The Internal Revenue Service is not adequately performing the job of managing its mainframe software licenses, according to a report from the Treasury Inspector General for Tax Administration.

Computer software is typically protected by federal copyright law requiring users to have a license granting them legal rights to use the software in accordance with the terms and conditions specified by the copyright owner.

The IRS runs approximately 200 different software products on its mainframe computer systems. For its report, TIGTA reviewed whether the IRS is adequately managing mainframe software licenses.

TIGTA found that the IRS is not adhering to federal requirements and recommended industry best practices.  Specifically, the IRS does not have policies, procedures, and requirements for mainframe software license management and does not have a centralized, enterprise-wide organizational structure for managing its mainframe software licenses.

The inadequate mainframe software license management has resulted in an estimated waste of $11.6 million and over-utilization of $1.5 million in license and software subscription support fees, according to the report.

“Efficient and cost-effective management of the IRS’s software assets is crucial to ensuring that information technology services continue to support the IRS’s business operations and help it to provide efficient services to taxpayers,” said TIGTA Inspector General J. Russell George in a statement.

TIGTA made seven recommendations to the IRS to improve management of its mainframe software licenses. They included developing policies, developing an enterprise-wide organizational structure to manage mainframe software assets and licenses, and developing a software license inventory and maintaining it with a specialized tool.

In response to the report, IRS management agreed with all seven recommendations with slight modifications to three of them. “The IRS recognizes the significance of having proper controls in place to manage software assets and we continue to maintain these controls,” wrote IRS chief technology officer Terence Milholland in response. “The IRS has already taken several actions that not only improve controls but also address the audit's recommendations which align with industry software management best practices.”

The IRS plans to enhance policies and guidance, and implement an Enterprise Software Governance Board; clarify the enterprise-wide organizational structure, including the roles and responsibilities for mainframe software asset and license management; enhance standard operating procedures; continue working to identify and implement a standard enterprise toolkit that can discover, track, and manage software license deployment and usage; continue developing a mainframe software inventory and identifying and implementing a standard enterprise toolkit; and enhance the software inventory process by leveraging tools with the data collected, which will be consolidated and maintained in a central data repository.