Internal Revenue Service:

Business Operations Need Continued Improvement

AIMD/GGD-96-152: Published: Sep 9, 1996. Publicly Released: Sep 9, 1996.

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Pursuant to a congressional request, GAO reviewed opportunities to improve the Internal Revenue Service's (IRS) business operations, focusing on actions IRS needs to take to: (1) implement its business vision; (2) overcome management and technical weaknesses in its tax systems modernization (TSM) efforts; and (3) improve the reliability of its financial management systems.

GAO found that: (1) IRS has not made significant progress in correcting its TSM management and technical weaknesses, and Congress should consider limiting IRS funding for TSM to critical and cost-effective projects; (2) IRS needs to develop an effective implementation strategy for its business vision, particularly regarding electronic filing, paper return processing, customer service, data capture and retrieval, and its TSM and reengineering efforts; (3) IRS needs to develop the capacity to make sound information technology investments; (4) IRS needs to build a technical foundation for TSM information systems projects, improve its software development activities, and complete systems architecture and test planning; (5) IRS has not given control of all systems development activities to one responsible official; (6) IRS must strengthen its capability to manage contracts effectively before obtaining additional contractor support; (7) IRS has not improved its financial management systems, financial records, and accounting procedures; (8) IRS, the Department of the Treasury, and the Office of Budget and Management need to ensure that IRS information management initiatives are promptly and fully implemented; (9) legislation has provided a good framework for measuring IRS performance in meeting its business vision; and (10) the National Commission on Restructuring IRS will have a leading role in evaluating IRS operations and recommending IRS organizational, management, and operating changes.

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