Status of Tax Systems Modernization, Tax Delinquencies, and the Potential for Return-Free Filing

Gao ID: T-GGD/AIMD-96-88 March 14, 1996

Regarding the Internal Revenue Service's (IRS) Tax Systems Modernization effort, GAO is concerned about various weaknesses involving the electronic-filing strategy, software development, and other factors that jeopardize the success of this multimillion-dollar project. Until these deficiencies are corrected, IRS' ability to successfully complete Tax Systems Modernization seems doubtful. In addition to more-effective use of technology, increased filing options could benefit both taxpayers and IRS. For example, if certain obstacles can be overcome, return-free filing can ease the burden for taxpayers while reducing the amount of paper IRS must process. In tax collection, IRS has made little progress in solving its accounts receivable problems. IRS continues to grapple with (1) inaccurate and unreliable information, (2) antiquated computers and a rigid collection process, (3) unintended problems with safeguards against potential taxpayer abuses, (4) a lack of accountability in its organizational structure, and (5) staffing imbalances. As a result, IRS cannot be sure how much money the government is owed or how much of the debt is collectible.



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