Tax Systems Modernization

Actions Underway But IRS Has Not Yet Corrected Management and Technical Weaknesses Gao ID: AIMD-96-106 June 7, 1996

GAO reported last year that the government's $8 billion tax systems modernization effort was plagued by pervasive management and technical weaknesses. Although the Internal Revenue Service (IRS) has taken steps to overcome these shortcomings, none of these actions, either individually or collectively, fully satisfy GAO's recommendations, and it is unclear when these actions will result in disciplined systems development. The upshot is that IRS continues to spend hundreds of millions of dollars on tax systems modernization even though fundamental weaknesses jeopardize that investment. IRS now plans to used a prime contractor and increase its use of software development contractors to develop tax systems modernization. However, its plans and schedules in this area are poorly defined and cannot be fully understood or assessed. Moreover, as the experience with Cyberfile and the Document Processing System projects makes clear, IRS does not have the mature processes needed to acquire software and manage contractors effectively.

GAO found that: (1) IRS does not have a comprehensive strategy to maximize electronic filing because the present strategy targets only a small portion of the taxpayers likely to file electronically; (2) IRS strategic information management practices remain ineffective because information systems are not managed as investments; (3) IRS reengineering efforts lag behind the development of TSM projects; (4) IRS is improving its software development activities, but these improvements are not complete or institutionalized; (5) the IRS technical infrastructure, including systems architecture, integration planning, and system testing and test planning, is incomplete; (6) IRS has not established an effective organizational structure to consistently manage and control TSM; and (7) IRS plans to increase its use of contractors to facilitate TSM, but it has not been successful in managing all of its contractors.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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