Budgetary Implications of IRS' Tax System Modernization and Automated Examination System Efforts

GAO discussed the Internal Revenue Service's (IRS) fiscal year 1990 budget. GAO found that: (1) the IRS budget request of $933 million focused on two critical efforts, including maintaining existing computer systems and pursuing its long-range plan for total system modernization; (2) the total estimated costs for the modernization were difficult to determine, because projects were renamed, consolidated, split, and not always clearly identified in budget documents; (3) since its development, Automated Examination System (AES) cost estimates have risen by $800 million and its schedule has slipped by 6 years due to software development problems; (4) IRS developed AES without adequate planning for its integration into the modernization system and had not addressed how it would make AES data structures consistent with other data structures; and (5) the Office of Management and Budget reduced the AES budget request by 82 percent because it lacked clear management, direction, or tangible benefits. GAO believes that IRS should: (1) clearly and consistently identify all projects that comprise the modernization program in its yearly budget requests; and (2) resolve AES problems, demonstrate its benefits, and plan for its integration into system modernization before making further investments.