Additional Actions Are Needed to Realize Benefits of the Tax Exempt and Government Entities Reporting and Electronic Examination System
January 29, 2010
Reference Number: 2010-10-020
This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.
Phone Number |
202-622-6500
Email Address | inquiries@tigta.treas.gov
Web Site |
http://www.tigta.gov
January 29, 2010
MEMORANDUM FOR COMMISSIONER, TAX EXEMPT AND GOVERNMENT ENTITIES DIVISION
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Additional Actions Are Needed to Realize Benefits of the Tax Exempt and Government Entities Reporting and Electronic Examination System (Audit # 200810035)
This report presents the results of our review to assess: 1) whether implementation of the Tax Exempt and Government Entities Reporting and Electronic Examination System (TREES) led to expected improvements in the examination process and 2) whether appropriate actions are being taken to improve the TREES. The former Commissioner, Tax Exempt and Government Entities (TE/GE) Division, requested this review, which was part of the Treasury Inspector General for Tax Administration’s Fiscal Year 2009 Annual Audit Plan coverage under the major management challenge of Modernization.
Impact on the Taxpayer
The TREES is a
TE/GE Division-wide information system that was developed to provide a case
management system for TE/GE Division employees and to improve the examination
process. While some improvements have
been made to the System since its release, the TE/GE Division has not
realized the expected improvements in the examination process due to the
difficulties experienced in the deployment of the TREES and because many planned
capabilities were not delivered because of budget cutbacks. If additional actions are not taken by TE/GE
Division management, the Federal Government will not receive the highest
possible return from the $18.7 million of taxpayer funds spent on developing
and implementing the System.
Synopsis
The $18.7 million
of taxpayer funds spent on developing and implementing the TREES has yet to
lead to expected improvements in the TE/GE Division examination process. The TE/GE Division deployed the System
to allow revenue agents and managers to work cases while electronically
tracking the inventory of cases throughout all stages of the examination
process. However, due to budget cutbacks
some of the planned functionalities needed to develop the TREES as a complete
case management system were not implemented.
In addition, the System encountered significant issues after deployment and
employees, in general, have not been using the System effectively. If these issues are not resolved, expected
benefits will not be achieved.
The
TREES was fully deployed Division-wide in April 2008 to all TE/GE Division
examination employees, but experienced hardware and software issues that
resulted in poor or no access to the System.
For example, users were unable to access the TREES after a software
upgrade in October 2008. For
approximately 8 weeks, users had to revert to a paper-intensive process while
waiting for the System to come back online.
Users were frustrated and noted that when the System was down it was
very burdensome and in most instances examination cases were not closed until
the System came back online. TE/GE
Division and Modernization and Information Technology Services organization personnel
took action to improve access, response time, and functionality of the System,
and discussions with users indicated that access to and response time of the
System was much better after these changes had been made.
The TREES Business Case, dated November 2007, identified four
performance measures[1]
to determine the success of the TREES. While
the System was fully deployed in April 2008, the TE/GE Division did not begin
analyzing its performance measures until the first quarter of Fiscal Year 2009. This is understandable due to the
difficulties experienced after the System was deployed, including the October
2008 update that caused the System to be taken offline in the first quarter of
Fiscal Year 2009. However, based on our
observations, we are concerned that the envisioned benefits are not being
realized.
As the Internal Revenue Service awaits funding to develop and expand the TREES as part of the Reporting Compliance Case Management System, we believe it can take steps to more effectively use the System and make some software improvements. Until the TREES includes critical pieces of functionality, employees receive additional training on how to use the System, and employees accept and use the TREES more fully, the TE/GE Division will not transform examinations from a paper-intensive process to an automated process and begin realizing more of the expected benefits of the TREES.
Recommendation
We recommended the Commissioner, TE/GE Division, develop an action plan that addresses the issues identified in this report and other issues the TE/GE Division has identified. This will allow the TE/GE Division to gain increased acceptance and fuller use of the TREES.
Response
The Commissioner,
TE/GE Division, agreed with our recommendation and provided planned actions to
address it. By
July 30, 2010, the TE/GE Division will develop an action plan to
address the issues identified in this report, including providing additional
information and training to TREES users.
Management’s complete response
to the draft report is included as Appendix V.
Copies of this report are also
being sent to the Internal Revenue Service managers affected by the report
recommendation. Please contact me at
(202) 622-6510 if you have questions or Nancy A. Nakamura, Assistant
Inspector General for Audit (Management Services and Exempt Organizations), at
(202) 622-8500.
Several Significant Hardware
and Software Issues Have Been Overcome
Appendices
Appendix
I – Detailed Objectives, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix
IV – Potential Opportunities for Improvement
Appendix V
– Management’s Response to the Draft Report
Abbreviations
|
IRS |
Internal Revenue Service |
|
TE/GE |
Tax Exempt and Government Entities |
|
TIGTA |
Treasury Inspector General for Tax Administration |
|
TREES |
Tax Exempt and Government Entities Reporting and
Electronic Examination System |
The TREES
was designed to allow TE/GE Division employees to assign, examine, close,
review, and store examination casework electronically.
The Tax Exempt and
Government Entities Reporting and Electronic Examination System (hereafter
referred to as the TREES or the System) is a system development project
undertaken by the Tax Exempt and Government Entities (TE/GE) Division to
modernize operations across its Division.
The TREES was envisioned to provide a single electronic case and
inventory management system across the TE/GE Division.[2] The System
was designed to allow TE/GE Division employees to assign, examine, close, review,
and store examination[3] cases electronically, reducing the cost and
inefficiencies of manually conducting examination casework using paper. Prior to the TREES, the TE/GE Division workforce
used examination workcenters that were labor intensive and involved manual
processes. The workcenters were on
obsolete technology, minimally maintained and not fully integrated with other
Internal Revenue Service (IRS) computerized systems, which meant employees had
to use multiple systems to accomplish their work.
The TREES will
provide more than 1,500 TE/GE Division employees[4] with electronic access to account data on their
computers and a greater volume of IRS information to enhance examination case management
and performance. Essentially, the TREES was
designed to allow examination cases and research information to be assigned to revenue
agents[5] electronically. This would allow examination cases to be created
and completed more quickly. In addition,
when errors are identified in the examination workpapers, electronic workpaper
files can be returned to revenue agents faster for correction, with electronic messages
within the TREES to explain why the case is being returned. The TREES was also designed to generate
messages so revenue agents are made aware when examination cases are assigned
or closed. Case inventories can also be
sorted and organized based on the age of the examination case (i.e., how long
it has been in the revenue agent’s inventory).
Based on the overall design, the TREES was intended to electronically provide Division-wide inventory control, compliance testing, tax computation, education and outreach, and team examination monitoring in one workcenter. The expected benefits of the TREES project included providing:
The TE/GE Division
began planning for the TREES in Fiscal Year 2002. In April 2008, the TREES was fully deployed and
in October 2008, the TREES was integrated with the Reporting Compliance Case
Management System.[6] Through
Fiscal Year 2008, a total of $18.7 million had been spent on the TREES. However, as shown in Figure 1, the TREES was
developed over many years and encountered various setbacks during its
development and early implementation.
Figure 1: TREES
Milestones and Setbacks
|
Date |
Action Item |
|
March
2002 |
Improvement
Project Plan for the TREES prepared and submitted. |
|
January 2003 |
TE/GE
Division management approved funding for the TREES and initiated development
of the System. |
|
September
2003 |
TREES
Exhibit 300[7] approved. |
|
May–June
2006 |
TREES
Release 1.00 Pilot initiated. Pilot
was suspended to correct critical defects.
Taxpayer data were being corrupted.
Additional 8 weeks of testing was conducted. |
|
September
2006 – March 2007 |
TREES
Release 1.20 Pilot initiated. |
|
April
2007 |
TREES
Release 2.0 Pilot initiated. |
|
May
2007 |
TREES
Release 2.0 Division-wide deployment began.
|
|
October
2007 |
TREES
Release 2.01 Pilot initiated. |
|
October–November
2007 |
Training
classes cancelled because of software defects in TREES Release 2.01. |
|
January
2008 |
TREES
Release 2.011 updated. |
|
April
2008 |
The
TREES was fully deployed. |
|
October
2008 |
TREES
Release 2.02 updated. The System
experienced major issues and was taken offline for approximately 8 weeks. Many manual workarounds were adopted for
the examination process. |
|
January
2009 |
TREES
Release 2.021 updated. |
Source: TREES project documentation and interviews
with TE/GE Division personnel.
This audit was being conducted while changes were being scheduled to the TREES. Any changes that have occurred since we concluded our interviews in July 2009 are not reflected in this report. As a result, this report may not reflect the current status of the TREES.
This review was performed at the TE/GE Division National Headquarters Business System Planning function
office in
We conducted this
performance audit in accordance with generally accepted government auditing
standards. Those standards require that
we plan and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions based on
our audit objectives. Detailed
information on our audit objectives, scope, and methodology is presented in
The $18.7 million of taxpayer funds spent on
developing and implementing the TREES has yet to lead to expected improvements
in the TE/GE Division examination process due to the difficulties experienced in
the deployment of the TREES and because many planned capabilities were not
delivered. The TE/GE Division deployed
the System to allow revenue agents and managers to work cases while electronically
tracking the inventory of cases throughout all stages of the examination
process. However, due to budget cutbacks
some of the planned functionalities needed to develop the TREES as a complete case
management system were not implemented.
In addition, the System encountered significant issues after deployment and
employees, in general, have not been using the System effectively and
consistently. If these issues are not
resolved, expected benefits will not be achieved.
While steps have been taken to improve the System, TE/GE Division management will need to take additional actions to ensure that the implementation of the TREES transforms the TE/GE Division’s examination process from one that is paper‑intensive and different within each functional area to a TE/GE Division-wide system where all TE/GE Division employees involved in examinations can efficiently assign, examine, close, review, and store examination cases electronically. If additional actions are not taken by TE/GE Division management, the Federal Government will not receive the highest possible return from the $18.7 million of taxpayer funds spent on developing and implementing the System.
Several Significant Hardware and Software Issues Have Been Overcome
The TREES was fully deployed Division-wide in April 2008 to all TE/GE Division examination employees, but experienced hardware and software issues that resulted in poor or no access to the System. However, the TE/GE Division took actions to improve access, response time, and functionality of the System.
Initially, the IRS’ computer network could not accommodate the changes made to the System during the various releases. Specifically, the TREES was very slow and at times would freeze up, not allowing the users to work effectively. However, the IRS upgraded computer circuits in 8 offices and purchased approximately 750 new computers for TE/GE Division employees in the fall of 2008.
In addition, users were unable to access the TREES after a software upgrade in October 2008. As a result, the System was taken offline for approximately 8 weeks. Compounding these problems, while the upgrade was being fixed, the TREES hardware was not sized sufficiently to allow developers to reverse the changes, which would have allowed TE/GE Division employees to use the prior version of the System. This meant that for approximately 8 weeks users had to revert to a paper-intensive process while waiting for the System to come back online. Users were frustrated and noted that when the System was down it was very burdensome and in most instances examination cases were not closed until the System came back online.
TE/GE Division and Modernization and Information Technology Services organization personnel took action to correct the issues, including revising the process used to recognize users (i.e., passwords), developing a solution to correct user’s access issues, and allowing more time to complete the software conversion process. These actions were completed in November 2008, after which TE/GE Division examination employees could use the System again. Discussions with users[8] indicated that access to and response time of the System was much better after these changes had been made.
In January 2009, the TREES was updated to revise computer codes, improve communication between users’ computers and the central database, and improve interactions with another IRS computer system. In addition, the TE/GE Division is planning to acquire additional hardware that will provide it with the capability to reverse changes if it experiences the same types of issues when upgrading the System in the future. Specifically, if the upgrade does not work properly, this new capability will allow the TE/GE Division to go back to the prior version of the System without reverting to manually intensive paper processing of examination cases.
While steps are being taken to improve the System, we believe the IRS needs to take additional actions to use the System more effectively and achieve more of the benefits initially envisioned.
An Action Plan Is Needed to Improve the Use of the System and Make Progress Towards Obtaining Expected Benefits
The TE/GE Division defined the benefits it expected to receive for its investment in the TREES as part of its business case and defined performance measures[9] for evaluating the positive impact the deployment of the TREES would have on the TE/GE Division. We are concerned that performance measures will not be achieved because planned capabilities were not delivered and the System is not yet being used effectively. As noted previously, the initial implementation of the TREES encountered significant problems. In addition, training for some users was inadequate or poorly timed. As the IRS awaits funding to develop and expand the TREES as part of the Reporting Compliance Case Management System, we believe the IRS can take steps to more effectively and consistently use the System and make some software improvements to begin realizing more of the benefits that were envisioned for the TREES.
The TREES may not be currently achieving its performance measures
The TREES Business Case, dated November 2007, identified four performance measures to determine the success of the TREES. While the System was fully deployed in April 2008, the TE/GE Division did not begin analyzing its performance measures until the first quarter of Fiscal Year 2009. This is understandable due to the difficulties experienced after the System was deployed, including the October 2008 update that caused the System to be taken offline in the first quarter of Fiscal Year 2009. Based on our observations, we are concerned that the envisioned benefits are not being realized. Figure 2 provides details of our observations.
Figure 2: Performance Measures and TIGTA Observations
|
TREES Performance Measures |
TIGTA Observations |
|
Dollars saved through productivity enhancements – An increase in productivity and cost savings measured in dollars through the reduction of manual processes. |
We determined that TE/GE Division examination employees were still using many manual processes and were using multiple inventory control systems to track and reconcile examination cases. |
|
Customer [employee] satisfaction – An increase in user satisfaction with the examination process due to more efficient processes. |
Employees were not consistently using the TREES to create and store examination workpapers. Instead, users were creating examination workpapers outside of the TREES and copying the workpapers into the System at the end of an examination. Users believed it took longer to work within the TREES, which makes the examination process less efficient. |
|
Length of time a case is open – A decrease in the time measured in days used to conduct an examination. |
Because the System was not available for almost 8 weeks starting in October 2008, it is difficult to judge the impact of the System on the length of time cases remain open. However, employees interviewed in early Calendar Year 2009 stated the TREES was not leading to quicker case resolution. |
|
Number of electronic cases stored – An increase in the number of examination cases stored electronically. |
The TREES may not contain a complete record of open examination cases. In addition, some employees are maintaining both a paper and electronic copy of examination cases. |
Source: TREES Business Case, TIGTA analyses, and
TE/GE Division Business Performance Review.
Until the TREES includes critical pieces of functionality, employees receive additional training on how to use the System, and employees accept and use the TREES more fully, the TE/GE Division will not transform examinations from a paper-intensive process to an automated process and begin realizing more of the expected benefits of the TREES.
The TREES does not currently include all planned capabilities
While we are concerned that performance measures are not currently being met partially due to acceptance and usage, we are also aware that some of the benefits initially envisioned for the System are not being realized because many of the planned capabilities were not delivered. We identified approximately 105 high-level capabilities that the TREES project should have provided in its various releases (Release 1 through Release 2.011). We evaluated 90[10] of 105 TREES capabilities to determine if the capability was delivered. We determined that 38 (42 percent) of 90 promised capabilities were “fully” delivered. However, we also found that 38 (42 percent) of the 90 were “not delivered” and 14 (16 percent) of the planned capabilities were only “partially” delivered. Most of the capabilities that were “partially delivered” or “not delivered” had to be foregone due to budgetary constraints. A breakdown of the status of the 90 capabilities is shown in Figure 3.
Figure 3: Status
of TREES Capabilities
Figure 3 was removed due to its size. To see Figure 3, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Partially delivered or undelivered capabilities pertain to issue management, trend analysis, case building, performing tax computations, allowing multiple users to work one examination case, time reporting, and automatically generating specific examination workpapers (e.g., letters, forms, and revenue agent reports). Some of these capabilities pertain to core examination processes. There is no development funding for the TREES for Fiscal Years 2009 and 2010, but funding is anticipated for Fiscal Year 2011 and beyond to allow the TREES (now included in the Reporting Compliance Case Management System) to deliver capabilities that were originally planned for the System. Examples of specific capabilities that were not delivered include:
·
Issue management and trend analysis functions. Without these
functions, the ability to track issues, perform trend analyses, and better
allocate resources is diminished.
· Case management reports or accomplishment reports. Without these reports, there is a lack of efficient reporting capabilities and ability to extract data from the System. Users will have to continue to rely on independent databases for management information reporting and quality measurement reporting.
· Quality review process.[11] Without this process, management will not have the ability to electronically identify trends, problems areas, training needs, and opportunities for process improvements.
· Access to consistent automated tax computation capabilities. Without this access, the TREES lacks the ability to calculate consistent tax computations for taxes commonly assessed in the TE/GE Division. This capability would enhance the accuracy and reliability of the data.
While major changes to the System are not possible until funding becomes available, we believe opportunities exist to change business processes and improve the System software, which could help achieve more benefits and lead to the transformation envisioned for the examination process.
Changing business processes to more effectively use the TREES could lead to additional benefits being realized
Our interviews of 70 TE/GE Division employees from December 2008 to March 2009 across each of the functional areas identified differences in how the functions were implementing the TREES and issues related to underutilizing the System. The TE/GE Division needs to take action to help achieve the benefits of the System without waiting for future upgrades that are planned for the Reporting Compliance Case Management System. Specific issues we identified include:
Figure 1 in Appendix IV contains a complete list of the opportunities for improvement and ideas on addressing these issues.
Making system improvements to the TREES software could also lead to additional benefits being realized
In addition to identifying opportunities to improve work processes and users’ experiences with the TREES, we identified areas where improvements could be made to the TREES software. Based on our interviews with TE/GE Division employees, we determined that several System improvements, if implemented, would enable the TE/GE Division employees to use the System more efficiently. These System improvements are:
Recommendation
Recommendation 1: The Commissioner, TE/GE Division, should develop an action plan to address the issues identified in this report and other issues the TE/GE Division has identified, as well as reeducate and train TE/GE Division users. This will allow the TE/GE Division to gain increased acceptance and fuller use of the TREES, which would lead to more attainment of the System benefits.
Management’s Response: IRS management agreed with this recommendation. By July 30, 2010, the TE/GE Division will develop an action plan to address the issues identified in this report, including providing additional information and training to TREES users.
Appendix I
Detailed Objectives, Scope, and Methodology
Our overall
objectives of this review were to assess: 1) whether implementation of the TREES
led to expected improvements in the examination process and 2) whether
appropriate actions are being taken to improve the TREES. To accomplish our objectives, we:
I.
Determined
whether required TE/GE Division personnel (within all five offices) have access
to and use the TREES.
II.
Identified
the System capabilities scheduled to be delivered for the TREES project and
determined whether they were delivered.
A.
Obtained
documentation detailing the various versions/releases of the TREES and identified
the capabilities each version/release was to provide TE/GE Division
personnel.
B.
Interviewed
applicable TE/GE Division personnel from various TE/GE Division functions
(within all five offices and the Business Systems Planning office) and obtained
documentation to determine whether expected capabilities were delivered as
promised.
C.
Analyzed
the information gathered in Steps II.A., II.B., and III. to determine whether
expected capabilities were delivered as promised.
III.
Determined
whether the TE/GE Division functions were getting the expected benefits from
the TREES.
A.
Obtained documentation and identified the
expected benefits of the TREES.
B.
Determined
whether measures were in place (and being monitored) that would allow
management to ascertain whether expected benefits are being achieved.
C.
Determined
whether expected benefits were being achieved by reviewing available
documentation.
IV. Identified post-implementation System issues and determined whether these issues were being addressed.
A. Analyzed information gathered in our interviews in Step II.B. to identify post-implementation System issues.
B. Determined whether TE/GE Division personnel addressed or are addressing identified post-implementation System issues.
Internal controls methodology
Internal controls relate to management’s plans, methods, and
procedures used to meet their mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program
operations. They include the systems for
measuring, reporting, and monitoring program performance. We determined that the following internal
controls were relevant to our audit objectives:
the TE/GE
Division’s approved systems development documentation, the expected
capabilities and benefits of the TREES, and TE/GE Division procedural documentation. We evaluated these controls by interviewing
management and other TE/GE employees who use the TREES and reviewing expected capabilities and benefits
of the System.
Appendix II
Major Contributors to This Report
Nancy
A. Nakamura, Assistant Inspector General for Audit (Management Services and
Exempt Organizations)
Troy
D. Paterson, Director
Thomas
F. Seidell, Audit Manager
Margaret
A. Anketell, Lead Auditor
Theresa
M. Berube, Senior Auditor
Steve
T. Myers, Senior Auditor
William
Simmons, Senior Auditor
Donald
J. Martineau, Auditor
Appendix III
Commissioner C
Office of the Commissioner – Attn: Chief of Staff C
Deputy Commissioner for Services and Enforcement SE
Deputy Commissioner, Tax Exempt and Government Entities Division SE:T
Director, Business Systems Planning, Tax Exempt and Government Entities Division SE:T:BSP
Director, Employee Plans, Tax Exempt and Government Entities Division SE:T:EP
Director, Exempt Organizations, Tax Exempt and Government Entities Division SE:T:EO
Director, Government Entities, Tax Exempt and Government Entities Division SE:T:GE
Chief Counsel CC
National Taxpayer Advocate TA
Director, Office of Legislative Affairs CL:LA
Director, Office of Program Evaluation and Risk Analysis RAS:O
Office of Internal Control OS:CFO:CPIC:IC
Audit Liaison: Director, Communications and Liaison, Tax Exempt and Government Entities Division SE:T:CL
Appendix IV
Potential Opportunities for Improvement
Although the TE/GE Division currently does not have the funding to add all the capabilities to the TREES to make the System the primary workcenter for the examination process, opportunities exist that would improve the System. Figure 1 provides a list of issues we identified during our audit and potential opportunities for addressing each issue.
Figure 1: TREES Issues
and Opportunities for Improvement
|
Issue Identified |
Potential Opportunities for Improvement |
|
Many TREES users are using the System primarily to track the flow of the examination cases (inventory control) from one stage of the examination process to the next, instead of using the system as a case management system where most aspects of the examination process could be completed and reviewed. |
· Phase in the mandate to use the System as a case management system, in addition to an inventory control system, after successfully rolling out the October 2009 System release and successfully testing the ability to rollback the System to a previous release if upgrades to new releases are not successful. · Remove the forms, letters, and templates from the functions’ shared drawers to encourage use of similar documents within the System. · Establish set standards (e.g., number of days) to complete activities (i.e., assign, review, and close) within the TREES. |
|
Many employees were maintaining both paper and electronic case files. Some of this duplication of data were at the request of the manager. |
· Establish guidelines to reduce the amount of paper being maintained Division-wide. · Require TE/GE Division managers to review the electronic files in the System to support a paperless environment and to promote storing the case files electronically in one centralized location. |
|
Additional guidance is needed relating to the type of information that should be included in the examination workpapers. |
· Provide additional guidance relating to the type of information that should and should not be included in the examination workpapers. This guidance will help to identify what type of information should be stored electronically on the TREES. |
|
Most users lacked access to scanners to convert paper files into an electronic format. |
· Purchase scanners. · Determine whether scanned signatures are acceptable for legal proceedings. |
|
Employees expressed their frustrations with the System and need for reeducation. |
· Communicate to users where the System is as of today and provide realistic timelines of what capabilities the TE/GE Division can expect in the near future. · Provide additional training Division-wide on the current capabilities of the System and significant capabilities that are added to the System. |
|
TE/GE Division examination functions are maintaining and reconciling multiple inventory tracking systems. |
· Educate users on how to the use the TREES to reconcile inventory. · Retire the other inventory tracking systems used by the TE/GE Division to eliminate duplication of effort. |
|
Users perceived that access to the TREES case library[13] was too limited. |
· Assess permissions assigned to employees to ensure users can efficiently complete their assigned tasks. For example, consider allowing for multiple user profiles (i.e., allowing a secretary to access the inventory of more than one group). · Provide users with specific procedures and/or written policy with regard to permissions and access to the case library. |
|
Although the System has the ability to automatically create cases and build the examination case files using data from another IRS computer system, some offices manually created cases on the System and manually built their examination cases (returns and research data) either on the System or in a paper file. |
· Reeducate users to use the System to establish and build examination case files automatically to reduce paper and maximize use of limited resources. · Provide additional training on an efficient way to post returns and documents into the System. ·
Evaluate whether tax returns may be
electronically extracted from other IRS sources in an efficient way to
automatically bring returns directly into the System. |
|
Some offices are including activities other than examinations on the System. Specifically, compliance checks, customer assistance, and education and outreach activities are included in the TREES for some of the business units; other business units do not include these activities. |
· Establish consistent policy and guidelines Division‑wide on what type of data should be maintained on the System to ensure that the System is used as the central electronic warehouse for all TE/GE Division compliance and education and outreach data. With consistent data, TE/GE Division management will be able to use the TREES to accurately assess compliance and education and outreach activities and efficiently allocate resources. |
|
TE/GE Division examination functions maintain other databases outside of the TREES. |
·
Assess whether data from all the TE/GE Division‑wide
independent databases can be uploaded into the System to efficiently manage resources. |
|
Although the TE/GE Division developed a uniform way of identifying and naming individual examination workpapers on the TREES, it is not being used consistently. |
· Reemphasize to the users the need to use the required naming conventions. · Require users to bring in their files at the beginning of the examination using the required naming conventions and work within the System. |
Source:
TIGTA analysis of interviews with TREES users and System personnel.
Appendix V
Management’s Response to the Draft Report
DEPARTMENT OF
THE TREASURY
INTERNAL
REVENUE SERVICE
WASHINGTON.
D.C. 20224
JAN 11, 2OlO
Commissioner
Tax Exempt and
Government
Entities
Division
MEMORANDUM FOR DEPUTY INSPECTOR GENERAL FOR AUDIT
FROM: For Sarah Hall Ingram /s/ Joseph H. Grant
Commissioner, Tax Exempt and Government Entities
SUBJECT: Draft Audit Report - Additional Actions Are Needed to Realize Benefits of the Tax Exempt and Government Entities Reporting and Electronic Examination System
I am pleased to respond to your report concerning the Tax Exempt and Government Entities Reporting and Electronic Examination System {TREES or the System}. We recognize that some of the planned functionalities needed to develop TREES as a complete case management system were not implemented and that we need to provide additional training to employees in using the System effectively and consistently.
We appreciate your finding that we, along with Modernization and Information Technology Services (MITS), overcame difficulties during the deployment of TREES. As described in your Report, many of these problems were infrastructure performance issues. Our MITS partners worked cooperatively with us to largely resolve most of them. Additionally, as a result of lessons learned from the October 2008 software release, we revised our procedures for software releases. The .January 2009 release was deployed very successfully.
We also appreciate your finding that the failure of TREES to provide some of the planned functionality was due to lack of funding. We are pursuing various alternative means of providing the additional functionality. We have successfully made available some of the specific functionalities detailed in your report. For example, the functionalities to create subfolders and to create one folder for multiple returns were included in Release 2.3.
Although your report accurately identifies items of functionality that were not included in the deployed version of TREES, it is also important to recognize that TREES as deployed is a working electronic case management system. A simple count of the number of items of functionality that were not delivered may not tell the whole story about TREES. Qualitatively, the functionality deployed with TREES does provide a useable system that if used optimally can produce much of the benefit projected in the business case.
We agree with your recommendation that additional user training is needed. When the first release of TREES was deployed, all users were given at least 32 hours of classroom, hands-on training. Prior to deployment of subsequent releases, change documents were provided to all users. An on-line user guide is available to all users, and each business unit has its own specialized training material. Nonetheless, we agree that more communication and training are needed to re-enforce employees' knowledge of the current capabilities of the System, to train employees to use new capabilities as they are added to the system, and to inform employees of plans for future additional capabilities. Our action plan, described in the attachment, will include additional training for TREES/RCCMS users.
Our specific responses to your recommendation are included in the attachment.
If you have any questions, please call Sarah Hall Ingram, TEGE Commissioner, at (202) 283-2500.
Attachment
ATTACHMENT
Recommendation
1
The Commissioner, TE/GE Division, should develop an action plan to address the issues identified in this report and other issues the TE/GE Division has identified, as well as reeducate and train TE/GE Division users. This will allow the TE/GE Division to gain increased acceptance and fuller use of the TREES which would lead to more attainment of the System benefits.
Corrective
Action
We agree with this recommendation. By July 30, 2010, TE/GE will develop an action plan to address the issues identified in this report, including providing additional information and training to TREES/RCCMS users.
Implementation
Date
July 30. 2010
Responsible
Official
Director, Employee Plans
[1] Performance measures are estimates of results expected for a given time period. They are included in plans as indicators of what an organizational unit wants to achieve.
[2] The TE/GE Division includes the Exempt Organizations, Employee Plans, and Government Entities functions. The Government Entities function includes the Federal, State, and Local Governments, Indian Tribal Governments, and Tax Exempt Bonds offices.
[3] An Examination involves a review of an entity’s books, records, and other data to develop all significant issues; ensure a proper determination of exempt status, qualification, or tax liability where appropriate; and determine that applicable statutory requirements are satisfied.
[4] These employees include: revenue agents, tax auditors, tax law specialists, front-line auditors, researchers, analysts, managers, tax examiners, and clerks.
[5] Revenue agents in the TE/GE Division’s Employee Plans, Exempt Organizations, and Government Entities functions conduct examinations to ensure that entities comply with all applicable tax laws.
[6] The Reporting Compliance Case Management System will consolidate the nonmajor investments, the TREES and the TE/GE Electronic Case Compliance System, into a new major information technology investment. The TREES officially merged into the Reporting Compliance Case Management System, along with the TE/GE Electronic Case Compliance System, in October 2008. However, for the purpose of this report, we will refer to the System as the TREES, not the Reporting Compliance Case Management System.
[7] The Exhibit 300 is also known as the Capital Asset Plan and Business Case. It is used as a one-stop document for a myriad of information technology management issues such as business cases for investments, agency modernization efforts, and overall project management.
[8] We interviewed 70 TE/GE Division employees from December 2008 through March 2009.
[9] Performance measures are estimates of results expected for a given time period. They are included in plans as indicators of what an organizational unit wants to achieve.
[10] Fifteen capabilities were out of the scope of our review.
[11] The quality review process provides a method to monitor, measure, and improve the quality of examination case work.
[12] The case library refers to a central electronic warehouse of all TE/GE Division open and closed examination cases.
12 Pre-populated forms contain existing information from IRS computer systems which eliminates the need to manually input these data.
13 A computer system used by the TE/GE Division to control returns, input assessments/adjustments to the Master File, and provide management reports. It provides inventory and activity controls of active examination cases by tracking the location, age, and status of each case. The Master File is the IRS database that stores various types of taxpayer account information. This database includes individual, business, and employee plans and exempt organizations data.
[13] The case library refers to a central electronic warehouse of all TE/GE Division open and closed examination cases.