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October 21, 2010
TIGTA - 2010-66
Karen Kraushaar
karen.kraushaar@tigta.treas.gov
TIGTA-PAO@tigta.treas.gov
(202) 622-6500

IRS Modernization Improving, But Risks Remain

WASHINGTON - The Business Modernization Program (Modernization Program) has continued to provide new information technology capabilities and related benefits to the Internal Revenue Service (IRS) as well as taxpayers, according to a new report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

The Modernization Program is a complex effort to modernize the IRS's technology and related business processes while replacing outdated technology and maintaining the current tax system. TIGTA assesses and reports annually on the progress of the IRS's modernization activities. TIGTA conducts annual reviews of the IRS's modernization efforts as required by the Internal Revenue Service Restructuring and Reform Act of 1998.

Since TIGTA's 2009 report, the IRS has implemented new releases of the Customer Account Data Engine (CADE), Account Management Services (AMS), and Modernized e-File (MeF) systems. Most significantly, the MeF for the first time included individual tax returns in addition to business tax returns.

Additionally, the IRS has refocused its Modernization Program to deliver new and retooled information technology services more quickly. TIGTA is encouraged by the IRS's efforts to focus the Modernization Program, especially related to the retooling of the CADE. However, significant risks are involved in retooling the entire Modernization Program, as they involve the use of techniques and processes new to the IRS.

"While the IRS has demonstrated some promising information technology capabilities in its Business Modernization efforts, our report found that the IRS still needs to resolve some troubling security vulnerabilities with the Modernization Program," said J. Russell George, the Treasury Inspector General for Tax Administration. "Further, management of the project costs and schedules has improved since our previous report, but the IRS has not always effectively implemented planned processes or delivered all planned system capabilities to achieve the Modernization Program's expectations," Mr. George added.

TIGTA did not make any recommendations in this report.