Tax Systems Modernization

To guide its efforts to improve customer service through tax systems modernization, the Internal Revenue Service (IRS) has developed its "Customer Service Vision," which describes how the agency proposes to meet taxpayers' needs in the future. IRS' plans for achieving this vision include a long process of consolidating work units, retraining employees, and developing new information systems. If IRS is to be successful, it must have the capabilities to quickly obtain the data needed to answer taxpayer questions and resolve various taxpayer problems. IRS' integrated case-processing system is one of the key information systems being developed to support these capabilities. With this and other new systems, IRS anticipates that by 2001 its employees will be able to resolve taxpayer concerns during a single telephone conversation 95 percent of the time. This report (1) evaluates IRS' assessment of the costs and benefits of the integrated case-processing system and provides users' views on its benefits, (2) analyzes IRS' testing of the system, (3) assesses IRS' efforts to redesign its customer service work processes to fully use the system's capabilities, and (4) assesses the software development processes being used for the system.

GAO found that: (1) improving service to taxpayers is an important goal that IRS' Customer Service Vision shows promise in addressing, but the promise anticipated by the vision is unlikely to be fulfilled unless changes are made in the development and deployment of ICP; (2) IRS estimated that about $150 million was spent on ICP from 1993 to 1995 and that an additional $77 million will be spent through 1996; (3) overall, IRS plans to spend about $641 million on ICP through fiscal year 2000; (4) despite this sizable investment, costs and benefits remain uncertain because: (a) the scheduled rollout of ICP workstations continues to change; (b) the ICP capabilities have not been finalized; (c) certain benefits are still to be determined; and (d) the software is still being developed; (5) IRS planned that certain ICP capabilities being developed would be pilot tested beginning on September 30, 1996, but in a memorandum dated July 31, 1996, the Associate Commissioner for Modernization postponed the pilot test indefinitely; (6) IRS developed and initiated a limited deployment of the initial ICP version; (7) the test results provided little insight on the potential benefits of the system, because IRS did not adequately measure ICP's impact on business operations; (8) IRS officials recognized the limitations of the testing and told GAO that testing of the next software release would be more comprehensive; (9) it is unclear how this and future versions will support new work processes that are being designed; (10) according to IRS' Customer Service Vision, ICP was expected to be the vehicle to provide customer service representatives with access to information that would enable IRS to combine a phase of the tax collection process with customer service; (11) IRS is now reconsidering the extent to which the collection process can be combined with customer service and is reconsidering the range of tasks a customer service representative can be expected to perform; and (12) the software development processes in place at IRS organizations responsible for developing ICP software are extremely weak, making the likelihood of their producing quality ICP software on time and within budget very low.

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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