TREASURY INSPECTOR GENERAL FOR TAX
ADMINISTRATION
COMPLETE ACTIONS WERE NOT TAKEN TO VALIDATE
THE BEST SOFTWARE SOLUTION WAS CHOSEN FOR THE PRIVATE DEBT COLLECTION PROGRAM
Issued on April 10, 2007
Highlights
Highlights of Report
Number: 2007-20-065 to the Internal
Revenue Service Chief Information Officer.
IMPACT ON TAXPAYERS
In a prior audit, TIGTA determined the documentation
prepared to support the Alternatives Analysis for the Filing and Payment
Compliance Project (the Project) was not accurate, complete, and timely. The Internal Revenue Service (IRS) agreed
with TIGTA’s conclusion and planned corrective actions to revalidate its
decision to purchase commercially available software for the Project. However, the IRS did not adequately complete
those corrective actions and thus cannot prove it spent taxpayer funds wisely.
WHY TIGTA DID THE AUDIT
The IRS does not actively attempt to collect billions of
dollars in delinquent taxes because it does not have sufficient staff, collection
processes, or systems. To address this
issue, in 2001, the IRS initiated the Project, which includes plans for the
Private Debt Collection program. Under
the Private Debt Collection program, the IRS has the authority to hire private
collection agencies to assist in the collection of delinquent taxes. In July 2004, the Department of the
Treasury estimated the IRS will collect $1.4 billion through the program over
the next 10 years (Fiscal Years 2006-2015).[1]
The IRS identified and evaluated three alternatives to
select the best solution for the Project.
During a prior audit of the Project, TIGTA could not verify whether the
IRS had selected the best solution for the Project because supporting
documentation was not always accurate, complete, and timely. TIGTA recommended the Chief Information
Officer complete corrective actions to validate the IRS’ decision to purchase
commercially available software for the Project. In August 2006, the IRS reported all
corrective actions were complete. TIGTA
conducted this review to determine whether the IRS revalidated its decision.
WHAT TIGTA FOUND
An Alternatives Analysis is used to identify, compare, and
assess viable alternatives for a project and document the rationale for
selecting the chosen alternative. The
IRS hired a contractor to estimate the acquisition cost for one alternative
included in the Alternatives Analysis.
However, the IRS’ efforts to revalidate its decision to purchase
commercially available software for the Project were incomplete. Without complete information, it is not
possible to compare the alternatives considered for the Project to identify the
best solution for the Project.
In 2006, the IRS significantly reduced the scope of the Project. Department of the Treasury regulations require
a new Alternatives Analysis when there is a significant change to the scope of
the Project. However, the Project is
approaching “steady state” (i.e., ongoing operations and support of
the Project, which begin after the business processes and system have been
installed and have begun performing business functions). Once it is considered “steady state,” the Project will no
longer be required to prepare an Alternatives Analysis. Therefore, it may not be cost effective to
expend significant resources developing estimates and supporting documentation
for a new Alternatives Analysis.
WHAT TIGTA RECOMMENDED
The Chief Information Officer should work with officials
from the Department of the Treasury and the Office of Management and Budget to
determine the level of effort required to develop estimates and supporting
documentation for a new Alternatives Analysis for submission to the Department
of the Treasury in June 2007.
In their response to the report,
IRS officials agreed with our recommendation.
They stated the IRS would use TIGTA’s observations as lessons learned for
preparing future Alternatives Analysis and will commence working with the
Department of the Treasury and the Office of Management and Budget.
READ THE
FULL REPORT
To view the report,
including the scope, methodology, and full IRS response, go to:
http://www.treas.gov/tigta/auditreports/2007reports/200720065fr.html.
Email
Address: Bonnie.Heald@tigta.treas.gov
Phone Number: 202-927-7037
Web Site:
http://www.tigta.gov