A Proposed Automated Tax Administration System for Internal Revenue Service:

An Evaluation of Costs and Benefits

LCD-76-114: Published: Nov 23, 1976. Publicly Released: Nov 23, 1976.

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An evaluation of a cost-benefit study by Internal Revenue Service (IRS) in support of a proposed computer system, the Tax Administration System, shows some needs for revision. IRS estimated that with an increased cost of $154 million over the present system, the proposed system would achieve gross benefits of about $2.1 billion in personnel savings and increased revenues.

GAO's review supports the proposed system, but finds that the ratio between costs and benefits is not as great as IRS estimated. Benefits were overestimated by $606 million and costs underestimated by $62. million. Possible software problems and delays create additional uncertainties. However, with adjustments in estimates, the proposed system would be more desirable economically than improving the present system.

Recommendation for Executive Action

  1. Status: Closed

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

    Recommendation: The Commissioner of IRS should revise the cost-benefit analysis and provide for update, reevaluate estimates for system development, and provide monitoring and testing criteria.

    Agency Affected:

 

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