for Customer Accuracy – Accounts (Phones) will decrease slightly to 94.0 percent. 

The IRS anticipates an increase in complexity in inquiries due to ACA implementation, which 

may negatively impact customer accuracy. 

The IRS Customer Contacts Resolved per Staff Year reached 21,018 for FY 2014, falling 

short of the target of 22,750. This measure includes activities such as automated and assistor 

calls answered and web services completed. The shortfall is attributed to a large decrease in 

the number of Web Services Completed. The decrease in Web Services is primarily due to a 

decrease in the number of “Where’s My Refund?” inquiries, which were 31.9 million

(14 percent) less than the planned number of 221 million. The IRS attributes the decrease in

number of users to a concerted effort to inform taxpayers that the “Where’s My Refund?”

application is only updated daily, and should not be repeatedly queried throughout the day. 

Future projections will take into account messaging efforts and the 2014 experience. The 

Customer Contacts Resolved per Staff Year target will be 21,000 for FY 2015 and 17,300 for 

FY 2016. To achieve these targets, the IRS will continue to provide efficient responses to 

customer contacts with the resources available and provide more self-service options on 

IRS.gov.
IRS-125

In FY 2014, the Customer Service Representative Level of Service was 64.4 percent, which 

was 5.6 percent above the planned target of 61.0 percent. In FY 2014, Assistor Calls 

Answered decreased by 23 percent and Informational Messages decreased by 29 percent. 

Overall, in FY 2014, the IRS experienced a 23 percent decline in call demand from FY 2013. 

The IRS was able to deliver a higher level of service to customers than originally planned

because of additional funding and lower than projected telephone demand (87 percent of 

planned). The Customer Service Representative Level of Service target is set at 38 percent 

for FY 2015 due to a projected increase in the number of ACA inquiries and at 80 percent for 

FY 2016. The IRS will continue to maintain a balance between responding to taxpayer 

telephone demand and receiving paper correspondence. 

In FY 2014, the Refund Timeliness Rate (paper) remained strong at 98.7 percent, exceeding 

the target of 97 percent. Throughout FY 2014, IMF return cycles and inventories were 

monitored through various reports and production meetings, and any identified issues were 

addressed promptly. The IRS expects to meet the target of 94.0 percent target for FY 2015 

and 97.0 percent for FY 2016.

3.1.2 – Budget and Performance Report and Plan 

Filing and Account Services

Resource Level 1, 2 FY 2009

Enacted

FY 2010

Enacted

FY 2011

Enacted

FY 2012

Enacted

FY 2013

Enacted

FY 2014

Enacted

FY 2015

Enacted

FY 2016

Request

Appropriated Resources $1,647,406 $1,614,418 $1,630,549 $1,614,514 $1,529,792 $1,546,058 $1,530,044 $1,726,050

Reimbursable Resources 37,094 21,993 27,857 20,759 37,535 28,555 32,800 34,500

User Fees 108,300 115,998 128,966 152,136 184,599 160,342 46,195 46,595

Budget Activity Total $1,792,800 $1,752,409 $1,787,372 $1,787,409 $1,751,926 $1,734,955 $1,609,039 $1,807,145

Filing and Account Services

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Measures Actual Actual Actual Actual Actual Actual Target

Percent Individual Returns Processed Electronically (Oe) (L) 65.9% 69.3% 76.9% 80.5% 82.5% 84.1% 84.6% 85.0%

Percent of Business Returns Processed Electronically (Oe) (L) 22.8% 25.5% 31.8% 36.7% 40.2% 43.1% 46.5% 47.0%

Customer Accuracy - Tax Law (Phones) (Ot) 92.9% 92.7% 93.4% 93.2% 95.7% 95.0% 92.0% 92.0%

Customer Accuracy - Accounts (Phones) (Ot) 94.9% 95.7% 96.0% 95.6% 96.0% 96.2% 94.0% 94.0%

Customer Contacts Resolved per Staff Year (E) 12,918 10,744 12,419 16,320 20,767 21,018 21,000 17,300

Customer Service Representative Level of Service (Oe) (L)1 70.0% 74.0% 70.1% 67.6% 60.5% 64.4% 38.0% 80.0%

Refund Timeliness - Individual (Paper) (Ot) 99.2% 96.1% 99.4% 99.7% 99.0% 98.7% 94.0% 97.0%

1

Beginning in FY 2013, target includes an increase in base user fees.

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

1

The FY 2009 - FY 2014 Appropriated Resources represents the approved Operating Plan including any interappropriation transfers. 

FY 2016

Request

Target

2

The FY 2009 - FY 2014 columns represent realized resources for reimbursable and user fees.

Dollars in Thousands
IRS-126

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 2016 is $5,399,832,000 in direct appropriations and 

44,800 FTE. This is an increase of $539,832,000, or 11.11 percent, and 4,236 FTE more than

the FY 2015 Enacted level of $4,860,000,000 and 40,564 FTE.

The performance measures reflected in the Enforcement appropriation support and align to 

Goal 3: Fairly and effectively reform and modernize federal financial management, 

accounting, and tax systems, Objective 3.3: Pursue tax reform, implement the ACA and 

FATCA, and improve the execution of the tax code of the Department of the Treasury’s 

Strategic Plan (FY 2014-2017).
IRS-127

2.1 – Budget Adjustments Table

Dollars in Thousands

Enforcement FTE Amount

FY 2015 Enacted 40,564 $4,860,000

Changes to Base:

Maintaining Current Levels (MCLs): $81,120

Pay Annualization 11,875

Pay Raise (1.3%) 46,428

Non-Pay 5,171

FERS Contribution Increase 16,488

Federal Employees Health Benefits (FEHB) Program Modification 1,158

Subtotal FY 2016 Changes to Base $81,120

FY 2016 Current Services (Base) 40,564 $4,941,120

Program Changes:

Before Cap Adjustment Program Increases:

Implement Foreign Account Tax Compliance Act (FATCA) 321 33,625

Address Impact of Affordable Care Act (ACA) Statutory Requirements 432 44,775

Implement Merchant Card and Basis Matching 322 28,212

Subtotal FY 2016 Before Cap Adjustment Program Increases 1,075 $106,612

Total FY 2016 Request Before Cap Adjustment 41,639 $5,047,732

Cap Adjustment Program Increases:

Enforcement Initiatives:

Prevent Identity Theft and Refund Fraud 358 47,738

Increase Audit Coverage 1,038 97,353

Improve Audit Coverage of Large Partnerships 107 13,722

Address International and Offshore Compliance Issues 238 35,206

Enhance Collection Coverage 986 83,236

Leverage Data to Improve Case Selection 14 5,111

Address Compliance Risks in the Tax-Exempt Sector 146 15,511

Pursue Employment Tax and Abusive Tax Schemes 52 8,677

Enhance Investigations of Transnational Organized Crime (TOC) 194 37,161

Ensure Ethical Standards of Conduct for Practitioners 28 3,385

Subtotal Enforcement Initiatives 3,161 $347,100

Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer:

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

Subtotal Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer Initiative $5,000

Subtotal FY 2016 Cap Adjustment 3,161 $352,100

Subtotal FY 2016 Program Increases 4,236 $458,712

Total FY 2016 Budget Request1 44,800 $5,399,832

Dollar/FTE Change FY 2016 Budget Request over FY 2015 Enacted 4,236 $539,832

Percent Change FY 2016 Budget Request over FY 2015 Enacted 10.44% 11.11%

1

FTE include those funded with newly appropriated resources only. FTE funded by User Fees and Unobligated Balances from Prior Years are included in the 

direct civilian full-time equivalent employment line of the President's Appendix, but are not shown in the table above.
IRS-128

2.2 – Operating Levels Table

Dollars in Thousands

Enforcement

Object Classification

FY 2014

Actual

FY 2015

Enacted

FY 2016

Request

11.1 Full-Time Permanent Positions 3,351,722 3,309,069 3,609,945

11.3 Other than Full-Time Permanent Positions 33,066 34,066 34,494

11.5 Other Personnel Compensation 128,589 115,634 137,255

11.8 Special Personal Services Payments 23,077 15,671 15,871

11.9 Personnel Compensation (Total) 3,536,454 3,474,440 3,797,565

12.0 Personnel Benefits 1,119,645 1,126,096 1,253,106

Total Personnel and Compensation Benefits $4,656,099 $4,600,536 $5,050,671

21.0 Travel 50,685 76,544 119,969

22.0 Transportation of Things 9,750 9,110 15,765

23.1 Rental Payments to GSA 3 1

23.2 Rent Payments to Others 472 479 529

23.3 Communications, Utilities, & Misc 2,655 2,727 3,244

24.0 Printing & Reproduction 2,505 2,602 2,995

25.1 Advisory & Assistance Services 89,844 56,794 62,212

25.2 Other Services 30,020 36,458 48,721

25.3 Purchase of Goods & Services from Govt. Accounts 41,639 43,080 47,515

25.4 Operation & Maintenance of Facilities 12 17 18

25.5 Research & Development Contracts 3,950 2,813 2,866

25.6 Medical Care 10 10 11

25.7 Operation & Maintenance of Equipment 569 237 436

25.8 Subsistence & Support of Persons 1,857 1,440 4,649

26.0 Supplies and Materials 17,675 17,369 22,050

31.0 Equipment 2,521 5,999 13,652

32.0 Land and Structures 5 12 12

42.0 Insurance Claims & Indemnities 1,100 950 967

91.0 Unvouchered 3,126 2,823 3,549

Total Non-Personnel $258,398 $259,464 $349,161

New Appropriated Resources $4,914,497 $4,860,000 $5,399,832

Budget Activities:

Investigations 601,740 602,298 713,282

Exam & Collections 4,154,342 4,104,453 4,513,376

Regulatory 158,415 153,249 173,174

New Appropriated Resources $4,914,497 $4,860,000 $5,399,832

FTE 42,119 40,564 44,800
IRS-129

2.3 – Appropriation Detail Table Dollars in Thousands

Enforcement

Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Investigations 3,581 $601,740 3,425 $602,298 3,931 $713,282 506 $110,984 14.77% 18.43%

Exam and Collections 37,409 4,154,342 36,104 4,104,453 39,692 4,513,376 3,588 408,923 9.94% 9.96%

Regulatory 1,129 158,415 1,035 153,249 1,177 173,174 142 19,925 13.72% 13.00%

Subtotal New Appropriated Resources 42,119 $4,914,497 40,564 $4,860,000 44,800 $5,399,832 4,236 $539,832 10.44% 11.11%

Other Resources:

Reimbursables 47 27,925 63 35,800 66 39,400 3 3,600 4.76% 10.06%

Offsetting Collections - Non Reimbursables 31,073 33,100 33,075 (25) -0.08%

User Fees1 109 13,241 133 15,940 133 16,240 300 1.88%

Recovery from Prior Years

Unobligated Balances from Prior Years 200 17,129 23,976 13,010 (10,966) -45.74%

Transfers In/Out2 17 7,561 (5,000) (12,561) -166.13%

Resources from Other Accounts 3 3 3

Subtotal Other Resources 359 $89,385 199 $116,377 202 $96,725 3 ($19,652) 1.51% -16.89%

Total Budgetary Resources 42,478 $5,003,882 40,763 $4,976,377 45,002 $5,496,557 4,239 $520,180 10.40% 10.45%

2 Resources from Transfers In/Out include FY 2014 transfers between IRS and the Office of National Drug Control Policy (ONDCP) High Intensity Drug Trafficking Area (HIDTA) Program (net transfer $17K), FY 2015 transfers between IRS and Spectrum (net transfer $7.6M), and an FY 

2016 transfer out to the Alcohol and Tobacco Tax and Trade Bureau (TTB) ($5M).

FY 2015 to FY 2015 to

Actuals Enacted

FY 2016

Request

1

FTE funded by User Fees and Unobligated Balances from Prior Years are included in the direct civilian full-time equivalent employment line of the President's Appendix.

FY 2016 Request FY 2016 Request

Change % Change

FY 2014 FY 2015

3C – Investigations ($713,282,000 in direct appropriations and an estimated $38,500,000

from reimbursable programs): This budget activity funds the Criminal Investigation (CI) 

programs that explore potential criminal and civil violations of tax laws; enforce criminal 

statutes relating to violations of tax laws and other financial crimes, and recommend 

prosecution as warranted. The program activities include the following:

• General Management and Administration supports the headquarters management 

activities of strategic planning, communications, finance, and human resources for 

CI activities.

• Criminal Investigations supports the enforcement of criminal statutes relating to 

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

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

recommends prosecution as warranted. This activity includes the investigation and 

prosecution of tax and money-laundering violations associated with narcotics 

organizations.

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

CI.

• International Investigations supports international investigations involving U.S. 

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

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

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

Description of Performance

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

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

confidence in the tax system and compliance with the law. The following measures are used 

to evaluate the success of achieving its mission. 
IRS-130

FY 2014 year end results for CI Completions (4,606) are 3.7 percent above year-end target 

(4,440) and reflect a 17.1 percent decrease compared to FY 2013. These results are similar to 

previous years before ID theft spiked. Year-end performance in FY 2014 was impacted by a 

decrease in the number of Special Agents in recent years, due to attrition and lack of hiring, as 

well as a re-focus on more complex tax case programs - which have a higher cycle time - and 

on existing inventory in the judicial process. The majority of investigations completed in 

FY 2014 (75.5 percent) consist of prosecutions that were recommended to the Department of 

Justice, a decrease of 20.3 percent from FY 2013. CI will continue to utilize proven case 

development strategies, expand case development efforts, and leverage interagency 

partnerships to identify, initiate and complete significant criminal investigations in all 

program areas. Statistics used in determining future performance were analyzed utilizing CI's 

Performance Projection Model. FY 2015 and FY 2016 year-end targets account for attrition, 

average case per case-working agent, projected case initiations, inventory of cases at the 

beginning of fiscal year and projected number of cases expected in inventory at the end of 

fiscal year. CI continues to carry a high number of ID Theft cases in all stages of its 

inventory. These cases have a shorter cycle time and usually result in multiple investigations, 

many of which were initiated prior to FY 2015 and are now in the judicial process. As more 

of these cases move forward into the judicial process, more resources continue to be required 

to work this judicial pipeline inventory. Additionally, a steady decrease in the number of 

special agents available to work cases due to attrition and no hiring authority will continue to 

impact future performance results, as already evidenced by a lower total number of open 

subject investigations (in all programs). Also, CI's re-focus on more complex tax case 

programs that take longer to complete (i.e. Corporate Fraud, Abusive Tax Schemes, etc.) will 

continue to impact future performance results. The IRS expects to achieve its target of 

3,800 Completed Investigations for FY 2015 and FY 2016.

FY 2014 year end results for the Number of Convictions (3,110) are 26.9 percent above the 

year-end target (2,450) and reflect a 6.1 percent decrease from FY 2013. Although results are 

lower than in FY 2013, the number of convictions in FY 2014 reflects an increase of 

42.4 percent when compared to FY 2010. The large number of quality investigations that 

were initiated and completed in previous years (most of which were ID theft cases) and are 

now being processed by the Department of Justice (DOJ) contributed to a high number of 

convictions. This accounts for the 2.3 percent increase in legal-source convictions from 

FY 2013. CI management will continue to ensure appropriate and consistent contact with the

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

appropriate movement of pipeline investigations. The year-end target are based on historical 

averages and the fact CI depends on the ability of the Department of Justice (DOJ) and U.S. 

Attorney’s office (USAO) to accept its cases for prosecution and to move them through the 

courts. The IRS expects to achieve its target of 2,700 convictions for FY 2015 and FY 2016.

FY 2014 year-end results for Conviction Rate (93.4 percent) are 0.3 percent higher than in 

FY 2013 and 1.5 percent above the year-end target. Acquittals increased in FY 2014 by 31.6 

percent to 25, while dismissals decreased by 13.7 percent to 195. Appropriate case selection 

and effective field performance continue to positively impact the number of cases resulting in 

convictions. Since CI does not prosecute its own cases, it must depend on the ability of the 

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

CI management will continue its current efforts to maintain appropriate and consistent contact 
IRS-131

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

appropriate movement of pipeline investigations to ensure a high rate of conviction. Year-end 

target will remain at 92 percent, based on historical averages and the fact CI depends on the 

ability of the Department of Justice (DOJ) and U.S. Attorney’s office (USAO) to accept its 

cases for prosecution and to move them through the courts. In FY 2015 and FY 2016, the IRS 

expects to achieve its target of 92 percent using this strategy.

The Conviction Efficiency Rate is defined as the cost of the Criminal Investigation program 

divided by the number of convictions. FY 2014 year end results ($231,103) are 17.5 percent 

better than the year-end target ($280,000). Although CI's financial plan for FY 2014 indicates 

a slight increase in Enforcement funds (1.6 percent) and FTEs (0.9 percent) from the original 

projections, a higher than expected number of convictions kept the rate below the $280,000

target. To achieve the FY 2015 and FY 2016 target of $243,000, CI will continue to monitor 

its budget and coordinate with DOJ Tax Division and U.S. Attorney Offices regarding 

prosecutorial priorities.

3.1.3 – Budget and Performance Report and Plan 

Investigations

Resource Level 1, 2

FY 2009

Enacted

FY 2010

Enacted

FY 2011

Enacted

FY 2012

Enacted

FY 2013

Enacted

FY 2014

Enacted

FY 2015

Enacted

FY 2016

Request

Appropriated Resources $611,601 $639,363 $644,479 $636,386 $589,751 $599,193 $602,298 $713,282

Reimbursable Resources 39,639 67,549 63,146 56,895 28,582 27,133 35,000 38,500

User Fees 6,935 4,709

Budget Activity Total $651,240 $706,912 $707,625 $700,216 $623,042 $626,326 $637,298 $751,782

Investigations

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Measure Actual Actual Actual Actual Actual Actual Target

Criminal Investigations Completed (Ot) (L) 3,848 4,325 4,697 4,937 5,557 4,606 3,800 3,800

Number of Convictions (Oe) (L) 2,105 2,184 2,350 2,634 3,311 3,110 2,700 2,700

Conviction Rate (Oe) (L) 87.2% 90.2% 92.7% 93.0% 93.1% 93.4% 92.0% 92.0%

Conviction Efficiency Rate ($) (E) (L) $327,328 $324,776 $310,029 $270,511 $211,048 $231,103 $243,000 $243,000

FY 2016

Request

Target

2

The FY 2009 - FY 2014 columns represent realized resources for reimbursable and user fees.

Dollars in Thousands

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, L - Long Term Goal

1

The FY 2009 - FY 2014 Appropriated Resources represents the approved Operating Plan including any interappropriation transfers. 
IRS-132

3D – Exam and Collections ($4,513,376,000 in direct appropriations): 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 the following:

• Compliance Services Management supports management associated with exam and 

collection program activities.

• Payment Compliance – Correspondence Collection supports IRS collection activities 

by initiating contact and collecting delinquent taxpayer liabilities through written 

notices and other means.

• Automated Collections and Support initiates contact and collects delinquent taxpayer 

liabilities through the centralized Automated Collection System (ACS). 

• Payment Compliance – Field Collection conducts field investigations and collection 

efforts associated with delinquent taxpayer and business entity liabilities, including 

direct taxpayer contact and outreach programs to protect the interest of the federal 

government in delinquent tax liability situations.

• Tax Reporting Compliance – Document Matching supports the Automated 

Underreporter (AUR), Combined Annual Wage Reporting (CAWR), Federal 

Unemployment Tax Act (FUTA), and other Document Matching Programs.

• Tax Reporting Compliance – Electronic/Correspondence Exam initiates written 

correspondence with taxpayers related to tax issues arising from claims on their tax 

returns.

• Tax Reporting Compliance – Field Exam compares taxpayer income levels and 

corresponding tax liabilities to ensure the accuracy of taxpayer returns.

• Fraud/Bank Secrecy Act assists and supports compliance employees IRS-wide in 

protecting the integrity of the U.S. tax administration system. The Bank Secrecy Act 

Program examines non-bank financial institutions and nonfinancial trades and 

businesses for compliance with the anti-money laundering provisions of the Bank 

Secrecy Act of 1970 (BSA) and the USA PATRIOT Act of 2001. It processes and 

provides customer support for Reports of Foreign Bank and Financial Accounts 

(FBARs) and Form 8300, Report of Cash Payments Over $10,000 Received in a Trade 

or Business. The National Fraud Program provides oversight and direction for fraud 

policy and operations IRS-wide.

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

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

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

interpretation of the tax law.

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

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

gift taxes.
IRS-133

• International Collection supports international field collection efforts associated with 

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

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

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

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

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

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

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

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

support for headquarters management activities of strategic planning, communication 

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

planning, and embedded training.

• EITC Management and Administration supports headquarters management associated 

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

• Integrity & Verification Operations supports IRS civil fraud detection and prevention 

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

developing policy and procedures and guidance for processing civil revenue protection 

programs(s).

• ID Theft Victim’s Assistant has end-to-end responsibility and accountability for IDT 

victim assistance policy and operations which will include paper inventories from 

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

Preparer Misconduct.

• Accounts Management Taxpayer Assurance Program provides support to Accounts 

Management for the review of questionable refunds including Identity Theft functions.

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

and analyze tips from individuals who identify potential tax problems.

• Communications and Liaison coordinates local government and liaison relationships; 

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

coordinates crosscutting issues, including audit management and legislative 

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

ensures IRS compliance with disclosure and privacy laws.

Description of Performance - Exam

The Examination program provides taxpayers top quality service by helping them understand 

and meet their tax responsibilities and by applying the tax law with integrity and fairness. 

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

discussed below. 

The FY 2014 IRS Individual Exam Coverage rate reached 0.9 percent, exceeding the target by 

0.1 percent. In FY 2014, the number of individual audits decreased by more than 162,000, or 

11.6 percent, which is attributable to the time lost because of the lapse in federal 

appropriations. Servicewide emphasis was placed on monitoring base inventory levels, 

decreasing cycle times, identifying workload with short cycle times, and emphasizing IMF 
IRS-134

related pickups from BMF returns, while focusing on improving quality. Servicewide IMF 

coverage will continue through the development and execution of the FY 2015 Examination 

Plan, which includes sufficient IMF closures to ensure coverage rates are met. The IRS 

expects to achieve an Individual Exam Coverage rate of 0.8 percent in FY 2015 and FY 2016. 

In FY 2014, Field Exam National Quality Review Score reached 88.4 percent, falling 

1.2 percent short of its 89.6 percent target. A decline in the weakest quality attribute (Time 

Span) for this performance measure has contributed to a decline in overall quality 

performance, with year-end performance falling slightly short of target. The leading error in 

this attribute is failure to meet closing action time frames. Area Directors have quality action 

plans and their FY 2014 and FY 2015 Performance Management Review System quality 

commitments focus on reducing those leading errors. Educational efforts, customized to 

address the leading errors within the weaker attributes, are ongoing at the area and territory 

level. The IRS expects to achieve a quality score of 89.6 percent in FY 2015 and FY 2016.

The IRS achieved a score of 90.6 percent for the Office Exam National Quality Review Score, 

exceeding the FY 2014 target of 90.2 percent. The Tax Compliance Officer (TCO) program 

will continue to focus on weaker performing attributes in FY 2015 (Time Span and 

Compliance Checks). The leading errors within these two attributes are closing action 

timeframes and multi-year compliance checks. Educational efforts, customized to address the 

leading errors within the weaker attributes, are ongoing at the Area and Territory level. The 

IRS expects to achieve a quality score of 90.2 percent in FY 2015 and FY 2016.

The Examination Quality – Large Business measure is calculated through a Large Business 

and International Quality Measurement System (LQMS) review of a statistically valid random 

sample of closed Large Business Return (LBR) cases. Case scores are based on the percentage 

of elements passed within each of the four quality audit standards (1. Planning; 2. Inspection; 

3. Development; 4. Work Papers and Reports). In FY 2014, Examination Quality – Large 

Business finished at 83.0 percent, 7.0 percentage points below the FY 2014 target of 

90 percent. The 83.0 percent was a result of low scores in audit standards 1, 2, and 4. 

Actions that are currently underway to improve this score include direct feedback to revenue 

agents, outreach presentations on the quality audit standards and ways to improve case 

quality, quarterly virtual training sessions to highlight and discuss actions for areas of 

improvement, and one-on-one report outs to analysts in each industry. As a result of these 

continued efforts, the IRS expects to achieve the FY 2015 and FY 2016 target of 90 percent.

The Examination Coverage – Business measure is calculated by taking the total 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 total filings for the 

preceding calendar year. In FY 2014, Business Examination Coverage ended at 4.3 percent. 

Total closures for FY 2014 decreased by 18.9 percent and projected closures decreased by 

5.7 percent, compared to FY 2013. LB&I was able to recover from the lapse in federal

appropriations and exceeded the target coverage rate of 4.2 percent. The IRS expects to 

achieve the FY 2015 and FY 2016 targets of 3.8 percent and 3.6 percent, respectively. The FY 

2015 projected coverage rate is based on planned closures of 10,186 and projected return 

filings of 268,800. With no hiring initiatives and continued attrition, planned closures are 
IRS-135

slightly lower in FY 2015 despite a projected increase in returns filed. As a result, planned 

coverage for FY 2015 is slightly less.

Exam Efficiency – Individual finished at 138, exceeding the FY 2014 target of 133. The 

Individual Exam Efficiency measure is calculated by taking the sum of all individual 

1040 returns closed by SB/SE, W&I (excluding non-audit EITC Proof of Concept cases), 

LB&I (Field Exam and Correspondence Exam), and TE/GE and audit reconsideration cases 

divided by the total staff years expended in relation to those individual 1040 returns. 

Individual closures decreased 11.6 percent due to the lapse in federal appropriations while 

staffing decreased 8.9 percent relative to FY 2013. Servicewide emphasis in FY 2015 will be 

placed on decreasing cycle times and increasing IMF related pickups from BMF returns. The 

IRS expects to achieve the FY 2015 and FY 2016 targets of 135 and 118, respectively. Since 

FY 2015 will not have a large impact from the FY 2014 lapse in federal approprations, Exam 

Efficiency – Individual should improve. In addition, as individual-related cases are worked in 

conjunction with business work streams, the efficiency rate should be consistent with 

FY 2014, unless FTE levels decline rapidly. The FY 2016 Exam Efficiency – Individual 

target is set lower as the IRS expects new FTEs to require time for training before reaching 

full efficiency.

Automated Underreporter (AUR) Efficiency finished at 1,935 in FY 2014, above the target of 

1,931. The AUR Efficiency measure is calculated by taking the total number of W&I and 

SB/SE contact closures (a closure resulting from a case where IRS made contact) divided by 

the total FTEs, including overtime. The effect of the decreased closures as a result of the 

lapse in federal appropriations was mitigated by AUR efficiency improvements made through 

programming changes, the case selection process, and procedural changes for various 

programs. Servicewide AUR efficiency will improve in FY 2015 because a large portion of 

the correspondence examinations have been screened and are clean moving into the fiscal 

year, which will allow additional time for contact closures work. The IRS expects to achieve 

the FY 2015 and FY 2016 targets of 2,032 and 2,014, respectively. The FY 2016 target is set 

lower as new FTEs will not have an immediate impact on case closures due to the need for 

training. 

In FY 2014, AUR Coverage ended at 2.6 percent. The AUR Coverage measure is calculated 

by taking the total number of contact closures divided by total prior calendar year individual 

filings. Total contact closures decreased 8.2 percent due to the lapse in federal appropriations

and individual filings decreased by 1.1 percent, compared to FY 2013. AUR improved 

coverage by strengthening the case screening process, issuing more notices, and increasing 

closures. The IRS will maintain an AUR Coverage rate of 2.6 percent in FY 2015 and FY 

2016. Since FY 2015 will begin without a large influx of overage inventory and new hires 

will have already received training, overall productivity should continue to increase. 

Description of Performance - Collection

The Collection program collects delinquent taxes and secures delinquent tax returns through 

the fair and equitable application of the tax laws and provides education to customers to allow

future compliance; thereby protecting and promoting public confidence in the American tax 

system. The performance goals that the IRS uses to gauge collection program performance 

are discussed below.
IRS-136

In FY 2014, Collection Coverage was 45.9 percent, exceeding the target of 42.7 percent. The 

Collection Coverage measure is calculated by taking the total volume of collection work 

disposed divided by total collection work available. Taxpayer Delinquent Account (TDA), 

Taxpayer Delinquent Investigation (TDI), and balance due notice dispositions exceeded plan 

which helped mitigate the impact of the lapse in federal appropriations on enterprise 

disposition totals. The IRS will continue to market and promote the use of the online 

Installment Agreement and Direct Pay tools. Disposition totals will be positively influenced 

by the additional Field Collection personnel hired in September 2014 who will become fully 

productive in FY 2015. The IRS expects to achieve the FY 2015 and FY 2016 targets of 43.8

percent and 45.9 percent, respectively.

Collection Efficiency finished at 2,051 in FY 2014, exceeding the target of 2,007. The 

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

total number of FTEs devoted to working the closures. Three ACS call sites returned to work 

Collection cases in March, which positively impacted dispositions. Through planned 

improvements including streamlined processes and enhanced case selection, the IRS expects 

to achieve the FY 2015 and FY 2016 targets of 2,173 and 2,131, respectively. 

In FY 2014, the Field Collection National Quality Review Score ended at 81.6 percent, 

exceeding the target of 81.0 percent. The Field Collection Quality measure is calculated by 

taking the quality attributes that are reviewed and determined to be correct by a third-party 

Quality Reviewer divided by the total number of quality attributes reviewed. Quality case and 

work products continued to be one of three strategic objectives for Field Collection. 

Continued focus on this goal in FY 2014 encompassed advanced technical training for over 

one-third of newer Field Revenue Officers on topics such as Research, Interviewing Skills, 

Comprehensive Financial Analysis, Trust Fund Recovery Penalty, Advanced Collection 

Theories and Suits. With a continued emphasis on improving the quality of case and work 

products as well as advanced technical training planned for approximately 900 revenue 

officers in FY 2015, the IRS expects to achieve the FY 2015 and FY 2016 target of 

81.6 percent. FY 2014 year-end results for Automated Collection System (ACS) Accuracy 

were 95.2 percent, exceeding the target of 94 percent. The ACS Accuracy measure reflects the 

percentage of correct responses from a random weighted sampling of calls selected for quality 

review by the Centralized Quality Review System (CQRS). SB/SE will continue to follow-up 

on quality action plans resulting from site visits. Monthly calls with the Quality staff will also 

continue to identify and discuss quality issues and trends impacting Customer Accuracy. The 

IRS expects to achieve the FY 2015 and FY 2016 target of 94 percent.
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3.1.4 – Budget and Performance Report and Plan 

Exam and Collections

Resource Level 1, 2 FY 2009

Enacted

FY 2010

Enacted

FY 2011

Enacted

FY 2012

Enacted

FY 2013

Enacted

FY 2014

Enacted

FY 2015

Enacted

FY 2016

Request

Appropriated Resources $4,355,186 $4,700,345 $4,689,220 $4,504,885 $4,210,108 $4,196,794 $4,104,453 $4,513,376

Reimbursable Resources 8,970 8,729 11,163 6,385 804

User Fees 3,103 49

Budget Activity Total $4,367,259 $4,709,123 $4,700,383 $4,511,270 $4,210,912 $4,196,794 $4,104,453 $4,513,376

Exam and Collections

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Measure Actual Actual Actual Actual Actual Actual Target

Examination Coverage - Individual (Oe) (L) 1.0% 1.1% 1.1% 1.0% 1.0% 0.9% 0.8% 0.8%

Field Exam National Quality Review Score (Oe) (L) 85.1% 84.9% 85.8% 87.4% 89.2% 88.4% 89.6% 89.6%

Office Exam National Quality Review Score (Oe) (L) 92.1% 91.6% 90.4% 91.3% 90.3% 90.6% 90.2% 90.2%

Examination Quality - Large Business1

 (Oe) (L) 92.0% 83.0% 90.0% 90.0%

(New in FY 2013)

Examination Coverage - Business (Assets > $10 million) (Oe) (L) 5.6% 5.7% 6.2% 6.2% 5.6% 4.3% 3.8% 3.6%

Automated Underreporter (AUR) Efficiency (E) (L) 1,905 1,924 2,007 2,041 2,025 1,935 2,032 2,014

Automated Underreporter (AUR) Coverage (E) (L) 2.6% 3.0% 3.3% 3.2% 2.8% 2.6% 2.6% 2.6%

Examination Efficiency - Individual (E) (L) 138 140 139 142 142 138 135 118

Collection Coverage - Units (Ot) (L) 54.2% 50.1% 50.0% 48.1% 47.0% 45.9% 43.8% 45.9%

Collection Efficiency - Units (E) (L) 1,845 1,822 1,952 1,997 2,057 2,051 2,173 2,131

Field Collection National Quality Review Score (Ot) (L) 80.5% 80.6% 80.3% 80.4% 81.4% 81.6% 81.6% 81.6%

Automated Collection System (ACS) Accuracy (Oe) 94.3% 95.9% 94.9% 94.7% 94.4% 95.2% 94.0% 94.0%

FY 2016

Request

Target

2

The FY 2009 - FY 2014 columns represent realized resources for reimbursable and user fees.

1

As a result of program changes that occurred in the Large Business and International (LB&I) organization, starting in FY 2013, a new Examination Quality - Large 

Business measure replaced the two previous LB&I quality measures - Examination Quality - Industry and Coordinated Industry.

Dollars in Thousands

Key: Oe - Outcome Measure, E - Efficiency Measure, L - Long Term Goal, Ot - Output/Workload Measure

1

The FY 2009 - FY 2014 Appropriated Resources represents the approved Operating Plan including any interappropriation transfers. 
IRS-138

3E – Regulatory ($173,174,000 in direct appropriations, an estimated $900,000 from 

reimbursable programs, and an estimated $16,240,000 from user fees): This budget activity 

funds the development and printing of published IRS guidance materials; interpretation of tax 

laws; internal advice to IRS on general non-tax legal issues; enforcement of regulatory rules, 

laws, and approved business practices; and support for taxpayers in the areas of pre-filing 

agreements, determination letters, and advance pricing agreements. The program activities

include the following:

• Tax Law Interpretation and Published Guidance interprets the tax law through 

published guidance, technical advice, and other technical legal services.

• General Legal Services provides advice to the IRS on non-tax legal issues, including 

procurement, personnel, labor relations, equal employment opportunity, fiscal law, tort 

claims and damages, ethics, and conflict of interest.

• Rulings and Agreements applies the tax law to specific taxpayers in the form of

pre-filing agreements, determination letters, advance pricing agreements, and other 

pre-filing determinations and advice.

• International Regulatory Legal Support supports Counsel’s work in tax law 

interpretation and rulings and agreements related to international issues.

• Return Preparer Strategy provides staffing, training, and direct support associated 

with the Return Preparer Strategy.

• Office of Professional Responsibility identifies, communicates, and enforces Treasury 

Circular 230 standards of competence, integrity, and conduct of those who represent 

taxpayers before the IRS, including attorneys, Certified Public Accountants (CPAs), 

enrolled agents, enrolled actuaries and appraisers, and other professionals.

Description of Performance

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

applications for qualified status of employee retirement plans (EP) under IRC Section 401(a) 

and applications from various charitable entities seeking tax-exempt status (EO). The IRS 

reviews applications to determine eligibility and closes them upon approval or disapproval. 

For FY 2014, final year-end results for TE/GE Determinations case closures were 136,746, 

exceeding the target of 71,219 by 92 percent. This was driven by an enterprise-wide focus in 

FY 2014 on closing the backlog of applications for tax-exempt status, which resulted in a 

114 percent increase in Exempt Organization (EO) Determinations case closures over the 

planned level. Specifically, this increase was due to: 1) The implementation of processing 

efficiencies as recommended by a Lean Six Sigma (LSS) review of the EO determinations 

program; 2) Additional resources, including detailees from EO Examinations and W&I, 

devoted to closing the inventory backlog, which was reduced by 65 percent from the previous 

year; and 3) The roll-out of the new Form 1023-EZ, which takes less time to process than the 

more complex Form 1023. In EP, the increase in case closures over plan was due to case 

processing efficiencies including limiting the application review to selected focus issues. In 

FY 2015, case processing improvements will be maintained by continuing streamlined 

processing of exempt organization applications and as more customers adopt the Form 
IRS-139

1023-EZ to apply for tax-exempt status. In addition, EP closures will be impacted by 

recommendations from a LSS review of the EP determinations program and the lower number 

of applications expected in FY 2015. These efforts will assist in achieving the FY 2015 and 

FY 2016 targets of 99,942 and 127,945, respectively.

3.1.5 – Budget and Performance Report and Plan 

Regulatory

Resource Level 1, 2 FY 2009

Enacted

FY 2010

Enacted

FY 2011

Enacted

FY 2012

Enacted

FY 2013

Enacted

FY 2014

Enacted

FY 2015

Enacted

FY 2016

Request

Appropriated Resources $150,480 $164,292 $159,293 $158,096 $149,319 $156,991 $153,249 $173,174

Reimbursable Resources 469 574 654 660 631 792 800 900

User Fees 13,249 12,482 15,700 13,241 15,940 16,240

Budget Activity Total $150,949 $164,866 $173,196 $171,238 $165,650 $171,024 $169,989 $190,314

Regulatory

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Measure Actual Actual Actual Actual Actual Actual Target

TE/GE Determination Case Closures (Ot) 96,246 105,247 91,205 87,000 65,877 136,746 99,942 127,945

Dollars in Thousands

Key: Ot - Output/Workload Measure

1

The FY 2009 - FY 2014 Appropriated Resources represents the approved Operating Plan including any interappropriation transfers. 

FY 2016

Request

Target

2

The FY 2009 - FY 2014 columns represent realized resources for reimbursable and user fees.
IRS-140

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 2016 is $4,743,258,000 in direct 

appropriations and 13,863 FTE. This is an increase of $1,104,812,000, or 30.36 percent, and

1,820 FTE more than the FY 2015 Enacted level of $3,638,446,000 and 

12,043 FTE.

The measures reflected in the Operations Support appropriation align to Goal 3: Fairly and 

effectively reform and modernize federal financial management, accounting, and tax systems, 

Objective 3.3: Pursue tax reform, implement the ACA and FATCA, and improve the execution 

of the tax code of Treasury’s Strategic Plan (FY 2014-2017).
IRS-141

2.1 – Budget Adjustments Table

Dollars in Thousands

Operations Support FTE Amount

FY 2015 Enacted 12,043 $3,638,446

Changes to Base:

Maintaining Current Levels (MCLs): $65,512

Pay Annualization 4,093

Pay Raise (1.3%) 16,004

Non-Pay 39,968

FERS Contribution Increase 5,447

Efficiencies/Savings: ($32)

Increase e-File Savings (32)

Reinvestments: $16,025

Expand Telecom Infrastructure to Handle Increased Demand 16,025

Subtotal FY 2016 Changes to Base $81,505

FY 2016 Current Services (Base) 12,043 $3,719,951

Program Changes:

Before Cap Adjustment Program Increases:

Improve Taxpayer Services 164 118,381

Leverage New Technologies to Advance the IRS Mission 3,618

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements 818 305,645

Improve Upfront Identification and Resolution of Identity Theft Returns 3,322

Implement Foreign Account Tax Compliance Act (FATCA) 140 37,380

Sustain Critical Information Technology (IT) Infrastructure 157 188,514

Address Impact of Affordable Care Act (ACA) Statutory Requirements 50 22,323

Enhance Service Options for Taxpayers 9 2,352

Restore Staffing for Essential Support Programs 152 19,938

Increase Service for Low-Income Taxpayers and Taxpayers in Need of Hardship Relief 596

Implement Merchant Card and Basis Matching 6,041

Subtotal FY 2016 Before Cap Adjustment Program Increases 1,490 $708,110

Total FY 2016 Request Before Cap Adjustment 13,533 $4,428,061

Cap Adjustment Program Increases:

Enforcement Initiatives:

Prevent Identity Theft and Refund Fraud 62 34,424

Increase Audit Coverage 61 64,456

Improve Audit Coverage of Large Partnerships 2,527

Address International and Offshore Compliance Issues 5,451

Enhance Collection Coverage 48 39,594

Leverage Data to Improve Case Selection 45 33,949

Address Compliance Risks in the Tax-Exempt Sector 13 7,951

Pursue Employment Tax and Abusive Tax Schemes 8,509

Enhance Investigations of Transnational Organized Crime (TOC) 5,367

Ensure Ethical Standards of Conduct for Practitioners 895

Subtotal Enforcement Initiatives 229 $203,123

Infrastructure Initiatives:

Consolidate and Modernize IRS Facilities 74 85,456

Maintain Integrity of Revenue Financial Systems 7 12,162

Implement Agency Wide Shared Services Priorities 9 10,992

Implement Federal Investigative Standards 11 3,464

Subtotal Infrastructure Initiatives 101 $112,074

Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer:

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

Subtotal Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer Initiative

Subtotal FY 2016 Cap Adjustment 330 $315,197

Subtotal FY 2016 Program Increases 1,820 $1,023,307

Total FY 2016 Budget Request1 13,863 $4,743,258

Dollar/FTE Change FY 2016 Budget Request over FY 2015 Enacted 1,820 $1,104,812

Percent Change FY 2016 Budget Request over FY 2015 Enacted 15.11% 30.36%

1

FTE include those funded with newly appropriated resources only. FTE funded by User Fees and Unobligated Balances from Prior Years are included in the 

direct civilian full-time equivalent employment line of the President's Appendix, but are not shown in the table above.
IRS-142

2.2 – Operating Levels Table

Dollars in Thousands

Operations Support

Object Classification

FY 2014

Actual

FY 2015

Enacted

FY 2016

Request

11.1 Full-Time Permanent Positions 1,130,683 1,149,605 1,344,969

11.3 Other than Full-Time Permanent Positions 8,238 8,142 8,245

11.5 Other Personnel Compensation 22,772 22,711 28,571

11.8 Special Personal Services Payments 337 2

11.9 Personnel Compensation (Total) 1,162,030 1,180,458 1,381,787

12.0 Personnel Benefits 396,074 426,472 492,282

13.0 Benefits to Former Personnel 43,679 52,266 52,936

Total Personnel and Compensation Benefits $1,601,783 $1,659,196 $1,927,005

21.0 Travel 10,780 18,658 33,260

22.0 Transportation of Things 13,541 13,854 15,247

23.1 Rental Payments to GSA 611,331 614,865 637,319

23.2 Rent Payments to Others 12,721 13,282 13,533

23.3 Communications, Utilities, & Misc 327,088 287,316 339,061

24.0 Printing & Reproduction 21,427 19,661 23,016

25.1 Advisory & Assistance Services 440,158 435,185 641,675

25.2 Other Services 58,871 60,809 200,393

25.3 Purchase of Goods & Services from Govt. Accounts 83,022 78,296 92,453

25.4 Operation & Maintenance of Facilities 169,422 159,097 177,440

25.5 Research & Development Contracts 33 33

25.6 Medical Care 13,560 14,150 16,614

25.7 Operation & Maintenance of Equipment 65,482 42,741 54,974

25.8 Subsistence & Support of Persons 159 115 117

26.0 Supplies and Materials 20,589 24,537 30,099

31.0 Equipment 257,169 193,566 462,849

32.0 Land and Structures 15,117 2,821 77,899

42.0 Insurance Claims & Indemnities 379 264 271

Total Non-Personnel $2,120,816 $1,979,250 $2,816,253

New Appropriated Resources $3,722,599 $3,638,446 $4,743,258

Budget Activities:

Infrastructure 845,558 829,389 973,521

Shared Services & Support 1,127,931 1,143,864 1,274,194

Information Services 1,749,110 1,665,193 2,495,543

New Appropriated Resources $3,722,599 $3,638,446 $4,743,258

FTE 11,652 12,043 13,863
IRS-143

2.3 – Appropriation Detail Table Dollars in Thousands

Operations Support

 Resources

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Infrastructure $845,558 $829,389 $973,521 $144,132 17.38%

Shared Services and Support 5,097 1,127,931 5,209 1,143,864 5,553 1,274,194 344 130,330 6.60% 11.39%

Information Services 6,555 1,749,110 6,834 1,665,193 8,310 2,495,543 1,476 830,350 21.60% 49.87%

Subtotal New Appropriated Resources 11,652 $3,722,599 12,043 $3,638,446 13,863 $4,743,258 1,820 $1,104,812 15.11% 30.36%

Other Resources:

Reimbursables 128 41,315 156 50,300 164 53,000 8 2,700 5.13% 5.37%

Offsetting Collections - Non Reimbursables

User Fees1 156 223,162 391,225 378,525 (12,700) -3.25%

Recovery from Prior Years 1,025

Unobligated Balances from Prior Years 108,023 149,270 131,787 (17,483) -11.71%

Transfers In/Out

Resources from Other Accounts 6

Subtotal Other Resources 290 $373,525 156 $590,795 164 $563,312 8 ($27,483) 5.13% -4.65%

Total Budgetary Resources 11,942 $4,096,124 12,199 $4,229,241 14,027 $5,306,570 1,828 $1,077,329 14.98% 25.47%

1

FTE funded by User Fees are included in the direct civilian full-time equivalent employment line of the President's Appendix.

FY 2016

Actuals Request FY 2016 Request

Change % Change

FY 2015 to FY 2015 to

FY 2016 Request

FY 2014 FY 2015

Enacted

3F – Infrastructure ($973,521,000 in direct appropriations and an estimated $800,000 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 

services needs, and non-IT equipment.

• Security covers building security costs related to contract guard services.

Description of Performance 

In FY 2014, there were 54 space reduction projects completed that resulted in the release of 

582,877 RSF of space with Annualized Rent Savings of $16.4 million.

In the first quarter of FY 2015, there are three space reduction projects that have been 

“Completed” as of November 30, 2014, totaling 32,442 RSF of space released, and resulting 

in Annualized Rent Savings of $663,298. There are an additional 42 space reduction projects 

that are approved for implementation in FY 2015 that will result in the release of another 

542,358 RSF and further Annualized Rent Savings of $16.1 million. The total of completed 

and approved space reduction projects for FY 2015 is 574,800 RSF of space to be released 

with Annualized Rent Savings resulting in approximately $16.8 million. Completion of a few 

of these projects may slip into FY 2016 due to construction delays and GSA negotiations with 

the lessors. 

Approximately 16 space reduction projects have been approved for implementation in 

FY 2016, which will result in the release of 358,092 RSF of space and Annualized Rent 
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Savings of approximately $9.7 million. Both FY 2015 and FY 2016 annualized rent 

reductions are contingent on the availability of sufficient funds in order to implement. 

Project identification will continue during this budget year.

The IRS also intends to place new hires in existing space and renew leases at existing sites 

rather than move to new locations, when cost effective. These and other actions will help 

offset the projected rent costs in FY 2015 and beyond.

3.1.6 – Budget and Performance Report and Plan 

3G – Shared Services and Support ($1,274,194,000 in direct appropriations, an estimated 

$23,900,000 from reimbursable programs, and an estimated $14,700,000 from user fees): 

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

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

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

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

corporate training, legal services, procurement, and employee benefits programs. 

The program activities include the following:

• National Headquarters Management and Administration directs the management 

activities of strategic planning, communications and liaison, finance, human resources, 

equity, diversity and inclusion programs, business systems planning, embedded 

training, and the Treasury Franchise Fund. This activity sets policies and goals, 

provides leadership and direction for the IRS and builds partner relationships with key 

stakeholders (Congress, GAO, OMB, and the Oversight Board). It provides policy 

guidance for conducting planning and budgeting strategies, conducting analysis of 

programs and investments to support strategic decision-making, and developing and 

managing human resources. It also includes official reception and representation 

expenses.

• Real Estate and Facilities Management provides services and supplies required to 

manage IRS facilities.

• 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 crosscutting issues, including managing audits and legislative 

Infrastructure

Resource Level 1, 2 FY 2009

Enacted

FY 2010

Enacted

FY 2011

Enacted

FY 2012

Enacted

FY 2013

Enacted

FY 2014

Enacted

FY 2015

Enacted

FY 2016

Request

Appropriated Resources $875,538 $895,202 $926,190 $929,634 $886,535 $849,025 $829,389 $973,521

Reimbursable Resources 14,120 505 880 1,016 701 16,694 700 800

User Fees 23,290 57,477 5,414 17,137

Budget Activity Total $889,658 $895,707 $950,360 $988,127 $892,650 $882,856 $830,089 $974,321

2

The FY 2009 - FY 2014 columns represent realized resources for reimbursable and user fees.

Dollars in Thousands

1

The FY 2009 - FY 2014 Appropriated Resources represents the approved Operating Plan including any interappropriation transfers. 
IRS-145

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 Agency-Wide Shared Services provides resources for 

shared cross-functional support, such as copiers, postage meters, shredders, courier 

services, and post office boxes.

• Printing and Postage – Media and Publications provides operating divisions with 

printing and postage, including shipping of taxpayer and internal use materials.

• Statistics of Income provides resources for researching annual income, financial, and 

tax data from tax returns filed by individuals, corporations, and tax-exempt 

organizations.

• Research provides resources for market-based research to identify compliance issues, 

for conducting tests of treatments to address noncompliance, and for the 

implementation of successful strategies to address taxpayer noncompliance.

• Security Administration and Management manages and oversees the staffing, training, 

equipment, and direct support for the protection of IRS employees, facilities, and 

assets, and the protection and proper use of identity information.

• Wage and Investment (W&I) Business Modernization Support provides staffing, 

training, and direct support for W&I’s enterprise-wide business modernization efforts,

including CADE 2, and Account Management Services (AMS) technology solutions,

and re-engineered business processes.

• Benefit Payments provides resources to fund Workers’ Compensation benefits and 

Unemployment Compensation for federal employee payments.

• Shared Services provides additional services, such as the Public Transit Subsidy.
IRS-146

Description of Performance

Through support activities that include management and administration of human resources, 

protection of sensitive information and the privacy of taxpayers and employees, physical 

security, and research, the IRS continues to provide shared services to all IRS programs.

Human Capital

Employees are the IRS’s greatest asset and the IRS is committed to building a diverse, and 

high performing workforce by recruiting and hiring top talent. The IRS has made significant 

progress toward achieving the strategic goal of becoming the “Best Place to Work in 

Government” and fostering high employee engagement. In FY 2014, the IRS:

• Continued to expand Geographic Leadership Communities (GLCs), which are now 

available in 40 geographic areas. The GLCs are cross-functional groups of executives 

that host development opportunities and community building workshops in specific 

geographic areas to improve engagement and networking and better leverage local 

resources and talent. 

• Conducted Town Hall meetings at various IRS locations across the country and issued 

83 Commissioner and Deputy Commissioner all-employee email messages.

• Continued the Leadership Succession Review (LSR) program to ensure a strong, 

cohesive leadership development and succession planning approach from frontline to 

executive development. Through the four-stage LSR process, employees and 

managers are assessed against the IRS leadership competencies on their readiness to 

compete for and be successful at their designated “Next Step” leadership level. 

Approximately 26,900 IRS employees participated in LSR and the IRS was 

recognized by The Training Officers’ Consortium with the 2014 Leadership 

Development Award for its Leadership Succession Review Process.

• Revamped the Commissioners' Corner section on the IRS intranet to showcase 

Commissioner news and employee feedback and to acknowledge employees’ input 

that resulted in organizational change.

• Exceeded the OPM and Treasury hiring cycle time requirement of 80 days by 9 days. 

This was done by leveraging technology and improving hiring strategies, the IRS 

processed more than 330,000 applications and 64,000 competitive and noncompetitive personnel actions. Additionally, the IRS deployed a new application 

designed to improve the Personal Identification Verification pre-screening process of 

potential new hires.

• Participated in 167 targeted virtual events to increase and attract persons with 

disabilities, veterans, and related organizations. The IRS’ efforts yielded these results:

o The IRS exceeded the 10 percent veteran hiring rate and 2 percent disabled 

veteran hiring rate goals; 11.35 percent of external hires were veterans and 

5.36 percent were disabled veterans.

o The IRS exceeded the 10 percent disability hiring rate goal; 10.82 percent of 

external hires were disabled and 1.73 percent had targeted disabilities.
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• Expanded the IRS Veteran Internship Program to include 47 new unpaid interns, 3 of 

whom were converted to full time positions, and implemented the Vets-to-Feds 

Program sponsored by OPM and the Department of Veterans Affairs.

• Conducted an in-depth review of the three classes taught at the World Services for the 

Blind (WSB) facility and modified the class schedule, reducing classroom instruction 

time by one-third. World Services for the Blind is a program that recruits individuals 

who are blind or have a visual impairment for IRS training classes and careers, and 

assist in transitioning them into IRS workforces. In FY 2014, WSB recruited 

30 students; 29 were admitted to classes and 21 completed the classes.

The IRS will continue to support its mission by investing in human capital strategies and tools 

for engaging, recruiting, hiring, developing, and retaining a highly-skilled and 

high-performing workforce.

Security

The security of IRS employees and facilities are critical to the IRS mission. The IRS 

continues to provide the necessary safety and security measures to protect its employees and 

facilities and proactively identify new threats and address future risks. In FY 2014, the IRS:

• Renewed 22,005 employee Smart Identification cards throughout the U.S., including 

remote posts of duty. The timely renewal of Smart Identification cards was achieved 

by ensuring cards were renewed prior to expiration and resulted in cost avoidance of 

$700,000 for reenrollment and travel. 

• Implemented the certificate rekey process for IRS Smart Identification credentials and 

met the FY 2014 goal by rekeying 4,002 employees and contractors. Additionally, the 

IRS implemented an online certificate rekey tool to reach more individuals remotely, 

resulting in cost avoidance of $156,000 for reenrollment and travel by ensuring timely 

rekeying of cards as required on a 3 year basis. 

• Closed four enterprise-wide IT security vulnerabilities related to auditing, penetration 

testing, security of shared services, and procurements of commercial off the shelf 

products.

• Initiated appropriate outreach to ensure that frontline employees are aware of current 

Potentially Dangerous Taxpayer (PDT) and Caution Upon Contact (CAU) designation 

processes as well as any changes that are made to the process in the future.

Research

The IRS National Research Program (NRP) continued to analyze reporting compliance data 

for various taxpayer populations, including Individual Income Tax, Corporate Income Tax, 

Employment Taxes, and Fuel Excise Taxes. NRP results enhance taxpayer service by

improving IRS processes to reduce taxpayer burden and support enforcement activities by 

identifying issues with high risks for noncompliance. The IRS Joint Statistical Research 

Program (JSRP) uses Statistics of Income and IRS administrative tax data, to study the effects 

of existing tax policies on individuals, businesses, and the economy. The JSRP is responsible 

for several research projects that require collaborating with academia, non-profit research 
IRS-148

organizations, and other government agencies on important issues affecting tax 

administration. In FY 2014, the JSRP expanded the IRS Databank, which provides a new 

way of looking at tax data at the individual level, rather than the return level. This key 

difference facilitates better understanding of the impact of taxes on individuals. Another 

research effort under this program demonstrated a relationship between taxpayer searches for 

IRS and third-party information on capital gains reporting requirements and the taxpayer’s 

capital gain realizations and reporting activity. Other current research focuses on the 

effectiveness of tax expenditures and the effect of tax rates on work-force participation.

3.1.7 – Budget and Performance Report and Plan 

3H – Information Services ($2,495,543,000 in direct appropriations, $28,300,000 in 

reimbursable resources, and an estimated $363,825,000 from user fees): This budget activity 

funds staffing, equipment, and related costs to manage, maintain, and operate the information 

systems critical to the support of the tax administration programs. This includes the design 

and operation of IT security controls and disaster recovery planning. This budget activity 

funds the development and maintenance of the millions of lines of programming code that 

support all aspects and phases of tax processing and the operation and administration of 

mainframes, servers, personal computers, networks, and a variety of management information 

systems. IT systems and data are key to all IRS functions. The FY 2015 reductions increase

risks and may delay critical system upgrades and the maintenance required for a safe and 

secure IT system, which is foundational to accomplish IRS's mission and to allow the IRS to 

interact with the tax paying public on their terms. 

Information Technology (IT) is responsible for information systems and technology, ranging 

from cyber security and networks to applications development and end user equipment and 

services. The program activities include the following: 

• ACA – Program Management Office (PMO) manages the strategic planning, 

development, and implementation of new information systems in support of the 

business requirements associated with healthcare reform. 

• Application Development performs the analysis, design, development, testing, and 

implementation of about 550 applications supporting critical tax processing, 

management information reporting, and financial management support systems for the 

IRS. This program also supports external trading partner data exchanges with federal 

government agencies, state and local governments, and other third party entities. The 

program controls application source code and deploys applications to the production 

environment.

Shared Services and Support 

Resource Level 1, 2 FY 2009

Enacted

FY 2010

Enacted

FY 2011

Enacted

FY 2012

Enacted

FY 2013

Enacted

FY 2014

Enacted

FY 2015

Enacted

FY 2016

Request

Appropriated Resources $1,269,642 $1,311,127 $1,291,568 $1,214,514 $1,111,317 $1,188,067 $1,143,864 $1,274,194

Reimbursable Resources 20,763 20,315 19,957 31,486 17,175 19,887 22,700 23,900

User Fees 17,887 4,588 14,938 33,826 7,819 27,400 14,700

Budget Activity Total $1,290,405 $1,349,329 $1,316,113 $1,260,938 $1,162,318 $1,215,773 $1,193,964 $1,312,794

2

The FY 2009 - FY 2014 columns represent realized resources for reimbursable and user fees.

Dollars in Thousands

1

The FY 2009 - FY 2014 Appropriated Resources represents the approved Operating Plan including any interappropriation transfers. 
IRS-149

• Cybersecurity delivers IT security services and ensures IRS compliance with federal 

statutory and regulatory requirements governing confidentiality, integrity, and 

availability of IRS electronic systems, services, and data. Cybersecurity tracks 

compliance, continuously monitors risk, and provides remediation to manage the IRS's 

IT Security Program in accordance with the Federal Information Security 

Management Act.

• Enterprise Operations designs, develops, and maintains IT that supports critical tax 

processing, management information reporting, and financial management support 

systems for the IRS. The program supports data exchanges with external 

organizations, such as other federal agencies, state and local governments, and 

external entities (e.g., employers and banks), and includes a comprehensive disaster 

recovery capability to ensure continued operations in the event of a major interruption 

of service. 

• Enterprise 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 to improve the quality, cost, and 

delivery schedule of IT systems. 

• Enterprise Services plans and manages service and delivery methods used across the 

IT organization, including demand analysis, enterprise architecture, configuration 

management, project reporting, enterprise life cycle management, release 

management, systems engineering, dashboard reporting, and internal management.

• IT Executive Oversight provides support to the Office of the Chief Technology Officer 

as well as his direct reports for equity, diversity, and inclusion, and the Director, 

Stakeholder Management (including Communications Services and Program 

Oversight). The program provides executive direction for the IT organization, 

enabling IT to be a customer-focused supplier of IT solutions that are responsive to 

customer business priorities and meet functional and operational needs effectively. 

• IT Infrastructure provides a centrally managed investment program for the

replacement of IRS IT infrastructure that has reached or surpassed its useful life cycle. 

• Management Services provides for the design, development, delivery, and evaluation 

of a wide range of human resource programs for the IT organization. These programs 

include workforce planning, recruitment and retention, career management, 

performance management, labor/employee relations, position management, workplace 

improvement, succession management, and service-wide IT training and education. 

• Strategy and Planning delivers the Enterprise IT investment strategy and portfolio 

management, addressing a broad spectrum of functions coordinated through four 

divisions: Business Planning and Risk Management ensures effective demand and risk 

management, overseeing Enterprise Intake and leveraging the Integrated Release Plan 

to support risk-based decisions; Financial Management Services, IT’s link to the Chief 

Financial Officer, formulates and executes IT budgets, prepares fiscal policy, and 

provides financial services to the IT organization; Investment and Portfolio 

Management and Oversight monitors investments currently executing in the control 
IRS-150

phase of the Capital Planning and Investment Control process as well as investments

and projects that have completed implementation; and, Strategic Sourcing strategically 

manages IT acquisitions and vendors to maximize the value of the IRS’s investments 

while simultaneously minimizing business risk.

• Treasury Franchise Fund (TFF) is a centralized functional area that pays for services 

provided through the Treasury Franchise Fund. 

• User and Network Services provides telecommunications and desktop support services 

that allow the IRS to fulfill its missions. 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 and desktop systems and services, including 

voice, video, and data communications.

Description of Performance

The IRS taxpayer service and enforcement programs rely heavily on information systems that 

fall into the non-business systems modernization (non-BSM) major products categories. 

These systems process tax and information returns, account for tax revenues collected, send 

bills for taxes owed, issue refunds, assist in the selection of tax returns for audit, and provide 

telecommunication services for all business activities, including the public’s toll-free access 

to tax information. 

In addition, in FY 2014, the IRS provided new applications and services to make it easier for 

taxpayers to get assistance and secure tax information. 

• Continued to expand on its use of video technology that allows assistors to interact 

with taxpayers virtually at selected IRS walk-in Taxpayer Assistance Centers (TAC). 

The Virtual Service Delivery (VSD) project allowed taxpayers to have face-to-face 

interactions with IRS assistors working in remote locations using video monitors. In 

FY 2014, nearly 8,000 taxpayers were assisted through this service vehicle, an 

increase of 19 percent for the fiscal year and 14 percent for the filing season. This was 

due, in part, to the repositioning of support equipment enabling more location to 

provide VSD.

• Provided assistance to taxpayers at Taxpayer Assistance Center and Volunteer Income 

Tax Assistance sites through Facilitated Self Assistance (FSA) kiosks. FSA enables 

taxpayers to prepare individual tax returns and learn about Free File options in an 

environment where live assistance is still available, creating a bridge to help taxpayers 

migrate from face-to-face service to convenient, lower cost methods available on the 

IRS website. FSA also introduces taxpayers to new tools such as the Get Transcript

application, available via IRS.gov, and Direct Pay, which provides taxpayers with an 

electronic online payment option. FSA usage in filing season 2014 was the highest 

ever with more than 169,000 returns prepared compared to over 82,000 during the 

same time last year, a 106 percent increase.

• Deployed Electronic Authentication (eAuth) Release 2.0, which allows the IRS to 

perform secure identity verification for online users, and allows them to establish their 
IRS-151

profile and access the business application with a fast turnaround. It also helps reduce 

costs through a reduction in calls and visits to taxpayer assistance centers. The eAuth 

has handled over 13 million requests (Jan-Sep 2014) by taxpayers to gain access.

In FY 2014, the IRS had a consistent record managing cost and schedule variance for an 

average of 26 non-BSM, information service projects that are part of major programs. Cost 

variances are primarily attributed to cost underruns, which outnumbered overruns by more 

than 3:1 in FY 2014. These projects comprise a significant component of the overall 

IT funding total and receive the same management approach and scrutiny as the more public 

BSM activity.

In FY 2015 and beyond, the IRS will continue to focus efforts on expanding IRS capabilities 

to identify fraudulent returns and prevent identity theft, enhance cyber monitoring and IT 

security controls, expand e-services to taxpayers and practitioners, and further modernize and 

consolidate IT infrastructure. In addition to supporting required changes for filing season, 

major initiatives for 2015 include delivering ACA and FATCA releases.

3.1.8 – Budget and Performance Report and Plan 

Information Services

Resource Level 1, 2 FY 2009

Enacted

FY 2010

Enacted

FY 2011

Enacted

FY 2012

Enacted

FY 2013

Enacted

FY 2014

Enacted

FY 2015

Enacted

FY 2016

Request

Appropriated Resources $1,721,831 $1,877,555 $1,838,958 $1,803,268 $1,803,091 $1,831,050 $1,665,193 $2,495,543

Reimbursable Resources 14,612 17,231 16,286 5,154 8,850 4,734 26,900 28,300

User Fees 9,543 36,081 26,764 59,823 145,036 198,206 363,825 363,825

Budget Activity Total $1,745,986 $1,930,867 $1,882,008 $1,868,245 $1,956,977 $2,033,990 $2,055,918 $2,887,668

2

The FY 2009 - FY 2014 columns represent realized resources for reimbursable and user fees.

Dollars in Thousands

1

The FY 2009 - FY 2014 Appropriated Resources represents the approved Operating Plan including any interappropriation transfers. 

Non-BSM Major Projects

Fiscal Year

Percent Within +/- 10%

Cost Variance

Percent Within +/- 10%

Schedule Variance

2014 68% 97%
IRS-152

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 2016 is $379,178,000 in direct appropriations and 

576 FTE. This is an increase of $89,178,000, or 30.75 percent, and 178 FTE more than the 

FY 2015 Enacted level of $290,000,000 and 398 FTE.

The performance measures reflected in the Enforcement appropriation support and align to 

Goal 3: Fairly and effectively reform and modernize federal financial management, 

accounting, and tax systems, Objective 3.3: Pursue tax reform, implement the ACA and 

FATCA, and improve the execution of the tax code of Treasury’s Strategic Plan 

(FY 2014-2017).

2.1 – Budget Adjustments Table 

Dollars in Thousands

Business Systems Modernization FTE Amount

FY 2015 Enacted 398 $290,000

Changes to Base:

Maintaining Current Levels (MCLs): $1,223

Pay Annualization 197

Pay Raise (1.3%) 770

FERS Contribution Increase 256

Subtotal FY 2016 Changes to Base $1,223

FY 2016 Current Services (Base) 398 $291,223

Program Changes:

Before Cap Adjustment Program Increases:

Leverage New Technologies to Advance the IRS Mission 178 87,955

Subtotal FY 2016 Program Increases 178 $87,955

Total FY 2016 Budget Request1 576 $379,178

Dollar/FTE Change FY 2016 Budget Request over FY 2015 Enacted 178 $89,178

Percent Change FY 2016 Budget Request over FY 2015 Enacted 44.72% 30.75%

1

FTE include those funded with newly appropriated resources only. FTE funded by User Fees and Unobligated Balances from Prior Years are included in the 

direct civilian full-time equivalent employment line of the President's Appendix, but are not shown in the table above.
IRS-153

2.2 – Operating Levels Table 

Dollars in Thousands

Business Systems Modernization

Object Classification

FY 2014

Actual

FY 2015 

Enacted

FY 2016

Request

11.1 Full-Time Permanent Positions 38,100 44,738 66,263

11.3 Other than Full-Time Permanent Positions 507 628 638

11.5 Other Personnel Compensation 751 1,154 1,833

11.9 Personnel Compensation (Total) 39,358 46,520 68,734

12.0 Personnel Benefits 11,013 12,352 18,762

Total Personnel and Compensation Benefits $50,371 $58,872 $87,496

21.0 Travel 102 647 2,444

22.0 Transportation of Things 1

23.3 Communications, Utilities, & Misc 2 70

24.0 Printing & Reproduction 6

25.1 Advisory & Assistance Services 83,740 198,145 246,924

25.2 Other Services 94 156 1,089

25.3 Purchase of Goods & Services from Govt. Accounts 18

25.4 Operation & Maintenance of Facilities 88

25.7 Operation & Maintenance of Equipment 300 1,500 2,046

26.0 Supplies and Materials 4 32 98

31.0 Equipment 10,624 30,646 38,898

Total Non-Personnel $94,864 $231,128 $291,682

New Appropriated Resources $145,235 $290,000 $379,178

Budget Activities:

IT Investments 145,235 290,000 379,178

New Appropriated Resources $145,235 $290,000 $379,178

FTE 337 398 576
IRS-154

2.3 – Appropriation Detail Table Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Business Systems Modernization 337 $145,235 398 $290,000 576 $379,178 178 $89,178 44.72% 30.75%

Subtotal New Appropriated Resources 337 $145,235 398 $290,000 576 $379,178 178 $89,178 44.72% 30.75%

Other Resources:

Reimbursables

Offsetting Collections - Non Reimbursables

User Fees

Recovery from Prior Years 2,272

Unobligated Balances from Prior Years1 139 98,578 226,127 226,866 739 0.33%

Transfers In/Out

Resources from Other Accounts

Subtotal Other Resources 139 $100,850 $226,127 $226,866 $739 0.33%

Total Budgetary Resources 476 $246,085 398 $516,127 576 $606,044 178 $89,917 44.72% 17.42%

FY 2015 to

Actuals Enacted

Business Systems Modernization

 Resources

FY 2016

Request FY 2016 Request FY 2016 Request

1

FTE funded by Unobligated Balances from Prior Years are included in the direct civilian full-time equivalent employment line of the President's Appendix.

Change % Change

FY 2014 FY 2015 FY 2015 to

3I – Business Systems Modernization ($379,178,000 in direct appropriations): This budget 

activity funds the planning and capital asset acquisition of information technology (IT) to 

modernize IRS business systems, including labor and related contractual costs.

Business Systems Modernization (BSM) uses best practices and expertise in business 

solutions and internal management from the IRS, businesses, and technology sectors to 

develop a world-class tax administration system. The program provides value to taxpayers, 

the business community, and government and it plays an integral role in reducing the tax gap. 

BSM has delivered improved taxpayer service, electronic filing, and data analysis capabilities,

and it has maintained strong performance in delivering projects within planned cost, schedule, 

and scope estimates. 

The following projects are supported by the FY 2016 BSM request of $379.2 million:

CADE 2 (Taxpayer Account Database): The CADE 2 program implements a single, datacentric solution that provides daily processing of taxpayer accounts. A major component of 

the CADE 2 program is a modernized relational database and comprehensive data model for 

all individual taxpayers that provide the foundation for more efficient and effective tax 

administration. In Transition State 2 of the CADE 2 initiative, the modernized database will 

become IRS’s authoritative source for taxpayer account data, as it begins to address core IMF 

financial material weakness (FMW) requirements for individual taxpayer accounts. Existing 

financial reports will be modified to take into account the increased level of detail and 

accuracy of data in the CADE 2 database. Also, CADE 2 data will be made available for 

access by downstream systems such as the Integrated Data Retrieval System (IDRS) for 

online transaction processing by IRS customer service representatives. It will enable 

analytical reporting for more meaningful business intelligence and expanded opportunities to 

increase compliance. 

Enterprise Case Management (ECM): Enterprise Case Management will address the need to 

modernize and upgrade aging IRS case management systems. These resources will provide 

for an enterprise solution using a Commercial Off-the Shelf (COTS) product for performing 

standard case management functions, an infrastructure platform, and a common service that 

case management applications will leverage. 
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Modernized e-File (MeF): MeF provides a standard filing structure for all IRS return types, a 

robust platform that meets performance and capacity needs, enhanced and up-to-date 

technologies, and customer service benefits that are of great appeal to external customers and 

stakeholders. With MeF, the IRS stores all tax return data in XML format in a Modernized 

Tax Return Database (MTRDB), allowing all authorized viewers of the data to see an entire 

tax return online. Once fully implemented, all tax returns and transmission files will be 

standardized and adhere to IRS rules/schemas.

Return Review Program (RRP): RRP delivers an integrated and unified system that enhances 

IRS capabilities to detect, resolve, and prevent criminal and civil tax noncompliance. The 

RRP provides a flexible and accessible system capable of supporting a cross-functional 

approach to address criminal and civil tax noncompliance. In addition, the RRP allows 

analysis and support of complex case processing requirements for compliance and criminal 

investigation programs during prosecution, revenue protection, accounts management, and 

taxpayer communications processes. 

Web Applications (formerly Enhance Online Services (OLS)): Web Applications will 

simplify the taxpayer’s online experience, provide secure digital communications, and add 

more interactive capabilities to existing web self-service products. This will allow taxpayers 

to resolve more issues online, requiring fewer direct interactions with the IRS over the 

telephone and in person. 

Architecture, Integration and Management (AI&M): The AI&M program provides 

engineering management capabilities essential to delivering a program of BSM’s magnitude 

and complexity. It also delivers essential IRS systems strategy, architecture, and engineering 

capabilities for the major modernization projects across all technology platforms: IT 

Infrastructure, Business Applications, Data Management, and IT Security. The AI&M 

program translates enterprise and project objectives into targeted, actionable investments to 

provide the necessary framework and direction for a cohesive, successful modernization.

Core Infrastructure: The Core Infrastructure program provides mission-critical services for 

designing, engineering, testing, and deploying standardized, consolidated, virtual, and secure 

modernized development and production environments for use by BSM projects. 

The IRS is modernizing taxpayer applications to take advantage of web-based technologies 

that allow taxpayers to communicate with the IRS through the Internet using commercially 

available technology. The modernized infrastructure provides a complete environment 

(hardware, software, processes, and management) for developing, testing, deploying, 

operating, and monitoring both customer and internal applications in support of business 

practices. This includes continuing to update the web portal environment and standardizing 

services, security, and operations management. 

This approach facilitates the IRS’s ability to develop a shared infrastructure and common 

business service solutions that are usable across multiple BSM projects. 

Management Reserve: The management reserve allows the IRS some flexibility to cover 

unanticipated cost adjustments. 
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Labor and support: This activity provides the labor and support costs associated with the 

development of projects within the BSM portfolio.

Description of Performance

The IRS’s modernization efforts focus on building and deploying advanced information 

technology systems, processes, and tools to improve efficiency and productivity. 

For the Business Systems Modernization program (BSM), the IRS reports two budget level 

measures that track the percentage of major BSM projects that are within +/-10 percent of the 

Cost and Schedule variance threshold. As listed in the tables below, there have been four 

project releases currently in progress or delivered to date in FY 2014 and the IRS is below its 

cost variance targets.

In FY 2014, two out of three (66.7 percent) BSM project segments met the cost variance 

threshold. The one project segment that did not meet the cost variance threshold is 

Modernized e-File (MeF) Release 9 (R9) Milestone (MS) 4b.

• MeF R9 MS 4b funds were realigned to cover hardware and software costs that 

were planned and expected for MeF R9 MS 4a, but did not materialize until MeF 

R9 MS 4b. 

In FY 2014, all three BSM project segments (100 percent) met the schedule variance 

threshold, as improved planning and project management continues to have a positive effect 

on the projects.

MeF R9 4b 23,000 26,300 3,300 14% NO

MeF R9 5 7,300 8,000 700 10% YES

RRP TS1 4b 21,303 21,303 0 0% YES

Within 

Acceptable 

Cost Variance for Project Segments Completed in FY 2014

Project Release MS Planned 

Cost 

Current 

Cost 

Variance 

($000)

Variance 

(%)

MeF R9 4b 12/27/13 12/27/13 0 0% YES

MeF R9 5 05/14/14 05/15/14 1 1% YES

RRP TS1 4b 02/26/14 02/26/14 0 0% YES

Schedule Variance for Project Segments Completed in FY 2014

Project Release MS Planned 

Finish 

Current 

Finish 

Variance 

(days)

Variance 

(%)

Within 

Acceptable 
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Starting in FY 2015, the IRS will expand this measure to include all major investments (BSM 

and non-BSM) assessing cost estimation and management capabilities at a broader major 

investment level. 

In FY 2015 and FY 2016, the IRS expects to meet a target of 90 percent for Cost and 

Schedule Variance through improved project management and oversight. Historical data 

recorded over the past two years for the new metric reveals an average cost and schedule 

variance within the range of the 90 percent target. 

3.1.9 – Budget and Performance Report and Plan

Business Systems Modernization

Resource Level 1, 2 FY 2009

Enacted

FY 2010

Enacted

FY 2011

Enacted

FY 2012

Enacted

FY 2013

Enacted

FY 2014

Enacted

FY 2015

Enacted

FY 2016

Request

Appropriated Resources $229,914 $263,897 $263,369 $330,210 $312,938 $312,938 $290,000 $379,178

Reimbursable Resources

User Fees 88,948

Budget Activity Total $229,914 $263,897 $352,317 $330,210 $312,938 $312,938 $290,000 $379,178

Business Systems Modernization

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Measure Actual Actual Actual Actual Actual Actual Target

Percent of BSM Projects within +/- 10% Cost Variance (E) 60.0% 40.0% 71.4% 50.0% 0.0% 66.7% 90.0% 90.0%

Percent of BSM Projects within +/- 10% Schedule Variance (E) 90.0% 100.0% 100.0% 90.0% 83.3% 100.0% 90.0% 90.0%

Key: E - Efficiency Measure

FY 2016

Request

Target

2

The FY 2009 - FY 2014 columns represent realized resources for reimbursable and user fees.

Dollars in Thousands

1

The FY 2009 - FY 2014 Appropriated Resources represents the approved Operating Plan including any interappropriation transfers. 
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Section 4 – Supplemental Information

4.1 – Summary of Capital Investments

Dollars in Thousands

Investments / Funding Source

FY 2013 

Actuals

FY 2014 

Actuals

% Change 

from 

FY13 to FY14

FY 2015 

Enacted

% Change from 

FY14 to FY15 

FY 2016 

Request

% Change 

from FY15 

to FY16 

Major IT Investments 

Account Management Services (AMS) $17,018 $14,648 -13.9% $17,728 21.0% $31,529 77.8%

IRS Operations Support 015-45-0919 17,018 14,648 17,728 31,529

Affordable Care Act (ACA) $248,336 $341,352 37.5% $373,000 9.3% $396,620 6.3%

IRS Operations Support 015-45-0919 178,628 155,611 173,000 326,620

IRS Operations Support User Fees 015-45-5432 69,708 185,741 200,000 70,000

CADE 2 $146,506 $102,560 -30.0% $130,930 27.7% $155,073 18.4%

IRS Operations Support 015-45-0919 6,053 4,939 6,925 7,054

IRS BSM 015-45-0921 140,453 97,621 124,005 148,019

e-Services $10,649 $10,349 -2.8% $5,250 -49.3% $5,337 1.7%

IRS Operations Support 015-45-0919 10,649 10,349 5,250 5,337

Electronic Fraud Detection System (EFDS) $18,132 $17,785 -1.9% $18,566 4.4% $18,910 1.9%

IRS Operations Support 015-45-0919 14,502 14,523 15,305 15,586

IRS BSM 015-45-0921 002 000 000

IRS EITC 015-45-0919-0 3,630 3,260 3,260 3,323

Foreign Account Tax Compliance Act (FATCA) $8,575 $41,534 384.3% $62,607 50.7% $49,541 -20.9%

IRS Operations Support 015-45-0919 4,906 41,534 62,607 49,541

IRS Operations Support User Fees 015-45-5432 3,669 000 000 000

Individual Master File (IMF) $11,293 $12,900 14.2% $12,907 0.0% $13,132 1.7%

IRS Operations Support 015-45-0919 11,293 12,900 12,907 13,132

Information Reporting and Document Matching (IRDM) $18,892 $10,595 -43.9% $5,512 -48.0% $5,603 1.7%

IRS Operations Support 015-45-0919 18,892 10,595 5,512 5,603

IRS End User Systems and Services (EUSS) $194,595 $177,774 -8.6% $187,532 5.5% $204,374 9.0%

IRS Operations Support 015-45-0919 193,394 177,728 187,532 204,374

IRS EITC 015-45-0919-0 013 013 000 000

IRS Operations Support User Fees 015-45-5432 1,188 033 000 000

IRS Main Frames and Servers Services and Support (MSSS) $473,912 $555,584 17.2% $535,929 -3.5% $754,484 40.8%

IRS Operations Support 015-45-0919 460,297 532,726 374,773 460,706

IRS BSM 015-45-0921 13,616 16,996 16,809 19,432

IRS Operations Support User Fees 015-45-5432 000 5,862 144,347 274,347

IRS Telecommunications Systems and Support $297,413 $271,737 -8.6% $247,560 -8.9% $289,695 17.0%

IRS Operations Support 015-45-0919 286,958 270,242 246,488 288,602

IRS EITC 015-45-0919-0 1,072 1,073 1,073 1,093

IRS Operations Support User Fees 015-45-5432 9,383 422 000 000

Integrated Customer Communications Environment (ICCE) $15,136 $13,867 -8.4% $13,066 -5.8% $13,295 1.8%

IRS Operations Support 015-45-0919 15,136 13,867 13,066 13,295

Integrated Data Retrieval Systems (IDRS) $15,951 $15,314 -4.0% $15,973 4.3% $24,560 53.8%

IRS Operations Support 015-45-0919 15,951 15,314 15,973 24,560

Integrated Financial System/CORE Financial System (IFS) $16,705 $15,227 -8.8% $14,195 -6.8% $14,463 1.9%

IRS Operations Support 015-45-0919 16,705 15,227 14,195 14,463

Integrated Submission and Remittance Processing System (ISRP) $11,891 $10,230 -14.0% $10,202 -0.3% $10,391 1.9%

IRS Operations Support 015-45-0919 $11,891 $10,230 $10,202 $10,391

Internal Revenue Service

FY 2016 Congressional Justification Submission

Capital Investments
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4.1 – Summary of Capital Investments (Continued)

Dollars in Thousands

Investments / Funding Source

FY 2013 

Actuals

FY 2014 

Actuals

% Change 

from 

FY13 to FY14

FY 2015 

Enacted

% Change from 

FY14 to FY15 

FY 2016 

Request

% Change 

from FY15 

to FY16 

Internal Revenue Service.gov (IRS.gov) $84,930 $71,643 -15.6% $73,496 2.6% $82,065 11.7%

IRS Operations Support 015-45-0919 44,130 68,572 73,496 82,065

IRS BSM 015-45-0921 1,636 3,071 000 000

IRS Operations Support User Fees 015-45-5432 39,165 000 000 000

Modernized e-File (MeF) $72,479 $48,956 -32.5% $76,821 56.9% $84,876 10.5%

IRS Operations Support 015-45-0919 20,312 25,068 46,936 47,799

IRS BSM 015-45-0921 52,167 23,888 29,885 37,077

Return Review Program (RRP) $42,849 $48,074 12.2% $63,599 32.3% $73,228 15.1%

IRS Operations Support 015-45-0919 22,879 007 16,219 16,517

IRS BSM 015-45-0921 000 48,065 47,380 56,710

IRS Operations Support User Fees 015-45-5432 19,970 003 000 000

Service Center Recognition/Image Processing System (SCRIPS) $12,062 $10,379 -13.9% $9,079 -12.5% $9,244 1.8%

IRS Operations Support 015-45-0919 12,062 10,379 9,079 9,244

Web Applications 000 000 N/A $16,540 N/A $23,586 42.6%

IRS BSM 015-45-0921 000 000 16,540 23,586

Subtotal, Major IT Investments $1,717,325 $1,790,508 4.3% $1,890,492 5.6% $2,260,008 19.5%

Non-Major IT Investments $567,503 $556,641 -1.9% $599,105 7.6% $976,343 63.0%

TOTAL IT Investments $2,284,828 $2,347,149 2.7% $2,489,596 6.1% $3,236,352 30.0%

Major Non-IT Investments

Criminal Investigations Capital Assets $399 $507 27.0% $300 -40.9% $1,044 248.0%

IRS Enforcement (One Year) 000 000 000 744

IRS Enforcement (Reimbursable) 000 000 000 000

IRS Enforcement (Forfeiture) 399 507 300 300

Security Equipment $1,684 $1,476 -12.3% $1,100 -25.5% $191 -82.6%

IRS Operations Support (One Year) 1,684 1,476 1,100 191

Leasehold Improvements $5,989 $15,927 165.9% $23,245 45.9% $86,904 273.9%

IRS Operations Support (One Year) 5,989 15,927 23,245 86,904

Total Major Non-IT Investments $8,073 $17,911 121.9% $24,645 37.6% $88,139 257.6%

Total Capital Investments $2,292,900 $2,365,060 3.1% $2,514,241 6.3% $3,324,491 32.2%

Internal Revenue Service

FY 2016 Congressional Justification Submission

Capital Investments
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4A – Capital Investment Strategy

The Information Technology (IT) office is a key facilitator of efficient and effective tax 

administration. The role of IT is more important than ever as the IRS faces the increasing 

complexity of tax administration, evolving taxpayer expectations, greater media scrutiny, and 

increasing occurrences of refund fraud and identity theft. However, as budget reductions 

continue and new mandates grow, in 2015 IT will struggle to fund legislatively mandated 

development while maintaining its existing systems. The IRS will largely have to defer 

upgrades to its aging infrastructure, reduce investments in new technologies, and delay

modernizing its existing IT systems, which in turn greatly limits the IRS’s ability to perform 

its mission. 

IT must address these new challenges and ensure that it continues to deliver on its core 

mission and meets ongoing business needs. The IRS needs new technologies to deliver 

comprehensive IT solutions that focus on improving the electronic filing of tax returns, 

enhancing services to taxpayers and third party practitioners, and strengthening compliance 

and criminal enforcement of tax laws. With increases in electronic data, online interactions, 

and related security risks, the IRS should be making significant investments to secure 

infrastructure, data, and applications. The continued investment in new technologies and the 

modernization of existing IT systems also would allow the IRS to improve service to 

taxpayers and achieve productivity gains. However, such investments have been curtailed 

because of the lack of funding. The IRS has established world-class practices and tools to 

manage and implement its portfolio of IT investments more efficiently. One element of the 

strategy, the Integrated Release Plan (IRP), provides a multi-year view of essential technology 

initiatives, noting schedule, budgetary, and human capital data, and a link to the IT 

Technology Roadmap. The IRS continues to develop and refine the IRP to encompass a 

larger proportion of its IT investments each year. This improves the IRS’s ability to use 

limited resources efficiently and practice sound investment management. 

IT Technology Roadmap 

The IT Technology Roadmap (illustration shown below) provides a multi-year strategic view,

defined in 18-month segments, or waves. Each wave identifies the critical people, processes, 

and technology needed to support the IRS mission. This guiding strategic document is an 

important component of the Integrated Release Plan.
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Technology Roadmap 2011 – 2017 Illustration

Delivering a Balanced Portfolio of Investments

While the annual tax-filing season and legislative changes are the IRS’s highest priorities each 

year, the IT strategy ensures that the IRS also explores new technologies, in areas such as 

communications, to complement its existing portfolio of IT investments. Projects such as 

Bring Your Own Device, for example, allow employees to use their personal smart phones and 

tablets for both professional and personal communications; Network Convergence embraces 

the power of the internet for voice, data, and visual communications; and IRS portal 

modernization is streamlining navigation and enhancing search capabilities to make it easier 

for taxpayers and other stakeholders to find information and resources quickly. The IRS 

balances these technologically advanced investments that allow for more effective use of 

resources against other IT investments that support revenue collections, such as third party tax 

information reporting and document matching, faster return reviews in processing to prevent 

tax refund fraud, and foreign account tax reporting. 

Managing Performance as part of IRS’s IT Strategy 

The IRS monitors major IT investments using baselines identified in Major IT Business Case 

Detail. The monthly review includes a comparison of the projected cost, schedule, and 

performance estimates to those in the approved Business Case and generates reports for 

internal and external stakeholders. Every month an Executive Steering Committee (ESC) 

reviews the overall status, cost, schedule, and scope for each investment and makes needed 

recommendations. Any changes to the cost, schedule, or scope of the investment require a 

formal Baseline Change Request (BCR). The IRS employs remediation strategies for 

investments that are not meeting their stated performance goals, including conducting internal 

TechStat meetings for investments with a “yellow” (or below) rating in the areas of cost, 
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schedule, or Treasury Chief Information Officer rating. 

IRS Portfolio of Major Investments 

The following is a comprehensive list of assets that make up the foundation of the IRS’s 

investment strategy. Also included are details regarding the immediate and full life-cycle 

costs, actual obligations through FY 2014, projected useful life, anticipated benefit(s), 

performance measurement criteria, and remediation strategy specific to each asset. 

Account Management Services (AMS) 

Account Management Services (AMS) is a strategic program that delivers improved customer 

support for managing taxpayer accounts by leveraging existing IRS applications. As part of 

the 2006 Modernization Vision and Strategy process, the IRS developed a strategy to use, 

retain, and provide real-time access to account data regardless of location in the current 

processing environment (CPE) or modernized data sources. Using a phased release strategy, 

AMS was able to validate this approach during its initial deployment in October 2007 using a 

service-oriented architecture implementation to access both CPE and the Customer Account 

Data Engine (CADE). In 2009 the Desktop Integration (DI) system was integrated into AMS 

and the Correspondence Imaging System (CIS) became an inventory within AMS. AMS was 

fully deployed in December 2010 and is now in the Operations and Maintenance stage. 

AMS provides multiple systems interfaces using only one computer terminal. The AMS 

application provides IRS employees with the ability to access and update taxpayer accounts 

on demand, provides data presentation services to display and validate changes/updates for 

taxpayer accounts, facilitates management actions/activities (such as work assignments, 

transfers, case creation and closures, and generation of letters to taxpayers) and makes case 

information readily available for decision making and reporting, provides the front-end 

applications for adjustments, penalties, interest, abatements, credit and debit transfers, name 

and address changes, bankruptcies, installments agreements, changes to the automated 

treatment streams, and many other taxpayer account-related functions required for customer 

service and compliance, and provides the functionality to monitor taxpayer accounts for 

follow-up activity or deferred actions.

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life cycle cost of the asset: 

FY 2015 - FY 2016: $ 49,257,073

Life-cycle Cost: $169,613,992

Actual Obligations to Date: $ 10,570,857 

Start Date of Investment: 2009

The projected useful life of the current asset: Estimated 2018.

The anticipated benefit(s) of the investment: AMS is a major strategic investment that 

delivers improved customer service to over 41,000 end-users by providing the tools necessary 

to access tax information quickly and accurately.
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How performance will be measured and evaluated:

• AMS Core Application Availability - The percentage of uptime that the AMS system 

is available for AMS users. The AMS Core Application allows all AMS users to 

handle a variety of Accounts Management actions. This measure indicates the 

percentage of scheduled up-time that the application is available to IRS employees. 

This technical measure considers the application servers and the infrastructure 

components of the AMS Core Application.

• AMS Databases Availability - This technical measure indicates the percentage of 

scheduled up-time of the four AMS databases that provide the data needed by AMS 

users.

• AMS Imaging Inventory Application Availability - The AMS Imaging Inventory is 

used by over 8000 users to respond to taxpayer correspondence. This measure 

indicates the percentage of scheduled up-time that the application is available to 

customer service representatives. This technical measure considers the availability of 

the application servers, workflow system, and content management system 

components of the Imaging Inventory.

• Accuracy of adjustments and responses to Taxpayer Correspondence - Percent of 

adjustments to taxpayer accounts and answers to taxpayer issues provided by 

correspondence units which are accurate.

• The project’s actual costs will not exceed the budget allocation in each quarter.

ACA Administration 

The ACA Administration investment encompasses the planning, development, and 

implementation of IT systems needed to support the IRS’s tax administration responsibilities 

associated with key provisions of the ACA legislation. The work is organized into Releases 

that deploy functionality to meet key legislative dates. Each release encompasses multiple 

projects that need to be delivered at a specific point in time.

ACA 1.0 through 3.0 and 4.1, already in production, involve changes to existing systems, 

along with the initial release of the Branded Prescription Drug Industry Fee and Insurance 

Provider Fee projects. These releases also provided the technical solution to support Health 

Insurance Marketplace open enrollment in the Fall of 2013 (ACA 3.0) and increased data 

flows from the Department of Health and Human Services/Centers for Medicare and 

Medicaid Services Data Hub into the IRS Coverage Data Repository.

• ACA 4.0 and 5.0 through 7.1 address work to support the Health Insurance 

Marketplaces and tax compliance activities, as well as annual updates for 

non-Marketplace provisions in the law.

• ACA 4.0 will increase data flows from the Department of Health and Human 

Services/Centers for Medicare and Medicaid Services Data Hub into the IRS Coverage 
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Data Repository, allowing the IRS to prepare for filing/post-filing compliance 

activities in 2015.

• ACA 5.0 will enable at-filing checks of a tax return for reporting a PTC, leveraging 

third-party data from the Insurance Marketplaces. 

• ACA 6.0 will focus on collections and PTC pre-refund compliance processing, while 

ACA 6.1 supports initial post-filing compliance activities.

• ACA 7.0 expands information return processing and capabilities needed for 

compliance processing.

• ACA 7.1 supports additional PTC reconciliation compliance and 

identification/evaluation of employer and individual shared responsibility payment 

compliance candidates.

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life cycle cost of the asset: 

FY 2015 - FY 2016: $ 769,620,471 

Life-cycle Cost: $1,762,029,389

Actual Obligations to Date: $ 650,646,000

Start Date of Investment: 2010

The projected useful life of the current asset: estimated 2018 

The anticipated benefit(s) of the investment: 

This investment is needed to ensure the full implementation of the ACA, which was 

passed by Congress and signed into law by the President in March of 2010. The ACA 

legislation represents landmark reform and changes to the healthcare system in the United 

States. The IRS IT organization will provide data models, databases, and information 

technology systems and operations to support the implementation of the ACA. If this 

investment is not fully funded, the IRS will not be able to fulfill the requirements as 

specified in the law. 

How performance will be measured and evaluated: 

• ACA applications in production requiring software code changes via P1/P2 defects. 

Note: Applications in production requiring no more than three P2 defects and zero P1 

defects. Yellow Threshold is 4 P2 Defects and Red Threshold is 8 P2 defects or any 

P1 defect;

• Percent of successful transactions;

• Response Time Performance - Average Response Time in Seconds;

• Annual Overall Cost Variance;

• Branded Prescription Drug Fee Statutory "Allocated Amount" Collected; and

• End-to-End Metric - Branded Prescription Drug.
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CADE 2

CADE 2 was chartered in 2009 to address the risks faced by the IRS in modernizing tax 

processing capabilities so they are more in line with industry standards. The CADE 2 

data-centric solution is critical for the IRS to achieve its Strategic Goals. The heart of the 

CADE 2 solution is an authoritative database for individual taxpayers that will transform the 

way the IRS approaches tax administration in the future. CADE 2 goals are:

• Establish a solid data foundation for the future by leveraging a relational database and 

daily processing capability.

• Continue the focus on moving away from 1960s technology so business processes can 

be realigned to enable better services and more timely compliance (i.e., aging 

infrastructure, applications and sequential flat file processing).

• Address the financial material weakness, demonstrate compliance with Federal 

Financial Management System Requirements, and maintain the IRS’s clean audit 

opinion.

• Improve security and privacy posture by addressing identified weaknesses.

• Create one authoritative source of taxpayer data.

With deployment of CADE 2 Transition State 1 (TS1), the IRS took a leap forward from a 

technology standpoint, accelerating the returns processing cycle from weekly to daily, and 

moving the management of the IRS's individual taxpayer account data from 1960s sequential 

flat-files stored on magnetic tapes to state-of-the-art database technology. All individual 

taxpayer account data is now updated daily in relational formats dictated by a data model that 

maintains historical values never before retained on account transactions, with instant viewing 

of taxpayer account data by IRS customer service and other representatives. CADE 2 TS1 

offers faster refunds and notices, faster payment postings, and improved service for taxpayers.

The next step to reach the IRS's data-centric vision is Transition State 2 (TS2), in which the 

IRS will rewrite its core taxpayer account processing applications to leverage the benefits of 

the new CADE 2 relational database. Once that is done, CADE 2 will become the 

authoritative source for individual taxpayer account data for the IRS. This will address the 

IRS's longstanding unpaid assessments financial material weakness, and will ensure long-term 

viability of IRS tax processing systems, mitigating risks associated with the aging architecture 

and the design of the IRS’s legacy core tax processing systems, as well as the risk of losing 

knowledge of outdated programming languages as employees retire.

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $ 286,002,608

Life-cycle Cost: $1,075,293,225

Actual Obligations to Date: $ 686,730,962

Start Date of Investment: 2009

The projected useful life of the current asset: estimated 2020. 
IRS-166

The anticipated benefit(s) of the investment: 

Taxpayer Benefits:

• Deliver more timely, accurate and complete data for faster issue resolution and 

improved customer service.

• Enhance taxpayer protection from fraud and identity theft.

• Enable more robust online self-service tools.

IRS Benefits:

• Increase agility of response to changing taxpayer priorities and legislation.

• Reduce IT cost and complexity and address workforce risk.

• Provide analytics and reporting to greatly improve compliance and issue resolution.

• Relieve burden of manually intensive processes on IRS employees enabling automated 

calculations that are currently not possible.

Fiduciary Benefits:

• Address the Unpaid Assessments FMW, retain the clean audit opinion, and comply 

with Federal Financial System Requirements (FFSR).

• Complete the data-centric foundation to better manage over $3 trillion in revenue.

How performance will be measured and evaluated: 

• Faster Notices. The percentage of daily notices generated by CADE 2 (versus weekly 

notices); 

• Faster Refunds: The percentage of refunds processed daily; 

• Increased percentage of transactions processed daily: The percentage of transactions 

processed daily compared to the total transactions processed by IRS; 

• Daily Updates to IDRS: The percent of business days the CADE 2 solution will 

process transactions within 48 hours of receipt from submissions processing for days 

in which there are transactions to process; and 

• Faster updates to account information: Percent of taxpayer accounts updated in 

Refund Information File and posted to the Web by the next day. Seasonal metric.

e-Services 

e-Services is a suite of web-based, self-assisted services that allow authorized individuals to 

conduct business with the IRS electronically. Currently, e-Services products are available to 

tax practitioners, payers, and other third parties. The services include Registration, Tax 

Identification Number (TIN) Matching, e-File Application, Disclosure Authorization (DA), 

Electronic Account Resolution (EAR), Transcript Delivery System (TDS), Reporting Agents, 

and Automated Electronic Fingerprinting. 
IRS-167

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $ 10,587,817

Life-cycle Cost: $193,644,007

Actual Obligations to Date: $172,707,218

Start Date of Investment: 1999

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

• e-Services Registration: More than 654,006 individuals registered via the IEP.

• e-file Application: Processed more than 363,112 Electronic Return Originator 

Applications for e-File via the IEP and EUP.

• TIN Matching: Processed more than 1,332.4 million bulk requests and more than 87.0 

million interactive requests.

• Transcript Delivery System: Processed more than 46.0 million requests for transcripts 

via the IEP and more than 210.8 million requests via the EUP. 

• Total estimated operational savings (print/mail/labor costs) in excess of $968.7 million 

for e-File Application, TDS, and address change via the IEP and EUP. 

• TIN Matching uncovered more than 856.3 million in potentially unpaid taxes on 1099 

income.

How performance will be measured and evaluated: 

• Number of Priority 2 tickets opened and are related to eServices applications.

• Number of TIN Matching Requests processed through the TIN Matching application

• The percentage of scheduled eServices availability per the approved Service Level 

Agreement as documented monthly by IRS Enterprise Services.

• Number of defect transmittals to the production environment.

• Number of transcripts processed through the Transcript Delivery System (TDS).

Electronic Fraud Detection System 

The Electronic Fraud Detection System (EFDS) is a major, automated client server-based 

system used to maximize fraud detection at the time that tax returns are filed to eliminate the 

issuance of fraudulent tax refunds. EFDS supports the Treasury FY 2014-2017 strategic 

goal 3: Fairly and effectively reform and modernize federal financial management, 

accounting, and tax systems. EFDS provides the capability for IRS Criminal Investigation 

(CI) division Investigative Aides/Analysts and Wage and Investment (W&I) division

Business Performance Solutions (BPX), Return Integrity and Correspondence Services 
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(RICS) Tax Examiners and the Small Business Self-Employed (SB/SE) division to protect 

government revenue by detecting potentially fraudulent tax refund claims and stopping the 

issuance of fraudulent tax refunds. Revenue protection is an important element in managing 

the government's finances; fraudulent tax refund claims are a major cause of revenue loss to 

the federal government. 

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $ 37,475,234

Life-cycle Cost: $165,813,269

Actual Obligations to Date: $110,552,937

Start Date of Investment: 1996

The projected useful life of the current asset: estimated 2021. 

The anticipated benefit(s) of the investment: 

EFDS aligns to the following Treasury strategic goal and objective for FY 2014-2017: Goal 3: 

Fairly and effectively reform and modernize federal financial management, accounting, and 

tax systems; and Goal 3:3: Pursue tax reform, implement the ACA and FATCA, and improve 

the execution of the tax code.

Additionally, EFDS supports FY 2014-2017 IRS Strategic Goal 2, effectively enforce the law 

to ensure compliance with tax responsibilities and combat fraud; Goal 2:4: Deter and 

promptly resolve noncompliance by protecting revenue from refund fraud and ensuring 

appropriate revenue collection; and Goal 2:4: Identify trends, detect high-risk areas of 

noncompliance and prioritize enforcement approaches by applying research and advanced 

analytics.

In FS 2014 EFDS processed over 133 million returns and was used to stop fraudulent refunds 

totaling over $9.65 billion, and inventory showed revenue protected increased by 64 percent. 

The dollar amount includes Outlier (Frivolous Filer) cases, fraud returns with a refund 

>= $10 million. One of the Business performance metrics, the percentage of Questionable 

Refund Program (QRP) refunds identified as false that are stopped by RICS, was 94.7

percent, as of July 26, 2014. This is the result of over $8.74 billion in refund amounts claimed 

and $8.28 billion in refund amounts stopped in FY 2014.

How performance will be measured and evaluated: 

• Number of confirmed fraudulent returns identified by the data models, expressed as 

percent of the seasonal target;

• Percentage of Questionable Refund Program refunds identified as false that are 

stopped by Return Integrity and Correspondence Services (RICS); 

• Percentage of scheduled system availability per the approved Service Level 

Agreement; 
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• Percentage of completed verifications which are potentially fraudulent; and 

• Percentage of primary investigations that are accepted by CI as subject criminal 

investigations.

FATCA

The FATCA is a program designed to improve tax compliance by identifying U.S. taxpayers 

that attempt to shield/divert assets by depositing funds in foreign accounts. The program will 

consist of a registration component, International Data Exchange Service (IDES), and a 

Compliance Solution. FATCA legislation requires foreign financial institutions (FFI) to 

report to the IRS information regarding financial accounts held by U.S. taxpayers, or foreign 

entities in which U.S. taxpayers hold a substantial ownership interest. The primary 

beneficiaries of this investment are the federal government and U.S. taxpayers. FATCA will 

allow the agency to increase international service and enforcement through examinations of 

employment tax, specialty program audits, individual audits, business audits, and criminal 

investigation case closures, ensuring that taxpayers meet their tax obligations.

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $112,148,385

Life-cycle Cost: $170,214,149

Actual Obligations to Date: $ 16,591,581

Start Date of Investment: 2011

The projected useful life of the current asset: estimated 2020

The anticipated benefit(s) of the investment: 

Benefits internal to Government: 

• Complies with federal legislation to implement FATCA as part of the Hiring 

Incentives to Restore Employment Act.

• Lays the groundwork for incremental future benefits as FATCA registration, reporting 

and compliance activities begin, and international compliance risks and tax gap 

components are identified.

Benefits external to the General Public:

• Lays the foundation for increased tax compliance by U.S. taxpayers with certain 

international investments and/or other assets, thus promoting tax fairness among U.S. 

taxpayers.

• Addresses the abuse of offshore accounts to facilitate tax evasion and provides 

framework to decrease this type of tax evasion over time.
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How performance will be measured and evaluated: 

• Encouraging Electronic Tax Administration - The percentage of registrations 

submitted electronically. This measure demonstrates the customer choice for 

interacting with the IRS by electronic means as opposed to submitting a paper form.

• Speed of Processing Submitted Registrations - This measure indicates the number of 

days the IRS used to process a submitted registration from a status of Submitted to a 

status of Approved, Limited Conditional, or Terminated.

• Timeliness of FFI List updated on IRS.gov - This measure indicates the timeliness of 

the data getting posted to IRS.gov. Posting this data provides the public with easier 

access to regularly released data, lowering operational costs for the IRS and for the 

FFIs and Individuals who use it.

• Request Processing Errors - This measure indicates the percentage of transactions that 

were not processed due to errors by the FFI Registration System. This is a 

measurement of: Errors as a Percentage of Total Transactions (Number of 

Errors/Transactions)

• System Response Time - This measure indicates the amount of time an individual user 

can expect to see results from any action taken via a "submit" or clicking a "next" 

button from the user interface. This is a measurement of the percentage of all requests 

processed in less than 5 seconds. (% =Transactions < 5 seconds / All Transaction)

Individual Master File 

IRS is responsible for collecting revenue from individuals to fund the operations of the federal 

government. In order to effectively accomplish this goal, it must maintain authoritative data 

on individual taxpayers. The Individual Master File (IMF) is the authoritative data stores for 

individual taxpayers accounts. Within the IMF, accounts are updated, taxes are assessed, and 

refunds are generated as required each tax filing period. Virtually all IRS information system 

applications and processes depend on output, directly or indirectly, from this data source.

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $ 26,038,686

Life-cycle Cost: $154,673,179

Actual Obligations to Date: $ 81,845,499

Start Date of Investment: 1999

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

• Performs daily processing of tax returns allowing faster issuance of refunds; and 

• Performs identity-theft related checks on individual tax returns filed on paper. 
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How performance will be measured and evaluated: 

• Interest paid on taxpayer refunds per 1 Million Dollars - This figure represents total 

Refund Interest divided by total refund dollars issued on original settlement. 

Measurement data is provided by W&I and SB/SE in the SMART database. The 

Business target for this measure is established by CAS every January, with a yearly 

goal and cumulative planned projection for each month. The results report the variance 

against the target, and the monthly cumulative target is reported in the comments.

• Percent of Taxpayer refunds (paper returns only) issued within 40 days - Timeliness 

measured by sampling taxpayers receiving refunds. Measurement data is provided by 

W&I and SB/SE in Submission Processing (SMART) database. The Business target 

for this measure is established by CAS every January, with a yearly goal and 

cumulative planned projection for each month. The results report the variance against 

the target, and the monthly cumulative target is reported in the comments

• Refund Error rate with Systemic Errors - The error rate is the ratio of total incorrect 

refunds compared to the total number of refunds. Measurement data is provided by 

W&I and SB/SE in the SMART database. Systemic errors (errors attributed to 

incorrect programming, less than ideal products from properly working systems, and 

incorrect IRM procedures) are also included in the rates which indicate “with systemic 

errors”. CAS sets the yearly target for this measure in January.

• IMF completes planned processing schedule (e.g., daily, weekly) to meet refund, 

notice and on-line access deadlines - Measurement available on Enterprise Operations 

weekly reports.

• The percentage of scheduled system availability per the approved Service Level 

Agreement - As documented monthly by IRS Enterprise Services in the IT 

Performance Report.

Information Reporting and Document Matching (IRDM)

Information Reporting and Document Matching (IRDM) is a program to improve business 

taxpayer compliance by automatically matching the tax return filings to third-party 

information returns. The goals of IRDM are to increase voluntary compliance and accurate 

reporting of income by establishing a new business tax return and information returns 

focusing on merchant card payments and securities basis reporting. IRDM supports the IRS 

by utilizing information systems that sort, match, identify, manage, and report on returns that 

are likely sources of Tax Gap-reducing revenue.

Closing the Tax Gap through IRDM increases federal government revenues and benefits the 

vast majority of taxpayers who voluntarily file accurate returns. To accomplish this, the IRS 

requires operational resources and systems to be put in place to implement changes that will 

expand and improve automated matching of data on information returns to the data submitted 

on tax returns filed. This automation will improve the use of third-party data to increase 

compliance, provide improved access to information to enhance the quality of customer 
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services, accelerate issue identification and resolution, and increase the productivity and 

quality of tax administration.

IRDM has many dependent relationships. IRDM is a system that interacts with systems across 

the IRS, including data submission systems, databases, data transport functionality, and data 

processing systems.

IRDM relies heavily on submission processing systems, corporate data systems, and newly 

implemented infrastructure to identify potential under-reporters and non-filers. IRDM is 

primarily a case management system that depends on data from submissions systems and 

additional data sources known as Master File. IRDM will utilize corporate data master file 

data such as Information Return Master File (IRMF) and Business Master File (BMF) 

extracted and stored in the Integrated Production Model (IPM). IRDM consists of new 

functionality developed to assimilate, correlate, and select potential cases. 

IRDM is a component of the overall Tax Gap Initiative. The effectiveness of other efforts, as 

well as funding for compliance personnel, will impact how much and how quickly the Tax 

Gap is decreased.

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $ 11,115,283

Life-cycle Cost: $110,660,009

Actual Obligations to Date: $ 70,056,892

Start Date of Investment: 2009

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

• Reduce the Tax Gap through IRDM, which will increase federal government revenues 

and benefit the vast majority of taxpayers who voluntarily file accurate returns; and

• Improve the use of third party data to increase compliance, provide improved access to 

information to enhance the quality of customer services, accelerate issue identification 

and resolution, and increase the productivity and quality of tax administration.

How performance will be measured and evaluated: 

• Production Problem Resolution and Reporting - Number of high priority trouble 

tickets (P1) not closed within 4 hours;

• Production Problem Resolution and Reporting - Number of priority trouble tickets 

(P2) not closed timely within 24 hours; 
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• Percentage of scheduled system availability per the approved

Service Level Agreement, as documented monthly by IRS Enterprise Services in the 

IT Performance Report;

• SB/SE Business Underreporter (BMF-AUR) Contact Closures per FTE – Number of

contact closures by BMF-AUR divided by the total FTEs expended during the same 

timeframe; and

• SB/SE Business Underreporter (BMF-AUR) Contact Closures - Sum of all contact 

closures by BMF-AUR. 

Integrated Customer Communication Environment (ICCE)

The Integrated Customer Communication Environment (ICCE) directly supports the IRS 

Strategic Goal of improving service to make voluntary compliance easier.

• Get Transcript is a web-based application that allows authenticated taxpayers to view 

copies of their account and return transcripts in a secure environment. 

• Online Payment Agreement Application allows a taxpayer or authorized representative 

(Power of Attorney) and qualified businesses to apply for and receive online approval 

for a short term extension of time to pay or set up a monthly installment agreement. 

• Identity Protection PIN (IPPIN) is a web based application designed to provide a pin 

to taxpayers that are victims of identity theft. This PIN will be used by taxpayers to 

file their tax return and prevent fraudulent tax return filing. Taxpayers will have to be 

authenticated and registered in the e-authentication interface prior to accessing IPPIN.

• Internet Refund Fact of Filing (IRFOF) - Where's My Refund application - provides 

tax refund status information via the web to 1040 series filers. 

• IRS2Go mobile applications - This product is designed for the taxpayer on the go to be 

used via smart phone technology.

• Where's My Amended Return (WMAR) - Allows taxpayers to check the status of their 

amended returns in either a web or phone environment

• Internet Refund Address Change - Allows taxpayers who have had their check 

returned from the post office as undeliverable to change their address of record.

• Internet Refund Trace - Allows taxpayers who have not received paper refunds after a 

specific amount of time to initiate a refund trace. 

• The Modernized Internet Employer Identification Number application - Allows the 

general public to apply for an Employer ID number (EIN) over the web and receive 

the number in the same session. 

• ICCE - Provides a set of telephone applications that allow individual taxpayers to 

interact directly with their accounts. Consolidating logic for telephone applications 

reduces overall costs as standard solutions are applied to what was a specialized arena.
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• ICCE Online Services (OLS) Web services & mobile applications - This suite of 

products is designed for the taxpayer on the go to be used via smart phone technology.

Applications include FATCA Foreign Financial Institution (FATCA FFI) Look-up 

Tool, Offer In Compromise (OIC) Calculator, Return Preparer Look-Up Tool, 

IRS2Go, and Volunteer Income Tax Assistance (VITA) and Search.

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $ 26,360,851

Life-cycle Cost: $522,647,048

Actual Obligations to Date: $482,418,165

Start Date of Investment: 1992

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

Due to the automation of taxpayer services, the government and taxpayers have realized

significant time savings as a result of the ICCE investment. The ICCE team continues to 

identify appropriate automated self-service features to incorporate into future releases to meet 

the challenge of increased automation.

The primary benefits defined for ICCE are due to Productivity Improvement in the cost per 

taxpayer contact. Currently, the toll-free phone service and internet inquiry features create 

significant savings of over $400 million per year when compared to the cost of live Customer 

Service Representative (CSR) handling.

Estimates show a cost of approximately $0.71 per completed toll-free automated call 

compared to the cost for live CSRs and a cost of $0.13 per web inquiry compared to the cost 

of CSRs. 

The ICCE Alternatives Analysis estimates benefits for FY 2015 (mainly from Productivity 

Improvement) at $539 million. The Return on Investment (ROI) for ICCE in FY 2015 is 

derived by dividing this number by FY 2015 costs. It calculates to an impressive return of 

3,400 percent.

How performance will be measured and evaluated: 

• The percentage of taxpayers utilizing IRS web applications and automated Phone 

Service versus CSRs in order to find solutions and answer questions related to tax 

matters. This is a periodic measure;

• The number of times a taxpayer accesses IRS web applications to request refund status 

and other web services: Internet Refund Fact of Filing, Internet Employee 

Identification Number, or Online Payment Agreement; 
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• The percentage of scheduled system availability per the approved Service Level 

Agreement, as documented monthly by IRS Enterprise Services in the IT Performance 

Report;

• Customer Satisfaction (IRS.gov American Customer Satisfaction Index Score); and 

• Reduction in the number of transmittals or requests for corrective changes to 

production environment, as evidence of improved efficiency. 

Integrated Data Retrieval System: 

Operational since 1973, the Internal Data Retrieval Systems (IDRS) is a secure, reliable, 

flexible, mission-critical system consisting of databases and programs supporting IRS 

employees working active tax cases. It would not be possible to run the federal government

tax filing season without IDRS or some equivalent system. Many IRS employees rely on it 

daily to do their work. It provides for systemic review of case statuses, alleviating staffing 

needs and providing consistency in case control. For example, each time a taxpayer calls the 

IRS, the person answering the phone uses IDRS to log the call and answer questions. IDRS 

issues notices and processes installment agreements, offers in compromise, and adjustments. 

Actions taken via IDRS include penalty and interest computations and explanations, credit 

and debit transfers among accounts, and research of taxpayer accounts for resolution of 

taxpayer inquiries. IDRS manages data retrieved from the Tax Master Files (Business, 

Individual, and Employee Plan), allowing IRS employees to take actions on taxpayer issues, 

track statuses, and post updates back to the Master Files. Using data analytics, IDRS allows

the IRS to evaluate taxpayer data efficiently to inform enforcement and secure compliance, 

both domestically and internationally. 

In addition to IRS employees, IRS internet applications depend on IDRS to provide back-end 

services to allow them to help taxpayers. For example, tens of millions of taxpayers ask 

Where's My Refund? at IRS.gov annually, and millions of business taxpayers obtain Employer 

Identification Numbers via IRS.gov instead of via paper. IDRS allows businesses providing 

payroll services to submit tax data on behalf of millions of taxpayers and collaborates with tax 

practitioners registered with the IRS to reduce the burden of filing Powers of Attorney and 

Taxpayer Information Authorizations, allowing them to request access to other e-Services. 

IDRS produces many kinds of tax information to support sending and receiving information 

to and from other systems within the IRS, SSA, BFS, state and local governments, and tax 

practitioners. 

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $ 40,532,774

Life-cycle Cost: $257,629,553

Actual Obligations to Date: $201,782,240

Start Date of Investment: 1973
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The projected useful life of the current asset: estimated 2020 

The anticipated benefit(s) of the investment: 

• Allows the IRS to evaluate taxpayer data efficiently to inform enforcement and secure 

compliance, both domestically and internationally. 

How performance will be measured and evaluated: 

• Individual taxpayer usage of the Where's My Refund? feature through IRS.gov, 

IRS2Go Smartphone application, or automated, toll-free telephone number. This 

feature relies on IDRS to operate and provides convenient, high-quality, 

taxpayer-centered service without the assistance of a federal employee. The target for 

this steady state performance metric is usage equal to 100 percent of the average usage 

during typical processing years;

• IRS staff usage of IDRS. IDRS enables approximately 60,000 taxpayer-facing IRS 

employees, using a variety of methods, to retrieve taxpayer records quickly, 

accurately, and securely to authorized staff while responding to taxpayer inquiries and 

conducting examinations. The command code TXMOD displays tax data for specific 

taxpayers for specific periods. The target for this steady state performance metric is 

TXMOD usage equal to 100 percent of the average usage during typical processing 

years; 

• The percentage of scheduled system availability. To measure this steady state 

performance metric, calculate the cumulative average percentage of system 

availability per an approved service level agreement as documented by IRS 

Information Technology Enterprise Services for “Essential Business Systems”; 

• Business taxpayer usage of IRS.gov to obtain Employer Identification Numbers 

(EINs). This feature relies on IDRS to operate and lets taxpayers obtain EINs without 

assistance of a federal employee instead of mailing form SS-4 "Application for EIN.” 

It reduces the expense and difficulty of doing business with the Government and 

environmental impact. The target for this steady state performance metric is usage 

equal to 100 percent of the average usage during typical processing years; and 

• The percentage of certified letters printed centrally versus locally. These notify 

business and individual taxpayers of issues. This aligns with IRS goals to improve 

taxpayer service and enhance enforcement of tax law. To measure this steady state 

performance metric, calculate the percentage of certified letters printed centrally 

versus locally out of all certified letters printed. 

Integrated Financial System (IFS)

The Integrated Financial System (IFS) is the core financial system used by the IRS for budget, 

payroll, accounts payable, accounts receivable, general ledger functions, and financial 

reporting. The IFS system provides accountants, budget, and financial management analysts 

the ability to effectively manage federal government finances for the IRS and respond to audit 
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requests in support of a clean audit opinion. 

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $ 28,658,579

Life-cycle Cost: $457,969,522

Actual Obligations to Date: $414,083,740

Start Date of Investment: 2001

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

• Allows the IRS to make informed and timely performance-based business and 

budgetary decisions; and

• Eliminates redundant data management by providing a single master data repository. 

How performance will be measured and evaluated: 

• Complete monthly financial close process and submit Treasury Information Executive 

Repository (TIER) report within 3 days after month end; 

• The percentage of scheduled system availability per the approved Service Level 

Agreement, as documented monthly by IRS Enterprise Services; 

• Percentage of end user issues (aka, Priority 1 and Priority 2 tickets, equating to 

severity) eliminated or remediated within timeframes established in the approved 

Service Level Agreement. 

• Percentage of timely implementation per IFS maintenance schedule (i.e. deployment) 

of IFS server patches including Solaris, Veritas, Oracle, SAP and Informatica; 

• Percentage of interface failures requiring transmission to system; and 

• Timely availability of environments for mocks and testing.

Integrated Submission and Remittance Processing System (ISRP)

The Integrated Submission and Remittance Processing (ISRP) system is a mission critical 

operations and maintenance project that processes tens of millions of tax returns and deposits 

billions of dollars to the U.S. Treasury on a yearly basis. ISRP is an integrated suite of 

hardware, software, and network components that provides the interfaces for data entry 

perfection and transmission of data to IRS Corporate data storage. ISRP Data Entry 

Operators enter the information from various paper documents that are then converted into 

electronic data used by downstream operations, such as Financial Information Systems. ISRP 

also updates tax forms to comply with legislative changes in tax laws. There is a system 

dependence on various IRS applications, such as Generalized Mainline Framework (GMF), 

Enhanced Entity Index File (EEIF), Integrated Data Retrieval System (IDRS), and Enterprise 

File Transfer Utility (EFTU).
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The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $ 20,593,084

Life-cycle Cost: $174,169,476

Actual Obligations to Date: $143,347,049 

Start Date of Investment: 1998

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

• Processes tens of millions of paper tax returns supporting the core business of IRS; 

and

• Processes billions of dollars of remittances to the U.S. Treasury on a yearly basis. 

How performance will be measured and evaluated: 

• The percentage of daily ISRP deposits made in accordance with Internal Revenue 

Manual (IRM) 3.0.275; 

• Production Problem Resolution and Reporting - Number of high priority trouble 

tickets (P1) not closed within 4 hours; 

• System Availability (Uptime) - Percent of up time hours (actual uptime hours/planned 

uptime hours);

• Production Problem Resolution and Reporting - Number of priority trouble tickets 

(P2) not closed timely within 24 hours; and 

• Scanner/Transport HARDWARE Response Timeliness - Percentage of Priority 

Trouble Tickets (P1) Maintenance Response within 2 hours. 

IRS End User Systems and Services 

The End User Systems and Services (EUSS) program supports the IRS’s day-to-day end user 

products, services, and support for IRS employees at headquarters and field sites. 

The End User Systems and Services (EUSS) investment is comprised of projects and 

operations and maintenance activities which provide desktops, laptops, mobile devices, 

software, incident management services, and asset management services to all end users in the 

IRS. The EUSS investment delivers a secure and stable IT infrastructure, provisioning and 

managing assets by using industry standard practices in the IRS production environment. 

In support of improving efficiency and productivity for all IRS employees, UNS will 

implement World Class Service strategies to deliver exceptional performance and service by 

meeting or exceeding industry performance standards through enhanced customer experience 

and innovation, driving to a transformative culture of self-sufficiency through tools and pro-
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active education and service, and improving efficiency through channel segmentation, 

demand management, and performance measures to implement, where the budget allows, 

new technologies and interactions to enable more frequent and effective user communication. 

UNS will also implement the Software Asset Management (SAM) life-cycle initiative to 

enhance client software controls to include: automation, use of discovery tools, license and 

rights management, and software policy compliance. The purpose of implementing the SAM 

initiative is to reduce security vulnerability with unsupported software and reduce operating 

costs for the software supported by the EUSS investment. 

In support of technical innovation, UNS will begin implementation of “Bring Your Own” 

(BYO) Smartphone/Tablet service options utilizing self-service support. BYO capabilities 

will be enhanced through secure commercial off the shelf software applications. BYO will 

benefit the EUSS investment by reducing mobile device infrastructure costs and improve end 

user satisfaction. UNS will continue deployment of BlackBerry 10 devices and support the 

upgrade and refreshment of BlackBerry devices for approximately 3,000 end users. The 

updated BlackBerry 10 environment will benefit end users by providing advanced technology 

mobile devices that operate in a secure and safe environment.

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $391,906,001

Life-cycle Cost: $764,274,569

Actual Obligations to Date: $705,367,363

Start Date of Investment: 1970

The projected useful life of the current asset: estimated 2019 

The anticipated benefit(s) of the investment: 

• Provides the IT infrastructure to allow the IRS to process tax returns, collect revenue, 

and issue refunds;

• Decreases the obsolescence rate of “in use” assets; 

• Optimizes use of technology and tools, allowing incidents to be resolved 

remotely; and

• Equips high-mobility employees with tools and technologies for network connectivity 

from off-site locations. 

How performance will be measured and evaluated: 

• Call Handle Time - Average time it takes a Customer Service Representative to 

complete a service call; 
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• United States Government Configuration Baseline (USGCB) Compliance - Percentage

of workstations that have settings configured that are compliant to pass baseline 

security scans; 

• Service Desk Speed of Answer - Average time a customer waits in the Service Desk 

queue before reaching a Service Desk Representative. The time does not include the 

time an employee spends listening to the Front End Message (FEM).

• First Level Resolution - Measures the percentage of IT interactions closed at the First 

Level (i.e. by the Enterprise Service Desk (ESD)); and

• EUSS Percent on Time Priority 3 – measures the timeliness of resolution against the 

standards contained in the Master Service Level Agreement (MSLA), two business 

days.

IRS Mainframes and Servers, Services and Support 

The Mainframes and Servers, Services and Support (MSSS) program provides for the design, 

development, and deployment of server, middleware, and large systems, as well as enterprise 

storage infrastructures, including systems software products, databases, and operating systems 

for these platforms. 

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $1,290,413,565

Life-cycle Cost: $5,939,691,315

Actual Obligations to Date: $4,093,693,794 

Start Date of Investment: 1970

The projected useful life of the current asset: estimated 2019

The anticipated benefit(s) of the investment: 

• Enables the IT infrastructure to allow the IRS to process tax returns, collect revenue, 

and issue refunds; 

• Provides 24x7 IT Operations and Maintenance to all Tier I and Tier II production 

systems responsible for the daily operation of the IRS batch and online processing 

environments;

• Ensures server computer resources maintain sufficient capacity to meet system 

functional and performance demands; and 

• Develops, installs, maintains, and modifies the infrastructure required for various 

on-going Tax Processing Unisys mainframe systems. 
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How performance will be measured and evaluated: 

• The percentage of Server Environment Virtualized; 

• The percentage of Uptime for the ACS, ICS and IDRS Databases; 

• The success Rate Percentage for Automated Deployment of Infrastructure Component 

Packages to Production - Using the Package Based Promotion Tool;

• The number of Standard Employee IDs with Elevated Access are Reduced; and

• Percentage of Priority Tickets Triaged in 30 minutes by Service Operations Command 

Center Systems Administrators

IRS Telecommunications Systems and Support 

The Telecommunications Systems and Support (TSS) program falls under the jurisdiction of 

the Users and Networks Services (UNS) organization, which is responsible for the 

management of voice and data networks, video services, and engineering throughout the IRS. 

This includes providing remote access, voice telephony, voicemail, contact centers, cell 

phones, pagers, and video conferencing. UNS network is composed of wide area networks, 

local area networks, servers, switches, and control devices. The investment supports the IT 

Infrastructure services related to the federally mandated transition to IPV6. 

Network Convergence replaces aged voice, voicemail, and video infrastructure, and combines 

these services on a common network. It provides operational efficiencies, supports agency 

initiatives to reduce real estate (through projects such as the shared workspaces initiative, 

universal workspace design, and home as point of duty), and reduces risks posed by aged 

legacy assets. The Video Conferencing System (VCS) infrastructure has aged devices that 

need replacing. The original equipment manufacturer no longer supports these devices. 

Enterprise eFax provides desktop fax capability to IRS employees nationwide. The fax 

capability will help support decreases in paper, hardware, and toner costs and help support 

telework-related initiatives. 

UNS manages a large-scale contact center infrastructure to assist its customers with 

tax-related problems and questions. It is in the planning stages of upgrading the existing 

Aspect Automated Call Distributor (ACD) platforms. ACDs distribute calls among local and 

remote agents at more than 30 centers within the United States and Puerto Rico. The ACD 

platforms are reaching end-of-life and need replacing. Replacement will provide features 

necessary to replicate primary functionality of the ACDs while supporting integration with the 

existing application and other Contact Center production systems. 

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $ 537,255,728

Life-cycle Cost: $1,106,405,801

Actual Obligations to Date: $1,007,403,330
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Start Date of Investment: 1970

The projected useful life of the current asset: estimated 2019

The anticipated benefit(s) of the investment: 

• Provides the IT infrastructure to allow the IRS to process tax returns, collect revenue, 

and issue refunds; 

• Supports agency initiatives to reduce real estate (through projects including the shared 

workspaces initiative, universal workspace design, and home as post of duty); 

• Reduces risks posed by aged legacy assets; and 

• Supports IRS’s Sustaining Infrastructure goal to retire aged assets and reduce 

obsolescence enterprise-wide. 

How performance will be measured and evaluated: 

• GSP Compliance (Network Devices) - measures the percentage of network devices 

that meet GSP (Guidelines Standards and Procedures) standards;

• WAN Availability - measures the percentage of availability of Wide Area Network 

(WAN) Services;

• LAN Availability - measures the percentage of availability of Local Area Network 

(LAN) Services;

• Internet Access Availability - measures the percentage of internet availability through 

the three CCGs (Common Communication Gateways); and

• GSP Compliance (Network Rules) - measures the percentage of network rules that 

meet GSP (Guidelines Standards and Procedures) standards.

IRS.gov - Portal Environment

The Integrated Enterprise Portals (IEP) are critical to the IRS mission and foundational to IRS 

electronic tax administration and to IRS business operations. The IRS has adapted these 

mission-critical systems over the years to meet the changing needs of the tax paying 

population; however, current portal design limitations and available systems capacity will not 

meet the needs of the future investment portfolio. The new IRS IEP will provide seamless 

one-stop web-based services to internal and external users, such as taxpayers, business 

partners, IRS employees, and other government agencies. The objective of the new portal 

project is to continue to maintain and operate secure and reliable portals to meet the goals of 

the agency by competitively acquiring managed services for the establishment and 

management of a new infrastructure, hosting, help desk, content management, search, and 

reporting solution, and the transition of the existing portal capabilities and services to the new 

IRS web environment transparent to external users. By transitioning to the new IEP 

environment, it improves the IRS capability to increase IT services to meet the changing 

needs of the taxpaying public. The IRS will build the new IEP environment in phases, with 

the final phase to be completed in FY 2013. 
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The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $155,561,118

Life-cycle Cost: $714,692,256

Actual Obligations to Date: $487,488,652

Start Date of Investment: 1996

The projected useful life of the current asset: estimated 2017

The anticipated benefit(s) of the investment: 

• Improves web environment, efficiencies, effectiveness, quality, and process maturity; 

• Provides visibility into program cost drivers; and 

• Delivers year over year unit cost reductions to the IRS. 

How performance will be measured and evaluated: 

• Providing a public facing web portal environment availability of 99.99 percent that 

allows taxpayers to meet their tax obligations timely; 

• Percentage of system response time of search queries completed in less than 3 

seconds;

• Percentage of system response times of User requests for Website content completed 

less than 3 seconds;

• Providing the percentage of Formal O&M deliverables submitted timely; and

• Providing a Web portal Content Management System (CMS) that allows availability 

of 99.99% portal services to meet obligations timely.

Modernized e-File 

The Modernized e-File (MeF) system is a mixed life-cycle investment that is the primary 

system to receive and process all tax returns submitted electronically. When MeF receives an 

electronic tax return, the system determines if it satisfies the acceptance rules required for 

further processing. 

One of the benefits of MeF is the extensive error checking and data validation that occurs 

before the return is fully processed. MeF creates an acknowledgment telling the transmitter 

that the return was either accepted or rejected, and it provides information about the cause(s) 

of rejection. This acknowledgment is generally available to the transmitter within minutes of 

tax return submission. MeF forwards accepted returns to IRS systems used for processing tax 

returns. If MeF rejects a return due to errors, the transmitter can correct the identified issues 

and re-submit. These up-front checks help ensure successful processing of returns by 

downstream tax systems. 
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The MeF program provides a secure web platform for electronically filing tax and 

information returns by registered Electronic Return Originators (ERO). This system uses a 

browser-based and application-to-application solution to provide ERO end users with 

optimized return filing. MeF is becoming the primary system for electronic filing of 

business and individual tax returns and forms. 

MeF has dependencies with: IRS.gov - Portal Environment, Information Return and 

Document Matching (IRDM); Individual Master File (IMF); Business Master File (BMF); 

Tax Return Data Base (TRDB); and Electronic Fraud Detection System (EFDS).

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $161,697,466

Life-cycle Cost: $586,608,515

Actual Obligations to Date: $375,955,489

Start Date of Investment: 2001

The projected useful life of the current asset: estimated 2020

The anticipated benefit(s) of the investment: 

• Beneficiaries include the tax preparation community and the taxpayers they represent; 

• Benefits large corporations and tax-exempt organizations that are required at a specific 

asset threshold to file their tax returns or annual information returns electronically by 

reducing the handling/mailing of voluminous paper returns that sometimes exceed 700 

attachments/schedules; 

• Extensive error checking and data validation that occurs before the return is processed; 

and 

• The system delivers tax returns that do not pass these error checks to the transmitter 

for correction. These up-front checks help ensure successful processing of returns by 

the downstream tax systems. 

How performance will be measured and evaluated: 

• The percent of business tax returns processed electronically by MeF;

• The average number of minutes within which electronic filers receive 

acknowledgement of their electronically filed tax returns;

• The percentage of scheduled system availability per the approved Service Level 

Agreement, as documented monthly by IRS Enterprise Services; 

• Error rate for electronically filed tax returns; 

• The percent of individual tax returns processed electronically; and 

• Total quarterly cost savings derived from electronically filed tax returns. Savings 

achieved is based on an average of $8M target savings per quarter. This is a periodic 

metric.
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Return Review Program 

The Return Review Program (RRP) is a system that uses leading-edge technologies to 

advance IRS effectiveness in detecting, addressing, and preventing tax refund fraud and 

protecting United States Treasury revenue. It will replace the legacy EFDS which was built 

in the mid-1990s. The entirely new RRP fraud framework is critical for IRS success in 

tackling ever-evolving tax schemes in a sophisticated, scalable, and adaptable manner. Based 

on specific business models from Criminal Investigation (CI) and the Return Integrity and 

Correspondence Services (RICS) Office, RRP will support the new cross-functional approach 

to criminal and civil tax noncompliance, including identity theft. 

Using the analytics capability in RRP, the IRS will be able to create predictive fraud and noncompliance detection models, which will seek out subtle data patterns to determine reliability 

of return data, including filer's identity. RRP will generate a scorecard for questionable 

returns, evaluating consistency and dependability. Electronic Fraud Detection System 

processing uses predictive analytics minimally. Cross-functional collaboration is difficult and 

returns with multiple issues are often partially worked. With RRP, IRS will be able to respond 

to multiple issues of non-compliance on a single return.

RRP will incorporate Linked Return Analysis (LRA), a tool that reveals patterns and 

relationships in masses of return data. LRA will allow RRP to identify clusters of returns that 

share traits indicative of schemes and other tax fraud or non-compliance. The automated 

actions of link analysis will expand known clusters and schemes; discover new ones and scale 

to incorporate additional linking characteristics. RRP will introduce three new unsupervised 

models to detect non-obvious patterns in consistency, outlier and new patterns in data.

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $136,826,858

Life-cycle Cost: $287,819,946

Actual Obligations to Date: $102,919,393

Start Date of Investment: 2010

The projected useful life of the current asset: estimated 2020

The anticipated benefit(s) of the investment: 

• IRS will be able to respond to multiple issues of noncompliance on a single return; and

• Using massively parallel processing, the system's capacity will promote speed, even 

during the peak of tax filing season. This speed will serve taxpayers not only by 

supporting fast refunds, but also by quickly recognizing patterns and redirecting 

fraudulently filed returns. 

How performance will be measured and evaluated: 

The IRS is developing performance measures for the RRP investment.
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Service Center Recognition/Image Processing System 

The Service Center Recognition/Image Processing System (SCRIPS) is a major paper input 

processing system specifically designed to automate the processing of Information Return 

Processing (IRP) forms, Schedule K-1s (Forms 1041 K-1, 1065 K-1, and 1120 K-1), Form 

941 (and associated Schedules B and Schedule R), and Form 940 (and associated Schedule A 

and Schedule R). SCRIPS scans and stores images of all tax documents processed, saving 

time by converting the scanned images and data to computer-readable code and providing 

hardcopy images when requested. This is accomplished using the Optical Character 

Recognition/Intelligent Character Recognition (OCR/ICR) engine in addition to utilizing 2D 

bar code recognition that optimizes and automates data entry of the taxpayer data. 

SCRIPS is one of the front-end input systems that operates at four IRS Submission Processing 

Centers where the IRS receives, sorts, and sends forms to the scanning areas. SCRIPS sends 

the electronic taxpayer data to the IRS downstream tax processing systems, including 

Generalized Mainline Framework (GMF) and Master File for posting to the IRS database, and 

also Service-Wide Employment Tax Research System (SWETRS) and Statistics Of Income 

(SOI) for compliance. The IRS archives and retains the images on the system. IRS Customer 

Service Representatives can request hard copies of images through the IDRS. 

SCRIPS processing of these forms directly supports the IRS's ability to administer and collect 

taxes while supporting voluntary compliance. The IRS has cited two strategic goals which are 

a direct link back to the Treasury Department's goals. Specifically, SCRIPS has a direct tie to 

the goal to collect revenue that is due the federal government. Images of these documents are 

used for research while resolving tax liability and compliance issues. SCRIPS processed more 

than 99 million tax forms in 2013. 

SCRIPS provides top quality service to all taxpayers through fair and uniform application of 

the law. SCRIPS will address the Information Reporting Document Matching (IRDM) effort, 

which is designed to match tax returns to their proper tax filing entity by making 

modifications to the IRP form via year-end legislative changes.

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $ 18,322,185

Life-cycle Cost: $185,992,642

Actual Obligations to Date: $157,291,609

Start Date of Investment: 1991

The projected useful life of the current asset: estimated 2019. 

The anticipated benefit(s) of the investment: 

SCRIPS scans and stores images of all tax documents processed, saving time by 

converting the scanned images and data to computer-readable code and providing 

hardcopy images when requested. 
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How performance will be measured and evaluated: 

• Maintain a character recognition error rate on scanned forms of no more than 

4 percent per month; 

• The percent of tax return image print requests fulfilled within 2 days; 

• The percentage of time the SCRIPS system is available per month for processing 

(system up-time); 

• The average number of tax return-related documents processed per hour; 

• Number of High Priority (P1) trouble tickets not closed within 4 hours; and

• Number of Moderate Priority (P2) trouble tickets not closed within 24 hours. 

Web Applications (Formerly Online Services (OLS))

The OLS was established within Treasury, IRS in January 2012 to meet the continued growth 

in demand for customer service from taxpayers across all channels. Specifically, OLS is a 

strategic business initiative within IRS that leads the innovation and creation of digital 

services to meet these taxpayer needs. There are 5 distinct functions within OLS: Online 

Engagement, Operations and Media; Product Management; User Experience and Design; 

Portal Business Management; and Strategic Services. These five functions have worked 

together in order to relaunch IRS.gov and deploy nearly 20 new products and services in line 

with using digital services to meet taxpayer needs; these products and services include Get 

Transcript, Where’s My Refund (WMR) tracker, and Filing Season (FS) updates to 30 other 

tools and content areas, including language and other key updates. 

In FY 2014, 2015, 2016 and beyond, OLS plans to continue working towards its goal of 

making taxes clearer through better online content by providing plain language, elegant 

structuring and clear writing on IRS.gov, as well as better search results on IRS.gov and the 

web. OLS will continue striving to provide a user-centric, data-informed approach in order to 

ensure that taxpayer information is being presented and provided in a way that is easy for a 

taxpayer to interpret.

The immediate cost (defined as the base FY 2015 budget plus the FY 2016 request) as 

well as the full life-cycle cost of the asset: 

FY 2015 - FY 2016: $40,126,306

Life-cycle Cost: $40,126,306

Actual Obligations to Date: $ 2,153,313

Start Date of Investment: 2013

The projected useful life of the current asset: estimated 2034

The anticipated benefit(s) of the investment: 

• OLS determined Status Quo was the best alternative which has a return on investment 

of 133% over seven years. The benefits of this selected approach are cost savings 
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which will come from reduced call volumes and mailing notices, a reduction in the 

number of walk-ins and a reduction in payment processing costs.

How performance will be measured and evaluated:

To Be Determined (TBD).

Criminal Investigations (CI) Capital Assets 

These capital assets are used to protect CI special agents from threats and bodily injury when 

performing their law enforcement duties including conducting investigations concerning 

alleged criminal tax fraud violations, financial crimes, and other related offenses. 

Security Equipment 

The IRS purchases security equipment such as cameras, digital video recorder system 

(DVRs), access control panels, and card readers. The IRS uses facility-specific security 

assessments to prioritize asset needs and develop criteria for replacing equipment in a given 

facility. Additionally, emergency needs arise over the course of the year. These needs are 

ranked and funded according to the effect the equipment has on the overall security posture. 

Performance is measured through security reviews, testing, and the assessment of individual 

facilities for their overall security posture using a number of criteria including location, size, 

number of employees, and type of work done in the facility. These criteria are used to 

develop an overall security posture. This posture is then compared to existing equipment in 

the facility to determine additional needs. If a facility has a large divergence from the 

posture, equipment is ordered. Reviews are done on a regular basis to measure and evaluate 

performance. 

The useful life of security equipment is usually five years. The need for equipment can arise 

at any time, such as when employees are moved into a new building, during internal moves, 

or intermittently when equipment needs to be replaced. The benefit of this capital asset 

investment is that it supports the IRS priority to provide a safe and secure environment for its 

employees, equipment, and facilities. 

Leasehold Improvements 

Many projects undertaken by IRS entail the design, alteration, and furnishing of space either 

upon acquisition, at lease renewal, or for other purposes, such as supporting space 

consolidation or reduction. The portion of the project that is captured as a capital asset is 

reflected in OMB Object Class 3200, Land and Structures, and includes alterations to 

buildings; fixtures such as elevators, plumbing, power-plant boilers, fire-alarm systems, 

lighting, heating systems, air-conditioning systems, flooring, and carpeting. The total figure 

is a sum of the expenditures in that object class for all IRS projects in that particular year. 

The IRS employs a scheme to rank projects in priority order and keeps a comprehensive list 

of projects across the territories. Projects are considered based on the critical need for the 

project. Projects approved but not funded in the current year are deferred to the following 
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year. Proposed projects are identified throughout the year and are prioritized and added to list 

as appropriate. 

Performance is measured utilizing the following measures: 

• Project Spend per usable square feet (USF) on Closed Projects; 

• Total USF Touched by Projects; and 

• Percent of Total USF Under Management; Percent Customers Satisfied With 

Completed Space Projects.

The useful life of these alterations is usually five years or the remaining fixed term of the 

lease. The fixed term of most leases is five years, with options to renew or to extend for some 

additional period. The need for alterations can arise at any time, including, but not limited to: 

• Adding personnel workspaces; 

• Consolidating functions; and

• Addressing other space issues. 

The benefit of these alterations is that they provide the means for the business unit occupants 

to perform their mission efficiently and in user-friendly space. In addition to space reduction 

associated rent savings, a portion of the investment may provide a savings such as in the area 

of energy consumption.

4B – IRS Aging Legacy Information Technology (IT) Infrastructure (non-BSM) 

Proposed Long-term Multiyear Funding Strategy and Timetable

The IRS established a Sustaining Infrastructure (SI) program to provide for long-term 

infrastructure viability with the flexibility to meet dynamically changing business 

requirements. The SI program includes a prioritization process to replenish aged assets that 

support the most critical IRS business needs. The prioritization process is a long-term 

funding strategy, within the Operations Support multi-year appropriation, to upgrade and 

modernize the aging legacy Information Technology (IT) infrastructure for non-Business 

System Modernization projects. The process is built on leading business practices that 

support the IRS mission and strategic objectives while ensuring compliance with federal laws 

and agency oversight. 

The SI program establishes its infrastructure investment timetable by overlaying the annual 

budget into the prioritization process. Extending beyond legacy systems, investments in 

innovation, such as network convergence and desktop virtualization allow the IRS to gain 

efficiencies such that foreseeable budgets will meet the requirements to replace aged assets. 

This innovation element, as part of the SI program, is a key component to IRS’s long-term 

infrastructure viability. Each year the IRS assesses and funds projects in the following four 

portfolios:
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Portfolio Name Description

Average 

Percentage of 

Portfolio

Sustaining Infrastructure Aged inventory beyond useful life 65%

Sustaining Architecture & 

Engineering

Aged inventory not past its useful 

life, but tied to production 

applications or critical business need

15%

Sustaining Enterprise 

System Software 

Updating aged software (beyond 

useful life) to achieve (N)(N-1)

11%

Sustaining Other Operational Demand 9%

The objectives of the SI prioritization process are to:

• Achieve an acceptable level of aged assets (20 – 25 percent);

• Reduce the aged inventory of IRS infrastructure;

• Describe an IRS future infrastructure replacement decision model; 

• Focus replacement investment decisions on the future infrastructure vision; 

• Assist in preparing annual asset retirement goals; and 

• Make the most efficient infrastructure investments. 

The benefits of the SI prioritization process include:

• Reducing the overall operational infrastructure cost of the IT Organization wherever 

possible; 

• Reducing equipment diversity and quantity; 

• Improving infrastructure capacity; 

• Improving governance; 

• Increasing IT security;

• Improving disaster recovery operations; and 

• Directing infrastructure to a more efficient world-class environment.

The SI prioritization process is defined by four lifecycle phases: Pre-Select, Select, Control, 

and Evaluate. During each phase, the IRS governance bodies make decisions using defined 

processes and data regarding the investments under consideration. Approved investments 

become part of the larger SI investment portfolio and both new and ongoing investments are 

monitored continuously throughout their lifecycle against Key Performance Indicators (KPIs) 

for Deputy, Chief Information Officer (DCIO) and Infrastructure Executive Steering 

Committee (IESC) review. The IRS conducts post-implementation assessments to ensure 

Cost, Schedule, and the overall goals of the project were successfully completed. 
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The four-lifecycle phases of the SI Prioritization Process are described below:

• The Pre-Select Phase assesses proposed IT solutions for unmet business requirements.

The pre-selection phase creates a portfolio of IT project investments designed to 

improve overall organizational performance. The three-step pre-selection process is: 

o Step 1 – Screen IT proposals for relevance and feasibility. A mature investment 

screening process prescribes the required amount of documentation and level of 

analytical rigor, depending on the project’s type (e.g., mission critical 

infrastructure, etc.) and phase (e.g., initial concept, new, ongoing, and operational).

o Step 2 – Retain proposals with the highest potential to support the IRS critical 

mission and/or operations. If viable, the proposal moves into the Investment 

Management Plan (IMP) development stage.

o Step 3 – Prioritize the list of IT projects. After completing the analysis, the IRS 

develops a ranked listing of IT projects. 

• During the Select phase, an executive level, decision-making body determines which 

projects to fund based on the analyses completed during the pre-select phase. The 

process is used to prioritize IT investments to align with organizational priorities and 

strategic direction. Projects are funded based on budget constraints with consideration 

for technical soundness of projects, contribution to mission needs, performance 

improvement priorities, and overall available budget levels.

• The Control Phase begins once investments are selected and approved for funding. 

The Control Phase monitors on-going IT projects during the planning, acquisition, 

deployment, and operation and maintenance stages of the IT investment life cycle. 

The primary objective is to assess the investment’s performance and enable effective 

management of all major IT investments within the IRS. If a project is late, over cost, 

or not being developed according to approved IMPs, projects may be modified or 

cancelled. 

• The Evaluate Phase includes two components, a Post Implementation Review (PIR) 

on implemented or cancelled investments, and an annual analysis of the performance 

of the IRS’s portfolio management process. During PIRs, data is collected, recorded, 

and analyzed to compare expected results against actual benefits and returns. Once 

investments are fully implemented or cancelled, actual versus expected results are 

evaluated to assess the investment’s impact on strategic performance, identify 

modifications that may be needed, and revise the investment management process 

based on lessons learned.

4.2 - Return on Investment (ROI) for IRS Major Enforcement Programs

The actual cost and actual revenue collected for FY 2010 through FY 2014 for the three major 

enforcement programs, Examination, Collection and Automated Underreporter (AUR) are 

provided below. The activities included in these programs include:
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Examination Program conducts examinations of tax returns of individual taxpayers, 

businesses, and other types of organizations to verify that the tax reported is correct. This 

includes examinations of individuals, small business, self-employed, large corporate business, 

partnerships, international, estate and gift, excise tax and employment tax, and tax-exempt, 

qualified pension benefit plans, and Government entities. The examination costs include the 

cost of the Field Exam, Correspondence Exam, IRS Chief Counsel and Appeals functions.

Collection Program collects delinquent taxes and secures delinquent tax returns, through the

appropriate use of enforcement tools such as lien, levy, seizure of assets, installment 

agreement, offer in compromise, substitute for return, summons, and IRC 6020(b) (which 

allows the IRS to prepare returns if a taxpayer neglects or refuses to file); and provides

education to taxpayers to enable future compliance. The cost of the Collection program 

includes Automated Collection System (ACS), Field Collection, and Payment Compliance/

Correspondence Collection.

Automated Underreporter (AUR) Program matches payer information returns (Forms 1099, 

W-2, etc.) against data reported on individual tax returns to the IRS. 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, a 

proposed notice is issued and a proposed assessment is generated. 

ROI is calculated by dividing revenue by cost. This information provides an indication of the 

ROI for the three major enforcement programs over time, but it is important to note that 

enforcement revenue collected in a fiscal year includes tax, interest, and penalties from 

multiple tax years. Some enforcement activities can take more than a year to close and may 

generate revenue over several years, so it is generally inappropriate to compare revenue 

collected in a given fiscal year to the staffing available for that same year. 

In addition, it also is important to note that these data reflect the average return on investment 

for these programs and do not include indirect effects of IRS enforcement activities on 

voluntary compliance. As such, they are not intended to be used to allocate resources or 

maximize revenue. Net revenue is maximized only when resources are allocated according to 

marginal direct and indirect return on investment, but those ratios are much more challenging 

to estimate than the average ROI shown here. As a result, the IRS will continue to allocate 

enforcement resources across a range of enforcement activities to ensure taxpayers pay the 

taxes they owe with integrity and fairness to all. 

Return on Investment for IRS Major Enforcement Programs

Dollars in Millions

Enforcement Program Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI Cost1 Revenue ROI

IRS Total $6,581 $57,592 8.8 $6,543 $55,229 8.4 $6,242 $50,187 8.0 $5,883 $53,345 9.1 $5,839 $57,146 9.8

Examination 4,371 23,563 5.4 4,333 18,924 4.4 4,232 14,476 3.4 3,965 16,662 4.2 3,965 18,983 4.8

Collection 1,948 29,105 14.9 1,939 31,060 16.0 1,742 30,442 17.5 1,660 31,396 18.9 1,618 33,198 20.5

Automated Underreporter (AUR) 262 4,924 18.8 270 5,245 19.4 267 5,269 19.7 258 5,287 20.5 256 4,965 19.4

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 2010 FY 2011 FY 2012 FY 2013 FY 2014
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4.3 – IRS Performance Measure Table

Performance Measures Type of 

Measure

FY2009 

Actual

FY2010 

Actual

FY2011 

Actual

FY2012 

Actual

FY2013 

Actual

FY2014 

Actual

FY2015 

Planned

FY2016 

Planned

Customer Service Representative Level of Service (LOS)1 Oe, L 70.0% 74.0% 70.1% 67.6% 60.5% 64.4% 38.0% 80.0%

Customer Contacts Resolved per Staff Year E 12,918 10,744 12,419 16,320 20,767 21,018 21,000 17,300

Customer Accuracy - Tax Law (Phones) Ot 92.9% 92.7% 93.4% 93.2% 95.7% 95.0% 92.0% 92.0%

Customer Accuracy - Accounts (Phones) Ot 94.9% 95.7% 96.0% 95.6% 96.0% 96.2% 94.0% 94.0%

Timeliness of Critical Filing Season Tax Products to the 

Public Ot 96.8% 95.3% 96.3% 97.2% 58.9% 99.1% 95.0% 95.0%

Timeliness of Critical TE/GE & Business Tax Products to 

the Public Ot 95.2% 97.7% 96.4% 94.5% 83.6% 98.7% 95.0% 95.0%

Percent Individual Returns Processed Electronically Oe, L 65.9% 69.3% 76.9% 80.5% 82.5% 84.1% 84.6% 85.0%

Percent of Business Returns Processed Electronically Oe, L 22.8% 25.5% 31.8% 36.7% 40.2% 43.1% 46.5% 47.0%

Refund Timeliness - Individual (Paper) Ot 99.2% 96.1% 99.4% 99.7% 99.0% 98.7% 94.0% 97.0%

Taxpayer Self-Assistance Rate E, L 69.3% 64.4% 70.1% 78.5% 83.3% 84.7% 85.0% 86.0%

Examination Coverage - Individual Oe, L 1.0% 1.1% 1.1% 1.0% 1.0% 0.9% 0.8% 0.8%

Field Exam Nat'l Quality Review Score Oe, L 85.1% 84.9% 85.8% 87.4% 89.2% 88.4% 89.6% 89.6%

Office Exam Nat'l Quality Review Score Oe, L 92.1% 91.6% 90.4% 91.3% 90.3% 90.6% 90.2% 90.2%

Examination Quality - Large Business2

 (new for FY13) Oe, L 92.0% 83.0% 90.0% 90.0%

Examination Coverage - Business (Assets > $10 million) Oe, L 5.6% 5.7% 6.2% 6.2% 5.6% 4.3% 3.8% 3.6%

Examination Efficiency - Individual E, L 138 140 139 142 142 138 135 118

Automated Underreporter Efficiency E, L 1,905 1,924 2,007 2,041 2,025 1,935 2,032 2,014

Automated Underreporter Coverage E, L 2.6% 3.0% 3.3% 3.2% 2.8% 2.6% 2.6% 2.6%

Collection Coverage (Units) Ot, L 54.2% 50.1% 50.0% 48.1% 47.0% 45.9% 43.8% 45.9%

Collection Efficiency (Units) E, L 1,845 1,822 1,952 1,997 2,057 2,051 2,173 2,131

Field Collection Nat'l Quality Review Score Ot, L 80.5% 80.6% 80.3% 80.4% 81.4% 81.6% 81.6% 81.6%

Automated Collection System Accuracy Oe 94.3% 95.9% 94.9% 94.7% 94.4% 95.2% 94.0% 94.0%

Criminal Investigations Completed Ot, L 3,848 4,325 4,697 4,937 5,557 4,606 3,800 3,800

Number of Convictions Oe, L 2,105 2,184 2,350 2,634 3,311 3,110 2,700 2,700

Conviction Rate Oe, L 87.2% 90.2% 92.7% 93.0% 93.1% 93.4% 92.0% 92.0%

Conviction Efficiency Rate ($) E, L $327,328 $324,776 $310,029 $270,511 $211,048 $231,103 $243,000 $243,000

TE/GE Determination Case Closures Ot 96,246 105,247 91,205 87,000 65,877 136,746 99,942 127,945

Percent of Major Projects within +/- 10% Cost Variance3 E 60.0% 40.0% 71.4% 50.0% 0.0% 66.7% 90.0% 90.0%

Percent of Major Projects within +/- 10% Schedule 

Variance3 E 90.0% 100.0% 100.0% 90.0% 83.3% 100.0% 90.0% 90.0%

3

 Starting in FY 2015, these measures include all major investments (BSM and non-BSM) whereas in the previous fiscal years it was only BSM.

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, L - Long-Term Goal

1 Beginning in FY 2013, targets include an increase in base user fees.

n/a - not applicable, HCTC Program ended on December 31, 2013.

2

 As a result of program changes that occurred in the Large Business and International (LB&I) organization, starting in FY 2013, a new Examination Quality - Large Business measure will replace the two previous 

LB&I quality measures - Examination Quality - Industry and Coordinated Industry.
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4.3 – IRS Performance Measure Table (Continued)

Budget Level Performance Measure Description 

Customer Service Representative (CSR) Level of 

Service

The number of toll free callers that either speak to a Customer Service Representative or receive informational 

messages divided by the total number of attempted calls.

Customer Contacts Resolved per Staff Year The number of Customer Contacts resolved in relation to staff years expended. 

Customer Accuracy – Tax Law Phones The percentage of correct answers given by a live assistor on Toll-free tax law inquiries.

Customer Accuracy – Customer Accounts 

(Phones) The percentage of correct answers given by a live assistor on Toll-free account inquiries.

Timeliness of Critical Individual Filing Season Tax 

Products to the Public

The percentage of critical individual filing season tax products (tax forms, schedules, instructions, publications, tax 

packages, and certain notices required by a large number of filers to prepare a complete and accurate tax return) 

available to the public in a timely fashion.

Timeliness of Critical TE/GE & Business Tax 

Products to the Public Percentage of critical other tax products, paper and electronic, available to the public in a timely fashion. 

Percent Individual Returns Processed 

Electronically The percentage of electronically filed individual tax returns divided by the total individual returns filed.

Percent Business Returns Processed 

Electronically The percentage of electronically filed business tax returns divided by the total business returns filed.

Refund Timeliness – Individual (Paper) The percentage of refunds resulting from processing Individual Master File paper returns issued within 40 days or less. 

Taxpayer Self Assistance Rate The percentage of taxpayer assistance requests resolved using self-assisted automated services.

Examination Coverage – Individual (1040)

The sum of all individual 1040 returns closed by Small Business/Self Employed (SB/SE), Wage & Investment (W&I), 

Tax Exempt and Government Entities (TE/GE), and Large Business and International (LB&I) (Field Exam and 

Correspondence Exam programs) divided by the total individual return filings for the prior calendar year.

Field Exam Nat'l Quality Review Score The score awarded to a reviewed field examination case by a Quality Reviewer using the National Quality Review 

System (NQRS) quality attributes.

Office Exam Nat'l Quality Review Score The score awarded to a reviewed office examination case by a Quality Reviewer using the NQRS quality attributes.

Examination Quality – Large Business Average of the scores of the Large Business Return (LBR) cases reviewed by LB&I Quality Measurement System 

(LQMS). Case scores are based on the percentage of elements passed within each of the four auditing standard.

Examination Coverage – Business Assets >$10 

Million)

The number of LB&I returns (C and S Corporations with assets over $10 million and all partnerships) examined and 

closed by LB&I during the current fiscal year divided by the number of filings for the preceding calendar year.

Examination Efficiency – Individual (1040) The sum of all individual 1040 returns closed by SB/SE, W&I, TE/GE, and LB&I (Field Exam and Correspondence 

Exam programs) divided by the total Full-Time Equivalent (FTE) expended in relation to those individual returns.

Automated Underreporter (AUR) Efficiency The total number of W&I and SB/SE contact closures (a closure resulting from a case where we made contact) divided 

by the total FTE, including overtime.

Automated Underreporter (AUR) Coverage A percentage representing the total number of W&I and SB/SE contact closures (a closure resulting from a case where 

SBSE and W&I made contact) divided by the total return filings for the prior year.

Collection Coverage – Units The volume of collection work disposed compared to the volume of collection work available.

Collection Efficiency – Units The volume of collection work disposed divided by total collection FTE.

Field Collection Nat'l Quality Review Score The score awarded to a reviewed collection cases by a Quality Reviewer using the NQRS quality attributes.

Automated Collection System (ACS) Accuracy The percent of taxpayers who receive the correct answer to their ACS question.

Criminal Investigations Completed

The total number of subject criminal investigations completed during the fiscal year, including those that resulted in 

prosecution recommendations to the Department of Justice as well as those discontinued due to a lack of prosecution 

potential. 

Number of Convictions The number of criminal convictions.

Conviction Rate The percent of adjudicated criminal cases that result in convictions.

Conviction Efficiency Rate ($) The cost of Criminal Investigation’s (CI) program divided by the number of convictions.

TE/GE Determination Case Closures The number of cases closed in the Employee Plans or Exempt Organizations Determination programs, regardless of 

type of case or type of closing.

Percent of Major Projects within +/- 10% Cost 

Variance 

The percentage of Major IT projects (BSM and nonBSM) that are within the +/-10% threshold for cost. The cost 

variance is measured from the initial cost estimate versus current cost estimate.

Percent of Major Projects within +/- 10% 

Schedule Variance 

The percentage of Major IT (BSM & nonBSM) projects that are within the +/-10% threshold for schedule. The schedule 

variance is measured from the initial schedule estimate to the current schedule estimate.
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4.4 – Alignment of the FY 2016 Initiatives to the IRS Strategic Goals FY 2016 Initiatives Pursue tax reform, implement the Patient Protection and Affordable Care Act and Foreign Account Tax Compliance Act, and Improve Execution of the tax code Introduce Self-Service and Electronic-Service Taxpayer Options Deliver High Quality and Timely Service to Reduce Taxpayer Burden and Encourage Voluntary Compliance Effectively Enforce the Law to Ensure Compliance with Tax Responsibilities and Combat Fraud Invest in our Workforce and the Foundational Capabilities Necessary to Achieve our Mission and Deliver High Performance for Taxpayers and Stakeholders Electronic Interaction Enablement Telephone Service Enhancements Partner Services Outreach and Education Marketing and Promotion Improve Taxpayer Services          Improve Upfront Identification and Resolution of Identity Theft Returns    Enhance Service Options for Taxpayers        Increase Service for Low-Income Taxpayers and Taxpayers in Need of Hardship Relief     Implement Foreign Account Tax Compliance Act (FATCA)    Implement Merchant Card and Basis Matching   Prevent Identity Theft and Refund Fraud      Address International and Offshore Compliance Issues    Increase Audit Coverage    Enhance Collection Coverage    Address Compliance Risks in the Tax-Exempt Sector   Improve Audit Coverage of Large Partnerships    Pursue Employment Tax and Abusive Tax Schemes    Enhance Investigations of Transnational Organized Crime (TOC)    Ensure Ethical Standards of Conduct for Practitioners   Leverage Data to Improve Case Selection    Address Impact of the Affordable Care Act (ACA) Statutory Requirements    Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements    Sustain Critical Information Technology (IT) Infrastructure  Implement Federal Investigative Standards  Consolidate and Modernize IRS Facilities  Maintain Integrity of Revenue Financial Systems 

Restore Staffing for Essential Support Programs Leverage New Technologies to Advance the IRS Mission     

Goal #1

Strategic Foundation 

for Organizational 

Excellence

Service Improvement Categories

Taxpayer Assistance Blueprint (TAB)

Priority Goals Goal #2

Strategic Goals

IRS Treasury 

Strategic Goal 3-

Objective 3.3
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Dollars in Thousands

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

FY 2015 Enacted

Reinvestment: 16,025 $16,025

Expand Telecom Infrastructure to Handle Increased Demand 16,025 16,025

Subtotal FY 2016 Changes to Base $16,025 $16,025

Program Changes:

Improve Taxpayer Services 78,343 1,231 23,154 7 101,497 1,238

Address Impact of Affordable Care Act (ACA) Statutory Requirements 108 1 44,775 432 22,323 50 67,206 483

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements 305,645 818 305,645 818

Subtotal Program Increases $78,451 1,232 $44,775 432 $351,122 875 $474,348 2,539

Total FY 2016 Budget Request $78,451 1,232 $44,775 432 $367,147 875 $490,373 2,539

FY 2016 TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT BSM TOTAL

Affordable Care Act (ACA)

4.5 – Summary of IRS FY 2016 ACA Budget Request
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4.6 – Summary of IRS FY 2016 Budget Request Bureau: Internal Revenue Service Summary of Proposed FY 2016 Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTE FY 2015 Enacted $2,156,554 28,274 $4,860,000 40,564 $3,638,446 12,043 $290,000 398 $10,945,000 81,279 Changes to Base: Maintaining Current Levels (MCLs): $52,822 $81,120 $65,512 $1,223 $200,677 Pay Annualization 4,837 11,875 4,093 197 21,002 Pay Raise (1.3%) 18,910 46,428 16,004 770 82,112 Non-Pay 3,571 5,171 39,968 48,710 FERS Contribution Increase 7,362 16,488 5,447 256 29,553 Federal Employees Health Benefits (FEHB) Program Modification 18,142 1,158 19,300 Efficiencies/Savings: ($18,399) (61) ($32) ($18,431) (61) Increase e-File Savings (2,374) (46) (32) (2,406) (46) HCTC Program Termination (16,025) (15) (16,025) (15) Reinvestment: 16,025 $16,025 Expand Telecom Infrastructure to Handle Increased Demand 16,025 16,025 Subtotal FY 2016 Changes to Base $34,423 (61) $81,120 $81,505 $1,223 $198,271 (61) FY 2016 Current Services (Base) $2,190,977 28,213 $4,941,120 40,564 $3,719,951 12,043 $291,223 398 $11,143,271 81,218 Program Changes: Taxpayer Service Initiatives: Improve Taxpayer Services 183,142 2,806 118,381 164 301,523 2,970 Improve Upfront Identification and Resolution of Identity Theft Returns 15,562 193 3,322 18,884 193 Enhance Service Options for Taxpayers 13,891 45 2,352 9 16,243 54 Increase Service for Low-Income Taxpayers and Taxpayers in Need of Hardship Relief 5,123 27 596 5,719 27 Subtotal Taxpayer Service Initiatives $217,718 3,071 $124,651 173 $342,369 3,244 Enforcement Initiatives: Implement Foreign Account Tax Compliance Act (FATCA) 33,625 321 37,380 140 71,005 461 Implement Merchant Card and Basis Matching 28,212 322 6,041 34,253 322 Prevent Identity Theft and Refund Fraud 47,738 358 34,424 62 82,162 420 Address International and Offshore Compliance Issues 35,206 238 5,451 40,657 238

Increase Audit Coverage 97,353 1,038 64,456 61 161,809 1,099Enhance Collection Coverage 83,236 986 39,594 48 122,830 1,034Address Compliance Risks in the Tax-Exempt Sector 15,511 146 7,951 13 23,462 159

Improve Audit Coverage of Large Partnerships 13,722 107 2,527 16,249 107

Pursue Employment Tax and Abusive Tax Schemes 8,677 52 8,509 17,186 52

Enhance Investigations of Transnational Organized Crime (TOC) 37,161 194 5,367 42,528 194

Ensure Ethical Standards of Conduct for Practitioners 3,385 28 895 4,280 28

Leverage Data to Improve Case Selection 5,111 14 33,949 45 39,060 59

Address Impact of Affordable Care Act (ACA) Statutory Requirements 108 1 44,775 432 22,323 50 67,206 483

Subtotal Enforcement Initiatives $108 1 $453,712 4,236 $268,867 419 $722,687 4,656

Infrastructure Initiatives:

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements 305,645 818 305,645 818

Sustain Critical Information Technology (IT) Infrastructure 188,514 157 188,514 157

Implement Federal Investigative Standards 3,464 11 3,464 11

Consolidate and Modernize IRS Facilities 85,456 74 85,456 74

Implement Agency Wide Shared Services Priorities 10,992 9 10,992 9

Maintain Integrity of Revenue Financial Systems 12,162 7 12,162 7

Restore Staffing for Essential Support Programs 19,938 152 19,938 152

Subtotal Infrastructure Initiatives $626,171 1,228 $626,171 1,228

Business Systems Modernization Initiative:

Leverage New Technologies to Advance the IRS Mission 3,618 87,955 178 91,573 178

Subtotal Business Systems Modernization Initiative $3,618 $87,955 178 $91,573 178

Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer:

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

Subtotal Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer Initiative $5,000 $5,000Subtotal Program Increases $217,826 3,072 $458,712 4,236 $1,023,307 1,820 $87,955 178 $1,787,800 9,306

Total FY 2016 Budget Request $2,408,803 31,285 $5,399,832 44,800 $4,743,258 13,863 $379,178 576 $12,931,071 90,524

Dollar/FTE Change FY 2016 Budget Request over FY 2015 Enacted $252,249 3,011 $539,832 4,236 $1,104,812 1,820 $89,178 178 $1,986,071 9,245Percent Change FY 2016 Budget Request over FY 2015 Enacted 11.70% 10.65% 11.11% 10.44% 30.36% 15.11% 30.75% 44.72% 18.15% 11.37%

TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT BSM TOTAL
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4.7 – Summary of IRS FY 2016 Program Integrity Cap Adjustment

Bureau: Internal Revenue Service Summary of Proposed FY 2016 Request $000 FTE $000 FTE $000 FTE $000 FTE $000 FTEFY 2015 Enacted $2,156,554 28,274 $4,860,000 40,564 $3,638,446 12,043 $290,000 398 $10,945,000 81,279Changes to Base:

Maintaining Current Levels (MCLs): $52,822 $81,120 $65,512 $1,223 $200,677

Pay Annualization 4,837 11,875 4,093 197 21,002

Pay Raise (1.3%) 18,910 46,428 16,004 770 82,112

Non-Pay 3,571 5,171 39,968 48,710FERS Contribution Increase 7,362 16,488 5,447 256 29,553

Federal Employees Health Benefits (FEHB) Program Modification 18,142 1,158 19,300

Efficiencies/Savings: ($18,399) (61) ($32) ($18,431) (61)

Increase e-File Savings (2,374) (46) (32) (2,406) (46)HCTC Program Termination (16,025) (15) (16,025) (15)

Reinvestments: 16,025 $16,025

Expand Telecom Infrastructure to Handle Increased Demand 16,025 16,025

Subtotal FY 2016 Changes to Base $34,423 (61) $81,120 $81,505 $1,223 $198,271 (61)

FY 2016 Current Services (Base) $2,190,977 28,213 $4,941,120 40,564 $3,719,951 12,043 $291,223 398 $11,143,271 81,218

Program Changes:

Before Cap Adjustment Program Increases:

Improve Taxpayer Services 183,142 2,806 118,381 164 301,523 2,970Leverage New Technologies to Advance the IRS Mission 3,618 87,955 178 91,573 178

Implement Information Technology (IT) Changes to Deliver Tax Credits and Other Requirements 305,645 818 305,645 818

Improve Upfront Identification and Resolution of Identity Theft Returns 15,562 193 3,322 18,884 193

Implement Foreign Account Tax Compliance Act (FATCA) 33,625 321 37,380 140 71,005 461

Sustain Critical Information Technology (IT) Infrastructure 188,514 157 188,514 157

Address Impact of Affordable Care Act (ACA) Statutory Requirements 108 1 44,775 432 22,323 50 67,206 483

Enhance Service Options for Taxpayers 13,891 45 2,352 9 16,243 54

Restore Staffing for Essential Support Programs 19,938 152 19,938 152

Increase Service for Low-Income Taxpayers and Taxpayers in Need of Hardship Relief 5,123 27 596 5,719 27

Implement Merchant Card and Basis Matching 28,212 322 6,041 34,253 322

Subtotal FY 2016 Before Cap Adjustment Program Increases $217,826 3,072 $106,612 1,075 $708,110 1,490 $87,955 178 $1,120,503 5,815

Total FY 2016 Request Before Cap Adjustment $2,408,803 31,285 $5,047,732 41,639 $4,428,061 13,533 $379,178 576 $12,263,774 87,033

Cap Adjustment Program Increases:

Enforcement Initiatives:

Prevent Identity Theft and Refund Fraud 47,738 358 34,424 62 82,162 420

Increase Audit Coverage 97,353 1,038 64,456 61 161,809 1,099

Improve Audit Coverage of Large Partnerships 13,722 107 2,527 16,249 107

Address International and Offshore Compliance Issues 35,206 238 5,451 40,657 238

Enhance Collection Coverage 83,236 986 39,594 48 122,830 1,034Leverage Data to Improve Case Selection 5,111 14 33,949 45 39,060 59

Address Compliance Risks in the Tax-Exempt Sector 15,511 146 7,951 13 23,462 159

Pursue Employment Tax and Abusive Tax Schemes 8,677 52 8,509 17,186 52

Enhance Investigations of Transnational Organized Crime (TOC) 37,161 194 5,367 42,528 194

Ensure Ethical Standards of Conduct for Practitioners 3,385 28 895 4,280 28

Subtotal Enforcement Initiatives $347,100 3,161 $203,123 229 $550,223 3,390

Infrastructure Initiatives:

Consolidate and Modernize IRS Facilities 85,456 74 85,456 74

Maintain Integrity of Revenue Financial Systems 12,162 7 12,162 7

Implement Agency Wide Shared Services Priorities 10,992 9 10,992 9

Implement Federal Investigative Standards 3,464 11 3,464 11

Subtotal Infrastructure Initiatives $112,074 101 $112,074 101

Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer:

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

Subtotal Alcohol and Tobacco Tax and Trade Bureau Program Integrity Transfer Initiative $5,000 $5,000

Subtotal FY 2016 Cap Adjustment $352,100 3,161 $315,197 330 $667,297 3,491

Total FY 2016 Budget Request $2,408,803 31,285 $5,399,832 44,800 $4,743,258 13,863 $379,178 576 $12,931,071 90,524

Dollar/FTE Change FY 2016 Budget Request over FY 2015 Enacted $252,249 3,011 $539,832 4,236 $1,104,812 1,820 $89,178 178 $1,986,071 9,245Percent Change FY 2016 Budget Request over FY 2015 Enacted 11.70% 10.65% 11.11% 10.44% 30.36% 15.11% 30.75% 44.72% 18.15% 11.37%

TAXPAYER SERVICES ENFORCEMENT OPERATIONS SUPPORT BSM TOTAL