Outrageous outages

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The system outages at the Internal Revenue Service on Tax Day (Tax Day!) will undoubtedly be the source of much outrage over the next several days – but that outrage will likely miss the point that, properly exploited, these outages could provide the impetus to make things radically better.

Last-minute taxpayers, already terrified by the approaching deadline, will be even more terrified; tax pros, already exhausted, will fume at the technological gremlins that tripped them up in the home stretch. The IRS will blame Congress; Republicans will complain about the ineptitude of big government; Democrats will rage at Republicans for starving the IRS of funds over the past several years

They are all, of course, right to rage: Filing is terrifying; tax season is a nightmare for professionals; Congress does overburden and underfund the IRS; and big government often stumbles under its own weight.

None of this is new – IRS funding and manpower may have declined precipitously over the past several years, even as the mandates placed on it have ballooned, but the service has been famous for its inability to manage technology for literally decades.

The litany of IRS projects that failed to deliver, went far overbudget, barely limped over the finish line, or were unceremoniously dumped in favor of a newer project (equally doomed to, if not failure, at least ignominy) is more or less continuous – and not very surprising.

The IRS’s interactions with the public are fairly unique in their frequency, their complexity, their compression in time, and the certainty that almost every interaction will be scrutinized by a suspicious taxpayer. The demands this makes on technology are enormous, and since the 1960s, the IRS has struggled to keep its technology up to snuff. As we noted, the government isn’t good at technology, and while more humdrum agencies might limp along with weak systems, the IRS’s technology needs are closer in scale and complexity to those of the Pentagon and the space program – without the same budgets and popular support.

It’s tempting to write off the IRS as a perpetual basket case, but there are actually reasons to hope that it could, in time, get better.

To start, its technology record is not quite as dismal as it often seems: Despite not-infrequent glitches, the IRS has actually managed to transition the vast majority of taxpayers to electronic filing relatively smoothly (“relatively” being the operative word here). It has also learned to make the most of technology when it comes to automating notices, improving audits, and fighting identity theft.

What’s more, the sort of technology it needs is much more common now that it was even a decade ago. When the IRS began getting computerized in the 1960s, very few organizations were using software and computers on the scale that it required, and it wasn’t until the 1990s that they became common. The internet and the web have made every company a technology company, and the industries involved in sourcing, implementing, assessing and improving large (even huge) technology systems are much more mature than they were. Even small companies are now capable of interacting complexly with millions of users.

Just prior to the targeting of conservative groups that soured relations between the IRS and Congress, then-Commissioner Doug Shulman articulated a vision of a future-forward IRS that would harness technology to both ensure and enable tax compliance. That vision was derailed by the acrimony that started shortly after his term, but it remains possible.

The same technologies that lets us apply for mortgages, find our soul mates, and handle our medical insurance online should allow for reliable, easy tax filing on state-of-the-art systems -- which will also give the IRS even more capabilities for closing the tax gap, fighting fraud, and, one hopes, protecting our identities.

If we can use the outrage sparked by system outages on Tax Day (Tax Day!) to develop a moonshot-style agenda that recognizes the need to fund first-rate, forward-looking technology at the IRS, then it may well have been worth the terror and the rage.

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