Use of the Internet offers tremendous research capabilities to Internal Revenue Service (IRS) employees to assist them in the performance of their duties. We estimate that almost 16,000 IRS employees use the Internet, with potential expansion to the rest of the 97,800 IRS employee population. Providing Internet access also carries some risks, one of which is the opportunity for employees to browse web sites for personal reasons. While personal use of the Internet may improve morale and increase employees’ research skills, it comes at a cost of lost productivity and increased demand on telecommunications lines. The Department of the Treasury’s guidance on Internet use requires employees to use the Internet for official duties only.

We conducted this review to determine whether the IRS complied with the Department of the Treasury policy on the use of the Internet. Near the end of our review, the IRS issued an electronic communication policy that supplemented the Treasury’s guidance.

While the Internet has proven to be a useful research tool, more than half of the Internet activity in our sample was for non-business purposes. IRS management made minimal efforts to enforce the guidance provided by the Department of the Treasury. As a result, the IRS is losing productivity, creating unnecessary demand on its telecommunications capacity, and could be fostering a hostile work environment by allowing sexually explicit material into the workplace via the Internet. We referred the most egregious instances of misuse to the Treasury Inspector General for Tax Administration Office of Investigations (OI). The OI is evaluating these referrals for potential legal violations.

Considering the wide-ranging duties performed by IRS employees, it is conceivable that any web site could be accessed for business purposes. Based on our analysis, however, we estimate that, of the 16,275 hours of transmission time used to request and receive web site data during our 7-day review period, 8,250 hours (51 percent) were for non-business reasons.

We could not project the impact of non-business Internet use on productivity because it was not feasible to review a statistically valid sample of Internet activity. Nor could we measure the impact on telecommunications costs because the IRS did not maintain detailed cost statistics on the different uses of its telecommunications lines, which annually cost approximately $390 million. However, because there is a fixed amount of telecommunications capacity, non-business Internet accesses reduce the amount of telecommunications available for official business.

The IRS did not do enough to raise employees’ awareness on the costs of misusing the Internet. In addition, management did not effectively use available software to block accesses to inappropriate sites and monitor the use of the Internet.

The Commissioner should implement procedures and controls to effectively enforce the recently issued IRS policy on electronic communications. The Chief Information Officer should ensure the timely renewal of the software license to block the use of inappropriate sites, starting in the year 2001, and implement controls to monitor the use of the Internet.

Management’s Response: Management generally agreed with the findings and their response is included as Appendix IV. Management agreed to focus on using commercially available blocking software, educating employees and managers on employee productivity issues, and performing random checks on usage. However, management’s response was incomplete because it did not identify the specific corrective actions to be taken, the responsible officials, and the implementation dates. We will follow up to obtain this additional required information.