Washington, D.C. - A pair of new reports from the Treasury Inspector General for Tax Administration found that the Internal Revenue Service's Modernized E-file System, which is supposed to replace the current electronic filing system by the 2013 filing season, still needs significant improvement.

The report reviewed whether the IRS corrected performance problems previously identified by TIGTA during the 2010 filing season and whether the system would be able to accurately process individual tax returns during the 2011 filing season in a timely manner.

Overall, however, TIGTA found that the processes that the IRS used to validate and monitor MeF system processing did not ensure the accurate processing of individual tax returns. TIGTA also could not validate that the previously identified performance issues had been resolved.

In its first report, TIGTA found that the IRS successfully planned for key performance enhancements and tested the system's requirements prior to implementation during the 2011 filing season, but needed to improve its methods for tracking performance problems and security weaknesses. Specifically, the IRS could not provide documentation to demonstrate that performance enhancements had been implemented to address the issues identified during the 2010 filing season. The IRS agreed with three of TIGTA's four recommendations for improvement, but disagreed with TIGTA's assertion that security weaknesses were not immediately mitigated.

In its second report, TIGTA found that IRS processes were not effective in ensuring the accuracy of the returns processed by MeF during the 2011 filing season. TIGTA also found that reluctance by tax return transmitters and state tax agencies to e-file using MeF raises significant concerns regarding the IRS's ability to replace fully the old e-file system for the 2013 filing season. Further, the IRS is not encouraging taxpayers to take advantage of the ability to use the MeF system to scan and upload supplemental documentation to their e-filed tax returns.

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