Summary: This testimony was intended to assist the National Commission restructure the Internal Revenue Service (IRS). GAO makes the following points: (1) One of the IRS' biggest problems has been the inefficient way in which its processes most tax returns. IRS needs to reduce the volume of paper returns. (2) IRS' strategy for improving customer service appears promising. However, the agency needs to develop a plan to overcome significant technical, managerial, and other obstacles to achieving its customer service vision. (3) Longstanding problems continue to undermine the effectiveness of IRS' collection problems. Significant changes are needed in the way IRS does business. (4) Although IRS has made some progress in resolving issues that have prevented GAO from expressing an opinion on the reliability of IRS' financial statements, serious management problems remain uncorrected. (5) IRS needs to improve its ability to make sound investment decisions in information technology. IRS' reengineering efforts could generate new business requirements that are not addressed by tax systems modernization or that make some of those projects obsolete.
