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Season and Summary of the Fiscal Year 2013 Budget Request' which was 
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United States Government Accountability Office: 
GAO: 

Report to the Subcommittee on Oversight, Committee on Ways and Means, 
House of Representatives: 

March 2012: 

Internal Revenue Service: 

Interim Results of 2012 Tax Filing Season and Summary of the Fiscal 
Year 2013 Budget Request: 

GAO-12-566: 

Contents: 

Letter: 

Agency Comments and Our Evaluation: 

Appendix I: Briefing Slides: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Abbreviations: 

ACA: Affordable Care Act: 

AMS: Account Management Services: 

BSM: Business Systems Modernization: 

CADE2: Customer Account Data Engine 2: 

EFDS: Electronic Fraud Detection System: 

e-SVS: e-Services: 

EUSS: IRS End User Systems and Services: 

FATCA: Foreign Account Tax Compliance Act: 

FTE: full-time equivalents: 

HITCA: Health Insurance Tax Credit Administration: 

ICCE: Integrated Customer Communication Environment: 

IDRS: Integrated Data Retrieval System: 

IFS: Integrated Financial System/CORE Financial System: 

IMF: Individual Master File: 

IRDM: Information Reporting and Document Matching: 

ISRP: Integrated Submission and Remittance Processing System: 

IT: information technology: 

IRS: Internal Revenue Service: 

MeF: Modernized E-File: 

MSSS: IRS Main Frames and Servers Services and Support: 

ROI: Return on Investment: 

RRP: Return Review Program: 

SCRIPS: Service Center Recognition/Image Processing System: 

TIGTA: Treasury Inspector General for Tax Administration: 

TSSIRS: Telecommunications Systems and Support: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

March 20, 2012: 

The Honorable Charles W. Boustany, Jr.
Chairman:
The Honorable John Lewis:
Ranking Member:
Subcommittee on Oversight:
Committee on Ways and Means:
House of Representatives: 

This letter transmits several briefings we provided between March 7 
and 19, 2012, as well as subsequent comments from the Internal Revenue 
Service (IRS). The briefings were based on our work to date from your 
requests for an assessment of IRS's 2012 tax filing season performance 
and a review of the fiscal year 2013 Congressional Budget 
Justification for IRS. See appendix I for the slides provided during 
the March 19, 2012, briefing. 

On the basis of discussions with your office, our briefing objectives 
were to (1) provide an interim assessment of IRS's 2012 performance in 
processing tax returns and refunds and providing telephone service; 
and (2) describe how IRS plans to manage funding reductions in fiscal 
year 2012; the fiscal year 2013 budget request for IRS including 
dollar and staffing trends, new program initiatives, the cost of major 
information technology (IT) investments; and selected performance 
measures and goals. To conduct this work, we obtained and analyzed IRS 
performance data for processing tax returns and refunds and providing 
telephone service; interviewed IRS officials and representatives from 
tax preparation and tax software firms on various aspects of filing 
season performance and challenges faced; reviewed IRS plans to manage 
budget reductions; compared and analyzed budget documentation for 
fiscal year 2008 through 2013; reviewed and summarized IRS performance 
data, annual IRS databooks, and other reports including those from the 
IRS Oversight Board; and interviewed IRS officials in the offices of 
the Chief Financial Officer and Corporate Budgeting. 

We conducted this performance audit in March 2012 in accordance with 
generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings 
and conclusions based on our audit objectives. We believe that the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. We interviewed IRS 
officials and determined that the data presented in this briefing were 
sufficiently reliable for our purposes. 

In summary, so far this filing season, IRS: 

* experienced an increase in total call volume (mostly for automated 
calls about taxpayer's refunds), and a reduction in IRS's level of 
service resulted in wait times of about 17 minutes; 

* has processed almost 68 million returns, and electronic filing 
continues to increase; and: 

* experienced problems, since resolved, that delayed refunds for about 
a week for millions of taxpayers, including one that involved a key 
electronic filing system, Modernized E-File (MeF).[Footnote 1] As we 
finished our work in March, IRS provided us with an update to its 
contingency plan for MeF dated December 2011. Given MeF's importance, 
the problems it experienced this year, and IRS's plans to turn off its 
legacy e-file system in October, without timely review and update--as 
needed--of its contingency plan to take into account the lessons 
learned from the current filing season, IRS risks not being able to 
timely and reliably process tax returns. 

In addition, the President's fiscal year 2013 budget request shows: 

* a $944.5 million (8.0 percent) increase over fiscal year 2012, 
mainly for the Enforcement and Operations Support appropriations. This 
is an increase of 5.3 percent over fiscal year 2011. The Taxpayer 
Service appropriation request for 2013 is about the same as last year, 
and IRS expects to gain savings from more e-filed returns and other 
efficiencies; 

* an increase of about 4,500 full-time equivalents (FTE)[Footnote 2] 
(5.0 percent) over fiscal year 2012, primarily for enforcement 
initiatives; 

* about $2.5 billion for IT investments; and: 

* reduced annual goals for 2012 and 2013 for selected taxpayer service 
and enforcement activities from 2011. 

MeF is critical to e-filing and millions of Americans depend on timely 
refunds. Without a timely review and update to its contingency plan 
that considers lessons learned from this year's experiences with MeF, 
IRS could be introducing additional risk to next year's filing season. 
To mitigate this risk, we are recommending that the Commissioner of 
Internal Revenue ensure that IRS's IT contingency plan for MeF is 
reviewed and updated as appropriate in time for the beginning of the 
2013 filing season. 

Agency Comments and Our Evaluation: 

On March 16, 2012, IRS provided technical comments on our findings and 
recommendation. IRS said it agreed with the recommendation, in 
concept, saying that updating its contingency plans for MeF is part of 
its filing season preparations. Given the critical nature of MeF, 
timely updates are important because of the issues IRS encountered 
early this filing season that resulted in refund delays for millions 
of taxpayers. 

As arranged with your office, unless you publicly announce the 
contents of this report earlier, we plan no further distribution until 
2 days after the date of this report. At that time, we will send 
copies of this report to other Chairmen and Ranking Members of Senate 
and House committees and subcommittees that have appropriation and 
oversight responsibilities for IRS. We also will be sending copies to 
the Commissioner of Internal Revenue, the Secretary of the Treasury, 
the Chairman of the IRS Oversight Board, and the Director of the 
Office of Management and Budget. Copies also are available at no 
charge on the GAO website at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-9110 or whitej@gao.gov. Contact points for our 
offices of Congressional Relations and Public Affairs are on the last 
page of this report. GAO staff members who made major contributions to 
this report are listed in appendix II. 

Signed by: 

James R. White: 
Director, Tax Issues: 
Strategic Issues: 

[End of section] 

Appendix I: Briefing Slides: 

Internal Revenue Service: Interim Results of 2012 Tax Filing Season 
and Summary of the Fiscal Year 2013 Budget Request: 

Prepared for the Subcommittee on Oversight, Committee on Ways and Means,
House of Representatives: 

March 19, 2012: 

Objectives: 

On the basis of discussions with your office, our objectives are to: 

* provide an interim assessment of IRS’s 2012 performance in 
processing tax returns and refunds and providing telephone service; 
and; 

* Describe how IRS plans to manage funding reductions in fiscal year 
2012; the fiscal year 2013 budget request for IRS including dollar and 
staffing trends, new program initiatives, the cost of major 
information technology (IT) investments; and selected performance 
measures and goals. 

Results in Brief: 

So far this filing season, IRS experienced: 

* a substantial increase in total call volume (mostly for automated 
calls about taxpayer refunds), and a reduction in IRS’s level of 
service resulted in wait times of about 17 minutes; 
- We have previously reported that the expense of providing live 
telephone assistance highlights the need for providing more automated 
services; and; 

* processing problems that delayed refunds for about a week for 
millions of taxpayers, and that in one case involved Modernized E-file 
(MeF), a key electronic filing system; 
- As we finished our work in March, IRS provided us with an update to 
its contingency plan for MeF dated December 2011. Given MeF’s 
importance, the problems it experienced this year, and IRS’s 
plans to turn off its legacy e-file system in October, without timely 
review and update-—as needed-—of its contingency plan to take into 
account the lessons learned from the current filing season, IRS risks 
not being able to timely and reliably process tax returns. 

The fiscal year 2013 budget request shows: 

* a $944.5 million (8.0 percent) increase over fiscal year 2012, with 
the Enforcement and Operations Support appropriations accounting for 
the largest increases. This is an increase of 5.3 percent over fiscal 
year 2011. The Taxpayer Service appropriation request is about the 
same as last year, and IRS expects to gain savings and efficiencies 
including from more electronically filed returns and other program 
reductions; 

* an increase of about 4,500 (5.0 percent) full-time equivalents (FTE) 
over fiscal year 2012, primarily for enforcement initiatives; 

* about $2.5 billion for IT investments—$2.14 billion for IT 
investments in the Operations Support appropriation and $330 million 
for Business Systems Modernization (BSM); and; 

* a decline in actual performance for selected areas since the 
mid-2000’s and mostly reduced goals for fiscal year 2012 and 2013 for 
taxpayer service and enforcement activities. 

Scope and Methodology: 

To conduct this work, we: 

* obtained and analyzed IRS performance and other data for processing 
tax returns and refunds and providing telephone service, and 
interviewed IRS officials and representatives of tax preparation and 
tax software firms on various aspects of filing season performance and 
challenges faced. 

* reviewed IRS plans to manage budget reductions; compared and 
analyzed budget documentation from fiscal year 2008 through 2013; 
interviewed IRS officials in the offices of the Chief Financial 
Officer and Corporate Budgeting; and reviewed and summarized IRS 
performance data, annual IRS databooks, and other reports including 
those from the IRS Oversight Board. 

We conducted this performance audit in March 2012 in accordance with 
generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. We interviewed IRS 
officials and determined that the data presented in this briefing were 
sufficiently reliable for our purposes. 

Background: 

For 2012, IRS began processing tax returns on a daily, rather than a 
weekly basis, as part of its transition to a new processing system. 
With the switch to daily processing, both IRS and industry 
stakeholders had an expectation of faster refunds. 

IRS expected that refunds generally would be issued in 4 business days 
for direct deposits and 6 business days for paper checks after IRS 
processes the return and posts the return data to the taxpayer’s 
account. 

In general, low-income taxpayers file early in order to receive their 
refund early. For some taxpayers, their refund may be the single 
largest payment they receive from any source during the year. 

IRS began using its Modernized E-file (MeF) system in 2010. MeF is 
replacing IRS’s legacy electronic filing (e-file) system, which IRS 
reported it is retiring in October 2012. MeF provides taxpayers with 
faster acknowledgment that their returns have been accepted and better 
information on why returns are rejected. It also provides IRS with the 
ability to accept additional documentation electronically through 
portable document files. Further, states must be able to access MeF to 
obtain state tax return data. 

Filing Season: 

Total Call Volume Substantially Increased and Service Decreased: 

Table 1: IRS Call Volume and Performance from January 1 through Late 
February: 

Call volume: 

Total calls to IRS: 
2008: 20.5 million; 
2009: 35.0 million; 
2010: 31.0 million; 
2011: 34.2 million; 
2012: 46.0 million; 
Percent change from 2011 to 2012: 34.5%. 

Automated calls answered: 
2008: 9.1 million; 
2009: 13.4 million; 
2010: 15.0 million; 
2011: 18.0 million; 
2012: 26.9 million; 
Percent change from 2011 to 2012: 49.4%. 

Assistor answered calls: 
2008: 6.3 million; 
2009: 8.8 million; 
2010: 7.6 million; 
2011: 7.2 million; 
2012: 6.5 million; 
Percent change from 2011 to 2012: -9.7%. 

Abandoned, busies, and disconnects: 
2008: 5.1 million; 
2009: 12.7 million; 
2010: 8.4 million; 
2011: 9.0 million; 
2012: 12.7 million; 
Percent change from 2011 to 2012: 41.1%. 

Performance: 

Level of service – Percentage of callers seeking live 
assistance who receive it: 

Fiscal year goal[A]: 
2008: 82.0%[B]; 
2009: 77.0%[C]; 
2010: 71.0%; 
2011: 71.0%; 
2012: 61.0%; 
Percent change from 2011 to 2012: [D]. 

Actual to date: 
2008: 78.6%; 
2009: 58.4%; 
2010: 73.5%; 
2011: 70.3%; 
2012: 65.1%; 
Percent change from 2011 to 2012: [D]. 

Average wait time (in minutes): 

Fiscal year goal[A]: 
2008: 4.5; 
2009: 10.4; 
2010: 11.6; 
2011: 11.6; 
2012: 18.8; 
Percent change from 2011 to 2012: 62.1%. 

Actual to date: 
2008: 5.7; 
2009: 10.0; 
2010: 10.1; 
2011: 11.2; 
2012: 16.6; 
Percent change from 2011 to 2012: 48.2%. 

Source: GAO analysis of IRS data. 

Note: Data are cumulative for IRS from January 1 of each year to 
February 23, 2008; February 28, 2009; February 27, 2010; February 26, 
2011; and February 25, 2012. 

[A] The goal listed is for the entire fiscal year, not just the period 
from January 1 through late February. 

[B] IRS revised its original fiscal year goal of 82.0 percent down to 
74.0 percent because of high call volume caused by economic stimulus-
related calls. 

[C] IRS revised its original fiscal year goal of 77.0 percent down to 
70.0 percent because of high call volume from taxpayers requesting 
electronic filing authentication information and asking stimulus-
related questions. 

[D] The difference is 10 percentage points between fiscal year 2011 
and 2012 for the goal and 5.2 percentage points for actual performance 
between 2011 and 2012. 

[End of table] 

Costly Telephone Service Highlights the Need for Automated Tools: 

In 2012 as with previous filing seasons, IRS officials attribute the 
lower level of service performance and goals to other funding 
priorities. IRS has also experienced an increase in call volume, 
driven in part by taxpayers calling for information on their refunds or 
requesting transcripts. These calls were mostly answered through 
automated services. Wait time to speak to an assistor is also 
increasing. We are still researching the causes of these declines in 
service. 

Providing live telephone assistance is expensive. We have previously 
reported that IRS can shift some assistor-answered calls to less-
costly automated tools, and needs to have an Internet strategy to 
provide taxpayers with more online services.[Footnote 3] As part of 
our ongoing 2012 filing season work, we are researching options for 
IRS to reduce call volume and improve its online services. 

* Through March 10, 2012, IRS is reporting 86.86 million visits to the 
“Where’s My Refund” web application, an 82.6 percent increase over 
last year. In addition, IRS continues to add automated tools to its 
website. 

E-Filed Returns Continue to Increase: 

Table 2: Tax Returns Processed through the Second Week of March 2012: 

Number of Individual tax returns processed: 
2008: 66,656,000; 
2009: 67,595,000; 
2010: 64,284,000; 
2011: 66,159,000; 
2012: 68,074,000; 
Percentage Change from 2011 to 2012: 2.9%. 

Electronic: 
2008: 53,143,000; 
2009: 56,451,000; 
2010: 55,945,000; 
2011: 59,701,000; 
2012: 62,753,000; 
Percentage Change from 2011 to 2012: 5.1%. 

Paper: 
2008: 13,512,000; 
2009: 11,144,000; 
2010: 8,339,000; 
2011: 6,458,000; 
2012: 5,322,000; 
Percentage Change from 2011 to 2012: -17.6%. 

Percentage electronically filed[A]: 
2008: 79.7%; 
2009: 83.5%; 
2010: 87.0%; 
2011: 90.2%; 
2012: 92.2%; 
Percentage Change from 2011 to 2012: n/a. 

Number of refunds issued: 
2008: 59,199,000; 
2009: 61,042,000; 
2010: 57,779,000; 
2011: 59,005,000; 
2012: 59,239,000; 
Percentage Change from 2011 to 2012: 0.4%. 

Amount of refunds: 
2008: $149,621,000; 
2009: $169,114,000; 
2010: $175,415,000; 
2011: $178,356,000; 
2012: $174,403,000; 
Percentage Change from 2011 to 2012: -2.2%. 

Average refund amount[B]: 
2008: $2,527; 
2009: $2,770; 
2010: $3,036; 
2011: $3,023; 
2012: $2,944; 
Percentage Change from 2011 to 2012: -2.6%. 

Legend: n/a = not applicable. 

Source: GAO analysis of IRS data. 

Notes: Data are from January 1 of each year through March 14, 2008; 
March 13, 2009; March 12, 2010; March 11, 2011; and March 9,2012. 

Numbers may not add due to rounding. 

[A] The percentage of returns filed electronically early in the filing 
season is likely to decline before the filing season is over.Taxpayers 
filed about 78 percent of all individual returns electronically in 
2011. 

[B] Average refund amount is in actual dollars, not thousands. 

[End of table] 

A Programming Error Resulted in Refund Delays Early in the Filing 
Season: 

Between January 17 and January 26, 2012, IRS delayed about 6 million 
returns because of a programming error. As a result, we estimated that 
approximately 5.5 million refunds were delayed for about 1 week over 
what had been planned, while IRS identified, isolated, and resolved 
the programming error. 

* To take advantage of benefits of daily processing, IRS automated 
some manual compliance checks—which are done before refunds are 
issued. However, a programming error caused IRS to hold a much higher 
than expected number of returns for additional review. 

- IRS expected about 12 percent of returns to be affected by this 
compliance check. However, during the first week of the filing season 
about 80 percent of returns filed that week were affected. 

According to IRS officials, they did not detect this issue during pre-
filing season testing, but it was identified when the filing season 
began. 

IRS officials reported that they had solved the problem by the end of 
January. 

Challenges Transmitting Data from MeF to Other Processing Systems Also 
Delayed Refunds: 

From the start of the filing season through February 7, 2012, a 
component of MeF that allows it to transmit data to other information 
systems used to process returns did not operate properly. 

* As a result, IRS had to manually verify the data being provided to 
the other systems used to process returns, which resulted in delays in 
processing about 7.8 million tax returns, of which we estimated 
approximately 7.0 million were refunds. 

* IRS asked companies responsible for transmitting returns 
electronically and which had the ability to switch to the legacy e-
file system to temporarily do so while IRS resolved the problem. 

According to IRS officials, they did not detect this issue during pre-
filing season testing. 

At the start of the filing season, MeF began to process a high volume 
of returns, and the transmission problem became evident. 

According to IRS officials, the problem was resolved on February 7, 
and the backlog of returns had been processed by February 18, 2012. 

MeF Has Also Experienced Problems with Stability and Volume: 

In the 2010 filing season, IRS accepted about 764,000 returns through 
MeF (less than 10 percent of IRS’s projections). Companies submitting 
returns to IRS electronically said that MeF had “instability” issues 
in 2010 (e.g., downtime, timeouts, slow servers, and delayed 
acknowledgments). 

In 2011, IRS accepted over 10.2 million returns via MeF (less than one-
third of projections). Although companies submitting returns to IRS 
electronically reported that it was more stable than in 
2010, not all companies and states eligible to use MeF did so. 

Through March 12, 2012, IRS accepted about 70 percent (47 million) of 
e-filed returns via MeF. However, IRS experienced some data 
transmission problems. As noted above, in order to minimize 
disruptions and avoid further delays, IRS asked transmitters that 
could do so to temporarily stop using MeF. 

In January 2012, IRS officials reiterated their intention to turn off 
the legacy e-file system in October 2012 as planned. However, more 
recently, IRS processing officials have told us they would reevaluate 
the situation after the 2012 filing season. IRS reported it is taking 
additional steps to try to better identify and resolve problems with 
MeF this filing season. 

The Treasury Inspector General for Tax Administration (TIGTA) has also 
reported IRS has experienced problems with tracking risks and 
controlling security weaknesses with MeF.[Footnote 4] 

IT Guidance Calls for Timely Review and Updates to Contingency Plans: 

According to National Institute of Standards and Technology Guidelines 
and other guidance, federal agencies’ IT contingency plan for key IT 
systems should be reviewed after major events but no less than 
annually and updated as needed. 

When we asked for the most recent MeF contingency plan, IRS provided 
us with a plan dated January 2011. 

In comments, IRS officials told us that the plan is reviewed annually 
in preparation for the next year’s filing season. 

As we finished our work in March, IRS provided us with an updated 
contingency plan dated December 2011. 

Given MeF’s importance, the problems it experienced this year, and 
IRS’s plans to turn off its legacy e-file system in October, without 
timely review and update—as needed—to the contingency plan to take 
into account the lessons learned from the current filing seasons, IRS 
risks not being able to timely and reliably process tax returns. 

[End of section] 

Budget: 

Fiscal Year 2012 Enacted Appropriations Reduced by $305 Million (2.5 
Percent) from Fiscal Year 2011: 

Table 3: Funding Reductions in IRS’s Appropriations Accounts between 
Fiscal Year 2011 and Fiscal Year 2012: 

Enforcement
Fiscal year 2011 enacted: $5.493 billion; 
Fiscal year 2012 enacted: $5.299 billion; 
Dollar change (percent change) fiscal year 2011 to fiscal 
year 2012: -$194 million; (-3.5%) 

Operations support
Fiscal year 2011 enacted: $4.057 billion; 
Fiscal year 2012 enacted: $3.947 billion; 
Dollar change (percent change) fiscal year 2011 to fiscal 
year 2012: -$109 million; (-2.7%) 

Taxpayer services
Fiscal year 2011 enacted: $2.293 billion; 
Fiscal year 2012 enacted: $2.240 billion; 
Dollar change (percent change) fiscal year 2011 to fiscal 
year 2012: -$54 million; (-2.3%) 

BSM
Fiscal year 2011 enacted: $263 million
Fiscal year 2012 enacted: $330 million
Dollar change (percent change) fiscal year 2011 to fiscal 
year 2012: $67 million (25.4%) 

Health Insurance Tax Credit Administration (HITCA)
Fiscal year 2011 enacted: $15 million
Fiscal year 2012 enacted: 0[A]; 
Dollar change (percent change) fiscal year 2011 to fiscal 
year 2012: -$15 million (-100.0%) 

Total appropriated resources
Fiscal year 2011 enacted: $12.122 billion
Fiscal year 2012 enacted: $11.817 billion
Dollar change (percent change) fiscal year 2011 to fiscal 
year 2012: -$305 million (-2.5%) 

Source: Fiscal year 2013 Congressional Justification for IRS. 

[A] In fiscal year 2012, administrative resources for HITCA were moved 
to the Taxpayer Services appropriation under the Consolidated 
Appropriations Act, 2012 (Pub. L. No. 112-74). 

[End of table] 

Fiscal Year 2012 Budget Reductions Absorbed by Decreasing FTEs and 
Other Costs: 

IRS expects to absorb fiscal year 2012 reductions by decreasing: 

* FTEs by about 3.4 percent[Footnote 5] from fiscal year 2011 through: 
- attrition and continuation of an agencywide hiring freeze in effect 
since fiscal year 2011, and; 
- targeted buyouts of more than 900 support functions; 

* other costs, such as: 
- across-the-board reductions of 10 to 15 percent to program support 
such as travel, training, and consulting contractual services; 
- technology savings resulting from internal program changes such as 
extending IT refresh from 3 to 4 years; 
- savings associated with policy changes such as reductions to awards 
budgets and change in public transit subsidy payments; 
- other Operations Support savings including reducing real estate 
footprint through space optimization and increased telework; and; 
- savings from employee suggestions such as eliminating single-sided 
printing, reducing use of laptop “aircards,” and increasing use of 
teleconferencing and videoconferencing equipment. 

Dollars by Appropriation Account, Fiscal Year 2008 through 2013: 

Table 4: Fiscal Year 2008 through Fiscal Year 2012 Enacted and Fiscal 
Year 2013 Budget Request for IRS by Appropriation: 

Appropriation: Enforcement; 
Fiscal year 2008 enacted: $4.780 billion; 
Fiscal year 2009 enacted: $5.117 billion; 
Fiscal year 2010 enacted: $5.504 billion; 
Fiscal year 2011 enacted: $5.493 billion; 
Fiscal year 2012 enacted: $5.299 billion; 
Fiscal year 2013 requested: $5.702 billion; 
Dollar change fiscal year 2012 enacted through fiscal year 2013 
requested: $402 million; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 7.59%. 

Appropriation: Operations support; 
Fiscal year 2008 enacted: $3.841 billion; 
Fiscal year 2009 enacted: $3.867 billion; 
Fiscal year 2010 enacted: $4.084 billion; 
Fiscal year 2011 enacted: $4.057 billion; 
Fiscal year 2012 enacted: $3.947 billion; 
Fiscal year 2013 requested: $4.476 billion; 
Dollar change fiscal year 2012 enacted through fiscal year 2013 
requested: $529 million; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 13.40%. 

Appropriation: Taxpayer services; 
Fiscal year 2008 enacted: $2.191 billion; 
Fiscal year 2009 enacted: $2.293 billion; 
Fiscal year 2010 enacted: $2.279 billion; 
Fiscal year 2011 enacted: $2.293 billion; 
Fiscal year 2012 enacted: $2.240 billion; 
Fiscal year 2013 requested: $2.253 billion; 
Dollar change fiscal year 2012 enacted through fiscal year 2013 
requested: $13 million; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 0.60%. 

Appropriation: BSM; 
Fiscal year 2008 enacted: $267
Fiscal year 2009 enacted: $230
Fiscal year 2010 enacted: $264
Fiscal year 2011 enacted: $263
Fiscal year 2012 enacted: $330
Fiscal year 2013 requested: $330
Dollar change fiscal year 2012 enacted through fiscal year 2013 
requested: 0; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 0.00%. 

Appropriation: HITCA; 
Fiscal year 2008 enacted: $15 million; 
Fiscal year 2009 enacted: $15 million; 
Fiscal year 2010 enacted: $16 million; 
Fiscal year 2011 enacted: $15 million; 
Fiscal year 2012 enacted: [A]; 
Fiscal year 2013 requested: [A]; 
Dollar change fiscal year 2012 enacted through fiscal year 2013 
requested: [A]; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: [A]. 

Appropriation: Subtotal; 
Fiscal year 2008 enacted: $11.095 billion; 
Fiscal year 2009 enacted: $11.523 billion; 
Fiscal year 2010 enacted: $12.146 billion; 
Fiscal year 2011 enacted: $12.122 billion; 
Fiscal year 2012 enacted: $11.817 billion; 
Fiscal year 2013 requested: $12.761 billion; 
Dollar change fiscal year 2012 enacted through fiscal year 2013 
requested: $945 million; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 7.99%. 

Other resources, such as user fees[B]: 
Fiscal year 2008 enacted: $566
Fiscal year 2009 enacted: $390
Fiscal year 2010 enacted: $539
Fiscal year 2011 enacted: $655
Fiscal year 2012 enacted: $559
Fiscal year 2013 requested: $592
Dollar change fiscal year 2012 enacted through fiscal year 2013 
requested: $34 million; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 6.04%. 

Total funding available for obligation: 
Fiscal year 2008 enacted: $11.661 billion; 
Fiscal year 2009 enacted: $11.913 billion; 
Fiscal year 2010 enacted: $12.686 billion; 
Fiscal year 2011 enacted: $12.777 billion; 
Fiscal year 2012 enacted: $12.375 billion; 
Fiscal year 2013 requested: $13.354 billion; 
Dollar change fiscal year 2012 enacted through fiscal year 2013 
requested: $978 million; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 7.91%. 

Source: Fiscal year 2010 through fiscal year 2013 Congressional 
Justifications for IRS. 

Notes: Dollars are nominal and not adjusted for inflation, and numbers 
may not add due to rounding. 

[A] In fiscal year 2012, administrative resources for HITCA were moved 
to the Taxpayer Services appropriation under the Consolidated 
Appropriations Act, 2012 (Pub. L. No. 112-74). 

[B] Other resources available for obligation are estimated by IRS and 
not subject to the annual appropriations process. 

[End of table] 

Staffing by Appropriation Account, Fiscal Year 2008 through 2013: 

Table 5: Fiscal Year 2008 through Fiscal Year 2011 Actual, Fiscal Year 
2012 Enacted, and Fiscal year 2013 Requested FTEs by Appropriation 
Account: 

Source: Fiscal year 2008 through fiscal year 2013 Congressional 
Justifications for IRS. 

Appropriation Account: Enforcement; 
Fiscal year 2008 actual: 46,431; 
Fiscal year 2009 actual: 47,361; 
Fiscal year 2010 actual: 50,400; 
Fiscal year 2011 actual: 49,920; 
Fiscal year 2012 enacted: 47,586; 
Fiscal year 2013 requested: 51,583; 
FTE change fiscal year 2012 enacted through fiscal year 2013 
requested: 3,997; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 8.40%. 

Appropriation Account: Operations support; 
Fiscal year 2008 actual: 12,079; 
Fiscal year 2009 actual: 12,101; 
Fiscal year 2010 actual: 12,262; 
Fiscal year 2011 actual: 12,103; 
Fiscal year 2012 enacted: 11,985; 
Fiscal year 2013 requested: 12,609; 
FTE change fiscal year 2012 enacted through fiscal year 2013 
requested: 624; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 5.21%. 

Appropriation Account: Taxpayer services; 
Fiscal year 2008 actual: 31,487; 
Fiscal year 2009 actual: 32,422; 
Fiscal year 2010 actual: 31,607; 
Fiscal year 2011 actual: 31,574; 
Fiscal year 2012 enacted: 30,535; 
Fiscal year 2013 requested: 30,570; 
FTE change fiscal year 2012 enacted through fiscal year 2013 
requested: 35; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 0.11%. 

Appropriation Account: BSM; 
Fiscal year 2008 actual: 347; 
Fiscal year 2009 actual: 322; 
Fiscal year 2010 actual: 337; 
Fiscal year 2011 actual: 309; 
Fiscal year 2012 enacted: 605; 
Fiscal year 2013 requested: 495; 
FTE change fiscal year 2012 enacted through fiscal year 2013 
requested: -110; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: -18.18%. 

Appropriation Account: HITCA[A]; 
Fiscal year 2008 actual: 10; 
Fiscal year 2009 actual: 10; 
Fiscal year 2010 actual: 12; 
Fiscal year 2011 actual: 0; 
Fiscal year 2012 enacted: 0; 
Fiscal year 2013 requested: 0; 
FTE change fiscal year 2012 enacted through fiscal year 2013 
requested: 0; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 0%. 

Appropriation Account: Subtotal; 
Fiscal year 2008 actual: 90,354; 
Fiscal year 2009 actual: 92,216; 
Fiscal year 2010 actual: 94,618; 
Fiscal year 2011 actual: 93,906; 
Fiscal year 2012 enacted: 90,711; 
Fiscal year 2013 requested: 95,257; 
FTE change fiscal year 2012 enacted through fiscal year 2013 
requested: 4,546; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 5.01%. 

Appropriation Account: Other resources, such as user fees[B]; 
Fiscal year 2008 actual: 1,331; 
Fiscal year 2009 actual: 1,153; 
Fiscal year 2010 actual: 752; 
Fiscal year 2011 actual: 1,003; 
Fiscal year 2012 enacted: 939; 
Fiscal year 2013 requested: 939; 
FTE change fiscal year 2012 enacted through fiscal year 2013 
requested: 0; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 0%. 

Total FTEs: 
Fiscal year 2008 actual: 91,685; 
Fiscal year 2009 actual: 93,369; 
Fiscal year 2010 actual: 95,370; 
Fiscal year 2011 actual: 94,909; 
Fiscal year 2012 enacted: 91,650; 
Fiscal year 2013 requested: 96,196; 
FTE change fiscal year 2012 enacted through fiscal year 2013 
requested: 4,546; 
Percent change fiscal year 2012 enacted through fiscal year 2013 
requested: 4.96%. 

[A] The administrative resources for HITCA were moved to the Taxpayer 
Services appropriation under the Consolidated Appropriations Act, 2012 
(Pub. L. No. 112-74). 

[B] Other resources available for obligation are estimated by IRS and 
not subject to the annual appropriations process. 

[End of table] 

Appropriation Increase of $945 Million Requested: 

Table 6: Funding Requested for Program Changes and New Initiatives: 

Total changes: $1.015 billion. 

New initiatives: 
Subtotal: $906.9 million; 

Description Of New Initiatives: 

Enforcement initiatives: 

Restore audit and collection coverage to address individual tax 
compliance issues (Projected Return on Investment [ROI]: 6.8 to 1. 
IRS’s ROI estimate is based on direct revenues collected and does not 
include revenue that may result from an increase in voluntary 
compliance): 
Fiscal Year 2013 Funding Requested: $200.5 million. 

Implement tax law changes for Information Reporting and Document 
Matching (IDRM) and Affordable Care Act (ACA) programs (Projected ROI 
3.5 to 1): 
Fiscal Year 2013 Funding Requested: $128.9 million. 

Promote offshore compliance (Projected ROI 6.4 to 1): 
Fiscal Year 2013 Funding Requested: $110.7 million. 

Implement revenue protection strategy (Projected ROI 1.9 to 1): 
Fiscal Year 2013 Funding Requested: $88.9 million. 

Other(improve international compliance, build out return preparer 
program, address appeals workload, leverage digital evidence, and 
implement uncertain tax position reporting requirements) (Unable to 
provide ROI because not all initiatives are revenue generating): 
Fiscal Year 2013 Funding Requested: $102.9 million. 

Infrastructure initiatives: 

To implement ACA-related IT and operational infrastructure to allow 
IRS to validate household income and determine the amount of advance 
payments of the tax credit: 
Fiscal Year 2013 Funding Requested: $275.1 million. 

Inflation adjustment and pay raises: 

Inflation adjustments for nonlabor expenses such as rent, postage, and 
health benefits, in order to maintain current levels and a proposed 
pay raise of 0.5 percent: 
Fiscal Year 2013 Funding Requested: $108.4 million. 

Savings and efficiencies: 

Savings resulting from increased use of e-filing of returns, reduced 
travel, and targeted program reductions (e.g.,using more online tools 
and IT contractual services): 
Total: -$70.9 million. 

Appropriation increase: 
Total: $944.5 million. 

Source: Fiscal year 2013 Congressional Justification for IRS. 

Note: Numbers may not add due to rounding. 

[End of table] 

IT is About 20 Percent of IRS’s Fiscal Year 2013 Budget Request: 

IRS requested about $2.5 billion for IT for fiscal year 2013—$2.14 
billion for investments in the Operations Support appropriation and 
$330 million for investments in the BSM appropriation. 

Of the $2.5 billion requested: 

* $1.6 billion is expected to fund 18 major investments[Footnote 6] 
and; 

* $900 million is expected to fund 123 nonmajor investments. 

Major IT Investments’ Planned Cost: 

Table 7: IRS’s Major IT Investments’ Cost Information[A]: 

Investment Name: Account Management Services (AMS); 
Enacted Funds for 2012: $20.9 million; 
Requested Funds for 2013: $21.0 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $103.2 
million. 

Investment Name: Affordable Care Act (ACA) Administration; 
Enacted Funds for 2012: $0.0; 
Requested Funds for 2013: $303.5 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $303.5[B] 
million. 

Investment Name: Current CADE[C]; 
Enacted Funds for 2012: $0.7 million; 
Requested Funds for 2013: $0.0; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $50.1 
million. 

Investment Name: Customer Account Data Engine 2 (CADE 2); 
Enacted Funds for 2012: $210.3 million; 
Requested Funds for 2013: $203.4 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $1.148 
billion. 

Investment Name: Electronic Fraud Detection System (EFDS); 
Enacted Funds for 2012: $15.6 million; 
Requested Funds for 2013: $15.8 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $77.7 
million. 

Investment Name: e-Services (e-SVS); 
Enacted Funds for 2012: $13.9 million; 
Requested Funds for 2013: $0.0; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $82.5 
million. 

Investment Name: Foreign Account Tax Compliance Act (FATCA); 
Enacted Funds for 2012: $0.0; 
Requested Funds for 2013: $11.4 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $42.3 
million. 

Investment Name: Implement Return Review Program (RRP) (Replaces EFDS); 
Enacted Funds for 2012: $18.4 million; 
Requested Funds for 2013: $18.3 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $87.3 
million. 

Investment Name: Individual Master File (IMF); 
Enacted Funds for 2012: $10.3 million; 
Requested Funds for 2013: $10.4 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $71.4 
million. 

Investment Name: Information Reporting and Document Matching (IRDM); 
Enacted Funds for 2012: $20.0 million; 
Requested Funds for 2013: $20.4 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $110.8 
million. 

Investment Name: Integrated Customer Communication Environment (ICCE); 
Enacted Funds for 2012: $16.0 million; 
Requested Funds for 2013: $16.1 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $89.3 
million. 

Investment Name: Integrated Data Retrieval System (IDRS); 
Enacted Funds for 2012: $18.3 million; 
Requested Funds for 2013: $18.4 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $290.0 
million. 

Investment Name: Integrated Financial System/CORE Financial System 
(IFS); 
Enacted Funds for 2012: $16.6 million; 
Requested Funds for 2013: $16.9 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $94.9 
million. 

Investment Name: Integrated Submission and Remittance Processing 
System (ISRP); 
Enacted Funds for 2012: $20.9 million; 
Requested Funds for 2013: $13.7 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $80.3 
million. 

Investment Name: IRS End User Systems and Services (EUSS); 
Enacted Funds for 2012: $201.0 million; 
Requested Funds for 2013: $183.0 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $1.477 
billion. 

Investment Name: IRS Main Frames and Servers Services and Support 
(MSSS); 
Enacted Funds for 2012: $449.3 million; 
Requested Funds for 2013: $446.5 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $4.034 
billion. 

Investment Name: IRS Telecommunications Systems and Support (TSS); 
Enacted Funds for 2012: $218.6 million; 
Requested Funds for 2013: $224.5 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $1.755 
billion. 

Investment Name: IRS.GOV - Portal Environment; 
Enacted Funds for 2012: $31.2 million; 
Requested Funds for 2013: $31.7 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $1.128 
billion. 

Investment Name: Modernized e-File (MeF); 
Enacted Funds for 2012: $49.1
Requested Funds for 2013: $50.4
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $292.1 
million. 

Investment Name: Service Center Recognition/Image Processing System 
(SCRIPS); 
Enacted Funds for 2012: $19.7 million; 
Requested Funds for 2013: $10.7 million; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $68.3 
million. 

Total: 
Enacted Funds for 2012: $1.350 billion; 
Requested Funds for 2013: $1.616 billion; 
Total Estimated Costs (fiscal year 2011-fiscal year 2015): $11.386 
billion. 

[A] Cost figures are represented in millions. 

[B] IRS did not receive any funds for this investment for fiscal year 
2011 and fiscal year 2012. At the time of our review,we did not 
receive the estimated costs for fiscal year 2014 to fiscal year 2015. 

[C] According to the OMB IT Dashboard, the Current CADE Investment 
ended on December 31, 2011. 

Source: GAO’s analysis of IRS’s Exhibit 53 data and Exhibit 300As. 

[End of table] 

Selected Measures Show Declines in Performance and Goals for Taxpayer 
Service and Enforcement Activities since 2007: 

Table 8: Selected Processing, Taxpayer Service, and Enforcement 
Measures for Fiscal Year 2007 through 2013: 

Performance measure: Assistor Calls: Level of service[A]; 
Fiscal year 2007 (actual): 82.1%; 
Fiscal year 2008 (actual): 52.8%; 
Fiscal year 2009 (actual): 70.0%; 
Fiscal year 2010 (actual): 74.0%; 
Fiscal year 2011 (actual): 70.1%; 
Fiscal year 2012 goal: 61.0%; 
Fiscal year 2013 goal: 63.0%. 

Performance measure: Assistor Calls: Tax law accuracy[B]; 
Fiscal year 2007 (actual): 91.2%; 
Fiscal year 2008 (actual): 91.2%; 
Fiscal year 2009 (actual): 92.9%; 
Fiscal year 2010 (actual): 92.7%; 
Fiscal year 2011 (actual): 93.4%; 
Fiscal year 2012 goal: 92.7%; 
Fiscal year 2013 goal: 92.7%. 

Performance measure: Assistor Calls: Account accuracy[B]; 
Fiscal year 2007 (actual): 93.4%; 
Fiscal year 2008 (actual): 93.7%; 
Fiscal year 2009 (actual): 94.9%; 
Fiscal year 2010 (actual): 95.7%; 
Fiscal year 2011 (actual): 96.0%; 
Fiscal year 2012 goal: 95.0%; 
Fiscal year 2013 goal: 95.0%. 

Performance measure: Examination coverage-—individual[C]; 
Fiscal year 2007 (actual): 1.0%; 
Fiscal year 2008 (actual): 1.0%; 
Fiscal year 2009 (actual): 1.0%; 
Fiscal year 2010 (actual): 1.1%; 
Fiscal year 2011 (actual): 1.1%; 
Fiscal year 2012 goal: 1.0%; 
Fiscal year 2013 goal: 1.0%. 

Performance measure: Examination coverage-—business[D] (assets greater 
than $10 million); 
Fiscal year 2007 (actual): 6.8%; 
Fiscal year 2008 (actual): 6.1%; 
Fiscal year 2009 (actual): 5.6%; 
Fiscal year 2010 (actual): 5.7%; 
Fiscal year 2011 (actual): 6.2%; 
Fiscal year 2012 goal: 5.6%; 
Fiscal year 2013 goal: 5.4%. 

Performance measure: Collection coverage[E]; 
Fiscal year 2007 (actual): 54.0%; 
Fiscal year 2008 (actual): 55.2%; 
Fiscal year 2009 (actual): 54.2%; 
Fiscal year 2010 (actual): 50.1%; 
Fiscal year 2011 (actual): 50.0%; 
Fiscal year 2012 goal: 47.8%; 
Fiscal year 2013 goal: 46.8%. 

Performance measure: Individual returns processed electronically; 
Fiscal year 2007 (actual): 57.1%; 
Fiscal year 2008 (actual): 57.6%; 
Fiscal year 2009 (actual): 65.9%; 
Fiscal year 2010 (actual): 69.3%; 
Fiscal year 2011 (actual): 76.9%; 
Fiscal year 2012 goal: 79.0%; 
Fiscal year 2013 goal: 80.0%. 

Source: Fiscal year 2013 Congressional Justification for IRS. 

[A] The number of toll-free callers who speak to live IRS assistors 
divided by the total number of attempted calls. 

[B] Customer accuracy measures how often customers receives the 
correct answer/solution to their inquiry from a live IRS assistor. 

[C] Examination coverage–-individual indicates the number of 
individual income tax returns examined and closed by IRS during the 
current fiscal year divided by the number of return filings for the 
preceding year. 

[D] Examination coverage-–business reflects the inventory of large and 
midsize business returns examined and closed by IRS during the current 
fiscal year divided by the number of return filings for the preceding 
year. 

[E] Collection coverage measures the volume of collection work 
disposed compared to the volume of collection work available. 

[End of table] 

Fiscal Year 2012 Performance Decreases Affect Taxpayers in Selected 
Areas: 

Hours assistors are available to answer calls decreased 20 percent (to 
12 hours per day from 15 hours in fiscal year 2011). 

Average wait time to talk with an assistor increased to about 17 
minutes (from 11.2 minutes in fiscal year 2011). 

So far this filing season, the telephone level of service is down 5 
percentage points from last year, and is currently at 65 percent. The 
planned goal for fiscal year 2012 is 61 percent, down from its 
original goal of 81 percent for fiscal year 2008. 

Abandoned, busies, and disconnected calls are up 41 percent since 
fiscal year 2011 and are up almost 150 percent since fiscal year 2008. 

Fiscal year 2012 planned service goals for examinations are also down, 
which could affect revenue from collections: 

* Individuals: 1.0 percent (reduced from 1.1 percent in fiscal year 
2011). 

* Large and medium businesses: 5.6 percent (reduced from 6.2 percent 
in fiscal year 2011). 

[End of section] 

Conclusion: 

IRS is processing tax returns in a rapidly changing environment. MeF 
is critical to e-filing and has been an important part of IRS’s 
modernization efforts. It provides benefits to both IRS and taxpayers—-
millions of whom expect timely refunds, and for many of them, 
it is the single biggest payment they will receive during the year. 
Without a timely review and update to its contingency plan that 
considers lessons learned from this year’s experiences with MeF, IRS 
could be introducing additional risk to next year’s filing season. 

Recommendation for Executive Action: 

The Commissioner of Internal Revenue should ensure that IRS’s IT 
contingency plan for MeF is reviewed and updated, as needed, in time 
for the beginning of the 2013 filing season. 

[End of section] 

Appendix I: Description of the Internal Revenue Service’s (IRS) Major 
Information Technology (IT) Investments: 

Table 9: IRS’s Major IT Investments: 

Investment name: Account Management Services (AMS); 
Investment description: AMS is intended to enhance customer support by 
providing applications that enable IRS employees to access, validate, 
and update individual taxpayer accounts on demand. 

Investment name: Affordable Care Act (ACA) Administration; 
Investment description: ACA Administration allows the IRS to continue 
the development of new systems and modification of existing systems 
required to support new tax credits as prescribed in the ACA. 

Investment name: Current CADE; 
Investment description: Current CADE was intended to deploy a 
modernized database and application to provide faster return 
processing and refunds and realignment to CADE 2. As of 12/31/2011,the 
transition to CADE 2 is complete. 

Investment name: Customer Account Data Engine 2 (CADE 2); 
Investment description: CADE 2 is intended to leverage CADE and the 
Individual Master File, which contain the repository of individual 
taxpayer information, to provide timely access to authoritative 
individual taxpayer account information and enhance IRS’s ability to 
address technology, security, financial material weaknesses, and long-
term architectural planning and viability. 

Investment name: Electronic Fraud Detection System (EFDS); 
Investment description: EFDS is a steady state, automated system used 
to detect fraud at the time that tax returns are filed in order to 
eliminate the issuance of fraudulent tax refunds. 

Investment name: e-Services (e-SVS); 
Investment description: e-SVS is a suite of web-based, self-assisted 
services that is intended to allow authorized individuals to do 
business with the IRS electronically. 

Investment name: Foreign Account Tax Compliance Act (FATCA); 
Investment description: FATCA requires foreign financial institutions 
to report to the IRS information about financial accounts held by U.S. 
taxpayers, or foreign entities in which U.S. taxpayers hold a 
substantial ownership interest. 

Investment name: Implement Return Review Program (RRP); 
Investment description: (Replaces EFDS)RRP, currently under 
development, is intended to be an automated system designed to 
maximize fraud detection at the time that tax returns are filed to 
eliminate the issuing of questionable refunds. 

Investment name: Individual Master File (IMF); 
Investment description: IMF is the authoritative data source for 
individual tax account data. All other IRS information system 
applications that process IMF data depend on output from this source. 
IMF is a critical component of IRS’s ability to process tax returns. 

Investment name: Information Reporting and Document Matching (IRDM); 
Investment description: IRDM is intended to close the tax gap by 
increasing voluntary compliance and accurate reporting of income by 
establishing a new business information matching program. 

Investment name: Integrated Customer Communication Environment (ICCE); 
Investment description: ICCE is intended to make voluntary compliance 
easier. It includes multiple projects that use voice response, 
Internet, and other computer technology to provide service to 
taxpayers. It also includes, among other applications, the Modernized 
Internet Employee Identification Number (Mod IEIN), which allows third 
parties to act on the behalf of taxpayers. 

Investment name: Integrated Data Retrieval System (IDRS); 
Investment description: IDRS has been a mission-critical system, used 
by 60,000 IRS employees. It is intended to provide for systemic 
review, improve consistency in case control, alleviates staffing 
needs, issue notices to taxpayers, and allow taxpayers to see status 
of refunds. 

Investment name: Integrated Financial System/CORE Financial System 
(IFS); 
Investment description: Integrated Financial System is the CORE 
financial system used by IRS for budget, payroll, accounts 
payable/receivable, general ledger functions, and financial reporting. 
IRS uses IFS to report on the cost of operations and to manage budgets 
by fiscal year. 

Investment name: Integrated Submission and Remittance Processing 
System (ISRP); 
Investment description: ISRP is the legacy frontline tax processing 
system that processes paper tax returns from individuals and 
businesses. It also updates tax forms to comply with tax law changes. 

Investment name: IRS End User Systems and Services (EUSS); 
Investment description: The End User Equipment and Services (EUES) 
program is intended to support the IRS day-to-day end user products, 
services, and support for over 100,000 IRS employees at headquarters 
and field sites. 

Investment name: IRS Main Frames and Servers Services and Support 
(MSSS); 
Investment description: MSSS is intended to provide for the design, 
development and deployment of server, middleware and large systems, 
and enterprise storage infrastructures, including systems software 
products, databases,and operating systems for these platforms. 

Investment name: IRS Telecommunications Systems and Support (TSS); 
Investment description: This investment supports IRS’s network 
infrastructure services. This includes WANs, LANs, servers, switches, 
etc., for voice, data, and video servicing of about 1,000 IRS sites. 

Investment name: IRS.GOV—-Portal Environment; 
Investment description: IRS portal will provide seamless one-stop web-
based services to internal and external users, such as taxpayers, 
business partners, IRS employees, and other government agencies. 

Investment name: Modernized e-File (MeF); 
Investment description: MeF is intended to provide a secure web-based 
platform for electronic filing of individual and business tax and 
information returns by registered Electronic Return Originators. 

Investment name: Service Center Recognition/Image Processing System 
(SCRIPS); 
Investment description: SCRIPS is a data capture, management and image 
storage system that uses high-speed scanning and digital imaging to 
process the 940, 941, K-1, and Information Returns Processing paper 
returns and converts data to electronic format for processing 
downstream. 

[End of table] 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

James R. White, (202) 512-9110, whitej@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Joanna Stamatiades, 
Assistant Director; LaKeshia Allen; Amy Bowser; Mary Fike; Chuck Fox; 
David Fox; Tom Gilbert; Sairah Ijaz; Erik Kjeldgaard; Kirsten Lauber; 
Libby Mixon; Paul Middleton; Sabine Paul; Neil Pinney; Mark Ryan; 
Cynthia Saunders; Sabrina Streagle; Robyn Trotter; and Weifei Zheng 
made key contributions to this report. 

[End of section] 

Footnotes: 

[1] The Modernized E-File system (MeF) is replacing IRS's legacy 
electronic filing system, which IRS has reported it plans to retire in 
October 2012. MeF provides taxpayers with faster acknowledgment that 
their returns have been accepted and better information if a return is 
rejected. 

[2] A full-time equivalent is a measure of staff hours equal to those 
of an employee who works 40 hours per week in 1 year. 

[3] GAO, 2011 Tax Filing: Processing Gains, but Taxpayer Assistance 
Could Be Enhanced by More Self-Service Tools, [hyperlink, 
http://www.gao.gov/products/GAO-12-176] (Washington, 
D.C.: Dec. 15, 2011). 

[4] TIGTA, The Modernized e-File Release Included Enhancements, but 
Improvements Are Needed for Tracking Performance Issues and Security 
Weaknesses, 2011-20-088 (Washington, D.C.: 2011); and Modernized e-
File Will Enhance Processing of Electronically Filed Individual Tax 
Returns, but System Development and Security Need Improvement, 2010-20-
041 (Washington, D.C.: 2010). 

[5] Reduction in FTEs calculated from fiscal year 2011 actual and 
fiscal year 2012 enacted FTE levels. 

[6] See appendix I for a description of the major IT investments. 
Additionally, according to IRS, major investments are defined by 
Treasury as those that cost $10 million in either current year or 
budget year, or $50 million over the 5-year period extending from the 
prior year through budget year +2. 

[End of section] 

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