Greg Reeder
Every spring in the United States, the Internal Revenue Service (IRS) prepares for one of the most high-pressure technology events in government: Tax Day. IRS systems cracked under that pressure on April 17, 2018, experiencing a critical outage that left millions of Americans temporarily unable to file their returns online.
The outage lasted approximately 11 hours and affected 59 production systems, including the IRS’s Modernized e-File platform and electronic payment processing services. In response, the agency took the unusual step of extending the filing deadline by 24 hours.
In the aftermath, the IRS added three additional storage arrays to increase failover capacity, at a cost of nearly $6 million. Because the extension delayed a full day’s worth of electronic tax payments and returns, billions of dollars in receipts were temporarily held back. Independent models suggest that the US Treasury might have forfeited several million dollars in overnight interest as a result.
This outage wasn’t the result of a cyberattack, a software bug, or infrastructure sabotage. According to multiple reports and post-incident disclosures, the root cause was a hardware failure in a Tier 1 storage array—a critical piece of infrastructure managed by one of the agency’s technology vendors. Although the outage originated from a single technical point of failure, the impact was wide-ranging and exposed just how interconnected and complex government IT environments can be.
In this post, we’ll explore:
- A few details of how the outage happened
- The challenges of operational complexity that the outage highlighted
- How Datadog can help government agencies achieve more favorable outcomes today with its unified observability platform
A chain reaction inside a system of systems
Federal digital services can consist of a web of contractors, platforms, APIs, and legacy infrastructure. In the case of the IRS outage, the incident was linked to a firmware issue. When the system entered an unrecoverable state, the primary storage node and its replica went down. Because dozens of applications shared the storage array, everything from tax-form validation to payment submission was suddenly unavailable.
Public reporting, including coverage by Federal News Network and subsequent audits, confirmed that the problem cascaded from the infrastructure layer up through mission-critical applications. Although the issue was ultimately resolved the same day, the consequences rippled outward: delayed tax filings, a nationwide deadline extension, emergency equipment purchases, and renewed scrutiny from Congress.
A subsequent Government Accountability Office (GAO) audit in 2018 found that key IRS systems, including the Individual Master File (IMF), Integrated Data Retrieval System (IDRS), and Mainframes and Servers Services and Support (MSSS), were “facing significant risks due to their reliance on legacy programming languages, outdated hardware, and a shortage of human resources with critical skills.” This finding underscored the challenge of maintaining performance and resilience inside a decades-old digital foundation.
Key takeaways from the outage
This isn’t a story of operator error, vendor negligence, or any one decision. Instead, it’s a case study in operational complexity, siloed monitoring, and the hidden fragility of hybrid environments.
The outage exposed several common challenges familiar to many agencies:
- Siloed telemetry data: Different tools and contractors handled storage health, application uptime, and incident alerting. None of the tools surfaced the full picture fast enough to trigger rapid action.
- Inconsistent awareness: Although firmware updates had been issued for the affected hardware months before the incident occurred, the IRS did not apply the patch to its production code before the failure.
- Limited automation and observability: With dozens of systems dependent on a shared storage backend, no centralized view showed how the failure impacted downstream services or how to recover quickly.
- Lack of predictive correlation: Alerts that were triggered across separate systems didn’t merge into one high-priority signal. That delay likely extended time to resolution.
Modern resilience for government IT
Could a unified observability platform have changed the outcome of the IRS outage? Although we can’t rewrite history, we can consider what’s possible today with modern observability practices, especially platforms that are designed to unite metrics, logs, traces, and security signals. Complex government systems have specific requirements, and Datadog for Government can help meet these needs.
Real-time infrastructure monitoring for hybrid environments
Government systems today run on a mix of mainframes, virtual machines, platform-as-a-service (PaaS) solutions, and cloud-native infrastructure from different cloud providers. Real-time visibility into infrastructure health, such as storage latency, database performance, and packet loss, can help detect issues before they escalate into outages. With Datadog Infrastructure Monitoring, government agencies can track metrics, automatically detect and prioritize vulnerabilities, and identify configuration changes across hosts, containers, and multi-cloud environments. Whether it's a federal tax system or a state unemployment site, having one unified dashboard across platforms reduces guesswork when every minute matters.
Correlated alerts, not noise
In many agencies, a single root issue can cause separate monitoring tools to trigger different alerts, such as network latency in one console, a database timeout in another, and app failure in a third. Datadog Event Management consolidates these signals into a single correlated alert, helping IT teams focus immediately on what matters most. While Event Management is not yet available in Datadog for Government’s GovCloud environment, it is already accessible to many public sector organizations, including higher education institutions and system integrators. Correlation is especially valuable for smaller state or local teams because it replaces dashboard hopping with instant clarity.
Automated response workflows that reduce downtime
Whether they’re supporting 50 million tax returns or a city’s emergency alert system, public sector teams often face pressure with limited staffing. Predefined, automated runbooks for failover, patch remediation, or service restarts can reduce mean time to resolution (MTTR) significantly. Instead of reacting manually, agencies can use actions and blueprints in Datadog Workflow Automation to codify smart, safe responses for repeatable issues and regain control faster.
Service maps that show real-world impact
When one node fails, who is impacted? In public sector systems, the answer could be students, veterans, drivers, or emergency responders. With a live service map, IT leaders can see how a technical failure affects upstream and downstream services such as mobile portals, payment APIs, and scheduling tools. These visualizations from the Datadog Service Map help teams prioritize fixes based on citizen-facing consequences, not just backend metrics.
Proactive testing with synthetic monitoring
Observability extends beyond reacting when things break. It also includes verifying that everything is working as expected before users notice a problem. Agencies need the ability to simulate real user journeys by testing critical workflows such as login flows, payment processing, and form submissions from multiple locations and environments. With Datadog Synthetic Monitoring, agencies don’t have to wait for help desk tickets and customer calls to alert them about issues.
Built-in postmortem and audit readiness
In addition to incident resolution, public sector accountability requires documentation, root cause clarity, and audit-ready transparency. Datadog Incident Response automatically builds timelines and captures alerts, logs, and actions taken in a format that agencies can submit for compliance audits or share during lessons-learned reviews. With Incident Response identifying what happened, when, and why, agencies don’t have to scramble to reconstruct events.
These six capabilities are just as relevant to county IT teams that manage emergency phone systems as they are to federal agencies that process national benefit claims. At every level of government, complexity is rising. Visibility, automation, and simplicity must rise with it.
Enhance the resilience of your agency’s systems
The 2018 Tax Day outage was a reminder for every government agency that operational resilience depends on visibility, clarity, and speed. In an era of tighter budgets, aging systems, and expansion of digital services for citizens, agencies need to monitor proactively across their stacks before things go wrong, correlate what matters, and act quickly.
Government systems can’t afford long downtime, especially during public events like Tax Day, open enrollment, or emergency response. Resilience is more than a technical objective. It’s an organizational capability that starts with unifying how we see, manage, and secure our most critical systems.
To find out more about how Datadog can help you achieve these goals, check out Datadog for Government. You can contact our Federal Sales team at fed@datadoghq.com and our State, Local, and Education (SLED) Sales team at sled@datadoghq.com.
If you don’t already have a Datadog account, sign up for a 14-day free trial to get started.
