The IRS is looking to implement and test new modernized technology to run parallel with legacy technology after the 2024 filing season, which a top IRS official this week said will eventually replace the legacy systems.
During a joint House Oversight hearing held on Oct. 24 by the Health Care and Financial Services Subcommittee and Government Operations and Federal Workforce Subcommittee, IRS Commissioner Danny Werfel discussed the agency’s plans to implement these new technologies as part of broader efforts to modernize the agency.
“The good news is in April, so after this filing season, we are going to turn on … that modern system for the first time, and we’re going to run it in parallel with our legacy system, work out any kinks, and hopefully, get it up and running by filing season ‘25,” said Werfel.
For over 60 years, the IRS has been utilizing the Individual Master File (IMF) to store and process tax submissions, which is running an outdated coding language known as COBOL. Replacing this legacy system has become a “keystone” goal at the agency, according to Werfel.
“We’re laying the bricks of a foundation to improve customer service,” added Werfel. Currently, the replacement for the system is slated for between fiscal year 2027 and 2029.
Although the IRS has been taking steps to modernize the agency, Werfel added that the base budget to keep the agency running has remained low in comparison to the modernization budget granted through the Inflation Reduction Act.
“We have a modernization budget as people have pointed out, it’s currently at $60 billion and it’s …very impactful. The issue, however, is our base budget. Our annual budget to run the trains every day … that’s been underfunded and is still underfunded,” said Werfel.
“In order to run those trains, we have to borrow from the modernization budget to pay for the base budget. And as we do that, we raid the modernization budget and then we might not have enough money,” he added.
