Tax System Modernization

Pursuant to a congressional request, GAO assessed the Internal Revenue Service's (IRS) progress in implementing its Tax System Modernization (TSM) Program to fully automate the tax processing system, focusing on: (1) the extent to which the program would meet its goal of improved service to taxpayers; and (2) whether individual system components had strategic plan guidance and measurable deliverables.

GAO found that: (1) the status of TSM remains uncertain because IRS had not fully defined the modernization process; (2) although IRS plans studies to examine the business functions, information requirements and data structures for its business areas, they may not be adequate for TSM planning; (3) IRS developed many independent projects without demonstrating how they would connect into an integrated system; (4) the lack of a master plan makes it difficult for IRS to provide a clear and consistent relationship between its TSM projects and modernization goals; (5) IRS risks basing projects on future benefits that may or may not materialize in the final modernization and creating a design to fit its newly purchased hardware, rather than allowing a long-range goal to drive the design; and (6) IRS needs to create a detailed long-range strategy that will transcend changes in leadership, since lack of continuity at key leadership and project management levels has precluded past modernization efforts.