Business Systems Modernization: Internal Revenue Service's Fiscal Year 2005 Expenditure Plan

GAO-05-774 Published: Jul 22, 2005. Publicly Released: Jul 22, 2005.
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The Internal Revenue Service's (IRS) Business Systems Modernization (BSM) program is a multibillion-dollar, high-risk, highly complex effort that involves the development and delivery of a number of modernized information systems intended to replace the agency's aging business and tax processing systems. As required by law, IRS submitted its fiscal year 2005 expenditure plan in April 2005 to congressional appropriations committees, requesting about $203 million from the BSM account. GAO's objectives in reviewing the plan were to (1) determine whether it satisfied the conditions specified in the law, (2) determine what progress IRS had made in implementing our prior recommendations, and (3) provide any other observations about the plan and IRS's BSM program.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service To address the many changes associated with the BSM and to clearly describe what the modernization program is intended to accomplish, when it will be completed, and at what cost, the Commissioner of Internal Revenue should direct the Chief Information Officer to fully revisit the vision and strategy for the BSM program and develop a new set of long-term goals, strategies, and plans that are consistent with the budgetary outlook and IRS's management capabilities.
Closed – Implemented
IRS took several actions to address this recommendation. Specifically, in fiscal year 2006, IRS issued an initial version of a new IT Modernization Vision and Strategy (MV&S). IRS also issued a companion 5-year plan (also known as the Enterprise Transition Strategy) to guide IT investments during fiscal years 2007 through 2011. The MV&S framework is built on a functional segmentation of IRS into core mission business functions (business domains) supported by services necessary for their effective and secure execution (service domains). The Enterprise Transition Strategy describes the overall IRS vision and strategy and how existing and proposed investments align to it. It also documents the scope, business challenges, current and transition architectures, redesign opportunities, strategy, proposed projects and associated release strategies, and the planned evolution (i.e., reuse, consolidation, retirement) of related key current production environment systems for each of the MV&S business domains. During fiscal year 2007, IRS updated its 5-year transition strategy to include a new service domain, planned business domains, and opportunities for retirement of legacy systems. As part of its modernization vision and strategy effort, IRS also developed an initial 5-year schedule for retiring and consolidating systems for each domain and began implementing this schedule. Finally, IRS recently started defining a new strategy for managing individual taxpayer accounts. On June 30, 2009, IRS issued preliminary analyses, including a solution architecture, a program roadmap and a timeline, in support of this new strategy. IRS plans to complete additional analyses and implement the new strategy by 2014.

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