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IRS set to begin rolling out new case management system

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The Internal Revenue Service is gearing up to deploy a more modern taxpayer case management system in December, starting with the customer support area of its Exempt Organizations unit and eventually more widely across the IRS, in the hope of making it easier for taxpayers and IRS employees to get access to information more quickly and efficiently.

The effort is in line with the Taxpayer First Act that Congress passed last year, which includes a number of IRS reforms, including modernizing the aging technology at the agency. The IRS has been relying on decades-old systems, some of which date back to the Kennedy administration. Last month, the IRS announced a new Enterprise Digitalization and Case Management office, and it’s in charge of the effort to create the Enterprise Case Management system. But the IRS has been working on modernizing its systems for many years, with a number of problems along the way, especially in the Modernized e-File system, which frequently needs to go offline for maintenance.

The IRS hopes to have more success with its latest endeavor. In July, a Cambridge, Massachusetts-based technology company, Pegasystems, announced it had signed a contract with the IRS to help produce the Enterprise Case Management system for the IRS. On Wednesday, the IRS revealed that its Tax Exempt and Government Entities division would be the first to use the new system, starting with the Exempt Organizations’ Customer Support operation.

The initial release of the new system will allow EO case workers to scan and copy documents, research case records, and send requests for publicly available documents such as applications for tax-exempt status and exemption letters, while also helping resolve problems involving determination requests for tax-exempt status.

“This really supports our overall IRS modernization efforts and puts us on a really great path with the Taxpayer First Act because it’s helping us consolidate aging systems and create that taxpayer experience that we are working hard to deliver,” said Justin Lewis Abold-LaBreche, co-director of the Enterprise Digitalization and Case Management office, during a conference call Wednesday with reporters. “At the top level, we are working on things like consolidating aging systems and migrating people over to a common platform, creating electronic case files, increasing digital channels and self-service, and streamlining our employees’ access to data so they can resolve issues quickly. Put together, this is going to transform the way the IRS works its cases and engages with the public. The taxpayers are going to see this right away with faster service, and IRS employees are going to benefit because they’re more comprehensively going to be able to resolve issues that taxpayers bring to them. It’s really a positive framework for helping the IRS modernize quickly and deliver value to the taxpayer.”

He noted that the IRS currently has 60 aging case management systems that often can’t talk to each other because they were built at different times over the past 20 or more years. “They have less of the modern interface that we would want for our employees,” said Abold-LaBreche. “That makes it hard for employees to resolve taxpayer issues as quickly and efficiently as our employees want to do. They want to provide outstanding service and we want to give them the best tool to do that. So that’s our challenge, to really take this opportunity to modernize the underlying business processes and then migrate upwards of 200 business processes and 45,000 users onto a common case management platform, so we can deliver that outstanding service to the taxpayer.”

The goal is to consolidate the various business processes that now exist on the legacy systems, modernize and migrate them onto the new Enterprise Case Management system, and decommission as many of the old legacy systems and components as the IRS possibly can.

“The way we’re doing it is to really use a dual approach,” said Abold-LaBreche. “We take bite-size pieces, manageable increments, and we deploy those into the enterprisewide case management platform. The first one is the Tax Exempt and Government Entities Exempt Organizations customer support organization. We’re taking these bite-size pieces in manageable increments so that we can gradually and quickly roll out new technology and combine it with the modernization. We’ll get new business processes onto the platform regularly so we give immediate value to the taxpayer.”

The IRS signed the contract with Pegasystems in April after going through a procurement process with due diligence. “There was thorough market research and evaluation, and we selected Pegasystems,” said Abold-LaBreche. “It’s a proven piece of technology. It has wide adoption in the private sector and the government, and we’ve made huge progress since April 2020, which was just a handful of months ago. We’re already up in the cloud. We’ve got foundational technology functionality in place, and we’re now finishing up the configuration of Pegasystems for our first business process.”

Edward Killen, deputy commissioner of the TE/GE division, is looking forward to deploying the new system in December. “Within TE/GE, our Exempt Organizations function has a correspondence workstream,” he explained. “That will be the first business process to migrate into ECM. This system was formerly known as TE/GE Exempt Organizations Customer Support.”

For answers to questions about exempt organizations, taxpayers traditionally have either needed to call a toll-free number at the IRS or write letters. The Exempt Organizations correspondence unit then responds to the various inquiries and letters. TE/GE has around 30 employees involved with processing approximately 30,000 pieces of correspondence received in the mail every year.

“The steps for handling this correspondence have not changed much over the years until now,” said Killen. “TE/GE handles requests from the public for a variety of information, all related to copies of exempt organization documents, such as requests submitted on Forms 4506-A, requests for copies of exempt or political organization IRS forms. This is information such as returns, reports, notices and exemption applications. Also, information submitted on Forms 8822-B, change of address of responsible party. Taxpayers also request copies of determination letters.”

Determination letters generated after 2016 can be retrieved publicly by using the IRS Tax Exempt Organization Search tool, or TEOS, which is accessible through IRS.gov. But many older documents need to be requested from the IRS because they aren’t available on TEOS, often because they were originally filed on paper and are stored somewhere within the federal records.

“Today the process for our correspondence workstream is very paper based and manual,” said Killen. “Taxpayers mail in letters and forms. We handle their requests manually in a paper format, and after research, which often means an employee has to search a number of IRS systems, we respond by sending them a letter in the mail. Starting in December, we will have a modernized process. Taxpayers will have a digital option to send their requests for copies of determination letters and applications online. We will take that request digitally, or if the taxpayer has to send a letter, we will scan it in and then do that work within the ECM platform. Employees also will be able to conduct almost all of their research right from the ECM platform. Now, with these requests being handled digitally, the IRS employees performing this work will be able to provide a faster, more complete response. I think this is a great example of how we are not only spinning out this new platform, the ECM, but we are doing it in a way that allows us to take the opportunity to modernize and create new digital channels. This is the model for how we are going to move forward as an enterprise.”

If the initial rollout is successful, the IRS plans to expand the system to other functions beyond customer support in the Exempt Organizations unit, although those have yet to be publicly announced.

Abold-LaBreche said more information would be released in the next 30 to 60 days about those plans.

“Next year we expect to go live with several business processes that will be migrating to the ECM,” he said. “One of the best aspects of the process that we’re using is that as we build something for the Tax Exempt and Government Entities division, for example, we reuse those components for the next business process, so it constantly is putting into place these building blocks, deploying them to someone who can use those, moving on to the next building blocks, and we keep moving from there. It’s a really efficient way to make progress across a wide number of internal customers that need ECM and get them onto the system quickly to deliver value. In summary, we’ve got this new Enterprise Digitalization and Case Management office, and our mission is to modernize business processes, deliver this new case management system and broaden out the opportunities we have for taxpayers. I think the end result is taxpayers and employees working together to resolve issues in a simplified digital environment faster than ever.”

He denied that the December rollout was timed to coincide after the November election. In 2013, the IRS’s Exempt Organizations unit ran into trouble amid revelations that it had been using terms such as “Tea Party,” “Patriot” and “Progressive” to filter out applications for 501(c)4 tax-exempt status from political groups ahead of the 2012 elections, which led to the ouster of the director of the EO unit, Lois Lerner, and several other top IRS officials.

“Our release schedule has no relationship to the election or the electoral timing,” he said. “We’ve had a long-term roadmap that we’ve been working on. It has no connection to the electoral process in any way.”

He said his office has a strong commitment from the IRS leadership for the new technology initiative and they are still working out what that will look like in the future. He pointed as well to other recent technology initiatives, such as the ability to file amended 1040-X tax returns electronically and added that it would be the first of many good things happening at the IRS.

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