Wednesday, March 30, 2011

IRS Identifies Benefits Of Modernizing The Management Of Individual Taxpayer Accounts

IRS has been able to identify 20 service, compliance, and other benefits for the first phase of its strategy for modernizing the management of individual taxpayer accounts, the Government Accountability Office (GAO) said in a report released on March 24. (GAO-11-168) The strategy is known as the Customer Account Data Engine (CADE) 2. It is being implemented in three phases, with the first phase expected to be delivered in 2012. The benefits identified by IRS include increasing the percentage of returns that are processed daily and reducing the number of erroneous notices due to better account information. IRS also has set quantitative targets for most of the identified benefits, an accomplishment GAO found especially noteworthy. The total preliminary lifecycle budget for the first two phases of the CADE 2 program is estimated to be $1.3 billion through 2024—$377 million for development costs and $922 million for operations and maintenance. Although IRS's process for arriving at those numbers “was generally consistent with best practices,” GAO said, “the agency did not follow three practices intended to improve the credibility of cost estimates.” IRS did, however, win praise for its work to identify possible risks. “To its credit, IRS has developed mitigation strategies for each identified risk,” GAO said. In conclusion, GAO noted that IRS can still improve its efforts at identifying possible benefits and producing better cost estimates. The report is available at

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