IRS' Year 2000 Efforts

The most critical issue facing the Internal Revenues Service (IRS) this year and in 1999 is the need to make its computer systems Year 2000 compliant. Completing this complex task involves correcting million of lines of computer code and thousands of commercial hardware and software products that IRS relies on to carry out its mission. If these efforts are not completed, IRS' tax processing and collection systems may fail to operate or may generate millions of erroneous tax notices, refunds, interest calculations, and account adjustments. The agency has less than nine months to complete the work that it believes is necessary to reach its goal of having all of its systems Year 2000 compliant by January 31, 1999. This testimony discusses the results of GAO's work to date on IRS' efforts to have its information systems function correctly when processing dates beyond December 31, 1999.

GAO noted that: (1) for its existing systems, IRS has made more progress in converting application software than converting its information systems infrastructure, which includes hardware, systems software, and telecommunications; (2) despite its progress on converting applications, IRS fell short of its goal to have the applications for 66 of the 127 systems that it considers mission-critical converted by January 1998; (3) IRS is still assessing or in the early stages of converting its hardware and systems software for two of its three levels of computing operations--minicomputers/file servers and personal computers; (4) of all the infrastructure areas, according to IRS' tracking systems, telecommunications is at the highest risk for not being completed by January 31, 1999; (5) in addition to converting systems, IRS is undertaking two major system replacement projects as part of its year 2000 efforts; (6) both of these projects have encountered some schedule delays; (7) GAO identified two significant risk areas to IRS' year 2000 efforts; (8) the first was the lack of a master conversion and replacement schedule; (9) the second was a limited approach to contingency planning; (10) IRS is taking actions to address GAO's concerns regarding the lack of a master conversion and replacement schedule; and (11) however, GAO remains concerned that IRS' current approach to contingency planning does not address the likelihood that system failures could occur once systems are implemented.