There’s been a lot going on in the IRS in the first few months of President Donald Trump’s second term. Now, it appears that modernization efforts are on pause and potentially in for an overhaul, according to media reports.
Acting IRS Commissioner Melanie Krause informed employees via email on March 28 that the agency was “standing down the Transformation and Strategy Office (TSO),” Tax Notes reported. Krause also wrote in the email that the IRS would review its “projects and initiatives…to determine their status and ensure alignment with future priorities.”
The IRS has been going through some things since Trump reoccupied the Oval Office. Before the pause in modernization efforts came to light, there were the mass layoffs and the possible recruitment of some agency staffers to help with immigration enforcement.
This announcement came about two weeks after Treasury Department officials told reporters the IRS would pause operational changes that commenced under the Biden administration, The Hill reported.
CFO Brew reached out to the IRS for comment on the TSO’s closure and for more details on its review of modernization efforts. The agency referred us to the Treasury’s press office, which did not respond to our inquiry by publication time.
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A refresher. The IRS has an allowance of $57.8 billion through the Biden-era Inflation Reduction Act to spend on service improvements. This number was originally $80 billion, but Republican lawmakers later clawed back more than $20 billion and have frozen another $20 billion, bringing the effective total to under $40 billion. The agency had spent about $9 billion of IRA funding as of Sept. 30, according to a report from the Treasury Inspector General for Tax Administration (TIGTA).
In a separate report, TIGTA claimed that the IRS “inappropriately spent” $4.6 million of IRA funding to maintain legacy systems from a $4.8 billion tranche meant for modernizing business systems. TIGTA further estimated, based on those findings, that the agency has “inappropriately spent” about $21 million on legacy systems.
Accounting interests support efforts to modernize the IRS and improve service levels. An AICPA VP of tax policy told CFO Brew in December that under Trump 2.0, she hoped lawmakers would keep IRS funding for service and technology improvements intact.
“A modern, functioning IRS is essential for Americans to meet their tax obligations and to our country’s financial health,” Mark Koziel, president and CEO of the AICPA, said in a statement in March.