While the Internal Revenue Service has made progress in improving taxpayer service, tax law enforcement and Business Systems Modernization areas, serious ongoing issues have kept the latter two areas on the Government Accountability Office's high-risk list, the watchdog agency said.

In its latest assessment of IRS's performance in taxpayer service, tax law enforcement, and systems modernization, the GAO said the agency's most noticeable progress has been in taxpayer service. Since the passage of the Reform and Restructuring Act of 1998, improvements in access to IRS by telephone, the accuracy of answers given to taxpayer inquiries, and the growth of IRS's Web site..."have been noteworthy accomplishments," GAO said.

However, in spite of recent increases in enforcement staffing, GAO said enforcement remains a high-risk area because of the continued need to improve enforcement and make progress towards reducing the tax gap.

Though it said the IRS has made "significant progress" in establishing management controls and acquiring infrastructure as part of the BSM program and in addressing financial management issues, the GAO said business systems modernization remains at risk because of "the scope and complexity of modernization activities and the need for better management capacity to avoid repeating the program's history of schedule delays and cost overruns."

The GAO said the IRS "must address resource constraints and realize efficiency and systems improvements." The report highlighted several opportunities the GAO identified for doing so, including: considering additional funding enhancements, such as user fees and private debt collection; leveraging nonfederal partners, such as states, to assist with tax law enforcement and volunteers to help provide taxpayer service; prioritizing taxpayer service activities; targeting enforcement resources to make more efficient use of available resources and to help reduce the tax gap; creating the necessary systems to enable the IRS to develop accurate cost accounting information; developing and using better productivity data; making needed management improvements; and making needed improvements to assure information systems security.

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