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GAO discussed the Internal Revenue Service's (IRS) tax systems modernization (TSM), focusing on: (1) how TSM is changing IRS business operations; (2) TSM implementation and how it will be kept up to date; (3) IRS management of TSM; and (4) taxpayer services and collection programs. GAO noted that: (1) interim systems, such as automated filing and corporate files on-line (CFOL), have increased productivity and response speed, and reduced costs and errors; (2) the IRS requirement to use automated filing through third-party facilities limits its availability and potential cost savings; (3) the automated filing system's design limits its ability to detect and handle fraudulent electronic returns and slows electronic returns processing; (4) CFOL does not permit taxpayer assistors to update a taxpayer's record at the point of contact; (5) IRS is not developing systems that will integrate with its existing systems; (6) an experienced chief systems architect at the executive level could improve the systems' technical performance and compatibility; (7) telephone accessibility has declined partly due to reduced staff, but IRS is contemplating the use of automatic routing equipment and increasing office hours for toll-free numbers to increase productivity and response time; and (8) IRS needs to place more emphasis on service center collection activities rather than field collections and improve its collection operations.

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