A computer program the Internal Revenue Service has been developing to expedite tax-exempt status requests is behind schedule, over budget and not performing all that well either, according to a report from the Treasury Department's in-house watchdog.

The Treasury Department Inspector General for Tax Administration found that the second phase of development of the IRS's Tax Exempt Determination System has run into scheduling delays and the elimination of several of its planned capabilities. The system delivered only $33.5 million of the $73.1 million in benefits initially anticipated in 2004. The cost of development also exceeded the contractor's initial estimate by 26 percent, to the tune of $2.1 million.

The IRS decided to replace the computer software and hardware installed in the first phase of the project when it revised the technology standards, so it has realized few benefits from the $17 million it has spent on phase one.

"It is imperative that IRS management adequately oversee the development of its computer systems," said TIGTA inspector general J. Russell George in a statement. "The nation's taxpayers should not be expected to continue supporting these missteps and poor management. The cost is simply too high."

However, TIGTA did find that an IRS committee had improved its management oversight of the project since the initial phase and has begun tracking some of the project costs as TIGTA had previously recommended.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access