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Treasury Inspector General for Tax Administration

Press Release

November 26, 2013
TIGTA - 2013-49
Contact: David Barnes
(202) 622-3062

The IRS’s CADE 2 Database Deployment is Experiencing Delays and Increased Costs

WASHINGTON – Deployment of the Internal Revenue Service’s (IRS) Customer Account Data Engine 2 (CADE 2) database has been delayed and its deployment cost has risen an estimated 74 percent to $83 million, according to a new report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

Taxpayer service improvements that were to be provided by the CADE 2 database have also been delayed, the report stated.

The CADE 2 mission is to provide state-of-the-art individual taxpayer account processing that will improve service to taxpayers. It will replace the current Individual Master File (IMF) account settlement system with a relational database and become a key component of the IRS’s enterprisewide, data-centric information technology strategy.

CADE 2 is being implemented in phases. In Transition State 1, the IRS is establishing a relational database that will store all individual taxpayer accounts. Processing on the current IMF will be enhanced to allow daily batch processing, allowing the key IRS customer service database, the Integrated Data Retrieval System (IDRS), to have the benefit of more timely posted data. The IRS will also develop interfaces between the CADE 2 database and selected systems, including the IMF, the IDRS, and Corporate Files Online (CFOL).

The overall objective of TIGTA’s review was to determine whether the IRS has implemented adequate data validation to ensure that the data provided to select systems are accurate and complete.

While the IRS effectively managed and resolved more than 1,000 data defects, it did not meet its June 2013 deadline for implementing system interfaces to allow IRS employees to access data, TIGTA found.

With a revised projected implementation date of January 2014, the overall total estimated cost of Transition State 1 system deployment rose from $47.7 million to $83 million. In addition, the lack of security systems integration prevents transaction-level tracking of employee access to the CADE 2 database.

“I am troubled by these delays and the escalating costs associated with implementing this significant component of the IRS’s modernization efforts,” said J. Russell George, Treasury Inspector General for Tax Administration. “The IRS needs to be aggressive in its efforts to resolve these problems.”

TIGTA made four recommendations, including that CADE 2 not exit Transition State 1 Milestone 5 until the interfaces with selected downstream systems are implemented into production and the database is accurate, complete, and timely.

The IRS agreed with one of the four recommendations and plans to certify that the database is accurate, complete, timely, and available to serve as the trusted source. IRS management disagreed with the three remaining recommendations.

TIGTA believes risks remain.

Read the report.


Note: The difference between the date TIGTA issues an audit report to the Internal Revenue Service and the date TIGTA publicly releases the report is due to TIGTA's internal review process to ensure that public release is in compliance with Federal confidentiality laws.

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