UPDATE: The debt ceiling and budget cuts package passed by Congress on May 31 rescinded $1.4 billion given to the IRS in the Inflation Reduction Act and includes a separate agreement to take $20 billion from the IRS over the next two years and divert those funds to other non-defense programs. With fewer discretionary funds at their disposal, the IRS will have to pull back on some of its plans described below.
The Inflation Reduction Act Strategic Operating Plan (SOP) represents a significant step towards the modernization and improvement of the Internal Revenue Service (IRS). With nearly $80 billion in supplemental funds allocated to the IRS through the Inflation Reduction Act, the SOP serves as a living document that adapts to evolving needs and aims to foster unity within the agency.
Breaking Down Silos
In a recent speech, Bridget Roberts, head of the IRS Transformation and Strategy Office, emphasized that the SOP was intentionally designed to break down institutional silos within the IRS. Rather than focusing solely on specific business units or functions, the plan takes a cross-functional and cross-agency approach. The objective is to foster collaboration and ensure that changes in service, enforcement, and technology are interconnected, influencing every aspect of the IRS’s operations. By eliminating silos, the agency can work cohesively towards a common goal and better serve taxpayers.
Enhancing Data Analytics
One crucial aspect highlighted in the SOP is the need for improved data analytics throughout the IRS. Roberts stressed the importance of using data and analytics to optimize resource allocation and focus enforcement activities on areas with the highest potential for noncompliance. Recognizing that auditing every taxpayer is impractical, the SOP emphasizes the strategic use of data to identify instances of true noncompliance. This approach will not only benefit taxpayers but also enable the IRS to direct its resources more effectively.
A Unified Mission
The SOP serves as a unifying force within the IRS, aligning various departments and functions towards a shared mission. By bringing together different areas of expertise, the plan encourages collaboration, information sharing, and the development of innovative strategies. With its dynamic nature, the SOP ensures that it remains a relevant and actionable blueprint for ongoing transformation, rather than a static document collecting dust on a shelf.
Closing the Tax Gap
A key objective of the SOP is to address the tax gap—the difference between taxes owed and taxes paid. Roberts emphasized that the SOP will support the IRS in ramping up enforcement activities while leveraging data analytics to target areas of noncompliance more effectively. By prioritizing enforcement efforts based on reliable data, the agency aims to ensure that audits result in meaningful changes and provide tangible benefits for both taxpayers and the IRS.