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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report Continued Review of the Tax Systems Modernization of the Internal Revenue Service Final Report Committee on Continued Review of the Tax Systems Modernization of the Internal Revenue Service Computer Science and Telecommunications Board Commission on Physical Sciences, Mathematics, and Applications National Research Council National Academy Press Washington, D.C. 1996
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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Harold Liebowitz is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I.Shine is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce Alberts and Dr. Harold Liebowitz are chairman and vice chairman, respectively, of the National Research Council. Support for this project was provided under contract number TIR-93-0070. Any opinions, findings, conclusions, or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the Department of the Treasury or the Internal Revenue Service. Copyright 1996 by the National Academy of Sciences. All rights reserved. Available from: Computer Science and Telecommunications Board National Research Council 2101 Constitution Avenue, N.W. Washington, DC 20418 Printed in the United States of America
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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report COMMITTEE ON CONTINUED REVIEW OF THE TAX SYSTEMS MODERNIZATION OF THE INTERNAL REVENUE SERVICE ROBERT P.CLAGETT,* University of Rhode Island, Chair ROGER BATE, Software Engineering Institute, Carnegie Mellon University BARRY BOZEMAN,* Georgia Institute of Technology CHARLES A.CARLSON,* Sears Technology Services (retired) LYNN W.ELLIS, University of New Haven (retired) PETER A.FREEMAN,* Georgia Institute of Technology CINDA A.HALLMAN,* E.I. du Pont de Nemours and Company JORDAN HAYES, Heuristicrats Research Inc. RUSSELL E.HOGG,* Hogg International Associates Inc. C.A.IRVINE, Eclectic Solutions Corporation JEROME KURTZ,* New York University GEORGE T.LIGLER,* GTL Associates NOEL MATCHETT, Information Security Incorporated GEORGE B.TRUBOW, The John Marshall Law School Staff MARJORY S.BLUMENTHAL, Director FRANK PITTELLI, CSTB Consultant LESLIE M.WADE, Research Assistant * Also served on the original Committee on Review of the Tax Systems Modernization of the Internal Revenue Service.
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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report COMPUTER SCIENCE AND TELECOMMUNICATIONS BOARD WILLIAM A.WULF, University of Virginia, Chair FRANCES ALLEN, IBM T.J. Watson Research Center DAVID D.CLARK, Massachusetts Institute of Technology JEFF DOZIER, University of California at Santa Barbara HENRY FUCHS, University of North Carolina CHARLES M.GESCHKE, Adobe Systems Inc. JAMES N.GRAY, Microsoft Corporation BARBARA J.GROSZ, Harvard University JURIS HARTMANIS, Cornell University DEBORAH A.JOSEPH, University of Wisconsin BUTLER W.LAMPSON, Microsoft Corporation BARBARA H.LISKOV, Massachusetts Institute of Technology JOHN MAJOR, Motorola Inc. ROBERT L.MARTIN, AT&T Network Systems DAVID G.MESSERSCHMITT, University of California at Berkeley WILLIAM H.PRESS, Harvard University CHARLES L.SEITZ, Myricom Inc. EDWARD SHORTLIFFE, Stanford University School of Medicine CASMIR S.SKRZYPCZAK, NYNEX Corporation LESLIE L.VADASZ, Intel Corporation MARJORY S.BLUMENTHAL, Director HERBERT S.LIN, Senior Staff Officer JERRY SHEEHAN, Staff Officer JOHN M.GODFREY, Research Associate JEAN E.SMITH, Program Associate LESLIE M.WADE, Research Assistant GLORIA P.BEMAH, Administrative Assistant GAIL E.PRITCHARD, Project Assistant
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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report COMMISSION ON PHYSICAL SCIENCES, MATHEMATICS, AND APPLICATIONS ROBERT J.HERMANN, United Technologies Corporation, Chair STEPHEN L.ADLER, Institute for Advanced Study PETER M.BANKS, Environmental Research Institute of Michigan SYLVIA T.CEYER, Massachusetts Institute of Technology L.LOUIS HEGEDUS, W.R. Grace and Company JOHN E.HOPCROFT, Cornell University RHONDA J.HUGHES, Bryn Mawr College SHIRLEY A.JACKSON, U.S. Nuclear Regulatory Commission KENNETH I.KELLERMANN, National Radio Astronomy Observatory KEN KENNEDY, Rice University THOMAS A.PRINCE, California Institute of Technology JEROME SACKS, National Institute of Statistical Sciences L.E.SCRIVEN, University of Minnesota LEON T.SILVER, California Institute of Technology CHARLES P.SLICHTER, University of Illinois at Urbana-Champaign ALVIN W.TRIVELPIECE, Oak Ridge National Laboratory SHMUEL WINOGRAD, IBM T.J. Watson Research Center CHARLES A.ZRAKET, MITRE Corporation (retired) NORMAN METZGER, Executive Director
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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report This page in the original is blank.
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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report Preface This is the sixth and final report of the Computer Science and Telecommunications Board (CSTB) of the National Research Council (NRC) on its review of the Tax Systems Modernization (TSM) program of the Internal Revenue Service (IRS). This reviews follows one begun in 1990, which culminated in a final report issued in 1992.1 In 1993 the IRS asked the NRC to continue reviewing the TSM program, focusing more on development and transition issues. A second committee was formed, including a number of members from the original committee and with more emphasis on technical (as compared to management) expertise. The committee met every 2 to 3 months, and various subcommittees focusing on specific issues made field trips to service centers, district offices, and development locations where IRS personnel were interviewed (Appendix B). In addition, IRS briefings and documents (Appendix A) were provided at committee meetings. An interim report was issued in 1994.2 Input to the current report from the IRS was completed in September 1995. The committee’s draft report was sent out for anonymous peer review on September 11, 1995, and the revised draft was submitted to the NRC’s Report Review Committee on November 9, 1995. In late November, I learned that TSM plans had been revised and reduced due to further budget cuts; further review of the plans currently is under way. This report does not reflect changes made after September 1, although acknowledgment of some developments, where communicated to the committee, is made. Both the dynamic nature of conditions at the IRS and the limited opportunity for the committee as a whole to deliberate necessitated a finite period of review. Inevitably something on which the committee has deliberated will have changed before the report is released. However, 5 years of experience have shown that, in general, such late-breaking developments do not alter the fundamental findings, conclusions, or recommendations of this committee. It should be noted here that Congress has just required that certain aspects of tax collection be delegated to external entities. This unusual step raises broader questions 1 Computer Science and Telecommunications Board, National Research Council. 1992. Review of the Tax Systems Modernization of the Internal Revenue Service. National Academy Press, Washington, D.C. 2 Computer Science and Telecommunications Board, National Research Council. 1994. Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Interim Report. Computer Science and Telecommunications Board, Washington, D.C.
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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report about competition in the conduct of tax collection activities. The subject of competition for government agencies is not a new topic, but it is outside the purview of the committee. We have in past reports emphasized concerns that key managers of TSM should have the necessary responsibility and authority, as would be the case for comparable managers in the private sector. The committee wishes to thank Commissioner Margaret Milner Richardson and the IRS staff at all locations for their cooperation in providing briefings and documents during this review. It is not easy for a federal agency to bring in outside, unpaid reviewers; cooperate in responding to requests for briefings, documents, and employee interviews; and ask for critical reports that they know will become part of the public record. We very much commend the IRS for doing all of these and sincerely hope that the series of meetings and reports will prove constructive and helpful. We hope very much that TSM will succeed. My personal thanks go, as well, to the members of the committee and especially to those who have served throughout the 5 years of the original and current contracts. They have all given freely of their time in an effort to offer their best advice. It has been a distinct pleasure and rewarding experience to be associated with them. We are all grateful to the support of the CSTB staff and wish particularly to recognize and thank Marjory Blumenthal, director; Frank Pittelli, consultant; and Leslie Wade, research assistant. Robert P.Clagett, Chair Committee on Continued Review of the Tax Systems Modernization of the Internal Revenue Service
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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report Contents SUMMARY AND MAJOR RECOMMENDATIONS 1 Need for Modernization, 1 What Is Success?, 2 Organizational Accomplishments, 2 Technical Shortcomings, 3 Major Recommendations, 5 Recommendation 1: Acquire More Technical Management Expertise, 7 Recommendation 2: Develop a Proper Set of Performance Goals and Metrics, 7 Recommendation 3: Develop an Adequate Architectural Design and Definition, 8 Recommendation 4: Significantly Increase the Means to Achieve Security, 9 Recommendation 5: Implement an Overall Process Improvement Plan, 9 Recommendation 6: Focus Efforts on the Integrated Case Processing Project, 11 Need for a Long-term View, 11 1 BACKGROUND 13 Introduction, 13 Goals of Tax Systems Modernization, 13 High-level View of Tax Systems Modernization, 15 Current Status, 17 2 SYSTEMS AND SOFTWARE DEVELOPMENT 18 To What Extent Will TSM Succeed?, 18 Systems Modernization Approach, 18 Requirements Definition, 19 The Development Process, 20 Leadership, 21 Technical Expertise, 22 Sufficient Funding, 24
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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report Technical Issues, 25 Architecture, 25 System Analysis, 27 Infrastructure Task Group, 29 Security, 30 Developing a Solution, 30 Current Development Activities, 30 Software Process Improvement, 31 Focused Project Development, 35 Additional Conclusions and Recommendations, 36 3 MANAGEMENT 38 Clarity of Scope and Objectives, 38 Strong Leadership, 39 Need for a Strong CIO, 40 Present Matrix Structure, 41 Field Structure, 42 Cultural Integration, 42 Planning Issues, 43 Overall Status, 43 Program Management Plan, 44 Operational Risk Planning, 44 Management Issues, 45 Project Lessons Learned, 45 Program Management Tools, 48 Evaluation and Metrics, 48 Integration Test and Control Facility, 49 Human Resources Issues, 50 Facilities Planning and Employee Training, 50 Contractor Management, 50 How to Continue to Make It Happen, 51 Summary, 51 4 PRIVACY 53 The Privacy Advocate Office, 54 Valuing Privacy, 54 Information Management Protocols, 55 Disclosure of Taxpayer Information to Third Parties, 55 Use of Data from Third Parties, 56 Privacy and Security Linkage, 56 5 SECURITY 58 Threats and Vulnerabilities, 59 Assessment of Security Policy, Requirements, and Architectures, 60 Communications Security, 62 Guidelines, 63 Concluding Points, 64
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Continued Review of the Tax Systems Modernization of the Internal Revenue Service: Final Report 6 TELECOMMUNICATIONS 66 TCS Schedule and Scope, 67 Telecommunications Management, 67 Overall Telecommunications Response Times, 68 Telecommunications Connectivity Versus Security, 69 APPENDIXES A Documents Reviewed, 73 B Major Committee and Subcommittee Meetings Held, 99 C Acronyms and Abbreviations Used, 100
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