In the wake of high-profile data breaches at the Internal Revenue Service and other federal agencies, a new government report warns the IRS against expanding its online customer service options before completing key technology upgrades.

The report, from the Treasury Inspector General for Tax Administration, pointed out that the IRS has made progress in providing taxpayers with online customer service options. However, the report cautions that the IRS needs to prioritize the completion of key information technology projects needed to develop future projects that will provide taxpayers with dynamic online access capabilities.

In May, the IRS revealed that organized criminals had used its online Get Transcript application to access the tax returns of approximately 104,000 taxpayers (see IRS Detects Massive Data Breach in ‘Get Transcript’ Application).

“As taxpayers continue to be provided with the electronic products and services they desire to interact and communicate with the IRS, the risk associated with unauthorized access to tax accounts will continue to grow,” said TIGTA Inspector General J. Russell George in a statement. “As such, completion of those technology projects that improve online service while mitigating the risks must be a priority.”

In its most recent Strategic Plan, the IRS acknowledged that the current technology environment has raised taxpayers’ expectations for online customer service, and it needs to meet these expectations. The IRS’s goal is to provide taxpayers with dynamic online account access that includes viewing their recent payments, making minor changes and adjustments to their accounts in real-time, and corresponding digitally with the IRS to respond to notices or complete forms. 

TIGTA performed an audit to assess IRS efforts to identify taxpayers’ needs and preferences for online services and the actions planned or taken to deliver these online capabilities. In the report, TIGTA found that the IRS has made progress in providing taxpayers with online customer service options. However, the report pointed out that the IRS must complete three main information technology projects to establish the electronic platform for developing future projects that will provide taxpayers with dynamic online access capabilities. These three projects are Online Account Activity, Taxpayer eAuthentication, and Taxpayer Digital Communications.

The completion of these projects is needed to provide the account features to enable taxpayers to view their accounts online, to accurately authenticate their identities online, and to enable the IRS and taxpayers to communicate with secure electronic messages, TIGTA noted.

TIGTA recommended that the IRS’s deputy commissioner for services and enforcement reprioritize the 71 Service on Demand projects to align with the IRS Commissioner’s long-term vision for modernizing taxpayer service. The IRS agreed with the recommendation. The IRS plans to use its annual Services Approach reflection and refresh process to ensure that the projects proposed for implementation, including the Service on Demand projects, align with the IRS commissioner’s long-term vision for modernizing taxpayer service.

“The IRS’ long-term vision for tax administration is to modernize taxpayer service by providing taxpayers with more robust online services and providing more efficient service options,” wrote Rajive Mathur, director of the IRS’ Office of Online Service, in response to the report. “To that end, the IRS has focused on delivering a number of self-service online interactive tools to increase service to taxpayers while achieving cost savings by reducing traffic on traditional, more expensive channels.”

An IRS spokesperson emailed a further response to the report. “The IRS’s long-term vision is to modernize its customer service by providing taxpayers with additional robust online accounts and applications in a safe and secure environment,” said the statement. “At the same time, we continue to focus on increasing the security of our online services. As TIGTA notes, the IRS has made considerable progress in providing taxpayers with more digital self-service options, including modernizing the IRS public website, updating the technical infrastructure that supports it, improving website content and design, and optimizing search capabilities. This also includes delivering a number of self-service online interactive tools, such as Where’s My Refund and Online Payment Agreements, to increase service efficiency for both taxpayers and IRS, while achieving cost savings and reducing traffic on traditional more expensive channels.

"The IRS will continue to look for ways to improve the taxpayer experience to provide more efficient options, particularly through the Service on Demand initiatives," the IRS statement continued. "Since 2010, the IRS has seen a budget decline of $1.2 billion and lost 16,000 employees across the IRS. Any proposed strategy must consider our limited funding and finite resources for high-priority information technology projects and other investments across the agency. We agree with TIGTA that we should continually revisit our strategic priorities to advance our digital offerings to taxpayers as far and fast as our resources allow to efficiently satisfy taxpayer service expectations.”

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access