Summary: The Internal Revenue Service (IRS) generally responded to the concerns raised in GAO's 1994 report (GAO/GGD-95-39) that dealt with meeting milestones for starting Taxpayer Compliance Measurement Program (TCMP) audits, testing TCMP database components, developing data collection systems, and analyzing data. Because of uncertainties about its fiscal year 1996 budget, IRS delayed the start of its TCMP audits from October 1 to December 1, 1995. This delay turned out to be fortuitous because IRS had not completed testing all the tax return database or data collection systems for the TCMP. If the tests show that major changes must be made to the database or data collection systems, IRS may not meet its December 1 deadline for starting audits. There is still time for IRS to develop a research plan to enable the agency to analyze final TCMP results more quickly. IRS can begin now to formulate research questions and could also use preliminary TCMP data as they become available to develop other questions. Further delays must be avoided because the existing TCMP data are old, and, to GAO's knowledge, no other data sources exist that would allow IRS to develop formulas for selecting returns for audit. IRS is trying to develop a system that could be used for selecting returns, but this system will not be up and running for years. TCMP data could also be helpful in the design and administration of alternative tax systems. The value of the data would depend on how much of the current tax system would be retained under the new system.
