TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION
Management Advisory Report: Substantial Work Remains If the Internal Revenue Service Is to Provide Refund Status Information on the Internet by the Beginning of the 2002 Filing Season
Reference No. 2001-30-031
An area of major concern for the Internal Revenue Service (IRS) is reducing the customer demand for its toll-free telephone services. During each filing season, the IRSí toll-free telephone system is inundated with millions of calls from taxpayers seeking information or assistance. Busy signals, long waiting times, and abandoned calls are the norm.
Refund inquiries significantly contribute to the demand for IRS toll-free telephone services. During the 2000 Filing Season, the IRS received approximately 44 million telephone calls from taxpayers checking on the status of their individual income tax refunds. These refund inquiries represented almost 62 percent of the calls to the IRSí 4 main toll-free telephone lines. The IRSí costs to handle these refund inquiries were more than $55.6 million.
The Internet is a low-cost alternative to telephone communication. Approximately 130 million Americans currently have access to the Internet. Nine of the 42 state governments that assess individual income taxes have implemented interactive refund inquiry applications on their Internet web sites.
By diverting refund inquiries to the Internet, the IRS could increase the level of service it provides on the toll-free telephone system by freeing up Customer Service Representatives to answer more tax law and/or tax account-related questions from other taxpayers. Diverting refund inquiries to the Internet could also reduce the IRSí costs by lowering the overall demand for telephone assistance. Our objective was to evaluate the IRSí plans and time frames for developing and implementing an interactive Internet-based refund status application.
The IRSí current plans are to implement an Internet-based refund inquiry application by the beginning of the 2002 Filing Season as part of its overall business systems modernization efforts. However, while some high-level planning has been accomplished, little detailed design work had been completed as of September 2000.
The General Accounting Office stated in a May 2000 Exposure Draft entitled Information Technology Investment Ė A Framework for Assessing and Improving Process Maturity (GAO/AIMD-10.1.23) that:
During the control phase the organization ensures that, as projects develop and as investment costs rise, the project is continuing to meet mission needs at the expected levels of cost and risk. If the project is not meeting expectations or if problems have arisen, steps are quickly taken to address the deficiencies.
The IRS needs to ensure that its Internet Refund Inquiry Project is designed and developed so that sufficient time is available to ensure the system meets all requirements and is completed on time and within budget.
Significant Efforts Are Needed to Ensure That an Internet Web Site Refund Status Application Is Available by the Beginning of the
2002 Filing Season
The IRSí attempts to modernize its complex computer systems historically have been delayed by various management and technical problems. The IRS has been planning to implement an Internet-based refund status application since 1996 and currently intends to have it available by the 2002 Filing Season as part of its overall business systems modernization efforts. While some general planning and analysis had been accomplished as of September 2000, little detailed design and development work had been started.
The IRS must define and complete a substantial amount of critical design requirements and development work in the 13 months that remain before the start of the 2002 Filing Season. Some of the development tasks that remain include:
Summary of Recommendations
Detailed design planning and development actions need to be started immediately to minimize the risk that the Internet-based refund application will be delayed beyond the 2002 target date. To further minimize the risk of delays, the appropriate security requirements need to be designed into the refund status application, and the development of the application needs to be closely monitored so that any unforeseen problems or issues can be promptly resolved.
Managementís Response: Managementís response was due on December 13, 2000. As of December 14, 2000, management had not responded to the draft report.