Revitalizing Tax Administration: America Needs a High-Functioning IRS

As Americans grapple with an ever-evolving tax landscape, one constant remains: the Internal Revenue Service (IRS) is a vital cog in the nation's fiscal machinery. Yet, decades of underfunding and technological stagnation have left the agency struggling to keep pace with the demands of a modern tax system. The Inflation Reduction Act (IRA) allocated $80 billion over 10 years for IRS modernization and enforcement, but recent events, such as the rescission of $20 billion, highlight the urgent need for a high-functioning IRS.

The IRS faces a daunting task: balancing improved taxpayer services with increased enforcement efforts without overburdening middle-class filers. The agency must prioritize high-income earners and corporations while investing in technology to enhance accessibility and efficiency. Already, the IRS has collected $160 million and hired 5,000 new customer service representatives, reducing phone wait times to an average of three minutes.

To modernize its systems and better serve taxpayers in the digital age, the IRS should prioritize several technological upgrades. Transitioning to cloud-based services, implementing the Customer Account Data Engine (CADE 2) program, and embracing robotic process automation (RPA) can improve taxpayer data accessibility, scalability, and security. Moreover, enhancing cybersecurity measures, leveraging AI and machine learning, and adopting Agile and DevOps methodologies can further boost the IRS's capabilities.

To restore public trust, the IRS must prioritize transparency and accountability. Enhanced data disclosure, improved oversight mechanisms, and expanded public engagement can help the agency achieve this. For instance, the IRS could publish more detailed data on its operations, undergo regular audits, and engage with taxpayers and stakeholders via digital platforms.

The IRS's effectiveness is critical for the nation's tax system, impacting Americans' financial lives and the federal budget. Additional policy changes, such as increased funding, modernization efforts, targeted enforcement, expanded digital services, and attracting and retaining talent, are essential for a high-functioning IRS.

In conclusion, a high-functioning IRS is vital for a robust and fair tax system in America. By investing in technology, prioritizing transparency and accountability, and implementing policy changes, the IRS can better serve taxpayers, address the tax gap, and restore public trust. It is crucial for policymakers to recognize the importance of a modern and efficient IRS in driving the nation's economic success.