The Internal Revenue Service (IRS) faces significant challenges as it prepares to process an estimated 128 million individual tax returns during the 2000 Filing Season. These challenges include recruiting and training employees, programming computer systems to implement new tax law changes, and modifying existing systems to effectively process tax returns for the Calendar Year 2000 date change.

To assess the IRS’ effectiveness in meeting these challenges, the Treasury Inspector General for Tax Administration (TIGTA) is conducting a series of reviews to evaluate the effectiveness of the IRS’ process for preparing for the 2000 Filing Season. In separate audit reports, the TIGTA will provide readiness assessments for several important filing season activities, such as the process the IRS uses for preparing tax forms and publications and for ensuring quality customer service.

The objective of this review was to assess the effectiveness of the process used by the IRS’ Submission Processing functions to control computer programming changes needed for the 2000 Filing Season. This is a critical process since the IRS has determined that over 250 computer programming changes are needed for the 2000 Filing Season. Although the scope of this review extends into Information Systems due to a cross-functional sharing of key databases, our focus is on the functions responsible for processing tax returns and their ability to ensure the effective preparation for upcoming filing seasons.

The IRS does not have a comprehensive process for controlling computer programming changes. Its current process does not document all critical activities from the point the IRS identifies the need for a computer programming change until the program is implemented. As a result, the IRS does not have a high degree of assurance that critical computer programming changes will be implemented before each filing season begins. Specifically, the IRS does not ensure that:

• Requests for computer programming changes are effectively controlled.
• Critical programming changes receive priority over non-critical changes.
• All IRS offices use the same process to control programming changes.

Although this review did not identify any requested programming changes that were not being addressed, we attribute this to the dedication of IRS employees who took the initiative to ensure that the changes were addressed.

Additionally, the IRS has recognized the need to improve the Request for Information Services (RIS) process. It chartered a study group (the Operations RIS Task Group) that recently issued a report listing 10 recommendations. While we concur with the improvements cited in this report, the IRS should also address the conditions identified during our review. Resulting process improvements will provide the IRS with an assurance that critical programming changes will be addressed for future filing seasons.

The IRS uses the RIS process to request, control, and monitor most programming changes. After an IRS office identifies the need for a programming change, it prepares a RIS that is forwarded to the Information Systems Division for programming.

The process for controlling these programming changes should include documenting key activities. The absence of adequate documentation of key activities makes it difficult for the IRS to ensure that it has effectively implemented necessary programming changes. We determined the IRS has not assured that procedures for monitoring programming changes adequately address documenting the following key activities:

• Pre-coordination to decide whether a programming change should be made and, if so, the scope of those changes.
• Document clearance to obtain comments from the IRS offices impacted by the programming change.
• Quality review to ensure that the RIS is accurately prepared.
• Acceptance of computer programming changes to ensure that the completed programming change meets the needs of the IRS user.

Although the RIS process requires that requested programming changes be included in automated databases for monitoring and control purposes, the information is not reliable because the IRS has not linked these two key databases or assured the information they contain is consistent.

These two databases contain RIS information for use by different IRS offices. The first is primarily used to track the status of both RIS requests and RIS placeholders (a RIS placeholder alerts Information Systems that an IRS office is evaluating the need for a programming change). The second database is intended to monitor the status and progress of RISs as they are addressed and implemented during the process. However, we determined the IRS does not maintain documentation explaining the information that is recorded in the databases or the rules for inputting to each data field. As a result, we were unable to assess the validity of the database information.

The Operations RIS Task Group supported combining these two key databases into a centralized tracking system to help improve the process. We identified the following omissions and inconsistencies that should be corrected prior to centralizing the database to ensure that the new database will contain accurate and complete information:

• In 91 instances, RIS requests were listed on 1 of the databases but not found on the other. These appeared to be final RISs and should have had a matching record in the other database.
• In 35 instances, RIS placeholders were listed with control numbers in a database field that made them appear to be RIS requests rather than placeholders.
• Completion dates for key activities were included on only one of these key databases. However, in 48 instances, these completion dates were unreliable because they were inconsistent with the dates found on an alternative listing.

Such errors reduce the IRS’ ability to effectively monitor programming changes and provide accurate management information.

Although the IRS recognized the need to prioritize RISs for the 2000 Filing Season, it did not assure that the most critical programming changes were made first. The Chief Operations Officer issued a memorandum to the Assistant Commissioners for Operations with instructions for prioritizing RISs into six categories. However, it did not include written criteria outlining what should be included in each of the categories.

To determine whether critical programming changes were consistently assigned, we selected a judgmental sample of 15 filing season programming changes and assigned each of them to a priority category. We used the priority guidelines that the Operations RIS Task Group established for the six categories as our basis, due to the absence of written criteria. Our results showed category assignments that did not agree with the IRS’ assignments for 20 percent (3 of 15) of these filing season changes. This is an example of how local guidelines within the IRS can be interpreted differently causing the priority for programming changes to be inconsistently assigned.

The IRS does not require all of its offices to use the RIS process to control requests for computer programming changes. For example, changes to the Electronic Federal Tax Payment System (EFTPS) were not controlled on the RIS system.

The IRS uses the EFTPS to electronically process federal tax deposits and other business and individual tax payments. Computer programming changes to the EFTPS were initiated using a Change Request (CR) instead of a RIS. A CR is similar to a RIS, and the process for implementing a CR is similar to the process for implementing a RIS. However, CRs are not controlled on the RIS databases or monitored as part of the filing season programming changes to ensure they are implemented.

The IRS cannot readily assess implementation risks for programming changes if all requests are not required to be controlled through the RIS process.

To ensure that all requests for computer programming changes are effectively controlled, we recommend that the IRS improve its process for managing computer programming changes and providing accurate management information. This should include documenting all critical activities within the RIS process as well as validating information in the existing RIS databases before it is combined into a centralized database. We also recommend the IRS develop written criteria for prioritizing RISs to ensure the RIS inventory is prioritized correctly for the filing season and publish standardized request procedures to assure that computer programming changes are effectively controlled for all IRS offices.

Management’s Response: The IRS agreed with our findings and recommendations. The Chief Operations Officer issued newly developed interim RIS procedures in November 1999 and final procedures are expected to be issued in May 2000. The IRS has also taken action to ensure that the process to request computer changes for the EFTPS is the same as the RIS process used by other IRS offices.

Two other initiatives are being implemented to address our recommendations. The first, initiated in July 1999, consolidates four databases used by different functional areas into a blended database effort, the RIS Tracking and Reporting System. This will provide IRS with a comprehensive, centralized tracking of any computer changes that are agreed to, accepted, programmed, and released into production. The second initiative, the Service-Wide Requirements Management Integrated Product Team, which began in December 1999, is developing a Service-wide methodology for planning, developing, tracking, managing, and prioritizing requirements across all IRS business units. Management’s complete response to the draft report is included as Appendix VII.