IRS Management: Improvement Needed in High-Risk Areas

Published by the Government Accountability Office on 1997-04-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         United States General Accounting Office

GAO                      Testimony
                         Before the Subcommittee on Government Management,
                         Information and Technology, Committee on Government
                         Reform and Oversight, House of Representatives

For Release
on Delivery
Expected at
                         IRS MANAGEMENT
10:00a.m. EDT
Monday, April 14, 1997

                         Improvement Needed in
                         High-Risk Areas
                         Statement of Lynda D. Willis, Director, Tax Policy and
                         Administration Issues, General Government Division


IRS Management: Improvement Needed in
High-Risk Areas

                       Mr. Chairman and Members of the Subcommittee:

                       We are pleased to be here today to assist the Subcommittee in its review of
                       the Internal Revenue Service’s (IRS) efforts to improve the management
                       and operation of its high-risk areas. A key factor in understanding IRS’
                       ongoing difficulties in the high-risk areas is the realization that its major
                       processes and systems were developed and implemented decades ago and
                       were not designed to address the critical needs and vulnerabilities that
                       confront IRS in the 1990s. In addition, the problems IRS faces in
                       attempting to eliminate its high-risk vulnerabilities are compounded by the
                       interdependency of the high-risk areas. For example, IRS’ success in
                       addressing the weaknesses in its program areas is clearly linked to its
                       success in modernizing its business processes and information systems.
                       However, without a comprehensive strategy or detailed business plan to
                       guide its modernization efforts, IRS cannot hope to successfully modernize
                       its outdated processes and systems or to, ultimately, resolve the problems
                       in its high-risk areas.

                       In February 1997, we issued our third series of reports on the status of
Overview               high-risk areas across the government.1 One report in the series discussed
                       the four long-standing high-risk areas at IRS: tax systems modernization,
                       financial management, accounts receivable, and filing fraud.2 Another
                       report in the series designated five new high-risk areas, two of which have
                       governmentwide implications and directly affect IRS’ operations:
                       information security and the computer-related year 2000 problem.3

                       Today, we will briefly discuss the problems IRS faces in these six high-risk
                       areas, the progress IRS has made recently in addressing these problems,
                       and the measures IRS must take to resolve the problems in its high-risk
                       areas. This testimony is based on our prior reports, which are listed in
                       Appendix I, and recent information obtained from IRS.

                       For years we have chronicled IRS’ struggle to modernize and manage its
IRS’ High-Risk Areas   operations, especially in the high-risk areas, and have made scores of
                       recommendations to improve IRS’ systems, processes, and procedures. It
                       is clear that in order to achieve its business vision of reducing the volume

                        IRS Management (GAO/HR-97-8, Feb. 1997).
                        Information Management and Technology (GAO/HR-97-9, Feb. 1997).

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                IRS Management: Improvement Needed in
                High-Risk Areas

                of paper tax returns, providing better customer service, and improving
                compliance with the nation’s tax laws, IRS must successfully modernize its
                systems and operations. To accomplish this modernization, however, IRS
                needs to develop comprehensive business strategies to ensure that its new
                and revised processes drive systems development and acquisition. Solving
                the problems in the high-risk areas is not an insurmountable task, but it
                requires sustained management commitment, accurate information
                systems, and reliable performance measures to track IRS’ progress and
                provide the data necessary to make informed management decisions.

Tax Systems     Over the last decade, IRS has been attempting to overhaul its timeworn,
Modernization   paper-intensive approach to tax return processing. At stake is the over
                $3 billion that IRS has spent or obligated on this modernization since 1986,
                as well as any additional funds that IRS plans to spend on the

                In July 1995, we reported that IRS (1) did not have a comprehensive
                business strategy to cost effectively reduce paper tax return filings; (2) had
                not yet fully developed and put in place the requisite management,
                software development, and technical infrastructure necessary to
                successfully implement its ambitious, world-class modernization; and
                (3) lacked an overall systems architecture, or blueprint, to guide the
                modernization’s development and evolution.4 At that time, we made over a
                dozen recommendations to the IRS Commissioner to address these

                Pursuant to subsequent congressional direction, we assessed IRS’ actions
                to correct its management and technical weaknesses. We reported in June
                and September 1996 that IRS had initiated many activities to improve its
                modernization efforts but had not yet fully implemented any of our
                recommendations.5 We also suggested to Congress that it consider limiting
                modernization funding exclusively to cost-effective efforts that (1) support
                ongoing operations and maintenance; (2) correct IRS’ pervasive
                management and technical weaknesses; (3) are small, represent low
                technical risk, and can be delivered quickly; and (4) involve deploying
                already developed and fully tested systems that have proven business

                Tax Systems Modernization: Management and Technical Weaknesses Must Be Corrected If
                Modernization Is to Succeed (GAO/AIMD-95-156, July 26, 1995).
                 Tax Systems Modernization: Actions Underway But IRS Has Not Yet Corrected Management and
                Technical Weaknesses (GAO/AIMD-96-106, June 7, 1996); and Tax Systems Modernization: Actions
                Underway But Management and Technical Weaknesses Not Yet Corrected (GAO/T-AIMD-95-165, Sept.
                10, 1996).

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IRS Management: Improvement Needed in
High-Risk Areas

value and are not premature given the lack of a completed systems

IRS has taken steps to address our recommendations and respond to
congressional direction. For example, IRS hired a new Chief Information
Officer. It also created an investment review board to select, control, and
evaluate its information technology investments. Thus far, the board has
reevaluated and terminated several major modernization development
projects that were not found to be cost-effective. In addition, IRS has
developed a plan for shifting modernization development and deployment
to outside contractors. IRS reports that the percentage of contractor
employees, as opposed to IRS employees, working on tax systems
modernization has increased from 40 to 64 percent over the last 2 years.

IRS is also finalizing a comprehensive strategy to maximize electronic
filing. It is also updating its system development life-cycle methodology
and is working across various IRS organizations to define disciplined
processes for software requirements management, quality assurance,
configuration management, and project planning and tracking.
Additionally, IRS is developing a systems architecture and project
sequencing plan for the modernization and intends to provide this to
Congress by May 15, 1997.

Although we recognize IRS’ actions, we remain concerned because much
remains to be done to fully implement essential improvements. Increasing
the use of contractors, for example, will not automatically increase the
likelihood of successful modernization because IRS does not have the
technical capability needed to manage all of its current contractors. To
successfully implement the essential improvements, IRS must also
continue to make a concerted, sustained effort to fully implement our
recommendations and respond effectively to the requirements outlined by
Congress. It will take both management commitment and technical
discipline for IRS to accomplish these tasks.

Furthermore, despite persisting weaknesses in both software development
and acquisition capabilities, IRS continues to request hundreds of millions
of dollars for systems modernization efforts. Specifically, in its fiscal year
1998 budget request, IRS is seeking $131 million for system development
initiatives. However, the request does not include a credible, verifiable
justification and states that IRS does not know how it plans to spend these
funds because its modernization architecture and deployment plan have
not yet been completed. In addition, the Administration is proposing to

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                       IRS Management: Improvement Needed in
                       High-Risk Areas

                       establish an Information Technology Investments Account to fund future
                       modernization investments at IRS. It is seeking $500 million in each of the
                       next two fiscal years ($1 billion in total) for “yet-to-be-specified”
                       modernization efforts. This request is also not based on analytical data or
                       derived using formal cost estimating techniques. Accordingly, Congress
                       should consider not funding either the $131 million request for system
                       development or the $1 billion capital account until the management and
                       technical weaknesses in IRS’ modernization program are resolved and
                       justifications completed.

Financial Management   Our audits of IRS’ financial statements have outlined the substantial
                       improvements needed in IRS’ accounting and reporting in order for IRS to
                       comply fully with the requirements of the Chief Financial Officers Act of
                       1990 (CFO Act). The audits for fiscal years 1992 through 1995 have
                       described IRS’ difficulties in (1) properly accounting for its tax revenues,
                       in total and by reported type of tax; (2) reliably determining the amount of
                       accounts receivable owed for unpaid taxes; (3) regularly reconciling its
                       Fund Balance With Treasury accounts; and (4) either routinely providing
                       support for receipt of the goods and services it purchases or, where
                       supported, accurately recording the purchased item in the proper period.

                       IRS has made progress in addressing problems in these areas and has
                       developed an action plan, with specific timetables and deliverables, to
                       address the issues our financial statement audits have identified. In the
                       administrative accounting area, for example, IRS reported that it has
                       identified substantially all of the reconciling items for its Fund Balance
                       With Treasury accounts, except for certain amounts IRS has deemed not
                       to be cost-beneficial to research further. It also has successfully
                       transferred its payroll processing to the Department of Agriculture’s
                       National Finance Center and has begun designing both a short-term and a
                       long-term strategy to fix the problems that contribute to its nonpayroll
                       expenses being unsupported or reported in the wrong period.

                       In the revenue accounting area, IRS’ problems are especially affected and
                       complicated by automated data processing systems that were
                       implemented many years ago and thus not designed to support the new
                       financial reporting requirements imposed by the CFO Act. Therefore, IRS
                       has designed an interim solution to capture the detailed support for
                       revenue and accounts receivable until longer term solutions can be
                       identified and implemented. Some of the longer term actions include
                       (1) implementing software, hardware, and procedural changes needed to

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                      IRS Management: Improvement Needed in
                      High-Risk Areas

                      create reliable subsidiary accounts receivable and revenue records that
                      are fully integrated with the general ledger; and (2) implementing software
                      changes that allow the detailed taxes reported to be maintained separately
                      from the results of compliance efforts that would not be valid financial
                      reporting transactions in the masterfile, other related revenue accounting
                      feeder systems, and the general ledger.

                      Over the past 4 years, we have made numerous recommendations to
                      improve IRS’ financial management systems and reporting, and IRS has
                      been working to position itself to have more reliable financial statements
                      for fiscal year 1997 and thereafter. To accomplish this, especially in
                      accounting for revenue and the related accounts receivables, IRS will need
                      to institute long-term solutions involving reprogramming software for IRS’
                      antiquated systems and developing new systems as required.

                      Follow-through to complete necessary corrective measures is essential if
                      IRS is to ensure that its corrective actions are carried out and effectively
                      solve its financial management problems. Solving these problems is
                      fundamental to providing reliable financial information and ensuring
                      taxpayers that the government can properly account for their federal tax
                      dollars. The accuracy of IRS’ financial statements is vital to both IRS and
                      Congress for (1) ensuring adequate accountability for IRS programs;
                      (2) assessing the impact of tax policies; and (3) measuring IRS’
                      performance and cost effectiveness in carrying out its numerous tax
                      enforcement, customer service, and collection activities.

Accounts Receivable   IRS routinely collects over a trillion dollars annually in taxes, but many
                      taxpayers are unable or unwilling to pay their taxes when due. As a result,
                      IRS estimates that its accounts receivable amounts to tens of billions of
                      dollars. Unfortunately, IRS’ ability to effectively address its accounts
                      receivable problems is seriously hampered by its outdated equipment and
                      processes, a lack of the complete information needed to better target
                      collection efforts, and the absence of a comprehensive strategy and
                      detailed plan to address the systemic nature of the underlying problems.

                      IRS’ collection efforts have also been hampered by the age of the
                      delinquent tax accounts. Because of the outdated equipment and
                      processes used to match tax returns and related information documents, it
                      can take IRS several years to identify potential delinquencies and then
                      initiate collection actions. In addition, according to IRS, the 10 year
                      statutory collection period generally precludes it from writing off

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               IRS Management: Improvement Needed in
               High-Risk Areas

               uncollectible receivables until that period has expired. As a result, the
               receivables inventory includes many relatively old accounts that will never
               be collected because the taxpayers are deceased or the companies

               This is not to say, however, that IRS has not been trying to overcome its
               deficiencies. In the last 2 years, IRS has undertaken initiatives to correct
               errors in its masterfile records of tax receivables, develop profiles of
               delinquent taxpayers, and study the effectiveness of various collection
               techniques. It has also streamlined its collection process, placed additional
               emphasis on contacting repeat delinquents, made its collection notices
               more readable, and targeted compliance-generated delinquencies for
               earlier intervention.

               IRS reported that as a result of taking these actions, its collection
               employees took in more money in 1996 than they classified as “currently
               not collectible” and that the amount of money collected immediately
               following the revision of its collection notices increased by almost 25
               percent over a comparable period in 1995. In addition, IRS reported
               collecting more in delinquent taxes in fiscal year 1996 than it ever has,
               almost $30 billion.

               Despite these positive results, IRS needs to continue the development of
               information databases and performance measures to afford its managers
               the data needed to determine which actions or improvements generate the
               desired changes in IRS’ programs and operations. And, this should not be
               looked upon as a short-term commitment. It will still take IRS a number of
               years to identify the root causes of delinquencies and to develop, test, and
               implement courses of action to deal with the causes. Furthermore, once
               the analyses and planning are completed, it will still be some time before
               full results of the new initiatives are realized.

               Therefore, IRS must take deliberate action to ensure that its
               problem-solving efforts are on the right track. Specifically, it needs to
               implement a comprehensive strategy that involves all aspects of IRS’
               operations and that sets priorities; accelerates the modernization of
               outdated equipment and processes; and establishes realistic goals, specific
               timetables, and a system to measure progress.

Filing Fraud   When we first identified filing fraud as a high-risk area in February 1995,
               the amount of filing fraud being detected by IRS was on an upward spiral.

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IRS Management: Improvement Needed in
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Since then, IRS has introduced new controls and expanded existing
controls in an attempt to reduce its exposure to filing fraud. Those
controls are directed toward either (1) preventing the filing of fraudulent
returns or (2) identifying questionable returns after they have been filed.

To deter the filing of fraudulent returns, IRS (1) expanded the number of
up-front filters in the electronic filing system designed to screen electronic
submissions for selected problems in order to prevent returns with those
problems from being filed electronically and (2) strengthened the process
for checking the suitability of persons applying to participate in the
electronic filing program as return preparers or transmitters by requiring
fingerprint and credit checks.

To better identify fraudulent returns once they have been filed, IRS placed
an increased emphasis in 1995 on validating Social Security Numbers
(SSN) on filed paper returns and delayed any related refunds to allow staff
time to do those validations and to check for possible fraud. IRS also
revised the computerized formulas it used to score all tax returns on their
fraud potential and upgraded the research capabilities of its fraud
detection staff.

IRS’ efforts produced some positive results. For example, the number of
SSN problems identified by the electronic filing filters quadrupled between
1994 and 1995, and about 350 persons who applied to participate in the
electronic filing program for 1995 were rejected because they failed the
new fingerprint and credit checks. IRS’ efforts to validate SSNs on paper
returns produced over $800 million in reduced refunds or additional taxes.
Unfortunately, IRS identified many more SSN problems than it was able to
deal with and released about 2 million refunds without resolving the

IRS identified over 65 percent fewer fraudulent returns in 1996 than during
a comparable period in 1995. IRS believes this decrease is attributable to a
31-percent reduction in its fraud detection staff and the resulting
underutilization of its Electronic Fraud Detection System, which enhances
the identification of fraudulent returns and lessens the probability of
improperly deleting accurate refunds. However, IRS does not have the
information it needs to (1) verify that the decline was the result of staff
reductions or (2) determine the extent to which the downward trend may
have been affected by changes in the program’s operating and reporting
procedures or by a general decline in the incidence of fraud.

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                       IRS Management: Improvement Needed in
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                       Given the decrease in fraud detection staff, it is critically important for IRS
                       to (1) optimize the electronic controls that are intended to prevent the
                       filing of fraudulent returns and (2) maximize the effectiveness of available
                       staff. Modernization is the key to achieving these objectives, and
                       electronic filing is the cornerstone of that modernization. Officials at the
                       Department of the Treasury estimate that 19.2 million Americans will file
                       their returns electronically in 1997, a 63-percent increase over the number
                       who filed electronically in 1995. But even at this rate of increase, IRS will
                       fall far short of its goal to have 80 million electronically filed returns in
                       2001. To achieve its goal, IRS must first identify those groups of taxpayers
                       who offer the greatest opportunity to reduce IRS’ paper-processing
                       workload and operating costs if they were to file electronically. IRS must
                       then develop strategies that focus its resources on eliminating or lessening
                       impediments that inhibit those groups from participating in the program.

Information Security   Malicious attacks on computer systems are an increasing threat to our
                       national welfare. The federal government now relies heavily on
                       interconnected systems to control critical functions that, if compromised,
                       place billions of dollars worth of assets at risk of loss and vast amounts of
                       sensitive data at risk of unauthorized disclosure. Increasing reliance on
                       networked systems and electronic records has elevated our concerns
                       about the possibility of serious disruption to critical federal operations.

                       As a result of our recent work at IRS, we believe that the vulnerabilities of
                       IRS’ computer systems may affect the confidentiality and accuracy of
                       taxpayer data and may allow unauthorized access, modification, or
                       destruction of taxpayer information by IRS employees.6 The overriding
                       problem at IRS is that information security issues are addressed on a
                       reactive basis. IRS does not have a proactive, independent information
                       security group that systematically reviews the adequacy and consistency
                       of security over IRS’ computer operations. In addition, computer security
                       management has not completed a formal risk assessment of its systems to
                       determine system sensitivity and vulnerability. As a result, IRS cannot
                       effectively prevent or detect unauthorized browsing of taxpayer
                       information by its employees and cannot ensure that taxpayer data is not
                       being improperly manipulated for personal gain.

                       IRS needs to address its information security weaknesses on a continuing
                       basis. More specifically, IRS needs to impress upon its senior managers

                        IRS Systems Security: Tax Processing Operations and Data Still at Risk Due to Serious Weaknesses,
                       (GAO/T-AIMD-97-76, Apr. 10, 1997); and IRS Systems Security: Tax Processing Operations and Data
                       Still at Risk Due to Serious Weaknesses, (GAO/AIMD-97-49, Apr. 8, 1997).

                       Page 8                                                                          GAO/T-GGD-97-79
                        IRS Management: Improvement Needed in
                        High-Risk Areas

                        the need to conduct regular systematic security reviews and risk
                        assessments of IRS’ computer systems and operations. The weaknesses
                        identified by these reviews and assessments then need to be corrected
                        expeditiously by personnel who have the technical expertise to effectively
                        implement, manage, and monitor the necessary security controls and

The Year 2000 Problem   For the past several decades, computer systems have used two digits to
                        represent the year, such as “97” for 1997, in order to conserve electronic
                        data storage and reduce operating costs. In this format, however, the year
                        2000 is indistinguishable from the year 1900 because both are represented
                        as “00.” As a result, if not modified, computer systems and applications
                        that use dates or perform date- or time-sensitive calculations may generate
                        incorrect results beyond 1999.

                        For IRS, such a disruption of functions and services could jeopardize all of
                        its tax processing systems and administration and could result in millions
                        of erroneous tax notices, refunds, and bills. It could effectively halt the
                        processing of tax return and return-related information, the maintenance
                        of taxpayer account information, the assessment and collection of taxes,
                        the recording of obligations and expenditures, and the disbursement of
                        refunds. At the very least, IRS’ core business functions and mission-critical
                        processes are at risk of failure, as are numerous other administrative and
                        management processes.

                        To avoid the crippling effects of a multitude of computer systems
                        simultaneously producing inaccurate and unreliable information, IRS’
                        Chief Information Officer has established a year 2000 project office with
                        responsibility for assessing, converting, and testing IRS’ computer
                        systems. The project office is analyzing the potential impact of such a
                        systems failure and is developing appropriate renovation strategies and
                        contingency plans for its critical systems. However, at this point most of
                        the project office’s efforts are being directed at IRS’ large, mainframe
                        computer systems while greater numbers of personal and portable
                        computers are being largely ignored. Modifying IRS’ critical computer
                        systems, converting and testing software applications, and acquiring
                        additional hardware for expected capacity increases are massive
                        undertakings whose success or failure will, in large part, be determined by
                        the quality of IRS’ executive leadership and program management.

                        Page 9                                                        GAO/T-GGD-97-79
                  IRS Management: Improvement Needed in
                  High-Risk Areas

                  IRS cannot hope to resolve the problems in its high-risk areas without a
A Comprehensive   detailed business plan and a comprehensive implementation strategy. For
Implementation    example, a principal goal of IRS’ business vision is to reduce the number
Strategy          of paper tax returns it must process by significantly increasing, by 2001,
                  the number of electronically filed tax returns. Our analysis of recent filing
                  trends indicates that IRS will fall far short of its goal because its electronic
                  filing strategy has targeted a limited portion of the taxpaying
                  population—those who use a third party to prepare and/or transmit simple
                  returns, are willing to pay a fee to file their returns electronically, and are
                  expecting refunds. Taxpayers who prepare their own tax returns using
                  personal computers, have more complicated returns, and/or owe tax
                  balances have been largely overlooked. IRS needs to better target its
                  efforts on reducing the cost to taxpayers of filing electronically and on
                  eliminating the impediments that discourage electronic filing by those
                  taxpayers who offer the greatest opportunity to reduce IRS’ paper
                  processing workload and processing costs.

                  In addition, IRS’ efforts to improve customer service and increase
                  taxpayer compliance depend in large measure on increasing the use of its
                  information systems. Not only do customer representatives need easy
                  access to the information necessary to answer taxpayers’ questions, but
                  enforcement staff also need timely access to reliable information to do
                  their jobs. However, IRS has not identified all the data elements that
                  customer service and enforcement staff need, nor has it fully defined the
                  business requirements for the systems that will provide this timely access
                  to greater amounts of on-line taxpayer data. It also does not have a
                  cost-effective strategy for accessing the needed data.

                  For years, IRS has struggled to collect the nation’s tax revenue using
Summary Outlook   outdated processes and technology. The result has often been inefficient
                  and ineffective programs and operations that are vulnerable to waste,
                  fraud, abuse, and mismanagement. Of particular concern to us have been
                  IRS’ efforts to modernize its tax systems, manage its administrative and
                  revenue accounting systems, identify and collect taxes owed the
                  government, detect and prevent the filing of fraudulent tax returns, protect
                  the confidentiality of taxpayer information, and prevent the future
                  disruption of tax services due to the year 2000 computer problem.

                  In recent years, Congress has put into place a statutory framework that
                  can assist IRS in resolving the operational and technological problems it
                  faces. This framework includes the Chief Financial Officers Act of 1990,

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IRS Management: Improvement Needed in
High-Risk Areas

the Government Performance and Results Act of 1993 (GPRA), and the
Clinger-Cohen Act of 1996. These acts require congressional and executive
branch decisionmakers to (1) clearly articulate their agencies’ missions
and the results-oriented performance goals that measure their success in
carrying their missions; (2) establish a detailed business plan or
comprehensive implementation strategy to meet their performance goals;
and (3) develop and use accurate, reliable, and timely program
performance and cost data to evaluate their progress in achieving their
performance goals.

In addition, GPRA requires each agency to consult with Congress and to
consider Congress’ views and the views of other stakeholders when
developing its strategic plan. For IRS, these consultations provide an
important opportunity for Congress, IRS, and the Department of the
Treasury to work together to ensure that IRS’ mission is focused, its goals
are specific and results oriented, and its implementation strategies and
funding expectations are appropriate and reasonable.

In order to resolve the problems in its high-risk areas, IRS needs, at a
minimum, an implementation strategy that includes both performing
cost-benefit analyses and developing reasonable estimates of the extent,
time frames, and resources required to correct its high-risk vulnerabilities.
IRS also needs to develop performance measures that will allow its
managers, Congress, and us to track its progress. And, above all, IRS
management needs to sustain an agencywide commitment to solving the
agency’s high-risk problems.

Mr. Chairman, this concludes my prepared statement. We will be glad to
answer any questions that you or the Members of the Subcommittee may

Page 11                                                       GAO/T-GGD-97-79
Appendix I

Related GAO Products

Tax Systems            Tax Systems Modernization: Actions Underway But Management and
Modernization          Technical Weaknesses Not Yet Corrected (GAO/T-AIMD-96-165, Sept. 10, 1996).

                       IRS Operations: Critical Need to Continue Improving Core Business
                       Practices (GAO/T-AIMD-96-188, Sept. 10, 1996).

                       Internal Revenue Service: Business Operations Need Continued
                       Improvement (GAO/AIMD/GGD-96-152, Sept. 9, 1996).

                       Tax Systems Modernization: Cyberfile Project Was Poorly Planned and
                       Managed (GAO/AIMD-96-140, Aug. 29, 1996).

                       Tax Systems Modernization: Actions Underway But IRS Has Not Yet
                       Corrected Management and Technical Weaknesses (GAO/AIMD-96-106, June 7,

                       Security Weaknesses at IRS’ Cyberfile Data Center (GAO/AIMD-96-85R, May 9,

                       Tax Systems Modernization: Management and Technical Weaknesses Must
                       Be Overcome to Achieve Success (GAO/T-AIMD-96-75, Mar. 26, 1996).

                       Tax Systems Modernization: Management and Technical Weaknesses Must
                       Be Corrected If Modernization Is to Succeed (GAO/AIMD-95-156, July 26, 1995).

Financial Management   Financial Management: Challenges Facing the IRS (GAO/T-AIMD-97-34, Jan. 9,

                       IRS Financial Audits: Status of Efforts to Resolve Financial Management
                       Weaknesses (GAO/T-AIMD-96-170, Sept. 19, 1996).

                       Financial Audit: Examination of IRS’ Fiscal Year 1995 Financial
                       Statements (GAO/AIMD-96-101, July 11, 1996).

                       Financial Audit: Actions Needed to Improve IRS Financial Management
                       (GAO/T-AIMD-96-96, June 6, 1996).

                       IRS Operations: Significant Challenges in Financial Management and
                       Systems Modernization (GAO/T-AIMD-96-56, Mar. 6, 1996).

                       Page 12                                                      GAO/T-GGD-97-79
                      Appendix I
                      Related GAO Products

                      Financial Audit: Examination of IRS’ Fiscal Year 1994 Financial
                      Statements (GAO/AIMD-95-141, Aug. 4, 1995).

                      Financial Audit: Examination of IRS’ Fiscal Year 1993 Financial
                      Statements (GAO/AIMD-94-120, June 15, 1994).

                      Financial Audit: Examination of IRS’ Fiscal Year 1992 Financial
                      Statements (GAO/AIMD-93-2, June 30, 1993).

Accounts Receivable   IRS Tax Collection Reengineering (GAO/GGD-96-161R, Sept. 24, 1996).

                      Tax Administration: Tax Compliance of Nonwage Earners (GAO/GGD-96-165,
                      Aug. 28, 1996).

                      Managing IRS: IRS Needs to Continue Improving Operations and Service
                      (GAO/T-GGD/AIMD-96-170, July 29, 1996).

                      Financial Audit: Examination of IRS’ Fiscal Year 1995 Financial
                      Statements (GAO/AIMD-96-101, July 11, 1996).

                      Tax Research: IRS Has Made Progress But Major Challenges Remain
                      (GAO/GGD-96-109, June 5, 1996).

                      Tax Administration: IRS Tax Debt Collection Practices (GAO/T-GGD-96-112,
                      Apr. 25, 1996).

                      Tax Administration: IRS’ Fiscal Year 1996 and 1997 Budget Issues and the
                      1996 Filing Season (GAO/T-GGD-96-99, Mar. 28, 1996).

                      Status of Tax Systems Modernization, Tax Delinquencies, and the
                      Potential for Return-Free Filing (GAO/T-GGD/AIMD-96-88, Mar. 14, 1996).

                      Financial Audit: Examination of IRS’ Fiscal Year 1994 Financial
                      Statements (GAO/AIMD-95-141, Aug. 4, 1995).

                      Taxpayer Compliance: Reducing the Income Tax Gap (GAO/T-GGD-95-176,
                      June 6, 1995).

                      Reducing the Tax Gap: Results of a GAO-Sponsored Symposium
                      (GAO/GGD-95-157, June 2, 1995).

                      Page 13                                                        GAO/T-GGD-97-79
                       Appendix I
                       Related GAO Products

                       Tax Administration: Administrative Improvements Possible in IRS’
                       Installment Agreement Program (GAO/GGD-95-137, May 2, 1995).

                       High-Risk Series: Internal Revenue Service Receivables (GAO/HR-95-6,
                       Feb. 1995).

                       Tax Administration: Tax Compliance Initiatives and Delinquent Taxes
                       (GAO/T-GGD-95-74, Feb. 1, 1995).

                       Tax Administration: Changes Needed to Reduce Volume and Improve
                       Processing of Undeliverable Mail (GAO/GGD-95-44, Dec. 7, 1994).

                       Financial Audit: Examination of IRS’ Fiscal Year 1993 Financial
                       Statements (GAO/AIMD-94-120, June 15, 1994).

Filing Fraud           Earned Income Credit: IRS’ 1995 Controls Stopped Some Noncompliance,
                       But Not Without Problems (GAO/GGD-96-172, Sept. 18, 1996).

                       IRS Efforts to Control Fraud (GAO/GGD-96-96R, Mar. 25, 1996).

                       The 1995 Tax Filing Season: IRS Performance Indicators Provide
                       Incomplete Information About Some Problems (GAO/GGD-96-48, Dec. 29,

                       Tax Administration: Electronic Filing Falling Short of Expectations
                       (GAO/GGD-96-12, Oct. 31, 1995).

                       Tax Administration: Continuing Problems Affect Otherwise Successful
                       1994 Filing Season (GAO/GGD-95-5, Oct. 7, 1994).

                       Tax Administration: Electronic Filing Fraud (GAO/T-GGD-94-89, Feb. 10, 1994).

                       Tax Administration: Increased Fraud and Poor Taxpayer Access to IRS
                       Cloud 1993 Filing Season (GAO/GGD-94-65, Dec. 22, 1993).

                       Tax Administration: IRS Can Improve Controls Over Electronic Filing
                       Fraud (GAO/GGD-93-27, Dec. 30, 1992).

Information Security   Financial Audit: Examination of IRS’ Fiscal Year 1995 Financial
                       Statements (GAO/AIMD-96-101, July 11, 1996).

                       Page 14                                                         GAO/T-GGD-97-79
           Appendix I
           Related GAO Products

           Security Weaknesses at IRS’ Cyberfile Data Center (GAO/AIMD-96-85R, May 9,

           IRS Information Systems: Weaknesses Increase Risk of Fraud and Impair
           Reliability of Management Information (GAO/AIMD-93-34, Sept. 22, 1993).

(268795)   Page 15                                                     GAO/T-GGD-97-79
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