Sixty-year-old tech

Sixtyfour years old. That’s the age of the technology that parts of the Internal Revenue Service currently rely upon to process tax returns. It’s time to retire it.

As the IRS has lurched from crisis to crisis in recent years, many of its woes have become well known: It answered only 13% of calls last year. It has a paperwork backlog that includes millions of unprocessed returns. It is beset by ongoing staffing shortages, notably the fewest auditors since World War II. There’s been some improvement. The IRS has hired 5,000 more workers to answer calls and significantly reduced the backlog, but huge challenges remain.

Its outdated technology has yet to be addressed. A new Government Accountability Office report highlights just how dire the IT situation is. Not only are the applications and hardware ancient, but some of the software it uses are up to 15 versions behind the current one.

A key problem is the “Individual Master File” that has been in use since 1970, when Richard M. Nixon was president and the Chevrolet Chevelle was a hot car. They both are long gone, but the Individual Master File is still the main database to collect and store taxpayer information. It was built with antiquated programming languages COBOL and Assembly. The IRS says it finally updated some code last year, but COBOL remains in use. Until the master file is fully modernized, it will remain a colossal task to get realtime information on refunds and processing status to taxpayers, not to mention assure the latest safety and fraud precautions. The target date to entirely replace the master file is now 2030, but the GAO warns it’s unlikely the IRS will meet that deadline.

This is unacceptable. Democrats passed the Inflation Reduction Act last year, giving the IRS almost $80 billion to improve operations. Half that money is for more auditors to pursue corporate and highearning tax cheats, but about $30 billion is for improving basic services, including IT and staffing. These upgrades are urgently needed. House Republicans are wrong to attempt to strip away this funding, but lawmakers in both parties should press for faster results.

Tax filing season is underway and there have already been problems. The IRS told people to wait to file their returns if they lived in about 22 states that sent out some type of inflation relief payment last year. This is because the IRS was deliberating on the question of whether these payments count as income on federal tax returns. That’s a valid issue, but one the IRS should not have waited until after tax season began to decide. It finally said on Feb. 10 that the payments would not be taxed.