TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

Office of Audit

Highlights

A SHORTENED DELIVERY CYCLE, HIGH VOLUME OF CHANGES, AND MISSED DEADLINES INCREASE THE RISK OF A DELAYED START OF THE 2019 FILING SEASON

Final Report issued on September 25, 2018

Highlights of Reference Number:† 2018-24-064 to the Commissioner of Internal Revenue

IMPACT ON TAXPAYERS

The Tax Cuts and Jobs Act of 2017 made significant changes to the tax code affecting individuals, businesses, and tax-exempt organizations.† It is the first major tax reform legislation in more than 30 years.

The IRS estimates that implementation will require creating or revising about 450 forms, publications, and instructions and modifying about 140 information technology systems to ensure that it can accommodate the newly revised tax forms.

WHY TIGTA DID THE AUDIT

This audit was initiated to provide a status of the Information Technology organizationís progress to make system modifications required by the Tax Cuts and Jobs Act of 2017 (hereafter referred to as the Act) for the 2019 Filing Season.

WHAT TIGTA FOUND

The Information Technology organizationís normal deadline for business units requesting information technology products and services for the next filing season is January 31st.† With the passage of the Act in December 2017, the Information Technology organization established several interim deadlines to facilitate timely implementation of the Actís tax provisions.† However, the business units missed the deadlines for submitting work request notifications and business requirements.† Subsequently, the Information Technology organization set a new deadline of June 1, 2018, for submitting final work request notifications.† The most recent deadline shortened the time frame for making system changes for the 2019 Filing Season by four months.† As of July 5, 2018, the Information Technology organization has not received all final work request notifications and business requirements.† Delays in receiving this information will result in less time for modifying and testing systems and increases the risk of a delayed start of the 2019 Filing Season.

Another area of concern that could affect the timely implementation of the Actís tax provisions for the 2019 Filing Season is the IRSís ability to quickly fill critical positions that were vacated by employees or contractors.† Due to the lengthy process to hire employees or bring contractors onboard, the positions might not be quickly filled causing risk to the timeliness of the information technology updates.

The IRS received $320 million to implement the Act, allocating $291 million it estimated would be needed for the information technology and ancillary operations support work.† TIGTA calculated it would take more than 1.1 million labor hours based on the IRSís estimate of 542 full-time equivalents to implement the Actís tax provisions.† The IRS plans to use current and new employees to meet these needs.† As of June 2018, 117 current and new employees have been hired and entered on duty to meet these needs.

In addition, the Information Technology organization is planning to identify any potential negative impact on existing programs and projects caused by implementing the Act.† As of July 16, 2018, the IRS had not provided documentation of any ongoing projects or programs that will be negatively affected by the implementation of the Act.† TIGTA is continuing to review the Information Technology organizationís efforts to implement the Act.

WHAT TIGTA RECOMMENDED

This report was prepared to provide information only.† Therefore, no recommendations were made in the report.

READ THE FULL REPORT

To view the report, including the scope, methodology, and full IRS response, go to:

https://www.treasury.gov/tigta/auditreports/2018reports/201824064fr.pdf.

 

Phone Number ††/† 202-622-6500

E-mail Address †/TIGTACommunications@tigta.treas.gov

Website†††††† ††††††/http://www.treasury.gov/tigta