An $18.7 million system that the Internal Revenue Service has developed to keep better track of the caseload in its Tax Exempt/Government Entities Division has failed to live up to its promises, according to a new report.

The Treasury Inspector General for Tax Administration audited the Tax Exempt/Government Entities Reporting and Electronic Examination System. The system, also known as TREES, is supposed to allow revenue agents and managers to work on cases while electronically tracking them through every stage of the examination process.

Instead, some of the planned functions were never implemented due to budget cutbacks and difficulties with its software and hardware when it was deployed in 2008. Employees generally have not been using the system effectively, TIGTA found.

The report recommended that the IRS develop a plan to address the issues identified during the audit, including re-educating and training users, to encourage the TE/GE division to better use the TREES software. The IRS agreed with TIGTA’s recommendations.

“The Tax Exempt division needs to take additional actions to transform its examination process from one that is paper intensive and inconsistent to an efficient electronic process,” said TIGTA Inspector General J. Russell George in a statement. “This will help the federal government receive the highest possible return from the $18.7 million of taxpayer funds spent on developing and implementing the system.”

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