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> If I'm creating tax filing software, do I need to spin up a local instance of the IRS to test with?

No, integrate directly with the test endpoints provided by the IRS [1].

[1]: https://www.irs.gov/pub/irs-schema/Portal%20Transition%20Gui...

You can possibly stub out the IRS with realistic test cases that you care about.

> "Run an individual service against mocks" doesn't count.

> "Run most services in a mostly-isolated development environment, calling out to a few hard-to-run external services" doesn't count.

I think they're talking about services that you or your firm develops, or maintains, or ships. In this case the IRS is none of those things.

Yes, obviously this. People who don't understand this either just want to argue, or haven't thought about this at all.

In the spirit of the article, I think that the approach would be to ask your partners to provide a sandbox/test environment that your sandbox/test environment can interact with, or test accounts in production at least.