The Electronic Tax Administration Advisory Committee (ETAAC) submitted its annual report to Congress today, June 24. According to the announcement about the report, “The ETAAC is a public forum whose members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and the nation’s tax industry that was established in 2015 to fight identity theft-related refund fraud and cybercrime.” The news release further stated “The 2020 report includes a total of 16 recommendations grouped into four sections: Fund, Modernize and Enable the IRS; Defend and Protect our Tax System; Improve the Taxpayer Experience; and Strengthen the Security Summit and the ISAC.”
You can read all 95 pages of the FULL REPORT, but I’ll attempt to provide a synopsis in a more manageable page or two.
Key Observations regarding the current environment:
1. The fiscal condition of the federal government is under tremendous strain – the IRS must narrow the $380 billion annual tax gap.
2. Modernization of the IRS is an essential component of narrowing the tax gap. Modern technologies play a fundamental role in the IRS’s ability to improve taxpayer services, deliver a 21st Century taxpayer experience, collect revenues owed to the government and increase the IRS’s operating effectiveness and efficiency.
3. Full funding of the IRS’s FY2021 budget request, including its request for a Program Integrity Cap Adjustment,5 is foundational to IRS enforcement and modernization.
4. Cybercriminals continue to attempt to steal billions of dollars in refunds and are constantly probing for new vulnerabilities – the IRS and the Security Summit cannot let down their guard.
5. Beyond IDTTRF, our tax system is exposed to disruption by adversaries intent on interrupting the flow of tax revenues, refunds and other payment streams critical to our nation and economy.
In the report the ETAAC enumerated 16 Recommendations for 2020, which were broken down into 4 themes, based on the key observations listed above.
Theme #1: Fund, Modernize and Enable the IRS
- Fully fund the IRS Fiscal Year (FY) 2021 budget request
- Consider and approve the IRS’s request for an FY2021 Program Integrity Cap Adjustment
- Monitor and enable government-wide digital identity policies and initiatives
- Provide IRS with the authority and necessary funding to enforce security standards
Theme #2: Defend and Protect our Tax System
- Collaborate on the identification and mitigation of disruption threats to our tax system
- Engage with the FTC to assess impact and implementation of proposed changes to FTC Safeguards Rule
- Study information security practices and identify vulnerabilities in the tax preparer community
Theme #3: Improve the Taxpayer Experience
- Collaborate on the identification and piloting of promising digital identity solutions
- Implement taxpayer-controlled “real-time” protections
- Expand collaboration on the design and launch of the IRS 1099 internet-based service
- Increase accuracy of EIN responsible party information
Theme #4: Strengthen the Security Summit and ISAC
- Evaluate the Taxpayer First Act’s (TFA) impact on the Security Summit and sustain the energy and commitment of Security Summit and ISAC participants
- Collaborate with state and industry ISAC participants to implement TFA’s ISAC related provisions
- Implement a more structured onboarding process to mitigate the adverse impact of continuing ISAC turnover
- Provide a more structured training program to improve ISAC participant performance
- Implement real-time EFIN and PTIN validation capabilities
IRS’s Top Management and Performance Challenges
In its report from October 2091, the Treasury Inspector General for Tax Administrations (TIGTA) identified 5 challenges the IRS has concerning Management and Performance. Details of the findings can be found here, but in short they are:
- Security over taxpayer data and protection of IRS resources
- Implementing tax law changes
- Addressing emerging threats to tax administration
- Supporting an enhanced taxpayer experience
- Modernizing IRS operations
The ETAAC enumerated 6 challenges in its assessment which the ETAAC says are consistent with the TIGTA’s. The challenges identified by ETAAC are:
#1: Collection of tax monies owed to the federal government
#2: Adequate funding
#3: IRS systems modernization
#4: Cybersecurity of tax system
#5: IDDTRF prevention in both individual and business tax areas
#6: Protection of the tax system from operational disruption
My goal in sharing this was to increase awareness of the report, share the high level recommendations from the report and hopefully drive engagement with the report which can be found here.