In a significant move to revamp the Internal Revenue Service’s technology modernization program, tech startup executive Sam Corcos has canceled contracts worth about $1.5 billion from the tax agency’s budget. Corcos, who is the founder and CEO of health technology firm Levels, and a member of President Donald Trump’s informal Department of Government Efficiency, revealed that he has discovered legacy contracts with outside technology consultants worth tens of billions of dollars for a systems modernization effort that is decades behind schedule.
The modernization budget stands at around $3.7 billion annually, with an additional $3.5 billion allocated for information technology systems. The IRS has paused technology modernization investments to reassess its operating approach in light of new artificial intelligence technologies, marking a shift from the original $80 billion in investment funding included in former President Joe Biden’s 2022 Inflation Reduction Act.
This effort aims to address a decade of under-funding to update outdated 1960s-era computer architecture, enhance taxpayer services, and improve the IRS’ ability to increase tax collections through more sophisticated audits of the ultra-wealthy and business owners. Corcos commended the IRS’ 8,000 career information technology employees for their cooperation in the cost review, but noted that the agency’s IT costs far exceed those of private-sector banks processing similar amounts of data.
The move to cancel contracts and review spending has faced challenges, with the legality and size of the cuts being questioned in court. However, many see this as a necessary step in modernizing the IRS’ technology infrastructure and improving its efficiency in tax collection and service delivery.
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