An Analysis of IRS' Proposed Tax Administration System:

Lessons for the Future

GGD-78-43: Published: Mar 1, 1978. Publicly Released: Mar 1, 1978.

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The Tax Administration System (TAS) was proposed to meet the Internal Revenue Service's (IRS) information needs through extensive use of interactive on-line processing and decentralization of the tax account master files. Because of uncertainties relating to costs and benefits of the system and concerns about privacy, plans for TAS were discontinued and, instead, funds are being sought to upgrade the current system. Observations developed during a review of TAS may be useful in evaluating requests for future computer systems.

In seeking approval for TAS, IRS noted that its current computer systems would be overtaken by increasing workload, obsolescence, and decreased manufacturer spare parts and maintenance support by the mid-1980's. The IRS current equipment, with planned enhancements, had substantial workload growth capacity, and there did not seem to be a basis for concerns that manufacturers would withdraw support. The 1975, IRS cost-benefit analysis, used as support for its fiscal year 1977 budget request, overstated expected benefits by about $607 million, and an additional $458 million lacked sufficient documentation for verification. In a revised analysis prepared in May 1977, 50 percent of expected benefits were again overstated or undocumented. It was difficult to evaluate the adequacy of the system's privacy provisions, but instances were observed in the areas of linkage, consolidation, and derivation of data which may require tightening of laws protecting the confidentiality of tax returns. A long-range equipment replacement plan is needed for the IRS computer system which will require a critical, well-documented analysis of problems and alternatives.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress could amend section 6103 of the Internal Revenue Code to expressly prohibit IRS from linking or consolidating tax returns or return information for non-tax administration purposes.

 

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