Tax Administration: Status of Tax Systems Modernization, Tax Delinquencies, and the Tax Gap

GAO discussed issues facing the Internal Revenue Service (IRS), focusing on: (1) management of the $23 billion Tax System Modernization (TSM) program; (2) collection of $30 billion in delinquent taxes; and (3) reduction of a $114 billion tax gap. GAO noted that: (1) IRS and taxpayers have realized some of the benefits of modernization, such as electronic filing; (2) IRS has made some progress with interim systems, but has not completed steps critical to long-term modernization; (3) after 6 years, IRS still does not have a complete set of system and data standards needed to guide TSM software development; (4) IRS has not completed detailed security, privacy, and telecommunications requirements for TSM; (5) IRS has not tracked exact spending levels and benefits for TSM projects through the IRS project tracking system; (6) IRS has increased collection of delinquent taxes, but inadequate records, an antiquated and inefficient collection process, and an ineffective staff allocation process have hindered collection efforts; and (7) IRS needs to reduce the tax gap through improved voluntary compliance.