TIGTA warns IRS of delayed start to 2019 tax season

The high volume of changes in the Tax Code, along with a shortened cycle and missed deadlines, are increasing the risk of a delayed start to the 2019 tax-filing season, according to a new report from the Treasury Inspector General for Tax Administration.

The report pointed out that the Tax Cuts and Jobs Act of 2018 made a number of significant changes to the Tax Code affecting individuals and businesses, as well as tax-exempt organizations, and is the first major tax reform legislation in more than 30 years.

The IRS estimates that implementation of the law will require creating or revising approximately 450 forms, publications and instructions, and modifying around 140 information technology systems to ensure it can accommodate the newly revised tax forms.

The IRS Information Technology organization’s normal deadline for business units requesting information technology products and services for the next filing season is January 31. After passage of the TCJA last December, the IRS IT organization set up several interim deadlines to facilitate timely implementation of the law’s provisions. However, the business units missed the deadlines for submitting work request notifications and business requirements. After that, the IT organization set a new deadline of June 1, 2018, for submitting final work request notifications. The most recent deadline shortened the time frame for making system changes for the 2019 filing season by four months. But, as of July 5, 2018, the IT organization hadn’t received all the final work request notifications and business requirements. Delays in receiving the information mean less time available for modifying and testing systems, thereby increasing the risk of a delayed start to the 2019 filing season.

Another major area of concern, according to the report, is the IRS’s ability to quickly fill a number of critical positions that were vacated by IRS employees or contractors. Thanks to the lengthy process involved in hiring IRS employees or bringing contractors on board, the positions might not be quickly filled, against putting the timeliness of the IT updates at risk.

The IRS received $320 million from Congress to implement the TCJA, including $291 million it estimated would be needed for the IT and ancillary operations support work. But TIGTA estimates it would take more than 1.1 million labor hours based on the IRS’s estimate of 542 full-time equivalents to implement the TCJA’s provisions. The IRS intends to use both current and new employees to meet the needs for implementing the act. As of June, 117 current and new employees have been hired or reassigned to carry out the work.

The IRS’s IT organization is planning to identify any potential negative impact on its existing programs and projects from implementing the tax overhaul. But as of mid-July, the IRS hadn’t provided documentation of any ongoing projects or programs that will be negatively affected. TIGTA said that it’s continuing to review the IT organization’s efforts to implement the new tax law.

In response to the report, IRS chief information officer S. Gina Garza said the IRS IT organization is committed to implementing the modifications required by the TCJA and providing a successful tax season for American taxpayers.

“The IRS has created new forms and governance structures to increase communication, collaboration and alignment across critical IT stakeholders and implement tax reform changes, including an Executive Oversight Team comprised of IT leaders,” she wrote. “The IRS has also secured adequate funding and hiring flexibility for tax reform implementation, and proactively addresses outstanding resource gaps.”

IRS chief information officer Gina Garza

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