HEARING BEFORE THE
SUBCOMMITTEE ON GOVERNMENT EFFICIENCY, FINANCIAL
MANAGEMENT AND INTERGOVERNMENTAL RELATIONS
COMMITTEE ON GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES
APRIL 15, 2002
STATEMENT FOR THE RECORD
PAMELA J. GARDINER
DEPUTY INSPECTOR GENERAL FOR AUDIT
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION
Mr. Chairman, and members of the subcommittee, I appreciate the
opportunity to appear today. I
have submitted to the subcommittee TIGTA’s analysis of management
challenges facing the IRS. I
would like to focus today on four of those areas:
security of IRS
employees, facilities and information systems,
the decline in
While the IRS has long recognized the risks that violence against its
infrastructure and employees poses, the events of September 11 expanded
the security paradigm considerably. For
instance, in the past IRS disaster recovery plans generally
addressed the risk of only one site shutting down.
The Al Qaeda terrorist attacks and the subsequent anthrax and bomb
threats made it realistically possible that sophisticated forces could
incapacitate multiple IRS locations.
The IRS is now developing plans to address multiple acts of
terrorism and maintain continuity of operations.
Completing these actions is important because the IRS is the
nation’s primary revenue collector and any disruption of these
activities would have a detrimental effect on all Government operations. In addition, the increased networking of IRS computers and
increased use of the Internet, combined with the growing number of
destructive computer viruses, makes the IRS more vulnerable to the risk of
data loss or theft. Apart
from the external risks, there is an overall lack of awareness of security
within IRS among IRS employees, and functional managers have generally not
accepted responsibility for security.
For example, posing as Help Desk employees, we contacted 100 IRS
employees and asked for their assistance in resolving a fictitious network
problem. We asked employees to temporarily change their password to
one that we had created. Of
the 100 employees contacted, 71 agreed to compromise their password,
effectively giving us access to IRS systems.
The second challenge that I would like to discuss is IRS’ business
systems modernization. This area is considered a significant risk due to
its high cost, previous failures, and because many IRS reforms, such as
improved debt collection, are backlogged awaiting systems modernization.
While the IRS has made some progress modernizing its systems, the
overall pace of these efforts has been considerably slower than expected.
To its credit, the IRS has begun implementing process improvements
in such areas as configuration management, risk management, schedule and
cost analysis, and quality assurance.
However, these improvements are recent and we have not yet seen
major improvements in the actual application of these actions at the
project level. As a result,
the projects continue to experience significant delays and cost increases,
with significant decreases in functionality.
We attribute this to several factors, including:
the initiatives are
still struggling with immature project management processes,
contractor has not consistently demonstrated the management and technical
disciplines that it was hired to bring to the IRS,
continued to evolve, and
lessons learned in
previous projects are not being applied adequately to other similar
projects and problems.
Another significant issue facing the IRS is meeting its goal to provide
quality service to taxpayers. At
times taxpayers need to come to the IRS for assistance. My office has conducted reviews of the IRS’ toll-free
telephone operations and walk-in activities during this filing season.
TIGTA auditors monitored 736 telephone calls and found IRS
employees responded incorrectly to 22% of the questions.
TIGTA auditors also visited 40 taxpayer assistance centers and
asked 168 tax law questions. IRS
responses despite procedural errors;
40 referrals to
publication in lieu of a response; and
Another concern with serious implications for voluntary compliance is the
well-known decline in enforcement activities at the IRS.
During the past decade, the number of tax returns selected for
examination by the IRS has decreased, while the number of tax returns
filed by taxpayers has increased. Additionally,
the number of liens, levies, and seizures, although slightly up from the
previous year, continue to be significantly fewer than in the past.
Also, delinquent accounts and delinquent investigations in
inventory are increasing dramatically.
The IRS is at a crucial point in its re-invention process.
As Commissioner Rossotti completes his term, the risks increase
that IRS will not succeed in delivering its promised improvements.
Commissioner Rossotti’s strategic planning and leadership skills,
combined with his willingness to substantially change the IRS culture,
have been instrumental in guiding the IRS to the successes it has achieved
I would be happy to answer questions now on these or any of the other management challenges.
Posted on 04/12/2002