Tax Systems Modernization:

IRS Needs to Resolve Certain Issues With Its Integrated Case Processing System

GGD/AIMD-97-31: Published: Jan 17, 1997. Publicly Released: Jan 17, 1997.

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Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) Integrated Case Processing (ICP) systems development effort, focusing on: (1) IRS' assessment of ICP costs and benefits and users' perceptions of the system's benefits; (2) IRS' testing of ICP; (3) IRS' ongoing efforts to redesign its customer service work processes to fully use ICP capabilities; and (4) the software development processes being used for ICP.

GAO found that: (1) improving service to taxpayers is an important goal that IRS' Customer Service Vision shows promise in addressing, but the promise anticipated by the vision is unlikely to be fulfilled unless changes are made in the development and deployment of ICP; (2) IRS estimated that about $150 million was spent on ICP from 1993 to 1995 and that an additional $77 million will be spent through 1996; (3) overall, IRS plans to spend about $641 million on ICP through fiscal year 2000; (4) despite this sizable investment, costs and benefits remain uncertain because: (a) the scheduled rollout of ICP workstations continues to change; (b) the ICP capabilities have not been finalized; (c) certain benefits are still to be determined; and (d) the software is still being developed; (5) IRS planned that certain ICP capabilities being developed would be pilot tested beginning on September 30, 1996, but in a memorandum dated July 31, 1996, the Associate Commissioner for Modernization postponed the pilot test indefinitely; (6) IRS developed and initiated a limited deployment of the initial ICP version; (7) the test results provided little insight on the potential benefits of the system, because IRS did not adequately measure ICP's impact on business operations; (8) IRS officials recognized the limitations of the testing and told GAO that testing of the next software release would be more comprehensive; (9) it is unclear how this and future versions will support new work processes that are being designed; (10) according to IRS' Customer Service Vision, ICP was expected to be the vehicle to provide customer service representatives with access to information that would enable IRS to combine a phase of the tax collection process with customer service; (11) IRS is now reconsidering the extent to which the collection process can be combined with customer service and is reconsidering the range of tasks a customer service representative can be expected to perform; and (12) the software development processes in place at IRS organizations responsible for developing ICP software are extremely weak, making the likelihood of their producing quality ICP software on time and within budget very low.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS said that the Illinois Institute for Technology Research Institute, Inc. undertook an independent verification and validation of the project and recommended that Release 2.0 development efforts be terminated. Further, IRS applied its Investment Review Board (IRB) Project Disposition Criteria to ICP 2.0, which also resulted in a recommendation to terminate the project. Accordingly, the Deputy Commissioner and Chair of the IRB terminated the project on February 24, 1997, and planned to allocate project assets of $279.7 million to higher-priority programs.

    Recommendation: Concurrent with the risk assessment being performed by the contractor, the Commissioner of Internal Revenue should immediately limit deployment of ICP workstations to those already purchased until: (1) projected costs and benefits are better known and can be validated by testing the system in a realistic operational environment, using baseline performance measures; and (2) decisions are made on work processes, including the blending of collection and service work and specific duties of CSRs.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Not Implemented

    Comments: IRS terminated future ICP requirements in February 1997. While IRS continues to make progress in processes to develop software, it is not rated at CMM level 2.

    Recommendation: Expedient steps should be taken to better position IRS to develop its software successfully and to protect its software investments. Specifically, the Commissioner of Internal Revenue should develop and implement an action plan to ensure that ICP software is developed by an organization with at least a level 2 CMM rating.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Implemented

    Comments: IRS has terminated ICP effective February 24, 1997.

    Recommendation: Expedient steps should be taken to better position IRS to develop its software successfully and to protect its software investments. Specifically, the Commissioner of Internal Revenue should delay major investment in ICP software until the action plan is implemented.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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