The Internal Revenue Service has been consolidating several of its data centers in an effort to comply with a directive from the Office of Management and Budget to reduce data center space, cut costs, and save energy, but it needs a plan to achieve future savings goals, according to a new report.

The report, released Wednesday by the Treasury Inspector General for Tax Administration, acknowledged that the IRS has been complying with the OMB mandate, setting a goal of reducing its data center space by 50 percent and reducing the number of data centers from 15 to eight by the end of fiscal year 2015.

For its report, TIGTA reviewed whether the IRS’s Data Center Consolidation Initiative would effectively reduce data center space and increase energy efficiency and found that the IRS has indeed exceeded its first two annual goals of reducing data center space and improving energy efficiency by closing two data centers and reducing the size of five other data centers by 76,560 square feet.

However, the IRS lacks a clear plan to ensure that it will meet its future data center space reduction goals, TIGTA pointed out. The IRS has not formalized a project management plan that addresses the challenges and details the decisions, milestones and timeframes needed for the IRS to meet its data consolidation goals. In addition, the IRS has not identified the optimal footprint for its data centers.

TIGTA auditors observed significant empty space at the IRS’s Enterprise Computing Center in Detroit, but IRS management later informed them that the lease on the Detroit center will expire in April 2015.

“Decreasing redundant or unnecessary data centers, as well as reducing operational costs and energy consumption, is an important part of federal efforts to cut costs and make more efficient use of taxpayer funds,” said TIGTA Inspector General J. Russell George in a statement.

TIGTA’s eight recommendations to the IRS included developing a project management plan and consolidating the Detroit Enterprise Computing Center into the Martinsburg and Memphis Enterprise Computing Centers.

IRS management agreed with seven of TIGTA’s recommendations. The IRS said it would close the Detroit data center and consolidate its operations into an appropriate facility of its choosing.

“The IRS is proud of the fact that in the first two years of the project, we have exceeded our goals of reducing data center space and are on track to meet our goals for the third year,” wrote IRS chief technology officer Terence V. Milholland in response to the report. “In 2011, we released 13 percent of space; in 2012, we released 12 percent of space; and this year, we are expecting to release another 13 percent of space.”

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