IRS modernization failures (1990s-2000s)
The Internal Revenue Service attempted a massive technology modernization called the Tax Systems Modernization program, spending an estimated $4 billion before Congress effectively shut it down. The IRS tried to replace decades-old systems with a centralized modern infrastructure while simultaneously serving 150 million taxpayers. Customer service representatives often could not access relevant taxpayer information because it was spread across incompatible systems.
The Government Accountability Office labeled the program a failure. The IRS answered only 35% of taxpayer calls during the transition, and paper correspondence backlogs ballooned as staff were reassigned to phones.
The IRS took over two decades to partially recover. It was not until the Inflation Reduction Act of 2022 provided $60 billion that the agency had resources to attempt modernization again, this time more incrementally.
The SSA is attempting a similar leap: replacing a decentralized, relationship-based service model with centralized technology while simultaneously cutting the workforce that understands the old system. The IRS experience suggests that launching new systems and reducing staff at the same time compounds both risks.