Tax Systems Modernization:

Management and Technical Weaknesses Must Be Corrected If Modernization Is to Succeed

AIMD-95-156: Published: Jul 26, 1995. Publicly Released: Jul 26, 1995.

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GAO reviewed the effectiveness of the Internal Revenue Service's (IRS) efforts to modernize tax processing, focusing on: (1) IRS business and technical practices in the areas of electronic forms, strategic information management, software development, technical infrastructures, and organizational controls; and (2) opportunities to improve IRS information systems management and software development capabilities.

GAO found that: (1) despite IRS efforts to improve its tax processing, pervasive management and technical weaknesses still remain that could impede its modernization efforts; (2) IRS does not have a comprehensive business strategy to reduce paper submissions; (3) IRS has not yet fully developed the requisite software and technical infrastructures to successfully implement its modernization efforts; (4) other tax system modernization (TSM) weaknesses include IRS failure to fully implement strategic information management practices, an immature and weak software development capability, and incomplete systems architectures and integration and system planning; (5) IRS does not manage TSM as an investment, systems development is not driven by reengineering efforts, and IRS staff do not have the necessary skills to meet future IRS needs; and (6) IRS has not assigned responsibility, authority, and accountability for managing and controlling systems modernization to one individual or office.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS' May 1997 Modernization Blueprint included a high-level description of a systems life cycle (SLC), which addressed investment selection, prioritization, control, and evaluation. GAO reviewed the SLC and found that while it was a good start and consistent with industry practices, it was not sufficiently detailed. Accordingly, GAO recommended in AIMD-98-54 that IRS complete its definition and implementation of all SLC processes. This recommendation enveloped and superseded the above recommendation, thus allowing the above recommendation to be closed out.

    Recommendation: To address IRS strategic information management weaknesses, the Commissioner of Internal Revenue should take immediate action to implement a complete process for selecting, prioritizing, controlling, and evaluating the progress and performance of all major information systems investments, both new and ongoing, including explicit decision criteria.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: While IRS has not completed its SLC, the Commissioner and CIO did review all planned and ongoing investments, which led to the cancellation of the Workload Management System ($53.4 million), the Corporate Accounts Processing System ($90.5 million), the Document Processing System ($15.0 million), and the Automated Tax Law system ($12.8 million). In addition to these cancellations, the former IRS CIO issued a moratorium on all new development projects until the SLC was completed and implemented.

    Recommendation: IRS should use these criteria to review all planned and ongoing systems investments by June 30, 1995.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Implemented

    Comments: According to IRS, it has developed standard wording for use in new and existing contracts that have a significant software development component that requires CMM Level 2 capabilities. Moreover, in the request for proposals for the modernization prime contract, IRS required CMM Level 3 capabilities.

    Recommendation: To address IRS software development weaknesses, the Commissioner of Internal Revenue should immediately require that all future contractors who develop software for the agency have a software development capability rating of at least Capability Maturity Model level 2.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  4. Status: Closed - Implemented

    Comments: IRS' May 1997 Modernization Blueprint included a high-level description of a SLC)covering such as areas as requirements management, quality assurance, configuration management, and project planning and tracking. GAO reviewed the SLC and found that while it was a good start and consistent with industry practices, it was not sufficiently detailed in a number of areas including the ones cited in the recommendation. Accordingly, GAO recommended in AIMD-98-54 that IRS complete its definition and implementation of all SLC processes. The recommendation in AIMD-98-54 enveloped and superseded the above recommendation, thus allowing the above recommendation to be closed out.

    Recommendation: To further upgrade IRS software development capability, the Commissioner of Internal Revenue should take action before December 31, 1995, to define, implement, and enforce a consistent set of requirements management procedures for all TSM projects that goes beyond the current IRS request for information services process, and for software quality assurance, software configuration management, and project planning and tracking.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  5. Status: Closed - Implemented

    Comments: IRS' May 1997 Modernization Blueprint included a high-level description of a SLC. GAO reviewed the SLC and found that while it was a good start and consistent with industry practices, it was not sufficiently detailed in a number of areas. Accordingly, GAO recommended in AIMD-98-54 that IRS complete its definition and implementation of all SLC processes. The AIMD-98-54 recommendation enveloped and superseded the above recommendation, and thus allows the above recommendation to be closed out.

    Recommendation: To further upgrade IRS software development capability, the Commissioner of Internal Revenue should take action before December 31, 1995, to define and implement a set of software development metrics to measure software attributes related to business goals, such as those outlined in this report.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  6. Status: Closed - Implemented

    Comments: IRS' May 1997 Modernization Blueprint included a high-level systems architecture. GAO reviewed the systems architecture and found that while it was a good start, it was not sufficiently detailed in a number of areas including security, telecommunications, network management, and data management. Accordingly, GAO recommended in AIMD-98-54 that IRS complete its definition and implementation of a systems architecture. The AIMD-98-54 recommendation enveloped and superseded the above recommendation, thus allowing the above recommendation to be closed out.

    Recommendation: To address IRS technical infrastructure weaknesses, the Commissioner of Internal Revenue should, before December 31, 1995, complete an integrated systems architecture, including security, telecommunications, network management, and data management.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  7. Status: Closed - Implemented

    Comments: IRS' May 1997 Modernization Blueprint included a high-level description of a SLC. GAO reviewed the SLC and found that while it was a good start and consistent with industry practices, it was not sufficiently detailed in a number of areas, including configuration management. Accordingly, GAO recommended in AIMD-98-54 that IRS complete its definition and implementation of all SLC processes. The AIMD-98-54 recommendation enveloped and superseded the above recommendation, thus allowing the above recommendation to be closed out.

    Recommendation: To address IRS technical infrastructure weaknesses, the Commissioner of Internal Revenue should, before December 31, 1995, institutionalize formal configuration management for all newly approved projects and upgrades and develop a plan to bring ongoing projects under formal configuration management.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  8. Status: Closed - Implemented

    Comments: IRS' May 1997 Modernization Blueprint included a high-level description of a SLC. GAO reviewed the SLC and found that while it was a good start and consistent with industry practices, it was not sufficiently detailed in a number of areas, including, for example, developing a security concept of operations. Accordingly, GAO recommended in AIMD-98-54 that IRS complete its definition and implementation of all SLC processes. The AIMD-98-54 recommendation enveloped and superseded the above recommendation, thus allowing the above recommendation to be closed out.

    Recommendation: To address IRS technical infrastructure weaknesses, the Commissioner of Internal Revenue should, before December 31, 1995, develop security concept of operations, disaster recovery, and contingency plans for the modernization vision and ensure that these requirements are addressed when developing information system projects.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  9. Status: Closed - Implemented

    Comments: IRS' May 1997 Modernization Blueprint included a high-level description of a SLC. GAO reviewed the SLC and found that while it was a good start and consistent with industry practices, it was not sufficiently detailed in a number of areas, including test and evaluation. Accordingly, GAO recommended in AIMD-98-54 that IRS complete its definition and implementation of all SLC processes. The AIMD-98-54 recommendation enveloped and superseded the above recommendation, thus allowing the above recommendation to be closed out.

    Recommendation: To address IRS technical infrastructure weaknesses, the Commissioner of Internal Revenue should, before December 31, 1995, develop a testing and evaluation master plan for the modernization.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  10. Status: Closed - Implemented

    Comments: IRS recently developed an integrated test facility to support its year 2000 conversion efforts.

    Recommendation: To address IRS technical infrastructure weaknesses, the Commissioner of Internal Revenue should, before December 31, 1995, establish an integration testing and control facility.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  11. Status: Closed - Implemented

    Comments: IRS' May 1997 Modernization Blueprint included a high-level description of a SLC. GAO reviewed the SLC and found that while it was a good start and consistent with industry practices, it was not sufficiently detailed in a number of areas including systems architecture enforcement controls. Accordingly, GAO recommended in AIMD-98-54 that IRS complete its definition and implementation of all SLC processes, including processes for effectively enforcing the architecture, and that IRS' Chief Information Officer be assigned responsibility for enforcing the architecture. The AIMD-98-54 recommendations enveloped and superseded the above recommendation, thus allowing the above recommendation to be closed out.

    Recommendation: To address IRS technical infrastructure weaknesses, the Commissioner of Internal Revenue should, before December 31, 1995, complete the modernization integration plan and ensure that projects are monitored for compliance with modernization architectures.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  12. Status: Closed - Implemented

    Comments: Public Law 105-206 stated that it was the policy of the Congress that paperless filing be the preferred form of paying taxes. The law further states that by 2007, the goal is to have 80 percent of all tax returns electronically filed. To reach this goal, the law allows IRS to promote electronic filing through targeted advertising campaigns. According to the IRS' Assistant Commissioner for E-file, during 1998 the IRS executed Requests for Agreements with the private sector that involved non-monetary incentives for tax practitioners to use electronic filing. In addition, the Assistant Commissioner for electronic filing has refocused its marketing to better target its electronic filing strategy by, for example, creating electronic filer demographics profiles using data mining techniques, completing awareness tracking and taxpayer attitudinal studies, and making electronic filing so simple, inexpensive, and trusted that taxpayers will prefer this method to calling and mailing.

    Recommendation: To better achieve its virtually paperless processing environment, IRS should refocus its electronic filing business strategy to target, through aggressive marketing and education, those sectors of the taxpaying population that can file electronically most cost-beneficially.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  13. Status: Closed - Implemented

    Comments: IRS consolidated, under the Associate Commissioner, the authority over all information systems development efforts, including research and development projects. IRS is now taking steps to institutionalize this relationship through the processes defined in its systems life cycle.

    Recommendation: To fully strengthen systems development accountability and responsibility, the Commissioner of Internal Revenue should give the Associate Commissioner management and control responsibility for all systems development activities, including those of the IRS research and development division.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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