IG: IRS sees some payoff from taxpayer database

The Internal Revenue Service used the latest release of its modernized taxpayer database to accurately post information to 11 million taxpayer accounts in the most recent filing season.

IRS had planned to use the system to process an additional 22 million returns, but delays in implementing Release 2.2 of the Customer Account Data Engine prevented it from doing so, said the Treasury Inspector General for Tax Administration (TIGTA).

CADE, which is a building block for managing taxpayer accounts in the IRS modernization program, will replace the Master File, which the agency launched during the Kennedy administration.

IRS is adding functionality to CADE each year so that the system will be able to process progressively more complex types of tax forms in the 1040 series. When fully operational, CADE will store information on more than 200 million individual and business taxpayers.

In the most reason tax season, CADE began processing returns that had any filing status, limited dependent exemptions and schedules for self-employment income.

IRS planned to use CADE for 33 million tax returns this year but reduced that amount to 11 million because the latest release required performance improvements and upgrades, TIGTA said in a report posted Oct. 28. The auditor evaluated samples of returns IRS posted to CADE after the agency added the self-employment data capability.

“In all cases, the posted information was accurate, and we did not identify any discrepancies,” said Michael Phillips, TIGTA’s deputy inspector general for audit, in the report.

TIGTA made no further recommendations.

IRS also accurately reported the self-employment information to the Census Bureau. And the agency adequately tested a separate scoring process used to determine whether returns posted to CADE should be audited, Phillips said.

CADE faltered with only one tax-filing condition, which could have resulted in $400,000 being refunded incorrectly to taxpayers. IRS added a condition for applying tax refunds to amounts owed on related business accounts to the CADE database but did not program the system to handle it.

The CADE Project Office took prompt corrective action and transferred the condition code back to the Master File, TIGTA said.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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