GAO: IRS technology overtaxed and under par

The Internal Revenue Service is riddled with operational problems ranging

from lapses in its computer security system to budgetary and financial systems

that fail, a new General Accounting Office report disclosed Tuesday.

In its annual review of the tax agency's problems, GAO told Congress

an obsolete and antiquated system would continue to plague the IRS with

problems until it is replaced with a state-of-the art system.

"The agency continues to experience pervasive material weaknesses in

the design and operation of its automated financial management and related

operational systems," the GAO reported to the House Government Management,

Information and Technology Subcommittee.

Although the IRS has embarked on a program to overhaul its systems,

it is estimated that enhancements would take 10 to 15 years and cost more

than $2 billion.

Meantime, the agency continues to limp along without tools to keep track

of financial data, causing endless headaches, such as last year's payments

of billions of dollars in refunds to taxpayers who were not entitled to

them.

"Unfortunately, it is an accepted fact that the federal government's

financial systems are obsolete and ineffective. Most federal agencies cannot

produce complete, consistent and reliable financial information on a timely

basis," said Rep. Stephen Horn, R-Calif., chairman of the subcommittee.

Among the problems identified by GAO:

* Significant delays — in some cases more than 10 years — in recording

payments made by taxpayers.

* Delays in releasing tax liens against properties owned by taxpayers

who have paid off their tax liabilities.

* Hiring IRS employees to process money and taxpayer data before receiving

satisfactory results from fingerprint checks.

* Serious weaknesses in protecting computer security.

"The key to better financial management at the IRS is improved technology.

The IRS must replace nearly its entire inventory of computer applications

and convert its data on every taxpayer to new systems," said Lawrence Rogers,

acting chief financial officer of the IRS, who testified before the subcommittee.

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