The IRS Digitalization Strategy envisions a digitally driven IRS by 2025, making data accessible in a format that enables employees to fully use digital tools to make decisions and serve customers, and the agency is counting on industry partners to help bring innovation and integrated solutions to the table.
Associate Chief Information Officer for the IT Enterprise Program Management Office Sheila Eason said IRS is “certainly on our way” to reach that goal and is looking at areas “to help us get there.”
“It was all brought to light during the pandemic that we need to move toward digital,” she said at the Government Technology and Services Coalition’s recent IRS Day. “We’re moving into that space today.”
To get there, the agency needs to reduce paper volume by creating and enhancing digital channels to support the receipt, use, and transfer of digital data and minimize internal paper-producing processes, increase access to digital data by converting paper-based information and hard-copy images into digital format and expanding the availability of accessible and usable digital data from paper-based documents and multimedia formats, and prepare the IRS to manage digital data by using authoritative electronic record-keeping solutions and practices to the fullest extent possible, strengthening data intake capabilities to enable the validation, storage, protection, and sharing of data, and training and supporting IRS employees on the use and management of electronic data and records.
On March 8, IRS announced that the agency had scanned more than 120,000 paper Forms 940 since the start of this year – a twentyfold increase compared to all of 2022 and “another milestone for the IRS as we work to transform the agency,” then-Acting IRS Commissioner Doug O’Donnell said.
As millions of forms are still filed by paper, the Digital Intake initiative is poised to expand to include scanning of Forms 1040 as well as Forms 941. Scanning initiatives are also underway with Lockbox Financial Agents and select industry partners
Enterprise Digitalization Office Director Harrison Smith emphasized that digitalization ultimately reduces the costs of storing so many paper documents as well as the risk of holding onto something that the agency doesn’t need.
“Our job is to understand how we can make business changes to our processes to optimize and also identify what we need in the future,” he said.
Making those changes includes sound policy decisions, communicating with stakeholders, incorporating the latest technology, and being flexible.
“You’ve got to understand what’s possible to change the way that you function; you’ve got to be able to take a step back,” Smith said. “If people like the system and way it functions you’ve got to have someone who doesn’t like it – you have to have perspectives.” And while innovation is taking IRS to the next level, flexibility is critical when “there are some areas where we need to be more measured, traditional.”
“The ability to test, the opportunity to identify what might work, to adjust and pivot with industry partners is really important,” Smith said. “…I care if it works, meets my needs, and engages with systems correctly.”
Solicitation release to award in the digitalization space has been 27 calendar days on average. Smith said industry should provide as much information as possible about an offered solution, how well it performs, and how long it’s going to take to see if it’s working.
“Find what you’re good at,” he advised. “Allow us to invest in what’s necessary.”
Noting that IRS and industry “need to have those conversations in a different way,” Smith said that they will ultimately “make decisions on what makes the most sense.”
“We want everybody to be successful but in some places we’re pushing pretty hard and it may not be a good fit at that time,” he added.
Smith stressed that there are a “significant number of opportunities in the digitalization space” for industry partners to pursue.
“We’re striking a balance – how to reduce reliance on paper, how do we make that experience better for the taxpayer,” he said, adding that reducing a particular strain will allow IRS to sunset processes and technologies.
The Digitalization Office tries to be as transparent as possible with partners about how systems are going to and need to function including multiple-use cases. “We need flexibility from our industry partners … we can’t continue to just build and build and build,” Smith said. “If we change this process, it will improve outcomes.”
Eason said that a platform is in place to be able to access what the office needs. “It’s building solutions that are not just for one but for all: how do we build not just for today?” she said. “Now we have it; now let’s make sure we have solutions.”
“As we modernize we have to sunset, decommission – no one likes to hear it,” she noted. “We will keep some processing avenues there.”
Eason said she’s looking to industry partners “to bring that special thing not in there that makes us move different, accelerate faster.”
“Don’t look just at what we’re giving you because you have that information about what’s happening in industry that could be beneficial to the taxpayer,” she advised on solicitations.
“If you have something that you can offer, tell us that. It may change the way we’re thinking so that we can deliver something better and not have to go back and redo it.”
Innovation will also “make sure the customer knows you’re listening to them and not just pushing something on them as a change,” Eason said. Industry should also “keep in mind that that integration has to be there.”
Smith encouraged “a more enterprise-wide view with the greatest benefit to the greatest number of people” in identifying IRS challenges and formulating solutions.
“When you see an opportunity in a solicitation, please tell us what the challenge is – tell us what the gaps are,” he advised. “If you start to identify that, that’s a huge opportunity for us if you ask those questions.”
