Information Technology:

IRS Needs to Take Additional Actions to Address Significant Risks to Tax Processing

GAO-18-298: Published: Jun 28, 2018. Publicly Released: Jun 28, 2018.

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What GAO Found

The performance of the Internal Revenue Service's (IRS) selected information technology (IT) investments that GAO reviewed varied. Specifically, the four selected investments in the development phase that GAO reviewed spent less than planned, but most were behind schedule and delivered less scope than planned (see table below). In addition, the five selected investments in the operations and maintenance phase that GAO reviewed had performed internal qualitative assessments of performance as required by the Office of Management and Budget (OMB); however, none of the analyses addressed all key factors specified in OMB guidance.

Reported Performance of Selected Internal Revenue Service (IRS) Investments in Development during Fiscal Year 2016 and the First Two Quarters of Fiscal Year 2017

Investment name

Total budgeted cost of work performed (in millions)

Total actual cost of work performed (in millions)

Cost variance

Schedule variance

Percentage of planned scope delivered

Enterprise Case Management

$31.8

$30.3

Under budget  

4.7%

Late

-8.7%

91.3%

Customer Account Data Engine 2

$35.0a

$31.0

Under budget

11.5%

Late

-54.0%

46.0%

Return Review Program

$78.8

$49.3

Under budget

37.5%

Late -18.8%

81.2%

Affordable Care Act Administration

$199.0

$157.4

Under budget

20.9%

On time

n.d.

Source: GAO analysis of IRS data. | GAO-18-298

Notes: n.d. –no data tracked by the agency.

aAccording to IRS, this represents the amount that was planned for development activities. Additional funding was expended for planning and design activities.

Three investments GAO reviewed in the operations and maintenance phase that are legacy investments—Individual Master File (IMF), Integrated Data Retrieval System (IDRS), and Mainframes and Servers Services and Support (MSSS)— are facing significant risks due to their reliance on legacy programming languages, outdated hardware, and a shortage of human resources with critical skills. For example, IRS reported that it used assembly language code and Common Business Oriented Language (both developed in the 1950s) for IMF and IDRS, which exposes these investments to a rise in procurement and operating costs, and a decrease in staff available with the proper skill sets. Further, MSSS relies on a significant amount of outdated hardware exposing the investment to rising warranty and maintenance fees, as well as equipment failures. Despite these risks, the agency has not fully implemented key risk management practices and may be challenged in mitigating risks effectively so that they do not impact the agency's ability to carry out its mission.

IRS has not yet fully implemented any of the key IT workforce planning practices GAO has previously identified. Specifically, the agency has developed a tool to automate the IT workforce planning process, but the tool is in the initial stages of implementation. IRS officials attributed the limited progress in implementing IT workforce planning practices to resource constraints and competing priorities. Nevertheless, until the agency fully implements these practices, it will continue to face challenges in assessing and addressing the gaps in knowledge and skills that are critical to the success of its key IT investments.

Why GAO Did This Study

IRS relies extensively on IT investments to annually collect more than $3 trillion in taxes, distribute more than $400 billion in refunds, and carry out its mission of providing service to America's taxpayers in meeting their tax obligations. For fiscal years 2016 and 2017, the agency reported spending approximately $2.7 billion and $2.6 billion, respectively, for IT investments.

GAO was asked to review IRS's IT operations. GAO's specific objectives were to (1) evaluate the performance of selected IRS IT investments, (2) summarize any risks associated with selected legacy systems and evaluate the steps the agency has taken to manage such risks, and (3) determine the extent to which IRS has implemented key IT workforce planning practices.

GAO analyzed planned versus actual performance information for nine selected investments for fiscal year 2016 and the first 2 quarters of fiscal year 2017—four in development and five in the operations and maintenance phase; identified risks facing three legacy investments and analyzed IRS's efforts to manage these risks against key practices; and analyzed IRS's IT workforce planning efforts against best practices.

What GAO Recommends

GAO recommends that IRS perform operational analyses consistent with guidance, implement key risk management practices, and fully implement key IT workforce planning practices. IRS did not agree or disagree with the recommendations, but said it would provide a plan for addressing each recommendation.

For more information, contact David A. Powner at (202) 512-9286 or pownerd@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should ensure the operational analysis for IMF fully addresses greater utilization of technology or consolidation of investments to better meet organizational goals. (Recommendation 1)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should ensure the operational analysis for IDRS addresses the extent to which the investments support customer processes as designed, and how well the investments are delivering the goods or services they were designed to deliver. (Recommendation 2)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should ensure the operational analysis for Telecommunications Systems and Support (TSS) addresses the extent to which the investments support customer processes as designed, and how well the investments are delivering the goods or services they were designed to deliver. (Recommendation 3)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  4. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should ensure the operational analysis for TSS includes a comparison of current performance with a pre-established cost baseline. (Recommendation 4)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  5. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should ensure the operational analysis for End User Systems and Services includes a comparison of current performance with a pre-established cost baseline. (Recommendation 5)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  6. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should ensure the operational analysis for MSSS addresses alternative methods of achieving the same mission needs and strategic goals. (Recommendation 6)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  7. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with preparing for risk management for the IMF investment. (Recommendation 7)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  8. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with analyzing risk for the IMF investment. (Recommendation 8)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  9. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice for prioritizing risk for the IMF investment. (Recommendation 9)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  10. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with mitigating risk for the IMF investment. (Recommendation 10)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  11. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with monitoring, reporting, and controlling risk for the IMF investment. (Recommendation 11)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  12. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with preparing for risk management for the IDRS investment. (Recommendation 12)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  13. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with analyzing risk for the IDRS investment. (Recommendation 13)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  14. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with mitigating risk for the IDRS investment. (Recommendation 14)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  15. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with monitoring, reporting, and controlling risk for the IDRS investment. (Recommendation 15)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  16. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with preparing for risk management for the MSSS investment. (Recommendation 16)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  17. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with identifying risk for the MSSS investment. (Recommendation 17)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  18. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with analyzing risk for the MSSS investment. (Recommendation 18)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  19. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with mitigating risk for the MSSS investment. (Recommendation 19)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  20. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement the risk management key practice associated with monitoring, reporting, and controlling risk for the MSSS investment. (Recommendation 20)

    Agency Affected: Department of the Treasury: Internal Revenue Service

  21. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Commissioner of the IRS should fully implement IT workforce planning practices, including the following actions (1) setting the strategic direction for workforce planning; (2) analyzing the workforce to identify skill gaps; (3) developing strategies and implementing activities to address skill gaps; and (4) monitoring and reporting on progress in addressing skill gaps. (Recommendation 21)

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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