Tax Administration:

IRS' Fiscal Year 2000 Budget Request and 1999 Tax Filing Season

T-GGD/AIMD-99-140: Published: Apr 13, 1999. Publicly Released: Apr 13, 1999.

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Pursuant to a congressional request, GAO discussed the Internal Revenue Service's (IRS) fiscal year (FY) 2000 budget request and the status of the 1999 filing season.

GAO noted that: (1) for FY 2000, the administration is requesting about $8.2 billion and 97,862 full-time equivalent positions for IRS; (2) the request includes about $197 million for three initiatives--organizational modernization, implementation of the IRS Restructuring and Reform Act of 1998, and customer service training; (3) GAO cannot comment on the reasonableness of the requested funding because IRS: (a) is still developing plans that could affect the costs associated with organizational modernization; and (b) did not provide GAO with sufficient detail to explain how some of the estimates were developed; (4) congressional oversight of IRS' FY 2000 operations could be made more complex because: (a) the FY 2000 budget request is formatted in a way that may not reflect IRS' organizational structure in FY 2000; and (b) many of the performance measures included in the FY 2000 budget request are new and two important measures have yet to be developed; (5) both of these situations are understandable because IRS: (a) has not finished planning for the organizational modernization; and (b) is in the initial stages of a major effort to develop a more balanced set of performance measures; (6) IRS' 5-year cost estimate to make its information systems year 2000 compliant is $1.3 billion; (7) changes in business requirements for one of IRS' replacement projects and a decision to upgrade or replace hardware and software for minicomputers/fileservers and personal computers account for some of the increase; (8) for FY 2000, IRS is requesting $250 million for its year 2000 efforts; (9) about $60 million of the $123.4 million allocated to the Century Date Change Project Office covers funding requests for various activities that have not yet been approved by IRS; (10) IRS is requesting $1.46 billion for information systems in FY 2000; (11) IRS' plans for spending those funds are consistent with GAO's prior recommendations and related congressional direction; (12) IRS is also requesting for FY 2001 an advance appropriation of $325 million for its multiyear capital account for systems modernization; (13) IRS has not adequately justified that request in accordance with federal information technology investment requirements; and (14) with respect to the 1999 filing season, preliminary data show that: (a) the accessibility and quality of IRS' telephone service has deteriorated considerably since last year, although accessibility has improved in recent weeks; and (b) the number of individual income tax returns filed electronically is continuing to increase, although fewer returns are being filed by telephone.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matter for Congressional Consideration

    Matter: GAO supports IRS' efforts to first strengthen its modernization capability and then acquire modernized systems. However, IRS' FY 2001 request for information technology investments account funds is not justified in accordance with federal information technology investment requirements. Accordingly, Congress may want to consider either denying (i.e., not funding) the $325-million advance request or restricting its obligation until IRS develops the requisite cost analyses to justify the amount requested, which IRS plans to do by September 1999.

    Status: Closed - Implemented

    Comments: The administration's request for an advance appropriation for IRS for fiscal year 2001 was denied by Congress. According to IRS', National Budget Director, the Appropriations Committees were not willing to approve this advance because to do so would tie up budget authority.

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