Internal Revenue Service:

Impact of the IRS Restructuring and Reform Act on Year 2000 Efforts

GGD-98-158R: Published: Aug 4, 1998. Publicly Released: Aug 4, 1998.

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James R. White
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Pursuant to a congressional request, GAO reviewed the impact of the Senate version of H.R. 2676, the Internal Revenue Service (IRS) Restructuring and Reform Act of 1998, on IRS' year 2000 efforts, focusing on whether: (1) the effective dates in the Senate bill could affect IRS' ability to achieve year 2000 compliance as planned; (2) IRS' year 2000 testing schedule could affect the timeframes for developing and implementing tax law changes, such as those in the Senate bill; and (3) specific provisions would present difficult implementation issues, not only in terms of information systems changes but also with regard to changes to IRS' business processes.

GAO noted that: (1) in isolation, an effective date of 2000 for any one of the provisons in the act may not adversely affect IRS' ability to achieve year 2000 compliance; (2) however, the cumulative impact of many provisions having effective dates of 2000 or before, the compressed schedule for implementing tax law changes that IRS has developed to accommodate its year 2000 testing efforts, could increase IRS' risk of not achieving year 2000 compliance as planned; (3) however, with the information that is available, GAO is unable to quantify that risk; (4) IRS' analysis of the impact of effective dates that was done for the Joint Committee on Taxation (JCT) concluded that IRS' ability to achieve year 2000 compliance would be affected by provisons that had effective dates before 2000; (5) accordingly, IRS recommended effective dates of 2000 for several provisions; (6) however, the assumptions that IRS officials used for recommending effective dates of 2000 may not be valid; (7) in addition to the possibility that IRS' assumptions might not all be valid, IRS' analysis for JCT did not consider the impact of IRS' year 2000 efforts on the schedule for implementing provisions in the act that would take effect in 2000;(8) exacerbating the complex process for developing business requirements will be shorter timeframes for finalizing business requirements, making application software changes, and testing the requisite application software changes; (9) because the final phase of IRS' year 2000 integrated test is scheduled to begin October 1, 1999, IRS has determined that all systems acceptance testing of tax law changes will have to be completed approximately 3 months earlier than they would be under a normal tax law change cycle--in September 1999 instead of January 2000; (10) accordingly, business requirements will have to be finalized by February 1999; (11) IRS attempted to meet the February 1998 milestone for the tax law changes that are to take effect in the 1999 filing season but did not; (12) GAO has reported in the past on IRS' difficulty in managing the development of business requirements for its information systems projects; (13) in the event that business requirements are not finalized by February 1999, IRS faces the risk that application changes made for provisions in the act may not be included in systems acceptance testing; and (14) if IRS includes a set of untested applications in the final phase of the year 2000 end-to-end test, this may compound efforts needed to identify the source of any problems that may arise in the final phase of that test.

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    Priority Open Recommendations:

    Internal Revenue Service
    GAO-20-548PR: Published: Apr 23, 2020. Publicly Released: Apr 30, 2020.

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