TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

Office of Audit

Highlights

Unmet Needs for Information Technology Support Result in Inefficiencies and Higher Tax Administration Costs

Final Report issued on July 3, 2019

Highlights of Reference Number:  2019-40-043 to the Commissioner of Internal Revenue.

IMPACT ON TAXPAYERS

The Information Technology (IT) organization provides and maintains the information technology products and services needed by the IRS to deliver tax administration.  This includes providing information technology services to maintain IRS operations, implement legislation, maintain security over taxpayer data, and ensure the timely delivery of the individual tax return filing season.

WHY TIGTA DID THE AUDIT

This audit was initiated to evaluate the effectiveness of IRS efforts to prioritize computer programming requests to support effective tax administration.

WHAT TIGTA FOUND

The allocation of information technology resources is primarily set by the IT organization with minimal involvement from the business operating divisions.  The operating divisions are concerned that their lack of participation limits their input when establishing agency priorities for determining how to allocate IT organization resources.

In addition, due to insufficient resources, projects are not started that would reduce taxpayer burden, protect revenue, and save significant IRS resources.  For example, there were 82 requests denied in Calendar Year 2016.  IRS executives informed us that this had negative impacts on tax administration, such as the potential for billions of dollars in lost revenue, taxpayers not receiving proper credits, and the IRS having to pay a large amount of interest due to withholding that was not credited to taxpayer accounts.

Finally, we found that the system used to track information technology requests does not accurately reflect the status and actions taken for some requests.  For example, not all denied requests are captured, and, for the ones captured, not all included a description as to the reason denied.  IT organization resources and contractor costs were not always captured as required.

WHAT TIGTA RECOMMENDED

TIGTA recommended that the Chief Information Officer coordinate annual meetings with business operating division executives and IRS chief officers to discuss priorities in allocating IT organization resources.  TIGTA also recommended that all key work requests are submitted through the IT organization’s tracking system and that a process is established to track estimated and actual resources needed to complete a work request by system or application.  Finally, TIGTA recommended that internal guidelines be updated to ensure that the information documented in the work request tracking system accurately reflects the status of the request, the IRS system or application to which the request applies, and the reason for the denial of the request.

IRS management agreed with five of the seven recommendations.  IRS management disagreed with the need to update internal guidelines to require users to identify the IRS system or application to which the work request applies.  IRS management believes it already has procedures in place that require this.

IRS management also partially agreed to establish a process to track estimated and actual resources needed to complete a work request by system or application.  The IRS will work with information technology suppliers to evaluate and assess the benefits versus the cost or burden of establishing such a process.

READ THE FULL REPORT

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

https://www.treasury.gov/tigta/auditreports/2019reports/201940043fr.pdf.

 

Phone Number   /  202-622-6500

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

Website             /  https://www.treasury.gov/tigta