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Aging IT System Costing IRS in Other Ways

For some years now we’ve heard about how the Information Technology systems inside the Internal Revenue Service need major upgrades. A new audit by the Treasury Inspector for Tax Administration finds that the lack of current technology is also raising administrative costs for the IRS.

The Audit

Within the IRS, the Information Technology (IT) division provides and maintains the computers, software and services the IRS needs to do its job. This includes providing information technology services to maintain IRS operations, implement legislation, maintain taxpayer data security, and ensure the timely delivery of the individual tax return filing season. TIGTA says the audit was aimed at evaluating the effectiveness of IRS efforts to prioritize computer programming requests in support of tax administration.

The Findings

The audit found that the allocation of information technology resources within the IRS is set by the IT division, with minimal involvement from the business operating divisions. So instead of the business operating divisions relaying what IT services they need, the IT division effectively tells the rest of the agency what services it will provide.

“In addition, due to insufficient resources, projects are not started that would reduce taxpayer burden, protect revenue, and save significant IRS resources,” the audit report notes. “For example, there were 82 requests denied in Calendar Year 2016.  IRS executives informed us that this had negative impacts on tax administration, such as the potential for billions of dollars in lost revenue, taxpayers not receiving proper credits, and the IRS having to pay a large amount of interest due to withholding that was not credited to taxpayer accounts.”

The audit also found that the system used to track IT requests doesn’t accurately reflect the status and action taken for some requests. Not all denied request are tracked for example, and for the ones that are tracked, not all included a description of the reason the request was denied. In addition IT resources and contractor costs weren’t always recorded as required.

Recommendations

TIGTA recommended that the Chief Information Officer coordinate annual meetings with business operating division executives and IRS chief officers to discuss priorities in allocating IT organization resources. 

TIGTA also recommended that all key work requests are submitted through the IT organization’s tracking system and that a process is established to track estimated and actual resources needed to complete a work request by system or application. 

Finally, TIGTA recommended that internal guidelines be updated to ensure that the information documented in the work request tracking system accurately reflects the status of the request, the IRS system or application to which the request applies, and the reason the request was denied.

Of the seven recommendations from the audit, IRS management agreed with five. The agency disagreed with the need to update internal guidelines so that users are required to identify the IRS system or software applicable to the work request. The IRS believes it has procedures already in place that require it. Management also partially agreed to set up a process to track estimated and actual resources needed to complete a work request. Tracking will be possible by system or by application.

The IRS also pledged to work with information technology suppliers to evaluate and assess the benefits of new systems versus their costs or burdens.

To see the full report from the Treasury Inspector General for Tax Administration, click here.

Bob Williams

Forget genes; I’ve got words in my DNA. Communication has been part of who I am nearly all my life. From a long career in radio news to another one in newspapers – and a University of Georgia journalism degree sandwiched between the two – language has been my life. I’ve also been fortunate to have learned the tax business from the ground up here at Drake, starting with 1040.com online forms some years ago before moving on to work on the Web. In all things tax-ish, we aim to give you tools you can use.

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