US Tax Collection Agency Relies on Outdated Hardware

Posted by Angie Petty on September 26, 2017

Old Computers

According to the Treasury Inspector General for Tax Administration (TIGTA), 64% of IRS’ hardware is beyond its useful life.

In a report released earlier this month, TIGTA examined the state of IRS’ hardware infrastructure and found that due to ongoing budget constraints IRS operates with ever-aging hardware some of which is three to four times older than industry standards. And the problem is only getting worse. 

In 2013, 40% of IRS’ hardware was considered aged or outdated, but in the most recent analysis this percentage had grown to 64%. The IRS estimates that the current replacement cost for its aged IT hardware is approximately $430 million. IRS’ objective is to reach a level of 20-25% in aged hardware assets. 

The Sustaining Infrastructure (SI) Program manages a central investment program for the replacement of the IRS’s aged information technology hardware. It is staffed part-time by three IRS employees and follows a prioritization process to replace the aged hardware that supports the IRS’ most critical business needs. In 2016, the SI Program budget totaled $172 million, falling well short of the $430 million estimated to replace all of the aged IRS hardware.

IRS is not alone.  GAO estimates that federal agencies have increased the amount of money spent on operations and maintenance (O&M) versus development, modernization and enhancement (DME) over the last seven years.  O&M spending as a percentage of overall IT spending has grown by 9% since FY 2010.

IRS processed 245 million tax returns and collected approximately $3.3 trillion in taxes in 2016.  IT infrastructure is a critical component to fulfilling the IRS mission.  

TIGTA recommends that the IRS CIO conduct additional coordination with the CFO and other business unit executives to identify the availability of funds that could be transferred, reprogrammed, or carried over to spend on reducing outdated hardware.  TIGTA also recommends that the CIO develop a comprehensive guidance document detailing enterprise-wide processes, policies, and procedures, as well as roles and responsibilities, to effectively manage the IRS’ aged IT hardware.

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