For every achievement that the Internal Revenue Service reaches when it comes to technology, there seems to remain a disconnect with the agency’s capability of fulfilling its longer-term strategic plans.

Just this week, the IRS released statistics that showed a number of technological highlights has been set during the 2007 tax filing season -- highlighted by the more than 76 million electronically-filed individual tax returns and more than 140 million visits to the agency’s Web site.

This year’s tax season saw a surge in electronic filing among last-minute filers, a group that has traditionally sent in paper returns. During the week that included this year’s tax-filing deadline (April 14-20), the number of electronically-filed returns received by the IRS jumped 35 percent over the same week last year, even though the overall number of returns (paper and electronic) received during the same week only rose 12 percent.

New records were also set for the number of returns e-filed by home computer users, the number of balance-due returns filed electronically and the number and amount of direct-deposit refunds.

That’s a good thing, because there’s little, if any doubt that taxpayers want and need online tools to reduce as much of the tax code’s uncertainties and confusions for them.

But there still remains some troublesome signs about the progress being made at the agency. A recent Government Accountability Office report said that a number of cost-benefit constraints means that the IRS doesn’t appear to be in a position to develop its own software for tax preparation anytime soon -- a sure sign of relief for members of the Free File Alliance -- while as far as the IRS’s technology infrastructure is concerned, the GAO still wants to see a long-term strategy that includes time frames for retiring legacy computer systems.

Like the interim tax season report recently issued by the Treasury Inspector General for Tax Administration, that most GAO report noted that disappointingly, the latest release of the Customer Account Data Engine, a faster tax processing system, was delayed this season, and millions fewer returns than expected made their way through the data engine. Another TIGTA report pointed to record-keeping problems, largely borne out of not having real-time data updates, as the key driver behind eliminating problems of processing and clearning separate joint tax accounts in innocent spouse case.

And it was around this time after the 2006 filing season that the IRS announced that its failure -- partially the fault of a private contractor -- to get a revamped computer program online in time to screen for fraudulent 2006 tax returns would cost the federal government between $200 million and $300 million.

None of the reports on their own sound all that ominous, but it’s apparent that the IRS, even with a public base that is demanding more sophisticated technological tools and an enforcement mandate that clearly makes those tools a necessity, isn’t always able to deliver and have access to the kinds of technology needed to boost compliance -- whether voluntary or involuntary.

When the next IRS commissioner comes on board, all taxpayers and preparers should hope to someone who’s concerned with all of the seemingly ticktack problems with the agency’s technology and tech processes, and makes it a priority to fix them before the scattered systems already in place lead to bigger problems.


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