I’?“oI’IIIlIy 1!J!IO TAX SYSTEM MODERNIZATION IRS’ Challenge for the 21st Century ;., ‘.) .“I 1 / .“ _‘b ,: gT68(. ., RETXfiSED .-----.--- _I .. .....*,ll.,. ~;AO~IM’1’II:~:-!~O-I:~ - United States General Accounting Office Washington, D.C. 20548 Information Management and Technology Division B-227683 February 8,199O The Honorable J. J. Pickle Chairman, Subcommitteeon Oversight Committee on Ways and Means Houseof Representatives Dear Mr. Chairman: In responseto your September29,1989, request, this report discusses the progress of the Internal RevenueService’s(IRS)Tax System Modern- ization (TSM) program in achieving a fully automated and modernized tax processingsystem. Specifically, you requestedthat we assess(1) the extent to which the program will meet its overall goal of improved ser- vice to taxpayers, and (2) whether individual componentsare guided by a strategic plan and have discrete, measurable deliverables. The modernization program is characterized by high expectations and Synbpsis unanswered questions. IRShas spent about $120 million on TSM since its inception in 1986 and expects to spend several billion dollars more to complete it. Although the program has made significant progress since 1986,the extent of this progress is difficult to measurebecausethe nature and scopeof the program has not been clearly articulated. At present, the program is a collection of independent modernization projects, most of which are intended to upgrade existing systems or pro- vide additional computer capacity to meet near-term requirements. While many of these projects should yield badly neededimprovements to IRStax processingcapability, the Service needsto clarify how they will fit together into an integrated system that will meet the agency’s needsinto the next century. This uncertainty stems in large part from the fact that IRSdoesnot expect to complete its Master Plan for TSM until the Fall of 1990. Without the road map that this plan is intended to pro- vide, it has been difficult for IRSto articulate to the Congresswhat projects will comprise TSM and how these projects will cometogether to meet IRS’ stated long-range goals for modernization. The Commissioner has recently demonstrated his commitment to effec- tive managementof information technology by creating the position of Chief Information Officer. This presents an opportunity for IRS manage- ment to take a fresh look at the status and future of the modernization program. To his credit, the Commissioneris exercising leadership in Page 1 GAO/IMTECBO-13IRS Modernlzatlon Challenge refining IRS’vision of the modernization. In the process,he is also seek- ing to addressmany of the unanswered questions that have surrounded TSM. To help in these efforts, this report provides our views on TSMand offers a framework for reducing the risks inherent in this critical and costly undertaking. This framework was reinforced at a recent GAO-sponsored symposium involving leaders from private industry, the executive agen- cies, and the Congress.IRSparticipated in the symposium and has enthu- siastically supported the managementframework. In general, this framework emphasizesthe significance of committed leadership, a clearly articulated vision of how technology can be used to enable the agencyto achieve its objectives, a concrete plan for implementing this vision that transcends changesin leadership and management,mile- stonesthat establish accountability while providing a clear means of measuring progress, and the right people to make the vision a reality. IRSgenerally agreed with the accuracy of this report and highlighted its progress in implementing the managementframework that resulted from the symposium. IRSalso noted four challengesto the modernization beyond those discussedin this report. We recognizethese issuesas being endemic to most major government modernization efforts and believe that the managementframework offered in this report can help IRSover- comethese challengesto a successfulmodernization. I TShk An Historical The IRStax processingsystem has remained virtually unchangedsince it was automated in the early 1960s.This system processestax returns Perspective using design conceptsfrom the 19609,such as batch processingand magnetic tape storage on reels. As a result, taxpayers and IRSemployees alike have to deal with a tax processingsystem that relies heavily on paper-driven, labor-intensive processes.Specifically, (1) employeesdo not have direct accessto its master files but must request paper docu- ments, (2) cross-country shipments of magnetic tapes are used to trans- mit information between computers instead of modern tele- communications, and (3) systems are not integrated to share informa- tion Consequently, data input and retrieval often take several weeks, making service to taxpayers slow and unreliable. IRSexpects the volume of tax returns to increasethrough the 1990s from 208 million in 1990 to 230 million by 1996; modernizing its tax processingsystem is critical if IRSis to operate in a world of increasing workloads and limited resources. Page 2 GAO/IMTEGBO-13IRS’ Modernization Challenge .. : B.227333 Recognizingthe limitations of the tax processingsystem, IRSset out in 1968 to redesign the entire system to take advantage of more advanced technology. This redesign effort was abandonedin 1978 becauseIRSwas unable to resolve congressionalconcernsabout the cost of the redesign and the security of taxpayer information. Another modernization pro- gram was initiated in 1982. From 1982 through 1986, IRSpursued three approachesto this modernization, yet none of these progressedbeyond the planning stage.These failures resulted in part from repeated changesin leadership at IRSand Treasury, a lack of clear management responsibility for the program, and the need for enhancedtechnical and managerial expertise within the agency’sexecutive ranks. Late in 1986, IRS began its third major modernization effort. By March 1988, IRS had approved a managementplan that was intended as a basis for modernization. The plan was updated in March 1989. In this update, IRS outlined a modernized environment in which its employeescould accessall neededtaxpayer information directly from computer termi- nals, thereby providing faster, less costly resolution of taxpayer ques- tions and problems. The agency has indicated to the Congressthat the modernization effort, known as TSM, could cost several billion dollars and take another 10 years to complete. IRS’ current modernization approach is surrounded by uncertainty. Mak- TSM Today: High ing the transition from a tax processingenvironment basedon 1950s Expectations and design conceptsto a state-of-the-art processingenvironment is neither Unanswered Questions simple nor rapid. For modernization efforts of this sort to be successful, they must be based upon and directed by a clearly marked road map detailing how the ultimate vision can be achieved.To date, IRS still needs to (1) complete its analysesof how it wants to do businessin the future, (2) resolve system integration issues,and (3) identify a clear and consis- tent set of projects that will comprise TSM. In addition, IRS needsto clearly distinguish between those projects that are primarily intended as near-term improvements to keep the current system operating and those that are designedto meet the modernization’s goals. IRS acknowledges that resolving these issuesis important to provide the Congress,the Ser- vice, and the oversight agenciesthe information they need to effectively guide the modernization effort. TSM Will Not Be Fully The status of TSM is difficult to assessin large part becausethe moderni- Defined Until Late in 1990 zation has not been fully defined. While IRS’ 1989 modernization man- agementplan generally describesthe objectives for modernizing IRS and Page 3 GAO/IMTEC30-13 IRS’ Modernization Challenge B-227633 outlines its planning process,the detailed analysis required to imple- ment the modernization will not be available until completion of the TSM Master Plan, currently scheduledfor September 1990. The Master Plan, as currently conceived,will identify the specific IRS functions to be performed, define the automated systems required to perform these functions, describe how these systems will share data, and outline the specific projects neededto implement the modernization. All of these componentsare necessaryto fully define TSM. IRS is cur- rently assessingwhether the Master Plan can be completed before Sep- tember 1990. TS$l Business Assessment An essential step in completing the Master Plan is assessingthe business Unfinished needsof IRS. In other words, before heavily investing in modernization projects, IRSshould determine precisely how it will provide taxpayer servicesand what organizational structure and systems will be needed to deliver these services. IRS has undertaken a series of businessarea analyses that are intended to examine the businessfunctions, information requirements, and data structures for each IRS businessarea. According to IRS’ Strategic Data Plan, these analyses are necessaryto complete the definition of IRS’ busi- nessrequirements for automated information systemssupport, The busi- nessareas under review include functions such as processingtax returns, reviewing tax returns, and collecting outstanding taxes. The results of these studies, if adopted, could changethe way IRS choosesto conduct businessin the future. The agency, for example, may decide to changeits organization, or realign the responsibilities of its current organizational units. It is important, therefore, that these stud- ies be completed and consideredin planning TSM. The most urgent of these studies are currently scheduledto be conducted while the TSM Master Plan is being developed and may not be completed before the Master Plan is finished in 1990. In commenting on this report, IRS said that the businessarea analyses are not critical to the completion of the Master Plan. According to IRS, its Global Baseline User Requirements analysis, Strategic Data Plan, and systems architecture analysis are an adequate foundation for develop- ing systems specifications for the Master Plan. IRS intends to use the busi- nessarea analyses as a secondstep, to define detailed requirements for Page 4 GAO/IMTJXXO-13 IRS’ Modernization Challenge B227683 software specifications. IRS believes that there is risk involved in delay- ing the Master Plan until the businessarea analyses have been completed. While we agree that the businessarea analyses will be useful in develop- ing systems specifications, we continue to believe that they should also be considered in planning WM. The three studies IRS cites may not be adequate for TSM planning. First, the Global Baseline User Requirements is an inventory of the information needsof parties inside and outside ms-ranging from oversight agenciesto IRS program offices-that will rely on TSM for analysis, information, and processingfunctions. This study doesnot analyze the businessfunctions and data needsof IRS, a necessarystep in designing the modernized architecture. Second,the Strategic Data Plan is a high-level document identifying IRS’ general busi- nessfunctions and information requirements. It lacks the detail needed to provide a clear picture of how IRS carries out its mission. In fact, the plan highlights the necessity of completing the businessarea analyses for this purpose. Third, the systems architecture analysis identifies, describes,and evaluates (1) alternate ways that IRS could operate within ‘EM and (2) the hardware and software architecture neededto support these alternatives. However, it is basedupon IRS’ existing organization and systems, which may not be structured to take full advantage of the potential efficiencies of modern technology. In light of the limitations of these studies, it is important that the busi- nessarea analyses be used in planning TSM. If IRS usesthe businessarea analyses only for defining software specifications, it is foregoing an opportunity to take a fresh look at how it doesbusinessand, according to the Strategic Data Plan, risks developing systems that lock IRS into its current way of doing business.Accordingly, IRS should consider their results as early as possible in TSM planning. System Integration Issues As part of the Master Plan, IRS intends to identify the projects that com- Unresolved prise TSM and describe how the individual projects will be integrated. However, IRS is currently proceeding with several independent projects before demonstrating how they will be connectedinto an integrated sys- tem that will enable IRS employeesto share data electronically. IRS believes that the independent projects now underway will bring suf- ficient benefits to justify developing them before the integration plans Page 6 GAO/IMTEGQO-13lRS’ Modernimtion Challenge B-227682 have been completed. We agreethat many of these projects should pro- vide badly neededimprovements to IRS’ tax processingoperations. How- ever, by developing these projects without a clear plan for their integration, IRS risks having to make potentially difficult and costly sys- terns modifications to allow data to be easily exchanged.IRS is working on plans for connecting and integrating the projects that will comprise TSM and will include these plans in the Master Plan. TSM Projects in Flux BecauseIRS has not finished the road map-the ‘EM Master Plan-the automation projects comprising TSM have been in a state of flux for the last few years. For example, in fiscal year 1990, the modernization pro- gram was composedof 17 projects, as compared to 6 projects in fiscal year 1989. In addition, one of the projects that had been identified as part of TSM in 1989 was dropped in 1990. As we testified in April 1989,’ the renaming, consolidating, splitting, and unclear identification of projects prevented us from tracing projects over previous years. Plans for fiscal year 1991 reflect further project shuffling. Although fis- cal year I991 information was not officially available from IRS, as of December31,1989, agency officials have said that there will be eight projects. Sevenprojects that were classified as TSM in 1990 will be dropped from the 1991 program, and two new projects will be added. One project appearing among the 1991 projects was excluded from the 1990 projects, but it had been included for 1989. Table 1 shows the shifts in the TSM projects that have occurred from fiscal years 1989 through 1991. Descriptions of these projects are contained in appendix I. According to IRS, these shifts reflect the neededrefinements that are occurring in the Service’sdefinition of modernization as planning pro- gresses.The projects identified for fiscal year 1991, according to IRS, focus on such activities as automating paper tax returns and are activi- ties that would need to be done under TSM regardless of the final design. Unfortunately, the lack of a master plan has made it difficult for IRS to provide a clear and consistent explanation of the relationship between these projects and the goals of the modernization. ’ BudgetaryImplicationsof IRS Tax SystemModernizationand AutomatedExaminationSystem Efforts (GAO/T-m-89-4, Apr. 4,1989). . Page 6 GAO/IMTEG90-13 IRS’ Modernization Challenge B-227633 Table 11:Annual Changes in Designation of R%+l Projects Fiscal Year Projecta 1989 1990 1991 I b Auto Pipeline X / Automated Underreporter Project X c Automation of Non-Master File X Check Handling Enhancements and Expert Systems X b Corporate Files On-Line X X Corporate Systems/Mirror Imaging Acquisition X Digital Imaging/Optical Disk Storage System X X b Electronic Federal Tax Deposit System X b Electronic Filing Project X X X Information Systems Development Mission Support X X X Integrated Input Processing System X X Integrated Telecommunications Network X Local Automation Support X Migration to State-of-the-Art Tape Drives X NCC IBM Interactive Programming/ Remote Job Entry X Optical Character Recoanition Replacement Svstem X Service Center Departmental Applications X Service Center Systems Acquisition X X Servicewide Citator System X Svstem lntearation and Lona Term Desian x X X aThis table is based on budget information that was in effect as of Feb 1988 (fiscal year 1989) Feb. 1989 (fiscal year 1990) and Dec. 1989 (fiscal year 1991). We generally used the most recent project titles and did not show changes in project titles or scope from year to year. bThese projects were included in Integrated Input Processing project for fiscal year 1991, ‘Automated Underreporter was included in the Service Center Departmental Applications project for fiscal year 1991. TSI’i4Projects Need As the above discussionof unresolved TSM issuessuggests,IRS is facing a Re-evaluation difficult dilemma. On the one hand, the agency must solve near-term problems such as the need to acquire additional computer capacity to support its current tax processingsystems.On the other hand, IRS needs to create a fully automated, modernized tax processingsystem that can take the agency into the 21st century. The current modernization projects reflect this dilemma. In essence, most of these projects are primarily designedto provide near-term improvements to current operations. For example, one TSM project, the Service Center SystemsAcquisition, is designed,in part, to upgrade the computers in the service centers in order to add computer capacity that Page 7 GAO/IMTEC-90-13IRS’ Modernization Challenge 5227682 IRSconsidersto be an immediate need; however, this project is also being justified on the basis of its potential function as an integral part of the modernization. Projects such as this may well be worth pursuing, but since TSM will not be fully defined until late 1990, planning and justify- ing them on the basis of their projected value to the modernization is difficult and risky. The risks inherent in IRS’ approach to TSM are two-fold. First, IRS risks basing a project’s justification in part on future benefits that may or may not materialize depending on the final modernization design. Sec- ond, if current hardware acquisitions are justified in terms of their pos- sible future role as part of TSM, then IRS risks creating a design to fit the newly-purchased hardware rather than allowing long-range business goals to drive the design. In other words, IRS could be limiting its future options in order to meet near-term needs.The net result of these risks is that IRS may increaseits overall costs by making investments before planning is complete, lock itself into a way of doing businessthat does not fully meet the needsof government and its taxpayers, increasethe time required to complete the modernization due to the need for correc- tive action, and limit competition among vendors to implement the modernization. IRS needsto determine the extent to which each of the projects currently included in ‘EM should be justified as modernization investments and the extent to which each should be justified solely on its own merits as meeting critical near-term needs.IRS officials believe that the projects they are currently pursuing are flexible enough to be adapted to the final design. However, IRS has not described the required flexibility or how the projects will be adapted to TSM. In fact, it is difficult to fully assessthe risks in IRS’ approach until the Master Plan is completed in late 1990. In the interim, becauseCongressionaldecision makers must allocate funds basedon the expected benefits of projects, it is important that they understand the distinction between those projects that are pri- marily designedas near-term improvements and those that are designed to achieve the goals of TSM. The federal government has repeatedly found that major modernization Charting the Course: a efforts such as TSM are extremely difficult and complex undertakings, Framework for and fraught with high risks. Many, including IRS’ past efforts, have Decisionmaking floundered and failed. This costly cycle of failure to meet the needsof our government and our nation’s people must be broken. Page 8 GAO/IMTEGBO-13IRS’ Modernization Challenge B-227692 To explore new ways of meeting the federal government’s technology challenge,we sponsoreda symposium in October 1989 that brought together concernedleaders from industry, the Executive Branch, and the Congress.These discussionsaddressedthe need for reducing the risk of major modernization efforts and confirmed our views in several key areas.IRS participated in the symposium and has been meeting with us to reconsider TSM in light of these perspe@ives. As confirmed by symposium speakersand participants, solutions to modernization problems start at the top. Sincethe position of Chief Information Officer was recently established in October 1989, this is an opportune time for IRS leadership to reevaluate its modernization activi- ties to ensure that each element of the framework is effectively implemented. The key to successfully integrating information technology into any agency is the commitment and vision of its leadership. Agency leaders must clearly define their agencies’fundamental missions, understand the needsof the public they serve, and firmly link their information sys- tems plans to these missions and needs.Instead of simply automating old ways of doing business,agenciesneed to take a fresh look at how technology can best help them accomplish their mission. It is important, therefore, that IRS complete its businessassessments;obtain taxpayers’ views on how IRScan better serve them, and use the results as the basis for modernization planning. As a general rule, modernization invest- ments should be justified only on the basis of how well they contribute toward achieving IRS’ vision of improving taxpayer services and reduc- ing operating costs. In order to translate the results of its businessassessmentsinto a techni- cal “platform” that defines the essential characteristics of the required hardware, software, telecommunications, and information repositories, IRS must forge a partnership between its businessand technical mana- gers. These groups must work together to ensure that the platform incorporates the best businessthinking with the best technical thinking. The resulting platform should be an integral part of the Master Plan, along with specific milestones that establish accountability for implementation. It is also critically important that the Commissionerand his top staff surround themselves with the best talent available from government, industry, and academia,and form alliances with these groups to obtain the best possible advice on major modernization decisions.It is also Page 9 GAO/lMTEC-99.13lRS’ ModerntzatIon Challenge B-227683 important that IRS have the right people with relevant experience and accomplishmentsdirecting the modernization at all organizational levels. The lack of continuity at key leadership and project managementlevels has been a problem in IRS’ past modernization efforts. IRS Commissioners seldom serve for more than 2 to 4 years; even career project managers often do not serve for the duration of a project’s development. In light of the likelihood of such disruptions, IRS needsto focus on creating a detailed long-range strategy that can transcend changesin leadership or management. IRS must involve the Congressas an active partner in the modernization effort. As a step in this direction, IRS must clearly articulate to the Con- gressthe businessgoals to be achieved by TSM and how each project will help achieve those goals. In this respect, IRS must separate the near-term projects neededto continue current operations from those that are more appropriate to the modernization’s goals. This will enable the Congress to better evaluate the progress on the modernization and make informed funding decisions.While near-term projects may be appropriate and even critical to IRS’ current operations, Congressshould understand that they are not part of TSM. Fully automating and modernizing IRS’ tax processingsystem will result in changesin the way IRS doesbusiness-how it is organized, how it usespeople, and how it interacts with taxpayers. It is important, there- fore, that IRS develop a strategy not only for the modernization, but also for the organizational and personnel changesthat modernization will surely bring. It is crucial that the Congressbe involved in deciding how best to effect these changes. TSM may prove to be the largest and most costly civilian modernization effort the government has undertaken. Becausethis challenge is so enor- mous, every avenue should be explored to maximize the prospects of its success.One such avenue is phased development whereby each phase produces incremental results that are tangible and build credibility. The increments should fit together as well conceivedbuilding blocks, each contributing to the ultimate modernization objective of faster taxpayer service at lower costs. The phased approach also reinforces the partner- ship with Congressbecauseit provides intermediate checkpoints for assessingTSM’S progress and benefits. The issuesdiscussedin this report illustrate the magnitude of the chal- lenge faced by IRS. It is essential, therefore, that IRS devote full attention Page 10 GAO/IMTEGBO-1%IRS’ Modernization Challenge to setting a clear coursetoward achieving an automated tax processing system that can serve the nation’s needsinto the next century. IRS generally agreedwith the accuracy of this report, highlighting its A ency Comments and participation in the GAO symposium and stressing its commitment to the 0 f r Evaluation resulting managementframework. IRS believes it is making significant progress in integrating the framework into its managementstrategy for the modernization. IRS underscored,in particular, (1) the commitment of the Commissioner and top managementto the modernization, (2) the recent establishment of a new organizational structure for technology management,(3) the creation of programs to provide training to its executives and to recruit seasonedinformation systems managers,and (4) concerted efforts to involve interested parties outside IRS in moderni- zation decisionmaking and to forge a partnership between its business and technical units. IRS also stated that it believed the three completed planning analyses constituted an adequate foundation for the Master Plan. (This issue is discussedin the section entitled TSM BusinessAssess- ment Unfinished.) We agreethat IRS has demonstrated progress in each of these important areas.However, as IRS acknowledges,the agency will have to show con- tinued progress to ensure a successfulmodernization, In this regard, IRS should emphasizethe issuesdiscussedin this report-completing the businessanalyses,resolving system integration issues,identifying a clear and consistent set of TSM projects based on the Master Plan, and determining the extent to which each of the projects currently included in TSM should be justified as modernization investments and the extent to which each should bejustified solely on its own merits to meet critical near-term needs. IRS also noted fouradditional challengesthat it believes increasethe dif- ficulty of successfully completing TsM: the constraints inherent in federal procurement regulations and the con- tract appeals process; the absenceof multiyear capital budgeting to ensure commitment of resourcesover long timeframes; the need to resolve issuesresulting from the impact of automation on the workforce; and the constraints posed by federal personnel and pay regulations in hiring and retaining technically proficient information systemsprofessionals. Page 11 GAO/IMTEG!IO-13IRS’ Modemization Challenge B.227682 We recognizethat the additional challengesIRS has pointed out must be met in completing TSM;most major government modernizations face them. The managementframework espousedin our recent symposium can be applied by IRS to help meet these challenges,particularly those dealing with mitigating the impact of automation on the workforce and hiring and retaining skilled professionals. Working closely with the Con- gressto addressissuessuch as these should be part of IRS’ strategy for completing a successfulmodernization. We are sending copiesof this report to the Chairmen, House and Senate Committeeson Appropriations; Chairman, House Committee on Govern- ment Operations; Chairman, SenateCommittee on Governmental Affairs; Chairman, SenateSubcommitteeon Private Retirement Plans and Oversight of the Internal RevenueService;the Secretary of the Treasury; and the Commissionerof Internal Revenue. This report was prepared under the direction of Howard G. Rhile, Direc- tor, General Government Information Systems,who can be reached at (202) 276-3466.Other major contributors are listed in appendix II. Sincerely yours, Ralph V. Carlone Assistant Comptroller General Page 12 GAO/IMTJZG9O-13IRS’ Modernization Challenge . Page 13 GAO/IMTEG@O-13IRS’ Modernization Challenge Appendix I TV SystemModernizationProjectsF’iscd Yc?ars19894991 This appendix contains descriptions of IRS information systems projects that have at one time been identified as part of Tax System Moderniza- tion. We used a number of IRS sourcesin compiling the descriptions, life cycle costs, and implementation dates. Life cycle costs refer to the total costs of developing and operating a system over the entire time it will be used. This period can extend from 5 to 10 years beyond the implementa- tion date-the earliest date the system is used to processtaxpayer information. To avoid including the sameinformation twice in this appendix, we have not provided life cycle costs and implementation dates for those projects that were later merged with other projects. Autd Pipeline Automation of the initial processingand transcription of tax returns received in paper form. Merged with the Integrated Input Processing System for fiscal year 1991. Automated Underreporter Automation of the service center research and analysis efforts to Project resolve casesin which a taxpayer’s reported income doesnot match information returns filed with IRS. Merged with the larger Service Center Departmental Applications project for fiscal year 1991. Automation of Non-Master Automates subsidiary tax forms and tax information files. Merged with File the Manual Accounting ReplacementSystem for fiscal year 1991. Life cycle cost: Not currently available. Implementation date: 1990. Cheqk Handling Pilot testing of image technology to combine remittance processingand Enhancements and Expert cash managementfunctions into a single system. Merged with the Inte- grated Input ProcessingSystem for fiscal year 1991. Syst@ms Corporate Files On-Line A multiphased project to create and provide accessto on-line data bases of taxpayer and tax-related information received from individuals and businesses. Y Life cycle cost: $250.9 Million. Implementation date: 1990 (PhaseI). Page 14 GAO/IMTEGSO-13IRS’ Modernization Challenge . Appendix I Tax Syetem Modernization Pro&cte Fiscal Years 19861991 Coiporate Systems/Mirror Replacementof mainframe computers at the Martinsburg Computing Imbging Acquisition Center and Detroit Computing Center and subsequentacquisition of I computers for the Corporate Files On-Line project. Life cycle cost: Not currently available. Implementation date: 1991. ital Imaging/Optical Development of a data basefor the storage and retrieval of tax returns Storage System and tax information documents in image form. Merged with the Inte- grated Input ProcessingSystem project for fiscal year 1991. Electronic Federal Tax Automated processingof federal tax deposits submitted by employers. Deposit System Merged with the Integrated Input ProcessingSystem for fiscal year 1991. Electronic Filing Project Automates the receipt and transcription of individual tax returns filed electronically by tax return preparers. Life cycle cost: $189 Million. Implementation date: 1989. Information Systems Annual staffing costs for the Office of the Assistant Commissionerfor Development Mission Information SystemsDevelopment. Sincethis is a recurring budget item, life cycle costs and completion dates are not applicable. StiPPOrt Iqtegrated Input A series of systems, incorporating image technology, for remittance Ptocessing System processing,and receiving, processing,and storing tax administration data. Life cycle cost: $1.4 Billion. Implementation date: 1993. Page 16 GAO/IMTEG99-13 IRS’ Modernization Challenge Y Appendix I Tax Syetem Moderntzation projects Fiscal Yeara 19881991 Integrated RenamedIntegrated TelecommunicationsServicesfor fiscal year 1991, Tel&communications Provides nationwide intercity and local area communications networks. Network Life cycle cost: $1.8 Billion. Implementation date: 1990. Local Automation Support RenamedField Automation Support for fiscal year 1991. Provides single and multiuser microcomputer and minicomputer systems in regional and district offices, and service centers. Life cycle cost: $418.1 Million. Implementation date: 1990. Migration to State-Of-The- Replacementof tape drives at the Martinsburg Computing Center with Art Tape Drives state-of-the-art tape cartridge systems. Life cycle cost: $29 Million. Imnlementation date: 1990. NCC IBM Interactive RenamedSupport of Master File Processingfor fiscal year 1991. Com- Programming/Remote Job puter system enhancementsat the Martinsburg Computing Center (for- merly the National Computing Center-Ncc) to provide capacity for all EnyrY aspectsof processingtaxpayer account files. Life cycle cost: $40 Million. Implementation date: 1992. Opt$cal Character Replacementof the equipment used to optically processpaper tax docu- Redognition Replacement ments filed at IRS service centers. Sy&em Life cycle cost: $88.1 Million. Implementation date: 1991 (PhaseI). Page 16 GAO/IM’lXG90-13 IRS’ Modernization Challenge Appendix I Tax System Modernization Projects JSacal Years 19861991 -_---- ~~ Se&ice Center A seriesof software development and conversion projects for tax Deeartmental Applications administration functions performed in IRS service centers. These include the Automated Underreporter Project, Automated Inventory Control System, and Accounts MaintenanceAutomation. Life cycle cost: $271.8 Million. Implementation date: 1990 (First project). Se&ice Center Systems Multiphased computer and local area network acquisition project to sup- Ac@isition port service center automation. Life cycle cost: $2.2 Billion. Implementation date: 1991 (PhaseI). SeFvicewide Citator Provide on-line tax, legal, and procedural reference data base for access System by all tax administration employees.Removedfrom the active project list effective fiscal year 1991. System Integration and Contractual assistancein managing the overall design and development Long Term Design of the Modernization effort. Life cycle cost: $485.1 Million. Implementation date: 1997. Page 17 GAO/IMTEGB@13 II@’ Modernization Challenge Appendix II Major Contributors to This Report Timothy P. Bowling, Senior Assistant Director Information Hazel E. Edwards, Assistant Director Mhagement and William D. Hadesty, Technical Adviser Technology Division, Charles D. Hughes,Evaluator-in-Charge Tamara J. Ealey, Evaluator W@hington, DC. Norman F. Heyl, Evaluator Daniel T. Mullaney, Evaluator . . bdbn Regional office Pamela Lynn Mllhgan, Evaluator (aloase) Page 18 GAO/IMTEGBO-13 IRS’ Modernization Challenge ‘ft~ltq,htmt~ 20%275m41 ‘I’htw~ is ;I 25% discount. on orders for 100 or more copit~s mailed Lo a sirrgltb ~~ddrt~ss.
Tax System Modernization: IRS' Challenge for the 21st Century
Published by the Government Accountability Office on 1990-02-08.
Below is a raw (and likely hideous) rendition of the original report. (PDF)