IRS Modernized e-File platform lags on delayed requirements, funding

The IRS should more deeply involve its Business Rules and Requirements Management office with the Modernized e-File project to keep the Internet-based electronic filing platform on track to replace the current individual 1040 tax return system.

The IRS plans to incorporate those who use the family of 1040 tax forms onto the MeF platform in 2009. IRS began requiring large corporations and tax-exempt organizations to e-file via the MeF last year. It also added the federal-state single-point filing system platform to MeF last year.

The latest release experienced problems with high volumes early in the 2006 tax season but was able to process peak tax-return volume in September. The IRS also deferred 53 of the project’s requirements to later versions, said a report from the Treasury Inspector General for Tax Administration.

Of the deferred requirements, the MeF project team has delayed completion of its ability to display return information within a certain time period until Release 4. The ability to display returns ensures the efficiency of IRS personnel who access returns through the MeF system, TIGTA said in its report.

Other deferred requirements include capabilities to create and store system error messages, capture audit trails and monitor infrastructure transactions and processes.

“The MeF project’s plans for processing additional tax forms are uncertain,” said Michael Phillips, TIGTA’s deputy inspector general for audit.

Better management of MeF’s expected capabilities and associated costs will improve the IRS’ prospects for meeting the 1040 goal, TIGTA said. The definition of requirements should incorporate the plans and concepts for the IRS’ five-year IT Modernization Vision and Strategy. IRS also should include the content of each release, expected deployment dates and anticipated funding for the release work.

The IRS agreed with most recommendations, but said it already had defined a sequencing plan, including implementing Release 5 in January 2008, and was implementing it.

“The current sequencing plan outlines the development and deployment of the 1040 family of forms across three releases with the implementation of the first release scheduled for 2009. Implementation of this plan is dependent upon the amount of approved funding provided to the MeF project,” said IRS CIO Richard Spires in a response.

Using fixed-price task orders, however, should occur after each release’s design is decided, IRS said. It will evaluate whether using fixed-price contracts for Release 6 is appropriate.

“The MeF project cannot enter into fixed-price arrangements until it receives all required funding. The service must enter into fixed-price contracts with appropriated rather than anticipated funding,” Spires said.

The CIO disagreed with TIGTA’s recommendation to identify the cost effects of deferring significant project release requirements to future releases. TIGTA responded back that it was concerned about the absence of controls to assign and track project requirement costs. Spires said that that was not an appropriate or productive use of resources. The IRS performs an impact assessment to determine the best way to use deferred requirement efforts in the future. The IRS, however, tracks the associated costs of deferred requirements in the development of its relational taxpayer database, the Customer Account Data Engine, TIGTA said.

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