For Immediate Release
May 26, 2006
Media Contact: Joelle Jordan
202-622-9931

IRS Oversight Board Discusses Modernization Five-Year Plan and IRS Critical Infrastructure Needs

(Washington, DC) The IRS Oversight Board met on May 23, 2006 to discuss critical
issues relating the IRS’ FY2008 budget and the agency’s long-term performance. It was
also briefed by the IRS on its successful tax filing season. Taxpayer service continues to
improve and enforcement performance remains strong. The number of taxpayers filing
their returns electronically continues to grow; toll-free tax law accuracy has improved
considerably since 2004; and more taxpayers are taking advantage of self-service
options such as the “Where’s My Refund” feature available on the IRS web site.

The Board focused on the future of the IRS’ Information Technology (IT) Modernization
Vision and Strategy (MVS), the agency’s infrastructure, and taxpayers’ needs.
At the meeting, the Oversight Board formally approved the IRS’ Modernization Vision
and Strategy Plan. This five-year plan redefines and refocuses the Business System
Modernization (BSM) program’s direction over the next five years and identifies the IT
strategy and investments that support these priorities. Establishing these priorities will
help formulate FY2008 and future budgets.

The MVS plan will serve as a roadmap for the IRS, which is now seven years into its
modernization initiative, and integrates the efforts of its BSM program and other IT
projects. BSM’s progress in the past year includes deploying on time and within budget
new releases of the Customer Account Data Engine, e-Services, and Modernized e-File.
Articulating how major BSM investments are made in the next few years is critical to
ensuring that taxpayers’ dollars are focused on critical IRS business needs that deliver
value to taxpayers. Taxpayers expect the IRS to provide service comparable to that
offered by modern financial institutions; the MVS plan aims for a system that allows for
services such as real-time or daily account updates and more self-service capabilities
over the Internet.

For taxpayers, future benefits are twofold. Not only would the modernized system
provide faster, more accurate service, it also would make it easier for the IRS to shrink
the nation’s annual $350 billion tax gap. Production efficiencies gained through
upgraded capabilities will allow the agency to focus its service and compliance efforts
effectively.

“The Oversight Board believes that the IRS has demonstrated in the last two years that it
can effectively manage its BSM program,” said Chairman Raymond T. Wagner, Jr. “It is
showing tangible benefits for taxpayers, and has a strong management team. The
Modernization Vision and Strategy provides essential business guidance and direction.
This is where the rubber meets the road: business decisions made now will define what
taxpayers get in the future. The Board commends the IRS for its progress and supports
its plan.”

The Board also discussed other tax administration priorities that will influence the
formulation of the FY2008 and future budgets. Tax administration faces a number of
strategic challenges in the future and ensuring budget priorities align with tax
administration needs is an essential responsibility of the Board.

IRS Critical Infrastructure Plan Will Define “Must Have” Items
At the meeting, the Board also discussed the state of the IRS’ critical infrastructure,
which includes the agency’s computers, networks, IT security, and software. Much of the
IRS’ infrastructure is aged; breakdowns slow the system while maintenance costs
increase over time. To keep pace with business standards, the agency is creating an
Infrastructure Roadmap that will determine exactly how it should invest in new
infrastructure in the next few years. The roadmap, which will include a thorough analysis
and recommendations, will be completed next month.

What do Taxpayers Really Want? Survey Says…
The Board also was briefed on the preliminary findings of the National Taxpayer Needs
and Channel Preference Survey by a representative from GfK Roper, a marketing
research firm. The survey was commissioned by the Board to develop a fuller
understanding of taxpayer service needs and channel preferences. Such information can
then help the Board guide the IRS in making strategic decisions. The Board plans to
complete its analysis and formally release a report on the study this summer.

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