Tax Administration:

IRS' Fiscal Year 1997 Spending, 1997 Filing Season, and Fiscal Year 1998 Budget Request

T-GGD/AIMD-97-66: Published: Mar 18, 1997. Publicly Released: Mar 18, 1997.

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GAO discussed: (1) its review of the Administration's fiscal year (FY) 1998 budget request for the Internal Revenue Service (IRS); (2) the interim results of its review of the 1997 tax return filing season; (3) a review of IRS' FY 1997 spending plans for information systems; and (4) GAO's past work on Tax Systems Modernization.

GAO noted that: (1) IRS' FY 1997 appropriation act and accompanying conference report indicated that Congress was concerned about, among other things, the level of taxpayer service and IRS' lack of progress in modernizing its systems; (2) in response to congressional concerns about taxpayer service, IRS added more staff this year to answer the telephone and revised its procedures for handling more complicated calls for assistance; (3) as a result, IRS answered 52 percent of taxpayers' call attempts during the first 2 months of this filing season, compared with 21 percent during the same period last year; (4) this filing season has also seen a large increase in electronic filing; (5) to respond to congressional concerns about modernization, IRS realigned its FY 1997 information system spending plans; (6) GAO's review of eight projects showed that the spending plans appeared to be consistent with congressional direction; (7) however, IRS has since cancelled projects that it had estimated would cost a total of $36 million in FY 1997, and decided not to start any new systems modernization efforts until at least the second quarter of FY 1998; (8) included in IRS' budget request for FY 1998 is $131 million for developmental information systems; (9) in addition, the administration is proposing a $1-billion capital account for information technology investments at IRS; (10) neither the $131 million nor the $1 billion is supported by the type of analysis required by the Clinger-Cohen Act, the Government Performance and Results Act (GPRA), and the Office of Management and Budget; (11) IRS' budget request also includes $84 million for its turn-of-the-century date conversion effort; (12) there is reason to question the sufficiency of that amount because IRS has not yet determined its total conversion needs; (13) IRS expects the funding limits it faces in FY 1997 and anticipates for FY 1998 to continue until at least 2002; (14) fiscal constraints as well as long-standing concerns about the efficiency of IRS operations make consensus on IRS strategic goals and the measures for assessing progress against those goals critically important; (15) in recent years, Congress has put in place a statutory framework for accomplishing this; and (16) this framework includes as its essential elements the Chief Financial Officers Act, the Clinger-Cohen Act, and GPRA.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Congress had not yet passed IRS' fiscal year 1998 appropriation--the Senate had acted on IRS' appropriation bill; the House had not. The Senate version of the bill does not rescind any fiscal year 1997 developmental funds. Instead, the Senate bill requires that IRS reprogram $105 million from its fiscal year 1997 appropriation for information system development to its century date conversion effort and data center consolidation.

    Matter: Congress should consider rescinding the $36 million that IRS will not be using for systems development and deployment in FY 1997.

  2. Status: Closed - Implemented

    Comments: Congress had not yet passed IRS' fiscal year 1998 appropriation--the Senate had acted on IRS' appropriation bill; the House had not. The Senate version of the bill specifies that the $131 million that IRS requested for information systems development be used for the century date change effort. This effort is a stay-in business activity. Although the Senate provided $325 million for the capital investment account, it specified that the $325 million be used for IRS' century date change effort and data center consolidation.

    Matter: Congress should consider not funding either the $131-million request for systems development or the $1-billion capital account until the management and technical weaknesses in IRS' modernization program are resolved and the required justifications are completed.

 

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