Summary: Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) progress with the modernization of its tax processing system, focusing on input processing initiatives intended to speed the flow of tax information into computer systems for processing.
GAO found that: (1) input processing initiatives will drastically reduce the manual processes associated with handling paper income tax returns, tax payments, and other tax information; (2) the initiative's three major modules, the Electronic Filing System, the Document Processing System, and the Cash Management System, are expected to cost over $390 million to develop; (3) the Electronic Filing System cost about $7 million to develop, was available nationwide, and was expected to handle about 13 million returns, about 7 percent of all returns received annually; (4) IRS projected that the Document Processing System, fully operational by 1998, would convert 97 percent of all paper returns to electronic images; and (5) IRS spent $200,000 to develop and test electronic funds transfer and automated check processing systems to replace current labor intensive processes.
