Menu
Tax Notes logo

IRS Exec Pushes for Agency ‘Digitalization’ Funding

Posted on Mar. 4, 2021

The IRS could have handled the coronavirus pandemic without a “hiccup” if its operations had been fully digitalized, a senior agency executive said March 3.

“If I could point to one thing [during the COVID-19 pandemic] that would’ve made life easier for us, it’s what I call digitalization,” Sunita Lough, IRS deputy commissioner for services and enforcement, said during a prerecorded March 3 presentation at the Federal Bar Association’s virtual tax law conference. “It’s a technology term, but it’s not just technology. It pretty much encompasses everything we do.”

Digitalization of exams, notices, two-way practitioner and taxpayer communications, and other IRS services “would have transformed this pandemic seamlessly,” Lough said. “It just would’ve been not a hiccup at all, if we had that capability, and if we had that funding” to move the agency to full electronic services, she said.

The IRS defines digitalization as the conversion of text, pictures, or sound into a digital form for processing, sharing, and accessing by a computer, according to a recent Government Accountability Office report on 2021 filing season risks.

Digitalization might include using optical character recognition to extract machine-readable text from a digitized file, or to meet paper reduction or elimination policy mandates, the GAO said.

The IRS announced a new enterprise digitalization and case management office in July 2020. The Tax-Exempt and Government Entities Division’s new enterprise case management (ECM) system, announced in September, was hailed as one of the office’s success stories.

But moving taxpayers to electronic filing and communication, as well as clearing away obstacles to e-filing information and other returns, has taken on new urgency at the IRS because of coronavirus social distancing and other health precautions, senior agency officials told the Fed Bar audience. 

‘Queen for the Day’ 

Lough noted that the IRS has expanded electronic filing and signature options along the way to a fully digital taxpayer experience. But full digitalization would allow the agency to detect and better target returns for further examination, and to issue additional economic impact payments more promptly, she said.

A fully digital IRS wouldn’t only enable better communications between the taxpayer and practitioners and the IRS, it could save the agency money, noted Jeffrey Tribiano, deputy commissioner for operations support.

The IRS is currently transitioning to an agencywide ECM system, Tribiano said. As that system comes online, it will allow the agency to retire 60 to 90 separate ECM applications, saving funds on operations and maintenance that could be used for other taxpayer services, he said.

“If I was queen for the day,” Lough said, “I would like to have an opportunity for all returns to be . . . e-filed.” Her wish list includes funding to expand digitalization to electronic conversion of paper returns, and to expand efiling options to forms the agency now requires on paper.

“They don’t have to be mandated, but the fact that we provide the taxpayer the opportunity that they can [electronically] file” would be progress, Lough said.

Copy RID