Bridging the Gap: The Role of Digital Identity in Modernizing U.S. Tax Services

With Tax Day upon us, it’s a good time to reflect not just on our fiscal responsibilities, but also on the technology that underpins our engagement with the IRS. In a recent speech, IRS Commissioner Danny Werfel called the digital transformation of the agency a “generational imperative” and rightly so. The move toward a fully digital IRS promises a streamlined future where all taxpayer interactions, from queries to payments, are handled digitally and efficiently.

The IRS’s Digital Transformation

The IRS has been actively upgrading its technological capabilities, making significant strides in areas like the deployment of artificial intelligence, to crack down on complex tax evasion schemes and achieving its digitization goals ahead of schedule. It also launched a pilot of Direct File to provide taxpayers with a free way to file their taxes directly with the IRS. These efforts are part of a broader push to utilize investments from the Inflation Reduction Act to revamp legacy IT systems and migrate data to more centralized and accessible platforms.

Yet, amid the advancements and tech achievements, there’s still a significant obstacle to overcome — giving Americans the option of using a robust, equitable, and reliable digital identity verification platform.

At Socure, we recognize that efficient and accessible digital services are only as good as the identity verification systems they rest on. It’s a foundational element that’s vital for protecting personal data, creating seamless services, increasing public trust, and preventing fraud. Without clear policy or transparent metrics to assess the reliability and equity of digital identity tools, the true potential of the IRS’s digital future remains muddy. It will be impossible to gauge if digital identity is serving people effectively.

Identity verification is the quiet guardian of the digital doorway to tax and other government services. It ensures that when a citizen interacts with the IRS digitally, they do so with the assurance that their identity is secure and their experience is seamless. It’s not just about the technical success of implementing new, updated technology; it’s about ensuring these systems serve their intended role without creating new burdens for users or unguarded openings for malicious actors. It really is at the core of what Commission Werfel says when he commits to focusing everything the IRS is doing right now on improving the taxpayer experience.

Digital Identity: The Missing Piece in IRS Modernization

As we observe the IRS’s commendable steps toward digitization, we also urge its leadership to take more seriously the essential role of identity management. Relying on an inadequate remote identity proofing system is not effective for an agency like the IRS, which holds taxpayers’ most sensitive information. This isn’t just a technical issue; it’s a matter of ensuring equitable access and secure, efficient service delivery to all Americans. In a world where cybercriminals are increasingly using advanced generative AI and deepfakes to steal identities, relying on credit header data isn’t enough. Only an approach based on machine learning can provide maximum security and accessibility.

As we await the next steps in the IRS’s modernization journey, we hope to see a significant emphasis on digital identity management — a move that will ultimately safeguard and enhance the taxpayer experience, living up to the vision Werfel sets for a 21st-century IRS.