Tax Administration

The Internal Revenue Service (IRS) is in the midst of a multi-billion dollar modernization of its tax administration systems. Changes in how IRS does business are essential if the agency is to fully realize the important benefits of modernization--namely, better service to taxpayers and lower costs to run the tax system. In GAO's view, one good candidate for change is the tax return, which is burdensome to taxpayers to prepare and file and costly to the government to process. Although IRS has come up with several filing alternatives, such as electronic filing, GAO believes that the tax filing burden will be reduced only if a way can be found to relieve many taxpayers of the need to file at all. Modernization presents IRS with opportunities to reduce its own burden as well as that of taxpayers through a combination of technology and revised business tactics. But many of the potential benefits of modernization will go unrealized unless IRS revamps its fundamental business approach.