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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report
TSM has existed for almost a decade, with about another 7 years of activity scheduled.2 During that time, the following specific goals have emerged for TSM:
Decrease the risk of catastrophic failure;
Increase the efficiency of tax return processing;
Provide better services; and
Increase enforcement capabilities.
When the committee first met with the IRS, most of the discussions centered on the possibility that the current system would collapse. The IRS was using systems and techniques that were antiquated, and although it was completing its core tasks every year, the IRS was unable to make any advances in keeping with the general advance of information technology. The desire to avoid a catastrophe was clearly the primary objective of TSM initially, and this committee wholeheartedly agreed with that goal.
Naturally, an inherent goal of any modernization program is to improve the efficiency of the system and the organization that uses that system. With regard to the IRS, however, this goal is not important in its own right: the goal of increasing efficiency is important only because it is needed to support the other goals.
During the committee’s tenure, the IRS shifted its perspective on TSM from “modernizing a technical system” to that of “modernizing the IRS.” This shift was an absolute necessity and showed the committee that the IRS was prepared to alter its way of doing business in order to gain full benefit from the technical changes. To this end, the IRS embraced a goal of providing a better quality of service. That is, the IRS was prepared to alter its fundamental handling of taxpayer issues to reduce the amount of erroneous information given out by the IRS and to make it easier for the average taxpayer to conduct business with the IRS. Technical capabilities, such as modern telephone call processing and on-line case processing, are being built specifically to support this goal.
Finally, it must be noted that one of the goals of TSM is to improve the IRS’s ability to collect taxes, including its ability to enforce the tax laws so that every taxpayer pays his or her legal share. This ability has always been controversial, with almost everyone taking both sides of the discussion at some point in his or her life. Taxpayers generally agree that the IRS should be empowered to collect taxes from tax evaders, but the same taxpayers are frustrated when they have to participate in an IRS audit, regardless of its outcome. Consequently, the goal of improving the IRS’s enforcement capabilities is not discussed often, but it is an important part of the overall modernization effort.
It is difficult to say which of these various goals is more important, primarily because they are intertwined. For example, it is difficult to provide better service if the system is not efficient enough to issue refund checks in a timely manner. When addressing any aspect of TSM it is important to consider all of these goals. The IRS along with all of its oversight organizations must remember this point in order to properly guide itself through the modernization effort.
General Accounting Office. 1995. Tax Systems Modernization: Management and Technical Weaknesses Must Be Corrected If Modernization Is to Succeed. GAO/AIMD-95– 156, General Accounting Office, Washington, D.C., p. 2. In this report, GAO documents that the IRS has spent $2.5 billion for TSM since 1986.