Paul L. Caron

Thursday, March 30, 2017

Trade Group: IRS Wastes 22% Of Its Budget ($2.76 Billion) On Information Technology

IRS Logo 2International Association of IT Asset Managers,  IT Waste at the Internal Revenue Service:

IRS IT Spending/Waste By The Numbers:

  • $11.2 billion - Total IRS budget in 2016. 
  • 79,890 - Total IRS employees as of FY2015.
  • $4,600-$4,900 - Average amount spent per employee on IT in the private sector.
  • $37,051 - Average amount spent per employee on IT at the Department of Treasury.
  • $31,000 - According to IAITAM, private sector-style IT Asset Management protocol implementation would save roughly $31,000 per employee at the IRS. 
  • More than three times – How much the potential ITAM-related savings per employee stack up in comparison to the average $9,118 federal income tax bill for Americans.
  • 22 percent - Total potential ITAM-related savings would add up to $2.76 billion
    or nearly one quarter of the total 2016 IRS budget.

IRS IT Problems By The Numbers ...

Fixing the ITAM Problem at the IRS ...

IRS News, Tax | Permalink


Have you ever been inside an IRS office or been on the phone with an IRS Revenue Officer waiting on their computer to pull up information? Their computers are ancient, and all the IT spending is not showing results. Remember this from just two years ago? >> IRS Chief: "We Still Have Applications That Were Running When JFK Was President"

Posted by: Woody | Apr 1, 2017 8:50:43 PM

No, we don't use DOS. We have the mighty IDRS. We have a mainframe that we go blind trying to use while staffing the phones in Accounts Management.

IDRS was around in 1969. Bill Gates hadn't even brought DOS into the world until the 1980s.

As to the pseudonym...gee, do you think IRS employees are actually allowed to comment online using their real names? HAHAHAHAHA. Nope. Don't need yet another visit to TIGTA for disciplinary infractions...

Posted by: Lieutenant Blantyre | Apr 1, 2017 8:24:48 PM

M's comment is relevant. The IRS and Treasury Dept. maintain huge data files - banks of large disk/tape farms with associated large computers. Those aren't (can't be) run on desktop MS-DOS computers. Of course they also have desktop systems for all of their white collar employees, with the costs of maintaining them, the email systems, ... Without a breakdown it's impossible to tell if their costs are too high, reasonable, or even too low!

Posted by: Henry | Apr 1, 2017 4:32:15 PM

Forgive me if I don't trust a lawyer to understand Information Technology. I'd love to hear his recommendations... "put it all in the cloud".

Posted by: EB | Mar 31, 2017 12:41:18 PM

It is also useful to do an international comparison of tax adminiistration costs. From what I recall, the US comes in very low in comparison to other OECD countries. I'm sure that IT management at IRS can be improved, but this involves tremendous challenges, and it seems doubtful that huge cost savings would result.

Posted by: Victor Thuronyi | Mar 31, 2017 10:02:23 AM

"But they need a bigger budget to stop all those tax cheats..."

That's what I've observed the usual suspects arguing around here and elsewhere. Of course, when it comes to gov't cheats, no comment...

Posted by: MM | Mar 31, 2017 7:31:45 AM

IRS/Social Security/Medicare systems run on DOS. That's right. Our tax system runs on technology from 1987. No wonder they were hacked. Updating is important.

Posted by: md | Mar 31, 2017 6:43:30 AM

Seems highly dubious that the number could be that far off due to "waste", as opposed by creative "lies, damned lies, and statistics" by whoever is trying to sell the IRS "ITAM" services. For examples, as a federal agency, the IRS likely makes liberal use of contractors. If you don't count them as employees, but you keep their cost in the equation, the "per employee" cost goes through the roof.

Posted by: realInfraredMenace | Mar 31, 2017 5:38:33 AM

While most companies' IT spending may be for the support of their employees, the IRS's IT budget also goes towards systems and data security for all taxpayers' data. This looks like it's most likely an irrelevant statistic.

Posted by: M | Mar 31, 2017 4:48:27 AM

This is the type of analysis you do in an undergraduate business school and get a middling grade on. It's fine to cite the data, but you need to dig deeper.

Posted by: HTA | Mar 31, 2017 4:32:57 AM

"More than three times..." is a very confusing statement. The link provided does not immediately provide the information that is being mentioned. This adds further confusion for the reader. Finally, there is no link to the "IAITAM" to corroborate the claim of saving $31,000 per employee, please provide.

Posted by: theMegaPope | Mar 30, 2017 8:46:25 PM

And the solution:

Hire lots of us IT Asset Managers! We'll do a lot of really obvious things from our standard checklist to save money.
Possibly that's true, but I'm skeptical.

Posted by: Eric Rasmusen | Mar 30, 2017 1:58:41 PM