Acting IRS chief: Agency is ‘on track’ with tax-law implementation

Acting IRS Commissioner David Kautter said Tuesday that the agency is on schedule in its preparations for next year’s filing season, the first under the new tax law that President Trump signed late last year.

“We are on track,” Kautter said at a hearing held by a subcommittee of the Senate Appropriations Committee. “You could always do better, we could always move a little faster, but I think we’re in pretty good shape.”

The new law cuts tax rates for individuals and businesses and makes a number of other changes to the code. The IRS needs to take a number of steps to implement the new law, including putting forth new tax forms and guidance.

A spending bill Congress passed earlier this year provided the IRS with an additional $320 million for tax-law implementation, and the agency is requesting an additional $77 million.

Kautter said the IRS has drafted most of the revised tax forms needed for next year’s filing season and is hoping to be done with form instructions in the next two weeks. He said the agency intends to release the updated forms and instructions over the summer so that the public can provide feedback.

Kautter added that “the most time-consuming and expensive part” of implementing the tax law is updating technology. He said the agency has started developing software to implement the new law.

He also said he expects proposed regulations on most of the main parts of the law to be released by the fall.

The IRS suffered a significant setback last month when a systems failure on the tax-filing due date led to the agency extending the deadline by one day.

Kautter said the equipment that failed was 1 ¹/₂-year-old software that runs mainframe computers, and that the problem that happened on the filing deadline had only occurred once before. He said the systems were back up and running within 12 hours.

“I think one of the lessons that we learned, frankly, from this last episode is that probably during the peak of filing season we need to keep our backup system up and running simultaneously with our mainframe systems,” he said.

Treasury Secretary Steven Mnuchin said earlier in the hearing that the system failure on Tax Day was “completely unacceptable” and that a “complete review” is being conducted. 

Mnuchin also said the Treasury Department and the IRS are working on a five-year plan to improve the IRS’s technology, and he hopes to provide a “preliminary update” on the plan within the next 90 days.